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The CEOs Get It Now
The new emphasis on talent management by CEOs underscores a burgeoning united force between top leaders and HR chiefs to steer their organizations into the future.
While talent management has long been a concern of human resource executives, many CEOs find themselves paying increased attention to this function -- the relatively new umbrella governing the attraction and selection of employees, the retention and development of leaders, the process for succession planning and, eventually, the transition of workers out the door. In interviews conducted for a 2006 white paper published by the London-based Economist Intelligence Unit, The CEO's Role in Talent Management: How Top Executives Are Nurturing the Leaders of Tomorrow, 15 of 20 CEOs and COOs across a range of industries reported spending at least 20 percent of their time on talent management. Seven of the 15 reported an even greater commitment of 30 percent or higher. Such findings come as no surprise to Gretchen Alarcon, vice president of human capital for Redwood Shores, Calif.-based software provider Oracle, who says she has noticed this heightened interest in talent management on the part of CEOs. "Effective talent management is a company strategy, not an HR strategy," she says. "Those customers who I have spoken to who are the furthest along in mobilizing their talent to achieve business objectives are those with a CEO who makes talent a priority." Manny Avramidis, senior vice president for global human resources for the American Management Association in New York, has observed the same trend. "CEOs recognize that developing the best human capital in their industry is an absolute competitive advantage," he says. "There is an increase in interest from a CEO standpoint, as they recognize the inevitable baby boomer retirement wave and the fact that it is critical to continuously develop employees so they are better equipped to execute strategy." Andrew Liveris, chairman and CEO of Midland, Mich.-based Dow Chemical Co., with 43,000 employees in 137 countries, says he believes it's his responsibility, in partnership with his HR team, "to build a people-centric culture and to secure the next generation of leaders for our organization." "As part of that process," he says, "I work closely with our vice president of HR and our executive team to identify critical leadership roles within the organization and ensure an effective succession planning process is in place. This means not only identifying critical roles and high-potential candidates to fill those roles, but also providing the development tools and resources necessary to groom these leaders of tomorrow." At Dow, talent is nurtured through a performance-management process involving every employee on every level within the company. In this annual effort, the company identifies the top 20 percent of "outperforming" employees in all job functions and categories. These exceptional performers are given additional internal and external training in leadership development. Activities include areas such as specialized training with peers, collaborating on challenging projects and mentoring and coaching from C-suite-level executives. Other best practices include succession planning, high-potential programs, job rotation, career tracks and other types of empowerment, according to AMA's Avramidis. "Engaging in conversations with employees about how best to help them realize their potential is also important," he says. "Coaching and mentoring employees, and investing in supervisors' [education in] how to manage talent, are also critical strategies." Why the new emphasis on talent management? Some might wonder if HR is deemed unable to handle this important function. Or the trend might be viewed as a return to earlier days when talent management was more widely understood to be a key part of the CEO's job. But the consensus seems to be that its importance to executives never really diminished, with HR's role also as important as ever. "What is going on now is an exciting new development that marries the responsibilities and communication of CEOs and HR officers," says Bernadette Kenny, senior vice president of human resources at Adecco NA, a Swiss human resource firm with headquarters in Melville, N.Y. "It's more of a give and take, with both sides bringing different viewpoints to the table: HR officers [coming with] the detailed information of current staffing situations, and CEOs [bringing] the overarching view of a company's business objectives." She compares the arrangement to that of a see-saw, which quickly falls out of balance if one side is heavier. "By having both HR officers and CEOs meeting together on either side, equal knowledge is brought to the table respectively," Kenny says. "This can provide great balance for the organization as a whole." The growing interest in talent management may actually be a testament to the evolving role of human resources. "I don't think this is a negative reflection on HR," Alarcon says. "In fact, I think it's the reverse." HR departments, she says, have been driving transformation in recent years to align themselves with their organization's business strategies, much like other support areas, such as finance and IT, have done in the past. "The fact that CEOs and other executives are taking an increased interest in the function highlights the success of HR organizations in achieving this transformation," Alarcon says. The changing nature of the workforce may also be a factor, as organizations strive to attract and retain people with the right skills for their needs. "We're seeing great changes in senior management with the appointments of more and more women and minorities to C-level positions," says Kenny. "With this increase in change at the top, we'll begin to see changes throughout organizations as they rethink their selections for talent in terms of today's key trends, such as managing 50-plus workers effectively and managing immigration issues. In turn, newly appointed C-level individuals will bring a much needed breath of fresh air to organizations in terms of talent management." Certainly, focusing on this area at the highest levels makes sense from a dollars-and-cents viewpoint. "There's the financial aspect of human capital," Alarcon adds. "Since people costs typically represent 60 percent of an organization's overall expenditure, CEOs really are taking an interest in the human capital side of the business. CEOs who understand the impact of staff turnover and its true cost in terms of customer service, productivity, innovation, quality and sheer hard cash are paying attention . . . ." Underlying such thinking is the realization that recruiting, developing and leading people is a shared accountability for all executive leaders. "The entire organization, including HR, has to be fully and constantly aware that people management is a strategic business imperative," says Hugh Grant, chairman, president and chief executive officer of Monsanto, an agriculture company based in St. Louis. "We have to be clear about what people management is not: It's not extracurricular or something you do when the important stuff is done. It is the important stuff, and it's not just the responsibility of HR." Working with CEOs
