CEO Forum

Kick-start your talent machine

Every CEO worries about having enough talent, but most are frustrated by the time and effort it takes to kick-start the talent machine.

By Alan Bird and Askin Morrison

First published on Μαΐου 03, 2010
min read


Every CEO worries about having enough talent, but most are frustrated by the time and effort it takes to kick-start the talent machine. The most effective CEOs today not only recognize that it's important to find, develop and deploy the best people, they also take personal responsibility for making it happen. As Australia companies slowly emerge from one of the sharpest and steepest downturns in the world economy, they face a new talent challenge. Fewer companies will be growing aggressively. Immediate shortages are likely to be less acute, but leadership becomes more urgent than ever coming out of a downturn. Ensuring an adequate supply of leaders in roles in which they can make the most difference remains a vital priority. Downturns—and the very early recovery phase—also put great talent in play, which creates opportunities for companies to close their talent gaps and upgrade the quality of their leadership. Our work in Australia and across the world shows that three specific steps not only have an immediate impact on talent supply, but also lay the foundation for a sustainable, longer-term supply of leaders. The first is to quantify the leadership gap. Many companies don't have a detailed picture of their talent challenge. A rigorous analytic picture of the talent gap makes the challenge visible. The second step is to deploy existing talent more effectively. Many companies don't know who their top performers are. Nor have they placed them in jobs where they can have the most impact. A third step, often overlooked, is to reduce the demand for talent. Organisations that simplify their processes and spell out accountabilities clearly can simultaneously control costs and make the most of existing talent. Taken together, these steps help leaders address their talent challenges quickly. They also build a longer-term commitment throughout the organisation, which is required to sustain investment in leadership supply. Quantify the leadership gap: Understanding the leadership gap—namely the difference between demand for talent and likely supply—is best accomplished through meticulous analysis of the current situation and careful forecasting of future changes. On the supply side, start with the basics. How many leaders do you have? What are your promotion rates? What are your attrition levels? What will affect these factors in the future? You can do this analysis by region, business unit or key capability area. The resulting data will allow you to build or validate a talent-supply forecast and identify choke points. In India, Cisco realised that its strategy to build networking talent needed to include the broader ecosystem of professionals using Cisco technology, like employees of customers, as well as students studying information technology. To address these external gaps, it developed programs such as collaborating with universities and building relationships with training centres for networking courses. Through these steps, Cisco reduced its demand for internal talent. The demand side begins with a similarly fundamental analysis. What will the business look like in a year, in three or five? How many leaders will you need in each unit or geography, and what skills will they need? During a recovery, some business units and regions will grow. But others will still be flat, and may export talent to talent-starved parts of the business. Matching the supply forecast to the demand forecast shows where the talent needs are likely to be most acute. Make the most of available talent: Many CEOs admit that most mission-critical roles are filled by average or poor performers instead of top performers. A 2008 Bain & Company global survey of 760 companies found less than 25% of respondents strongly agree that "our best people are in the jobs where they add most value." Matching top performers with key roles typically involves three steps. The first is to identify the positions themselves. What jobs make the biggest difference to business performance, depending on the calibre of the person occupying them? In which roles will a top performer have more impact than an average performer? The next step is implementing a rigorous and realistic system for evaluating employees. Companies need to know who has what skills. The key to answering all these questions is an effective performance-management process with real consequences related to career opportunities, mentoring and compensation. The third move involves placing the right people in the right jobs. The thorniest issues range from releasing people from their current roles where they may be star performers to matching opportunities with a talented manager's desired location. For this, one must consider who "owns" the talent supply and makes deployment decisions. Many companies say that their top talent must be a global resource: the corporate centre has the authority for managing these individuals' careers. SAB Miller, the brewer, takes a different approach. AT SAB Miller, the business units own the company's talent. In keeping with the company's business model, these units are typically organized by country; a country's managing director has the final say over whether an individual can be released to a new role. As a counterbalance, the corporate centre evaluates these managing directors carefully on the basis of what it calls the "People Balance Sheet." Do country-managing directors nurture talent and feed strong performers into roles that support corporate goals or are they net consumers of talent? The method gives control of leadership supply to each country's operations but leaves no doubt that the managing directors need to manage talent in ways consistent with the company's global business objectives. Reduce demand for talent: The most common response to a leadership supply gap is to upgrade recruitment efforts, creating stronger ties with universities and other talent sources. Such measures are essential for closing the gap over the long haul. In the meantime, companies can take actions that lower their demand for talent. By redesigning their organisation and operations to reduce the need for highly skilled leaders and technical experts, managers can narrow the leadership supply gap, sometimes quickly. The two most effective methods of reducing demand are to strip out organisational complexity and to redesign jobs so that they use the skills of managers more effectively. Such measures also help increase productivity. We found that companies that take the steps described above usually see an impact on their leadership supply gap in the first six to eighteen months. And with a business plan that matches its talent plan, a company has a far greater chance of success. Alan Bird is a partner in Bain & Company's London office and Bain's global expert on leadership supply. Askin Morrison is a partner in Bain & Company's Melbourne office and is the local leader of Bain's organisation practice.

