Critiquing Critical-Talent Practices

A new survey finds less than half of companies notifying "critical" employees of their status as such. Regardless of whether high performers are informed of their status, experts say HR must step up its efforts in defining, identifying and nurturing the organization's critical talent.

Monday, April 14, 2014
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It may be nice for your most essential employees to know they're an important part of the organization, but a recent Mercer survey finds a majority of companies don't let their most critical employees know just how critical they are.  

The New York-based consultancy's latest Critical Talent Practices Survey polled more than 120 employers across all industries throughout the United States and Canada. Among the respondents, 64 percent said they believe managing critical talent is essential to success. Less than one-third of participants (30 percent), however, said they have programs that are "extremely effective" in achieving that goal.

Moreover, 75 percent of the companies polled said they employ processes to identify critical talent (with about 2 percent to 5 percent of the workforce categorized as critical). Yet, just 49 percent said they notify critical talent of their status within the organization, with just 34 percent reporting they track the status of critical talent in their HR systems.

So, why aren't more companies sharing that information with this small but special segment of the workforce?

There may be several factors at work, says Matthew Stevenson, Mercer's North America workforce analytics and planning practice leader.

For example, "it may be that firms don't want to give employees additional leverage in salary negotiations," he says. "There may be legal and/or compliance matters involved when and if 'critical status' changes. The company culture may not promote transparency, or systems may not be in place to adequately track critical talent status."

Organizations that don't identify and inform critical talent of their place, however, run a risk of losing these individuals to those that do, adds Stevenson.

"Given the focus on critical talent 'branding,' greater transparency in critical talent status may be worth considering to better differentiate the employee experience and to enhance attraction and retention."

That said, there are good reasons for employers to shy away from informing the most indispensable employees of their status as such, says Kim Ruyle, president of Coral Gables, Fla.-based talent management and organization-development firm Inventive Talent Consulting.

"Some [of these reasons] are valid," says Ruyle, "but not all of them."

Organizations often do not notify talent of their status, he says, because they lack managerial courage, and are afraid of offending or disenfranchising those who don't make the cut.

"This decision may border on cowardice," he says, "but I think the reason is underpinned with good intentions."

On the other hand, some organizations may not tell talent of their status because they "realize that you don't need to tell them," he says. "They already know it. Also, there's no reason to differentiate talent if you're not going to treat them differently. ...They'll know they're critical, because they're treated as critical -- with more aggressive stretch assignments, greater responsibilities, etc."

Labeling employees as "critical" may have some unintended, unwelcome consequences as well, adds Ruyle.

"We differentiate talent based on our best understanding of their potential and contributions, but if our understanding changes for whatever reason, so does the status. If we confer status on someone, we may establish a sense of entitlement that's hard to break."

Nevertheless, it usually makes sense to be "absolutely transparent" with regard to the process for differentiating talent, says Ruyle, and then applying differential treatment -- moving high-potential employees more quickly and giving them more responsibility, for example.

Regardless of whether critical talent is clued in on their status, the organization -- and HR leadership -- needs to at least create a definition of critical talent and identify such employees within the company.

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In terms of how firms make that determination, respondents to the Mercer survey were "equally split," says Loree Griffiths, principal in Mercer's talent practice.

"Approximately half consider the individual, while the other half consider the job function or role," says Griffiths.

"This may reflect different talent-management priorities within an organization," she says. "Those that look at talent development around people -- e.g., future CEOs -- may focus on individual skills and capabilities, while those that care about certain roles -- e.g., specific or emerging skills or functions - may take more of a job view."

There is no "right way" to define your organization's most crucial talent, continues Griffith.

"Companies use multiple approaches to define critical talent. Top criteria for defining critical talent are those individuals identified as high-potentials or high performers. Where performance is used, most firms use historical multi-year performance as a key input," she says, noting that approximately 40 percent to 45 percent consider job-based criteria, with 28 percent using competencies to define critical talent.

However it's done, HR should help facilitate the process for identifying, notifying and tracking critical talent, says Stevenson.

"HR can also provide information to leaders when the flows of critical talent are not going in ways that favor the mission of the organization," he adds.

For example, HR must inform leadership when voluntary departures are outstripping that of the rest of the organization, key technical roles are being streamed into management roles or critical roles may be " 'aging out,' putting competencies at risk when firm-specific knowledge leaves the organization [with retiring employees]," says Stevenson.

By recognizing these trends and identifying these groups, "HR can run analytics to determine current and future risks to critical talent," he says, "and to allow the organization to be proactive in its talent management."




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