B U I L D I N G C A PA B I L I T Y F O R T O M O R R O W ’ S W O R L D

Tim Draketim.drake@normanbroadbent.com

Norman Broadbent Consulting

2

INTRODUCTION

In 1998, McKinsey wrote “The War for

Talent”, a definitive piece predicting that

in the coming decade, scarcity of Talent

would come to define the world of work.

The article proved scarily prescient, and

even today, 22 years on, businesses thrive

- and fail - based on the capability and

quality of their people.

Normally, systemic organisational change

takes a long time to achieve, but every

now and then a huge upheaval emerges

such as COVID-19. It has touched every

organisation, in every industry the world

over, and they will all need to adapt and

evolve to succeed. This can only happen if

those entities have the right people with

the right skills and characteristics to drive

that change.

Norman Broadbent conducted a survey of

senior business and HR leaders to

understand if anything has really changed

in the way we view and manage Talent,

and how the disruption caused by COVID-

19 to organisations over the past three

months has – or will – influence the way

they compete in the new ‘War for Talent.’

Despite being long established as a critical

arena, managements’ understanding of

their human capital often plays second

fiddle to other priorities. An organisation’s

human capital is a key - and often the only

- differentiator they have in a crowded

marketplace. Yet while a new acquisition,

a new site or office requires a full business

plan assessment and ROI analysis, our

survey confirmed we continue to make

critical people decisions based on

subjectivity such as ‘gut feelings’, ‘first

impressions’ or current context (individual

performance and environment).

As a result, overall what emerged was:

❖ a picture of organisations with a clear

understanding of what they should be

doing, but with limited confidence in

the ability of their current processes

and procedures to deliver future

success.

❖ a lack of successors for critical roles,

❖ low confidence in the likelihood of

those individuals succeeding

❖ limited engagement of the

organisational leadership in developing

Talent

❖ a consistent theme of focussing on the

present, not the future requirement

and context.

For those charged with future proofing

their organisation to be able to respond to

disruption, driving the need for rapid and

agile transformation this must be of major

concern

3Respondents were all clear about thebenefits of effective successionplanning. A study 2018 by Deloitteii

identified a range of benefits fororganisations who successfullyimplemented effective talent andsuccession planning processes. Theseimpacted every area of performancefrom talent retention to the bottomline. In our experience, a strongtalent development-led culture is akey predictor of success whichcreates, amongst others, benefitssuch as:

❖ Greater organisational diversitythus avoiding narrow thinkingand the “Peter Principleiii”.

❖ Greater success at attracting,retaining, and engaging high-performing, high-potential talentas they benefit from career andother personal and professionaldevelopmental opportunities.

❖ Improved organisational culturefrom a process which identifies,attracts and retains people whoembody the core values of theorganisation.

❖ A secure legacy by ensuring thatfuture skills and characteristicsalign with the business strategyand future operating context.

TALENT: WHY BOTHER?

Legacy: A Cautionary Tale

Alex Ferguson is one of the most famous

leaders in the world. Frequently

described as ‘the best Football Manager

ever’, he won 38 trophies during his 26

years with Manchester United. Yet his

retirement in 2013 marks the last time

the club won a championship - since then

they have seen their world-leading streak

come to a crashing, lacklustre end. For

many, this story emphasises the

importance of leadership on team and

performance, but it also highlights the

dangers of failing to have a succession

plan in place. For a while, under Alex

Ferguson, Manchester United were the

‘greatest team in the world’ - but seeing

how quickly it all fell apart is not a mark

of a leader’s greatness, but a

condemnation of ego and his failure to

protect his own legacy ...

Of the HRDs and CEOs surveyed, only 42% were confident they had at least two

potential ‘succession’ candidates in sight for each business-critical role.

10% of respondents had zero confidence.

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REALITY CHECK: WHAT IS REALLY GOING ON?

Our survey discovered that whilerespondents understood the importanceof succession planning, and largely believethey have the right measures in place forselecting and retaining talent (an averageconfidence rating of 70%), only two fifths(42%) have faith that their identifiedsuccessors would be able to step up andperform. This suggests that despite CEOsunderstanding the critical importance ofthe process, something is still goingwrong. Our findings echo a study byDeloitteii in 2018, which discovered thatwhile 86% of leaders believe thatsuccession planning is a priority, only 14%believe they do it well.