Every CEO worries about having enough talent, but most are frustrated by the time and effort it takes to kick-start the talent machine. The most effective CEOs today not only recognize that it's important to find, develop and deploy the best people, they also take personal responsibility for making it happen.

As Australia companies slowly emerge from one of the sharpest and steepest downturns in the world economy, they face a new talent challenge. Fewer companies will be growing aggressively. Immediate shortages are likely to be less acute, but leadership becomes more urgent than ever coming out of a downturn. Ensuring an adequate supply of leaders in roles in which they can make the most difference remains a vital priority. Downturns—and the very early recovery phase—also put great talent in play, which creates opportunities for companies to close their talent gaps and upgrade the quality of their leadership.

Our work in Australia and across the world shows that three specific steps not only have an immediate impact on talent supply, but also lay the foundation for a sustainable, longer-term supply of leaders. The first is to quantify the leadership gap. Many companies don't have a detailed picture of their talent challenge. A rigorous analytic picture of the talent gap makes the challenge visible. The second step is to deploy existing talent more effectively. Many companies don't know who their top performers are. Nor have they placed them in jobs where they can have the most impact. A third step, often overlooked, is to reduce the demand for talent. Organisations that simplify their processes and spell out accountabilities clearly can simultaneously control costs and make the most of existing talent. Taken together, these steps help leaders address their talent challenges quickly. They also build a longer-term commitment throughout the organisation, which is required to sustain investment in leadership supply.

Quantify the leadership gap: Understanding the leadership gap—namely the difference between demand for talent and likely supply—is best accomplished through meticulous analysis of the current situation and careful forecasting of future changes. On the supply side, start with the basics. How many leaders do you have? What are your promotion rates? What are your attrition levels? What will affect these factors in the future? You can do this analysis by region, business unit or key capability area. The resulting data will allow you to build or validate a talent-supply forecast and identify choke points.

In India, Cisco realised that its strategy to build networking talent needed to include the broader ecosystem of professionals using Cisco technology, like employees of customers, as well as students studying information technology. To address these external gaps, it developed programs such as collaborating with universities and building relationships with training centres for networking courses. Through these steps, Cisco reduced its demand for internal talent.

The demand side begins with a similarly fundamental analysis. What will the business look like in a year, in three or five? How many leaders will you need in each unit or geography, and what skills will they need? During a recovery, some business units and regions will grow. But others will still be flat, and may export talent to talent-starved parts of the business. Matching the supply forecast to the demand forecast shows where the talent needs are likely to be most acute.

Make the most of available talent: Many CEOs admit that most mission-critical roles are filled by average or poor performers instead of top performers. A 2008 Bain & Company global survey of 760 companies found less than 25% of respondents strongly agree that "our best people are in the jobs where they add most value."

Matching top performers with key roles typically involves three steps. The first is to identify the positions themselves. What jobs make the biggest difference to business performance, depending on the calibre of the person occupying them? In which roles will a top performer have more impact than an average performer?

The next step is implementing a rigorous and realistic system for evaluating employees. Companies need to know who has what skills. The key to answering all these questions is an effective performance-management process with real consequences related to career opportunities, mentoring and compensation.

The third move involves placing the right people in the right jobs. The thorniest issues range from releasing people from their current roles where they may be star performers to matching opportunities with a talented manager's desired location.

For this, one must consider who "owns" the talent supply and makes deployment decisions. Many companies say that their top talent must be a global resource: the corporate centre has the authority for managing these individuals' careers. SAB Miller, the brewer, takes a different approach. AT SAB Miller, the business units own the company's talent. In keeping with the company's business model, these units are typically organized by country; a country's managing director has the final say over whether an individual can be released to a new role. As a counterbalance, the corporate centre evaluates these managing directors carefully on the basis of what it calls the "People Balance Sheet." Do country-managing directors nurture talent and feed strong performers into roles that support corporate goals or are they net consumers of talent? The method gives control of leadership supply to each country's operations but leaves no doubt that the managing directors need to manage talent in ways consistent with the company's global business objectives.

Reduce demand for talent: The most common response to a leadership supply gap is to upgrade recruitment efforts, creating stronger ties with universities and other talent sources. Such measures are essential for closing the gap over the long haul. In the meantime, companies can take actions that lower their demand for talent. By redesigning their organisation and operations to reduce the need for highly skilled leaders and technical experts, managers can narrow the leadership supply gap, sometimes quickly. The two most effective methods of reducing demand are to strip out organisational complexity and to redesign jobs so that they use the skills of managers more effectively. Such measures also help increase productivity.

We found that companies that take the steps described above usually see an impact on their leadership supply gap in the first six to eighteen months. And with a business plan that matches its talent plan, a company has a far greater chance of success.

Alan Bird is a partner in Bain & Company's London office and Bain's global expert on leadership supply. Askin Morrison is a partner in Bain & Company's Melbourne office and is the local leader of Bain's organisation practice.