According to a recent survey by McKinsey & Co.¹ only 12 percent of the CEOs of large companies (i.e. revenues greater than $1B) and 17 percent of those of smaller companies view talent management as their single most pressing business concern. At the same time an IBM study ² reports that 80 percent of CEOs have set their primary objective as "revenue growth." To achieve that growth, 90 percent say they will need to transform their company to be more flexible and responsive-especially to meet new customer requirements. Half of those say they must execute the transformation in two years.

In sum, the majority of CEOs believe we're in a growth environment, but succeeding in this environment will depend on execution of a strategic plan and transformation. Yet only a small minority see talent management as a top concern. Why is talent management not a major concern? We believe many CEOs and other senior executives operate under assumptions such as: even with the economy doing better, the employment market is still a tough one with limited opportunities.

Let's consider the perspective of today's highly talented professionals and effective leaders. In the last few years they've learned:

• Ethical/regulatory issues in their company or industry can undermine personal opportunities and rewards
• There is no stigma to being laid off or out of work
• Talented employees often volunteer for a downsizing and choose to invest six months in life outside of their careers
• Highly talented people can find a new position relatively quickly (according to DOL statistics median, unemployment is less than 12.5 weeks)
• All things considered, it is often better to take a new opportunity than stay in your current position

In short, more than ever, talented people know that they have mobility and opportunity regardless of fluctuations in the economy. In a real sense, the relationship of highly talented people to their company may be more akin to that of a contractor rather than an employee.

In this environment, the minority of CEOs concerned about talent management may have a significant advantage. They may build loyal workforces that outperform their competitors. Outperform them in profitable growth, customer loyalty and employee engagement.

How to Leverage Talent Management

If you understand that people make the difference in strategic planning and business performance, we'd suggest you take the following five actions to retain your top talent:

1. Model talent's impact on the bottom line
2. Require visible leadership development
3. Challenge your best people with your best opportunities
4. Develop the common weaknesses
5. Demand accountability

Let's look at each of these in turn.

Model Talent's Impact on the Bottom Line

At the end of the day, your goal, indeed your obligation, is to meet or exceed your business objectives. In good times investing in people seems logical and can be done on faith. But it's in the tough, challenging, competitive environments where how and where you invest can really make a competitive difference. In challenging environments you will likely only make decisions that you can prove have an impact. So make sure you have rock-solid proof of how talent management drives business performance. That's the only way you can stay the course in tough times. Making the case for driving business performance via talent management is a relatively simple and inexpensive process.

Cornell University's Professor Gary Fields coined the term "bottom-line human resource management." In his view, truly strategic human resources starts with the targeted business performance results and determines what investments and actions will achieve them. Rutgers University's Professor Mark Huselid has proven since the mid-'90s that human resources impacts the financial performance of the enterprise. Modeling and measuring the impact of human resources-more specifically talent management-on business results is entirely possible and has been for quite some time.

Nothing will convince your management and leaders that you will stay the course more than documenting the ROI from talent management.

Require Visible Leadership

People work for people-not brands, not strategies, not ideals. Your leaders are your organization to your people. Yes, you have to pay competitively whether you employ scientists, bankers or engineers. However, that will only get you talented people, not retain talented people.

When people see management exemplifying leadership on a regular basis and see them behave in alignment with your business performance strategies and corporate values they become confident and committed. When leaders are invisible, people not only lose confidence-they become cynical.

Visibly effective leaders are approachable leaders. People feel comfortable coming to a leader when they are dealing with a tough situation. People rarely go to strangers with problems.

Finally, effective leaders can spot warning signs and take steps to correct them before they become problems that decrease performance.

Make sure your leaders are out in front of your people-not behind their desks.

Challenge Your Best People With Your Best Opportunities

"I wouldn't give you this assignment if I didn't know you could pull it off." These words often follow assigning someone to a difficult if not impossible situation. There is nothing wrong with giving a talented individual the opportunity to grow a tough business or manage a difficult client group-as long as it's not a pattern.

Great people want great opportunities. They want the chance to take a new concept to market or to go after a relationship that clearly has great promise. They want the excitement of being able to use their skills and abilities to really leverage a situation. Like an athlete, they want to know what their peak performance is when everything is in their favor. They want to know how great a competitor they can be.

A Fortune 100 company widely respected for its talent management recently uncovered a problem. A group of high performance/high potential individuals were consistently being deployed to "trouble shoot" business units that were floundering. Indeed, they were almost always successful at turning around the assigned situation. Unfortunately, they were leaving the company with increasing frequency. The reason was quite simple-they wanted an opportunity to show what they could do. Not another opportunity to show they could fix someone else's mistakes.

If you give great people great opportunities they will stay and grow your business.

Fix the Common Weaknesses

Most companies have a common leadership weakness or two that spans the organization. In some organizations leaders don't know how to coach. In others decision-making is slow and cumbersome. In some internal competitiveness saps the resources and energy needed to win in the marketplace. The truth is most organizations have some such common weakness.

The common weakness is visible to your most talented people. They see it and begin to realize no matter where they work the leaders who they work for and the leaders who work for them will have this common flaw. It will become the one frustration the talented person can't see a way around. The reason they may first consider an external opportunity.

Develop your leaders to remove a common weakness and your business will perform better and your most talented people will stay longer.

Demand Accountability

Talented people work hard to win. They are willing to take risks to win. What they are not willing to do is put their performance or even careers at risk because other people aren't being held accountable.

Your best people expect everyone to contribute and perform reliably. They expect everyone else to do so as well. They understand that sometimes people make mistakes and fail to meet targets. What they don't understand is when people are not held accountable for poor results.

In addition to results, talented people are becoming more and more concerned about other people's behavior. They've seen the damage that a few irresponsible or unethical people can cause to a company-indeed, to an industry. To the talented person, there is no excuse for such behavior. Equally there is no excuse for failing to deal with it.

Talented people want to work in an organization where everyone, including themselves, is held accountable for results and achieving those results by adhering to a core set of values and ethics.

Embed accountability in your organization's culture and you'll attract and retain talented people.

At the end of the day you must compensate talented people fairly for the value they provide. That's a necessary but not sufficient factor in retaining people.

To retain talent you need to grow and transform your business provide an environment where your best people can perform at their peak. Give them great opportunities. Develop strong, supportive leadership they can rely on. Hold people accountable for performance and ethical behavior. And as with all investments, demonstrate the impact of talent management on your enterprise's financial performance. Then stay the course.

¹McKinsey Global Survey of Business Executives 2004 ©, 2004 McKinsey & Co., Inc.
²The Global CEO Study 2004 ©, 2004, IBM

First published for Flanagan Consultants, LLC.