Despite the confidence of our respondentsin their processes, less than two thirdshave drawn up plans or profiles for thetypes of talent required for the future. Thecritical measure of knowing that “we havethe right people to drive our success” wasan average of only 62% , again suggestingthere is still a relatively high degree ofsubjectivity in the process of bothmapping what is needed and thenidentifying where the gaps are andworking to fill them.

A strong indicator which supports this isthat confidence was at its lowest whenasked if successors were in place forcritical roles. For those that did havesuccessors, confidence was shockingly low(just 42%) that they would be ready tostep up and succeed in an unexpectedsituation.

This question was asked specifically ofbusiness-critical roles, highlighting this as amajor area of concern.

This contrasts with the relatively high level

of confidence (average of 70%) that the

right measures were in place for retaining

critical talent, perhaps implying that the

measures are not retaining the right

talent. This is a common problem when

succession and talent development

programmes become disconnected from

the wider context of the business strategy,

generating uncertainty and lack of clarity

around future success profiles.

Respondents’ average confidence rating that

they have the right measures in place for

selecting and retaining talent was 70%

Respondents’ average confidence rating that

they have the right people in place to

drive success was 62%.

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REALITY CHECK: WHAT IS REALLY GOING ON?

Respondents’ average confidence rating was

58% when asked if they felt they had concrete

actions in place to attract/develop/engage

the right talent to develop into the leaders needed for tomorrow …

YETOnly 8% of respondents

were fully confident they had

profiles/outlines for key roles mapped against

future context to understand the skills

and attributes needed.

Our survey results suggest there is a

rather mixed bag of successful and

ineffective practises in place to

identify, develop and retain talent,

meaning there is no joined up

approach or overall solution. It

appears that a larger percentage of

senior leaders are happy to trust their

“gut feel” and beliefs when it comes

to the personality, skills and

attributes and that are required for

making people decisions.

Confidence of less than 50% in the

talent pipeline to fill business critical

roles shows an issue in attracting and

retaining talent – or possibly

attracting and retaining the ‘wrong’

talent. And whilst there are not many

that have robust processes in place to

validate their assumptions, the talent

could well be there, hidden and

undiscovered – because no one is

sure what they are really looking for.

This implies a lack of certainty around

culture, making it hard (if not

impossible) for leaders to identify

‘what good looks like’ in those key

roles. With these levels of

uncertainty, key appointments are

reduced to little more than a coin

toss, hardly a set up for success.

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SO WHERE DOES IT GO WRONG?

We have seen that despite thenumerous significant benefits of aneffective talent/ succession planningstrategy, many organisations andleaders do not have faith in theirprocesses to deliver effective leaders fortomorrow. So why is successionplanning so hard? As with all businessprocesses, there are plenty of pitfallseven the most experienced leaders cantake a tumble into.

❖ Disconnect from business strategy:The people agenda must be drivenby organisational strategy and needs.Failure to marry these two elementswill result in ambiguity around whatskills and attributes the businessneeds in its people to drive its futurestrategy and a general “what is thepoint?” mindset from its leaders.

❖ Pressure to focus on short termresults: The long-term nature ofsuccession planning sits uneasily withpressure on senior leaders to deliverresults in the short term. This canonly be tackled by ensuring buy-infrom stakeholders across the board.

❖ Relying on ‘gut feeling’: Manyrespondents felt confident they hadprocedures in place, yet fewer thantwo thirds had profiles mapped outfor key roles. Without a clear profileand understanding of what ‘good’looks like, the process becomesentirely subjective, and runs the riskof falling prey to group think.

❖ Ignoring the ‘people’ element: Somebusinesses can go too far down thedata-driven route, reducing successionplanning to an inhuman ‘tick box’annual exercise. The best processesbalance objectivity with empathy.

❖ Infallible leadership: The era of theego-driven leader is over. Businesseswith a proper talent mindsetconsistently challenge their peopledecisions and assess their successes. Aleader who makes any people decisionsolely on ‘gut feelings’ and refuses toacknowledge mistakes will fall into thetrap of narrow thinking, creating teamsof identical thinkers or a ‘mini me’.

❖ Lack of accountability: In manyorganisations, overall responsibility forsuccession planning and talentdevelopment bounces around betweenvarious stakeholders … from CEO toHRPBs (and back again). This means noone feels/is fully accountable ...

Less than a quarter of new hires have the skills required

for the future success of the

company

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SO WHERE DOES IT GO WRONG?

❖ Lack of ownership: Often devolvedto HR, the process becomes seen asan annual ‘tick box exercise’,disconnected from the hearts andminds it needs to win over.

