TALENT MANAGEMENT SHOULD BE STRATEGY DRIVEN

As is shown in figure 2.1, talent management needs to be driven by an organization’s strategy and the capabilities it requires for it to be effectively implemented. Every strategy is only as good as an organization’s ability to implement it, and its implementation is only as good as its talent’s ability to execute it. Because of this, organizations need to be sure that the capability demands of their strategy (e.g., agility, low-cost production, etc.) can be met with respect to how talent is managed. If they cannot be met, then the strategy needs to be changed. This relationship between strategy and talent is why figure 2.1 has a two-way arrow between “Strategy” and “Capabilities.”

Figure 2.1

The five most important talent management practice areas are identified in figure 2.1. To some degree they are independent of each other, and they will be treated separately in the chapters that follow. Yet they are interdependent in many ways and need to fit with each other. Thus, they are connected by two-way arrows in the figure, and as we examine each one of them, we will consider issues of fit with other talent management areas. Only by using talent management practices that fit an organization’s strategy and fit together to create an integrated talent management system can an organization be effective.

The reality that talent has become the key resource of many corporations mandates that it be a major determinant of most corporations’ business strategies and that it be managed in ways that support strategy implementation. Much of the writing on talent management emphasizes that strategy should drive the talent management practices of corporations. Given the importance of talent, it is hard to argue against this point. To be successful, a strategy needs to be supported by the right talent management practices. But thinking of strategy as determining talent management is not the best way to state or think about the interaction of the two.

Yes, talent management needs to be influenced by an organization’s strategy, but its strategy needs to be driven by the talent that is available to it and how it can be managed. A strategy that cannot be implemented or executed effectively because of talent availabilities and deficiencies is not a good strategy. It is just as likely to lead to poor organizational performance as one that is based on incorrect assumptions about financing, marketing, or production.

Perhaps the most obvious area in which talent should drive business strategy involves the availability of talent. The key to implementing every strategy is the ability of an organization to recruit and/or develop the talent it needs to implement and operate the strategy. Thus, there are a number of questions that every organization must ask when it develops its strategy: What is the right talent, and do we have it? If we do not have it, can we recruit and/or develop the talent we need to implement this strategy? Can we structure and design talent management practices that will lead to the type of talent we need to be motivated and willing to commit to the effectiveness of the organization? If the answer to either of the latter two questions is no, then the case is clear: the strategy will not be effective and should not be adopted.

There are numerous challenges to an organization’s recruiting the talent it needs to implement a strategy. For instance, there simply may not be people in the labor market that have the right skill sets, or the organization may not have the assets it needs to make an attractive offer to the right talent. There are also many reasons why it can be difficult for an organization to develop the talent it needs; these include the willingness and ability of current employees to develop new skills and competencies, or the lack of the expertise needed to develop the skills of both existing employees and new ones.

In many ways, there is a great deal of similarity between the factors that are critical in recruiting new talent and those that are involved in obtaining financial capital when a new organization is formed. New organizations do not have a track record, and they need to sell the promise of future payoffs to talent. Not surprisingly, one of the major things that causes the demise of many start-up organizations is their inability to attract the kind of talent they need to be successful.

At the forefront of any discussion of talent availability should be a consideration of alternative approaches to accessing talent. For a host of reasons ranging from agility to cost and availability, the best way for an organization to get the talent it needs may not be by employing it on a full-time, permanent basis. Consideration needs to be given to the wide variety of talent access approaches that are available today and will be increasingly available in the future. These include contract employees, gig workers, employees borrowed from other organizations, workers hired through temporary agencies, and a host of other ways to temporarily obtain talent. Organizations increasingly need to think of themselves as being made up of constantly changing teams that assemble talent to meet the performance demands of a changing market.

It is increasingly common for organizations to take into account the availability of talent when it comes to implementing a strategy that has been decided upon. Talent availability is increasingly driving decisions about where organizations locate their operations. Further, an increasing number of organizations are using technology that allows talent to work anywhere, and at any time.

Most executives do recognize that implementing a strategy depends not only on having the right talent but also on being able to motivate and direct the talent to behave in ways that are strategically appropriate. But what it means to operate in strategically appropriate ways and how this can be accomplished is not always well thought out during the strategy development process; instead it is left for “later.”

Leaving talent management considerations for later is a big risk, because it may not be possible to design an organization that has talent management practices that are conducive to the implementation of the business strategy. It is during the development process that organizations need to deal directly with how the organization can obtain and manage the right talent for a strategy to be implemented successfully. The next question should be, Does our organization have these practices and, if not, can we implement the right talent management practices?

Simply adopting a series of best practices with respect to rewards, performance management, recruiting, selection, and development is rarely the right answer to creating strategically appropriate talent management systems. Different strategies require different systems. Organizations must start with an understanding of what the talent management options are and an understanding of how the many options that exist impact the behavior of individuals and organizations.

Overall, developing strategic talent management practices is a critical and challenging task. To be done well, it requires an extensive knowledge of the alternative methods of talent management as well as an understanding of how they relate to the kind of organizational culture, competencies, and capabilities that are required to implement and operate a strategy. It also requires realizing that talent management practices may soon be outdated, especially with the way work and organizations are changing. Few “silver bullets” exist that can solve all talent management problems or can be strategically relevant for years or even decades.