In the year 2000 McKinsey & Company published ‘The War for Talent’, a survey of people management practices at major US-based corporations, and found that “talent has been the most under-managed corporate asset over the past two decades.”
‘Talent’ has a specific definition at every company but in broad terms it refers to leaders and managers are key to helping a company achieve its goals and attain a superior level of performance. They do this through their enhanced communications skills, strategic thinking, entrepreneurial instincts, leadership abilities, and functional skills.
So how can companies better manage this valuable asset? To begin with they have to embrace a ‘talent mindset’. A talent mindset is the fundamental understanding and appreciation that having better talent is what elevates a company above its competitors. Adopting this mindset means throwing out some old previously held beliefs about people management.
One popular misconception is that people management is solely the responsibility of the Human Resources department. The fact is that every leader within an organisation should be responsible, and be held accountable, for talent management. It is imperative that the CEO takes ownership and then communicates the talent mindset to the rest of the leadership in the company.
It is plain to see where talent management currently fits into the typical hotel company CEO’s priority list. At the recent International Hotel Conference in Monaco, a panel session on ‘Staff Attraction and Retention’ was held concurrently to sessions on finance and development opportunities. No prizes for guessing which sessions had the higher attendance. I am not suggesting that talent management is more important than finance but, as McKinsey found in their study, it should certainly have a seat at the same table.
Every leader should be continually assessing their team and looking at how to strengthen it. To do this, leaders need to set the example for talent within their organisation. They should ensure they only hire top quality employees, encourage people to raise their game, mentor certain employees, let go low performers, and create a benchmark for evaluation and promotion.
Leaders should play an active role in the people management decisions within their organisations. A CEO, for example, should be deeply involved in the development, assessment, hiring, deployment and retention of the company’s top echelon of performers. Talent must also be reviewed on a regular basis and talent management should be subjected to the same scrutiny as the annual budget. Review sessions should result in plans as to how best to strengthen the talent pool and how best to deploy it according to the business’s critical priorities.
And of course there is a financial commitment. Most managers view salaries, bonuses, and benefits as an immediate negative hit to their P&L instead of viewing it as an investment. Having a talent mindset means being able to take a long-term view and to recognise the benefit of investing in new hires, competitive salaries, attractive benefit schemes, stock options, signing bonuses etc. Importantly it also enables a leader to take smart decisions regarding compensation and to know which employees are worth retaining and are most worthy of this investment.
Finally, managers should be held accountable for the strength of their talent pool. In a similar way that financial performance, quality, and guest satisfaction are measured, so should a manager’s talent management. This can be done simply by setting a number of objectives at the start of the year for the strengthening of the talent pool. A fair amount of judgement will be involved when assessing the attainment of these objectives but, without accountability, a talent mindset will never be successfully integrated into an organisation.
Talent management is not something that can be delegated to Human Resources and forgotten about. A talent mindset has to be taken on 100% by all leaders within an organisation. After all, effective talent management ultimately yields increased company performance. As McKinsey & Company found, “companies scoring in the top quintile of their talent management index, on average, earned 22 percentage points higher return to shareholders than their industry peers.” Something worth thinking about.