4 strategies for linking talent to value
In many ways,
organizing a successful business isn’t much different than hosting a family
barbecue. Picture this: it’s a Saturday afternoon and your family is coming
over for a good, old-fashioned barbecue. With only an hour before guests
arrive, you need to be smart with your time and available resources. There are
three tasks that need doing: mowing the lawn, washing the dishes and buying
food.
Thinking through the
tasks and family members at home, you know that your partner can operate the
lawn mower well, your son is best at washing dishes and you know what to buy
for the barbecue. Assigning each family member to their optimal role,
everything comes together, and the barbecue is a tremendous success. On Monday,
as you reflect at work, you wonder if the same dynamics aren’t at play in the
office.
At McKinsey, we’ve
heard many organizations say they have their best people in their most critical
roles – when this is not always the case.
Many organizations end
up losing effectiveness by failing to put the right people in the right roles.
Often, they focus too much on building a strong hierarchy, with the mindset
that the best people are the top two layers. Likewise, they achieve broad
strokes alignment (i.e. thinking: “We need to up our game in marketing, so
let’s get someone talented in there”). They also fill key roles as best as
possible with available talent –putting IT under Finance, for example, because
they thought the department head could handle it, and there wasn’t a more
suitable leader to run it at the time.
We put forward an
alternate version of this management trope – one that suggests 5 percent of
roles in an organization create 95 percent of the value. More details will be
revealed on this in a future post. Winning companies identify such roles, find
the right talent to fill them, and invest to develop these employees.
To make this happen,
here are four things you will need to do:
1. Understand how to create value:
To make strategic choices that deliver shareholder value,
you must identify clearly the sources of current and future value. The best way
to optimize your best talent to deliver on your strategy is by being clear on
how your business creates value.
2. Identify the most important roles:
Organizations typically keep track of critical talent.
But there are two potential pitfalls: Employers define critical roles in terms
of hierarchy and make the mistake of regarding roles and talent as
interchangeable. What you really want to do is identify the roles that have a
disproportionate impact on value capture. They could include value creators,
enablers or protectors.
3. Get the right talent into the right roles:
Organizations struggle to make unbiased, quick talent
decisions when they lack sufficient data to make a case to place employees in
certain positions. To avoid this, employers must assess the fit of talent
against the specific needs of each role in terms of knowledge, skills,
attributes and experience required; identify the biggest gaps; and craft a
strategy to address the gaps (e.g. recruit or develop capabilities, build the
succession pipeline and rotate talent).
4. Manage performance and develop talent in real time:
The days of once-a-year HR exercises to review talent and
evaluate employee performance are over. Employers need to manage performance
and develop talent in critical roles on a real-time basis. This involves making
changes to the ongoing talent and business planning processes to ensure that a
sustainable pipeline of talent is available to fill key roles over time. As
strategies shift, critical roles should be revisited and reassessed with
agility.
While this process may
seem obvious, few companies do this systematically. A large consumer goods
company McKinsey worked with took this approach and was surprised to find that,
of its tens of thousands of employees, it could identify 53 individual
positions on which the lion’s share of value creation rested. By matching
talent to value in the context of its strategy, the company saw a twofold
increase in share price, 50 percent reduction in the number of employees and
€3.1Bn ($3.7Bn) of value unleashed.
Having highly talented
people isn’t enough. They must be put in the right roles if your organization
is to hit its goals and become a global champion and market leader in value
creation. Or, it at least can help you execute a delicious family barbeque.
– by Sarah Pobereskin and Bill Schaninger
https://www.mckinsey.com/business-functions/organization/our-insights/the-organization-blog/4-strategies-for-linking-talent-to-value?cid=other-eml-alt-mip-mck-oth-1804&hlkid=972a662c0ae54fe6aee3ed751bbeaf79&hctky=1627601&hdpid=38769ec6-3e9a-48e0-ae08-e1f18e7e2ede
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