Top 4 Factors that Make Talent Management Work

Organizations beyond tech are going agile in a major way. From healthcare to hospitality, from manufacturing to finance, the agile mindset and methodologies are infiltrating every industry, and every department within companies. An appealing alternative to command-and-control-style management, the agile approach has spread to HR, drawing more and more attention to effective talent management strategy. 

Results from a recent McKinsey Global Survey, “Winning with your talent management strategy,” highlight the positive and measurable impact of an intentional talent management strategy on business outcomes. According to the survey’s 1820 respondents, companies with strong talent management strategies have a better chance of outperforming competitors and are likelier to outpace their peers’ returns to shareholders. 

Still not convinced? Consider this: Companies with very effective talent management are six times more likely than those with very ineffective talent management to report higher total returns to shareholders than competitors.

Survey results reveal several practices that have a unique impact on the overall effectiveness of talent management as well as organizational performance. These include: 

• Rapid allocation of talent
• HR’s active involvement in fostering a positive employee experience
• A strategically-minded HR team
• Employees understanding an organization’s overall strategy

Let’s take a closer look at each of these factors.

Rapid Talent Allocation

This factor refers to an organization’s commitment to quickly shift talent across strategic priorities. To accomplish it, the annual performance review, with employee goals set just once per year by one business unit, are going the way of the dinosaur. Instead, according to Harvard Business Review, more agile-minded organizations are doing performance assessment project by project.

Public companies that rapidly allocate talent are 1.5 times likelier than slower talent allocators to report higher returns to stakeholders. According to the McKinsey survey, rapid talent allocation is the norm when three things are the case in a given organization: 1) cross-functional teams are in place, 2) skills-based deployment is the norm, and 3) executives are involved. 

Positive Employee Experience

This second factor in talent management strategy addresses the crucial role HR plays in actively improving the employee experience. An organization reporting a great employee experience is one in which teams are empowered to make decisions, operate with trust and employ user-friendly processes. Because this factor is so powerful, there has been an increase in companies such as Cigna and Proctor & Gamble offering coaching skills training to managers.

While only 37 percent of respondents to the McKinsey talent management survey say that their organizations’ HR functions facilitate a positive employee experience, those who do are 1.3 times more likely than other respondents to report organizational outperformance. 

Strategic HR Team

This factor refers to the extent to which an HR team understands overall organizational strategy and business priorities. Survey respondents who reported that their organizations have a strategy-minded HR team are 1.4 times more likely to report outperforming competitors. 

Cross-functional experience on the part of HR leaders has the biggest impact on this factor. When HR leaders have experience in other functions within an organization, they are 1.8 times more likely to have a comprehensive understanding of strategy and business priorities.

Employee Understanding of an Organization’s Overall Strategy

Top-down planning within organizations no longer works. Faster methods for managing projects, such as rapid prototyping, iterative feedback, team-based decisions and task-centered “sprints” are becoming the norm, according to HBR. Because speed is so essential, talent management strategy is more effective when employees—as well as HR—understand their company’s overall strategy.

The agile approach to HR is all about innovation in functional processes. Organizations are moving away from a rules-based long-term HR approach toward a simpler and faster model. Because most companies operate in highly dynamic environments, talent management strategy with an agile approach is no longer a nice-to-have but a have-to-have.

Here at Narish International, we help businesses like yours build higher performing teams. Contact us today for more information.