Defining Your Talent Needs
When you’re focused on succession planning for mission-critical roles, it can be challenging to determine the best allocation of your often limited resources. How do you choose between developing your internal talent and recruiting externally?
We know that economic conditions are uncertain and HR budgets are being squeezed – over half (55%) of HR teams in the UK expect to have their budgets cut in the next few months. It doesn’t help that the labour market remains tight, especially for specialized skills in certain industries. A recent survey of HR leaders across 60 countries found that 50% of them expect increased competition over talent in the next six months, while labour shortages are cited as the number one external stressor for CEOs in the US.
And of course, there are costs associated with hiring externally; for C-suite roles, that cost can be as much as 213% of the executive’s salary. This doesn’t include the financial implications when the external hire doesn’t work out. A study by Allgood and Farrell revealed that externally-hired CEOs have an 84% greater chance of turnover in their first three years than insiders . . . usually for poor performance.
Developing internal talent can be a more accessible option for building the skills that your organization needs, while mitigating the risks of the external environment.
Why developing internal talent makes sense
Developing talent internally sends the strong message that growth opportunities are available within the organization. This can have a positive impact on employee engagement, attraction, and retention. Internal employees also have a deeper understanding of company culture, so they’ll have a shorter learning curve compared to external hires. High-potential internal employees are quick to take action and drive change when promoted, unlike external hires who require time to acclimate.
Identifying your talent challenges
To maximize talent development, it’s essential to address the specific challenges your organization faces. These challenges may include:
- a lack of qualified successors for senior positions
- difficulty filling specialized roles
- issues retaining top talent
- limited career progression paths for high-potential individuals
- facilitating career development in a hybrid work environment
Make sure you keep these challenges in mind as you move through this process, so that you can develop targeted strategies that address your organization’s needs.
Business strategy drives talent strategy
Once you’ve decided to invest in internal talent, it can be tempting to jump right into development programs and supports for your leaders . . . but talent strategies cannot exist in a vacuum. Instead, your talent strategy should be a direct outcome of your business strategy. Remember, your people are the key drivers of results!
Take a close look at your strategic plan and consider what the coming years demand. During periods of rapid growth and transformation, you might want to focus on developing individuals who demonstrate agility, innovation, and transformational thinking. On the other hand, there may be times where your business focuses on operational excellence and stability. In this case, you’ll need leaders who have strong operational capabilities and understand how to manage within your culture.
By reviewing your strategic priorities, you can determine the specific talent needed to lead your business through the coming periods.
Defining your talent profile
Once you have reviewed your business strategy, you can define your talent profile. This can be for a single role or for a level of leadership such as Vice President.
When we build these for clients, we consider the following key factors.
1. Leadership Capabilities
Think of these as “how” you would want leaders to accomplish results in the role. Key capabilities such as influencing, strategic thinking, or execution would fit here.
2. Technical Capabilities
These are the role or organization-specific capabilities; think of them as the “what” skills that would be required for success. For example, a technology role might require expertise in cloud computing, while a finance role could benefit from a background in auditing.
3. Critical Experiences
These are the specific experiences that are crucial for success in the role. Do you need someone with experience managing large-scale transformational projects, handling significant profit and loss responsibilities, or navigating complex matrixed organizations? Be selective and prioritize experiences that significantly impact role suitability.
4. Cultural Alignment
This speaks to the degree of alignment with your organizational values: what it feels like to work in your organization. For guidance here, you can look to your existing mission and values.
5. Key Relationships
Identify the relationships that are vital for success in the role. Consider which existing relationships need to evolve, the need for new connections, and how the balance between internal and external relationships may shift. Recognize that fostering strong relationships can unlock success in the new role.
Here are a few questions to help prompt your thinking further:
- What’s the core function of the role (operational / advisory / innovation)?
- What do you need to retain from how the incumbent led in the role?
- What’s more important for this role: impact or influence (expertise vs relationships)?
- Will success in the role be found by a structured thinker who gets their enjoyment from refining processes, or one who enjoys breaking the mould and challenging the status quo?
When you consider all five factors, you’ll be able to develop a comprehensive talent profile that ensures strong alignment between your talent and organizational goals. You’ll also have the added benefit of promoting a culture of growth and development.
Keep in mind that you shouldn’t define a talent profile in isolation. Instead, involve the entire executive team as an important alignment exercise. When organizations actively engage leadership, they foster alignment, gather valuable input, and ensure that talent decisions are driven by business objectives.
Getting it right
To ensure success when defining your talent needs, keep the following points in mind:
- Define the talent profile as a full executive team.
- Treat this as a business issue, not an HR issue.
- Be future focused – accepting the status quo will not move your organization forward.
- Consider the role, not the incumbent.
- Avoid the laundry list. Focus on the unique nuances and needs of the role, and not on the generic requirements that apply across your entire organization.
The key takeaway from this part of the process is the need to pause and question assumptions about the role or level. For long term executives, there is a risk of defining what right is by “feel” – and at times, rejecting candidates who you have on a succession plan without a clear rationale for why they’re no longer a credible fit.
A well-defined talent profile helps you plan for the future of the role, build solid development plans for your candidates, and most importantly, to strongly connect your talent strategy to the business strategy.
In Part Two of this series we’ll explore the next step on your path to strategic talent development: getting to know your talent.
Sarah Skyvington is an experienced talent management specialist who works closely with leaders to create talent strategies that support business results. She holds an M.A. in Industrial/Organizational Psychology and is certified in numerous assessments, including the Hogan Suite, Birkman Method and Leadership Effectiveness Analysis 360. As Principal Consultant, she specializes in talent strategy, assessment, succession management and organizational development.