Ideally, the entire executive team will work together to achieve the best results, with the CEO setting the tone. But in organizations lacking such a shared vision, human resource executives may need to take the initiative in motivating upper management to take a more active role. One key is to highlight the importance of attracting and nurturing talent with specific facts rather than generalities. "HR officers need to present talent considerations in terms that matter to the CEO," Alarcon says. "For example, instead of telling the CEO that improving recruiting efficiency will help the company, show him that Tom was hired into sales in 15 days less than the average, and in those 15 days, he sold X dollars. From my experience, CEOs will respond to hard facts that impact the bottom line." Reporting survey results and other data can also be helpful. "CEOs tend to be fans of statistics and historical data, so HR professionals should learn to talk in that language," says Patrick Flood, chairman and CEO of HomeBanc Mortgage Corp. in Atlanta. He notes that his HR department conducts an annual company survey asking employees about every aspect of working there. They provide historical statistics that include changes in benefits, compensation and other matters of interest to staff. "From one year to the next, this survey tells us that X percent of our employees are happy with our benefits package or that Y percent are not happy with how raises and promotions are handed out -- and we can compare that data with data from previous years and see how we're doing in all these areas and consider making changes," Flood says. "That's the kind of hard data a CEO can relate to, and that an HR professional can present as actionable and real." As Julie Fasone Holder, Dow's corporate vice president of human resources, diversity and inclusion, puts it: "My role, and that of my organization, is to clearly understand Dow's business strategy and to make sure HR is aligned to help enable that strategy." "So, the CEO sets the strategy, and we build the framework and the change-management plan around our people to bring it to life," she says. "We are accountable to both our leadership teams and to our employees. Ultimately, we want more than to have the right people in the right place at the right time. We want Dow to be the employer of choice, with employees who are highly motivated and engaged. "Too often," says Holder, "HR practitioners become so focused on implementing processes around traditional 'HR technologies' that they lose perspective on why these processes exist. Start first with the business strategy -- understand your customers and your markets, and then build your people strategy and implementation plans around achieving business success. "And, never underestimate the power of the 'human element.' People are the key source of competitive advantage in any company in any industry. Set them up for success by providing strong, personal leadership, an inclusive culture and an environment that thrives on innovation and growth." Kenny suggests holding frequent face-to-face visits with CEOs. "By meeting and discussing topics on a regular basis, both sides can get a sense of which way their company is tracking," she says. "Thinking in overarching and detailed manners can help HR officers with their current work and can help provide valuable information to the CEO during meetings." Penny Morey, managing director of CBIZ Human Capital Services in Boca Raton, Fla., says HR executives can play a vital role by informing CEOs about best practices while also keeping them up-to-date on the status of talent management within the organization. "CEOs need to know the best practices and new ways in which to do the right things," she says. "HR should present to their CEOs what they consider to be the most pertinent advice on techniques, processes, systems and so forth." Morey adds that the job of human resources is to ensure that whatever aids are selected along these lines are properly implemented to enrich the organization. "Gather the data on the success -- or failure -- of talent-management systems and keep the CEO apprised if improvements need to be made," she says. It's also important to make sure HR is truly regarded as a part of the executive team and not just a support area. "HR officers should recognize how important people are to business success these days and lobby for a place at the executive table if they don't have one already," Flood says. "Talented people, properly motivated, will give you a leg up. HR people should position talent management as just as crucial to business success as financial management or marketing campaigns." In fact, both CEOs and human resource executives will do well to focus on the value of people in an organization as a core consideration, according to Grant. "Never forget that this is about integrating and aligning talented, smart people with your business strategy," he says. "And that understanding must permeate your people-management processes." Grant adds that the nature of competition warrants a focus on talent management by the entire executive team. "We compete for people just as we compete for everything else in the marketplace," Grant says. "When we attract great people, and when we retain great people, we've created a competitive advantage for our business. Realizing the full potential of all of the people you lead clearly sets successful organizations apart."
March 2, 2007 Copyright 2007© LRP Publications |
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