❖ “Buy-in” mentality: Some leadersstill believe that they can simplybuy in talent when needed,ignoring evidence that thesesearches are costly in terms of bothtime and money, and may still failto deliver results. Research carriedout at the Wharton School ofBusiness suggests that externalhires receive lower performancevaluations, are paid more, and havehigher exit rates than their internalcounterparts.

❖ Poor engagement from the SeniorLeadership: McKinsey highlightbusinesses “where the ability todevelop talented people is acriterion for promotion” as a keyindicator of high performance.Failure to engage the very peoplewho should be mentoring anddeveloping the leaders oftomorrow will prevent a successionprogramme getting off the ground.

❖ Using the right language: It is ofvital importance that successionplanning be embedded in theculture of a business. Phrases like“project” or “initiative” actuallyundermine a process by presentingit as a short-term enterprise, not anon-going element of the cultureand routine, just like forecasting forinstance.

The world’s largest brewer ensures its leaders embrace

succession planning and talent development, with an emphasis on developing their people to be

“better than them”. This is a critical element of its

leadership culture.

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ORGANISATIONAL LIFE STAGES NEED DIFFERENT TYPES OF PEOPLE …

Succession planning is vital for organisations at allstages of growth. To illustrate our experience andinsights, below we have identified three examples oforganisations at different stages facing new challengesand the consequence of poor people systems:

1. Start-up transitioning to a mature business.Startup Inc. is an entrepreneur-led business,specialising in digital and online sales. Founded by Kyanand Li Jing in Kyan’s mum’s spare bedroom ten yearsago, they have enjoyed astronomical growth, thanks totheir agile workflows and enthusiastic team. Kyan andLi Jing make every business decision together, which,as the business grows, has become a real drain on theirtime. Also, as they now have over 200 employees, theiragile matrix structure has begun to feel incrediblycomplex, and not as flexible as it once was. It's as ifonly the things they are paying attention to get done.

This not-uncommon scenario is the making or breakingof many SMEs. Entrepreneurs famously struggle torelinquish control of their ‘babies’, and regardless ofwhat led the success in the beginning, growingorganisations will require processes and structure inplace to ensure the business survives beyond theenthusiasm of its creators. A small, flexible workforcewho are willing and able to pitch into many differentroles is a major asset to a small business, but a liabilityas it grows and facing complexity becomes a day-to-day challenge. Developing clear role profiles whichdescribe the new characteristics/attributes will ensurethe organisation continues to make the best peopledecisions for the new context, allowing Kyan and Li Jingto delegate some of the responsibility for day-to-dayoperational leadership and focus on utilising theirstrengths to drive the busines forward.

Many entrepreneurs find the transition from start-upto mature business a challenge, but it is a vital elementof ensuring their legacy. Whether the end goal is to selland exit the business, or remain on board in a seniorleadership role, succession is the responsibility of theincumbent, and it is the mark of a poor leader to havebuilt an organisation which cannot continue withoutthem.

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ORGANISATIONAL LIFE STAGES NEED DIFFERENT TYPES OF PEOPLE …

2. Operating model disruptionHardTimes Ltd are struggling with acompetitor who has entered theirmarket and utterly disrupted theirbusiness model. This competitor sells aproduct very similar to their own, but areundercutting them with a basic productwith minimal support, whereasHardTimes have a long-establishedreputation for quality and service andrely on relationships to sell their product.They have lost a number of key clientsand had to lay people off, and Sarah, theCEO, is worried they just can’t compete.Investors are pushing to embrace thetechniques of the competitor and offer asimilar service to recover some of theclients, but Sarah is worried thatcontradicts their strong customer serviceethos and will dilute their proposition.

Organisations struggling with adisruption to their business model, suchas from a competitor, a change inregulation or technology, or perhaps aglobal pandemic are most in need of areview of their talent strategy. Now isthe moment for Sarah to envisage whatis needed to meet the challenges of thenew context while remaining true toHardTimes’ culture of excellent service.Then individuals who align with thatethos and who have the rightcharacteristics and skills can be identifiedand developed and new hires will fit theprofiles required for success.

3. Mature and ComplacentKingOfTheHill.com is an undisputedleader in its field. It is widelyacknowledged that this is largely down toits people - Benjamin, the CEO, has areputation for being able to ‘spot greattalent a mile away.’

