Winning with your
talent-management strategy
Three
best practices for managing and allocating talent support better business
performance, according to a new survey.
The allocation of financial capital has long been recognized as a critical driver of
an organization’s performance. The value of managing and allocating human
capital, however, is less widely known. But the results from a new McKinsey
Global Survey confirm the positive effects of talent management on business
outcomes. According to respondents,
organizations with effective talent-management programs have a better chance
than other companies of outperforming competitors and, among publicly owned
companies, are likelier to outpace their peers’ returns to shareholders.
The survey also sought
to uncover the specific practices that are most predictive of successful
talent-management strategy. While there is no one-size-fits-all approach to the
effective management of human capital, the survey results reveal three common
practices that have an outsize impact on the overall effectiveness of talent
management as well as organizational performance: rapid allocation of talent,
the HR function’s involvement in fostering a positive employee experience, and
a strategically minded HR team. The survey results also point to underlying
actions that organizations of all stripes can take to cultivate these practices
and thereby improve their talent-management strategy and organizational
performance.
Why effective talent management matters
According to the survey
responses, there is a significant relationship between talent management—when
done well—and organizational performance. Only 5 percent of respondents say
their organizations’ talent management has been very effective at improving company
performance. But those that do are much more likely to say they outperform
their competitors: 99 percent of respondents reporting very effective talent
management say so, compared with 56 percent of all other respondents. What is
more, the effects of successful talent management seem to be cumulative. Like
an overall effective talent-management program, the abilities to attract and retain talent appear to support outperformance. Among public
companies, we see a similar effect on total returns to shareholders (TRS). At
companies with very effective talent management, respondents are six times more
likely than those with very ineffective talent management to report higher TRS
than competitors.
Three drivers of successful talent-management strategy
To support these
outcomes, the results suggest three practices that most closely link with
effective talent management: rapid allocation of talent, HR’s involvement in employee
experience, and a strategically minded HR team.
Respondents who say all
three practices are in place—just 17 percent—are significantly more likely than
their peers to rate their organizations’ overall performance, as well as TRS,
as better than competitors’. They are also 2.5 times more likely than others to
rate their organizations’ overall talent-management efforts as effective.
Rapid allocation of talent
Only 39 percent of
respondents say their organizations are fast or very fast at reallocating talent as strategic priorities arise and dissolve—a practice that leads to a
1.4-times-greater likelihood of outperformance. And while it is well
established that companies with rapid capital allocation are likely to see higher TRS, our findings show that the same
holds true for talent allocation. At public companies that quickly allocate
talent, respondents are 1.5 times more likely than the slower allocators to
report better TRS than competitors.5The link between rapid allocation
and effective talent management is also strong: nearly two-thirds of the fast
allocators say their talent-management efforts have improved overall
performance, compared with just 29 percent of their slower-moving peers.
To allocate talent more
quickly, the survey results point to three specific actions that meaningfully
correlate with the practice. The first of these is the effective deployment of talent based on the skills needed, which has a direct impact on the
speed of allocation. Respondents are 7.4 times more likely to report rapid
talent allocation when their organizations effectively assign talent to a given
role based on the skills needed.
Second is
executive-team involvement in talent management. Respondents who say their
leaders are involved in talent management are 3.4 times more likely to report
rapid talent allocation at their organizations. The frequency of leaders’
involvement also makes a difference. At organizations that quickly reallocate
talent, executive teams usually review talent allocation at least once per
quarter. Finally, the results suggest that organizations where employees work
in small, cross-functional teams are more likely than others to allocate talent
quickly.
HR’s involvement in employee experience
A second driver of
effective talent management relates to employee experience—specifically, the HR function’s role in ensuring a positive experience across the employee life
cycle. Only 37 percent of respondents say that their organizations’ HR
functions facilitate a positive employee experience. But those who do are 1.3
times more likely than other respondents to report organizational
outperformance and 2.7 times more likely to report effective talent management,
though our experience suggests that the HR function’s role is just one of the
critical factors that support great employee experience.
A couple of key actions
underlie the HR function’s ability to ensure better employee experiences. One
is quickly assembling teams of HR experts from various parts of the function to
address business priorities. Just 24 percent of respondents say their
organizations employ this characteristic of an agile HR operating model, and they are three times likelier than other
respondents to report a positive employee experience. Second is deploying
talent and skills in a way that supports the organization’s overall strategy.
One-third of all respondents say their organizations’ HR business partners are
effective at linking talent with strategy in this way, and those who do are
over three times more likely than other respondents to say the HR team
facilitates positive employee experiences.
Strategic HR teams
The third practice of
effective talent management is an HR team with a comprehensive understanding of
the organization’s strategy and business priorities. When respondents say their
organizations have a strategy-minded HR team, they are 1.4 times more likely to
report outperforming competitors and 2.5 times more likely to report the
effective management of talent.
The factor that most
supports this practice, according to the results, is cross-functional
experience. When HR leaders have experience in other functions—including
experience as line managers—they are 1.8 times more likely to have a
comprehensive understanding of strategy and business priorities. Also important
is close collaboration among the organization’s chief HR officer, CEO, and CFO.6Fewer than half of all respondents
say those executives work together very closely at their organizations,7but those who do are 1.7 times
likelier to report a strategy-minded HR function. The findings also point to
the importance of transparency with all employees about strategy and business objectives.
Respondents who say their organizations’ employees understand the overall
strategy are twice as likely to say their HR team has a comprehensive
understanding of the strategy.
In summary, effective
talent management—and the practices that best support it—contributes to a
company’s financial performance. No one approach works for every company, but
the survey results confirm that rapid allocation of talent, the HR function’s
involvement in fostering positive employee experience, and a strategic HR
function have the greatest impact on a talent-management program’s
effectiveness.
https://www.mckinsey.com/business-functions/organization/our-insights/Winning-with-your-talent-management-strategy?cid=other-eml-alt-mip-mck-oth-1808&hlkid=453f217d9ec440b4b75cbd75522d2af7&hctky=1627601&hdpid=6f5e0ea2-c469-4c6d-b190-485924d7f033
No comments:
Post a Comment