When he joined the company five yearsago, he implemented a complete talentreview, identifying that graduates ofcertain programmes seemed to havegreat cultural fit with the business andthe skills to help develop their digitaloffering, which was a huge growth area.He developed a recruitment anddevelopment programme to target thoseindividuals, creating a reputation for notonly attracting those with hidden talentand developing them, but also retainingthem thanks to a great culture. Butrecently, a couple of importantappointments have not quite goneaccording to plan, with long-appointedsuccessors leaving within months. Theirexit interviews imply that the roles werenot what they had expected.

Unfortunately, once a talentdevelopment programme is devised, thereal work begins. Not only should aprogramme be under constant reviewand assessment, it is vital that it remainsmarried to the wider context andbusiness strategy. The programme mayhave been effective at recruiting peopleto drive a digital strategy, but as thefocus of the strategy changed, talentedemployees were being developed forroles which had little bearing on thedemands of the business. Just as abusiness consistently reviews its P&L,talent development programmes mustbe scrutinised to ensure they are goingto deliver what the business will need,not what it has needed in the past.

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BUILDING A PEOPLE CENTRIC CULTURE

There are a few critical aspects to whatbuilds and sustains a culture where peopleare at the heart of your thinking. One ofthose is how you make decisions: who toselect/hire/develop/promote/terminate.

From our research and experiences, wehave identified many examples of bestpractice which we have distilled into somesimple actions to help guide your thinking:

❖ Get a check up: You wouldn’t get ahealth check just once and assume aclean bill of health forever, yet manyorganisations establish their Talentprocesses as an annual exercise whichgets pulled off the shelf, dusted downand run by HR. Any change in strategynot flowed through into how peopledecisions are made, will result in acostly disconnect which may not makeitself felt for 12 months – far too lateto do anything about it. Your peoplestrategy should be agile and evolve,just as your context shifts and changesand should live and breathe in the wayyou undertake your business. Anyleadership team should regularly bechallenging itself on the 5 questionsbelow:

1. What type of people will we need todeliver our strategy?2. Are we attracting, developing andretaining the right people?3. How does our culture demonstrate ourcommitment to attracting, developing,and retaining the right people?4. How successful are our peopledecisions?5. Are our leaders good at developingtheir own replacements?

❖ Make sure your strategy includespeople. If your strategic plan is full ofwhat you want to do, but doesn’tmention the people, you have no ideahow you are going to achieve it.

❖ Challenge your assumptions about thetype of people you want and have.Make sure the profiles of your peopleare aligned to your strategy and futureneeds, not just because they fit nowand have performed well to-date.

❖ Ask - Do we know our high potentials?How engaged are they? These are yourvery top performers, who in additionto meeting targets, align culturally withthe business and always demonstratethe capability/desire to take on newexperiences and challenges. Thesepeople are the future of your business -take the time to know them, engagewith them and develop them quickly.

❖ Check - Do your leaders really get it?What are you doing to engage yourleaders and ensure they are fullycommitted and actively focussed onattracting, retaining, and developingthe best people.

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CONCLUSIONS

It is clear that most organisations havework to do when it comes to their talentmindset. Far more than simply an HRexercise, talent development andretention needs to be embedded intothe core of an organisation, from itsculture, via its leadership and out to thevery people who deliver on the targetsand objectives. Your people are at theheart of your organisation's future, andfailing to recognise that will jeopardizeyour legacy and future success.

Our survey results suggest that whilemany CEOs and HRDs have confidencethat they have procedures andprocesses in place to manage theirpeople decisions, they have significantlyless confidence in the outcome of theseprocesses - the successors themselves.This implies a disconnect between theneeds of the organisation and thecandidates produced by the existingprocesses, created by a failure to linkstrategy to capability to outcome in thehearts and minds of the wholeleadership team who ultimately areaccountable for delivering a “match fit”and talented workforce.

As we traverse a period ofunprecedented uncertainty and change,it is a critical moment for leaders acrossall sectors and industries to pause andtake a fresh look at their talentprocesses and developmentprogrammes. While the future isuncertain, it is safe to say that withoutthe right people, you will not createsustainable success and that what gotyou to where you are today, won'tnecessarily get you to where you needto be tomorrow …

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REFERENCES

Notes:

i The War for Talent’, McKinsey (1998)

Ii ‘The holy grail of Leadership

Succession Planning’, Deloitte (2018)

Iii The Peter Principle’, Peter, Laurence

J. and Hull, Raymond (William Morrow

and Company, 1969)

Iv ‘Paying More to Get Less: The

Effects of External Hiring versus

Internal Mobility’, Matthew Bidwell,

University of Pennsylvania (ASQ, vol

56, Dec 2011)

NORMAN BROADBENT

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www.normanbroadbent.com