Talent Management as a Sustainable Advantage

To create a sustainable competitive advantage, leaders must first create a culture of excellence. These are characterized by creativity, innovation, sustainability, engagement, achievement, collaboration, diversity, and ethics. The primary way to create such a culture is to implement a proactive talent management (TM) process with three elements:

1. Creed. A TM creed is composed of a widely publicized set of core principles, values, and mutual expectations that guide behavior. Collectively, the stated principles depict the type of culture an organization strives to create to achieve its unique portrait of success. The principles of the creed are embedded in both the TM strategy and system by incorporating its doctrines into selection criteria, competency definitions, performance criteria, and internal selection and development processes.

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Johnson & Johnson states: "Our Credo is more than just a moral compass. We believe it’s a recipe for success." Microsoft expects its values to guide behavior and shine through in all interactions. Most companies have updated their creeds to include social responsibility, sustainability, ethical behavior, innovation, and creativity.

Starbuck’s creed includes Six Guiding Principles: 1) Provide a great work environment and treat each other with respect and dignity; 2) Embrace diversity as an essential component in the way we do business; 3) Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee; 4) Develop enthusiastically satisfied customers all of the time; 5) Contribute positively to our communities and our environment; and 6) Recognize that profitability is essential to our future success.

2. Strategy. A TM strategy makes explicit the investments made in the people who are believed will best help it achieve competitive excellence. ATM strategy views a workforce as a portfolio of human resource assets that are differentiated based on an assessment of each person’s current and potential contribution to success.

The criteria for selecting the people who will receive different investments are rooted in the talent creed. The TM strategies of most high-performing organizations contain three directives:

Cultivate the people who will make the biggest contribution now and in the future. They seek and inspire others to superior accomplishments, and embody the creed, core competencies, and values. Their loss or absence inhibits growth because of their impact on performance.

Retain key position backups. Gaps in replacement activity for incumbents in key positions are disruptive, costly, and distracting. Key positions should be staffed by, and have replacements who exceed performance expectations, develop others, and role-model the creed.

Allocate training, rewards, education, assignments, and development based on the actual and potential contribution of people. To properly allocate funds, you must classify employees based on their actual ability (or their potential) to add value on the basis of three criteria: their performance and competencies, their leadership and development of others, and their modeling of the creed.

3. System. You next need a TM system—procedures and processes for implementing the creed and strategy. The best TM systems have: assessment tools (competency assessments, performance appraisals, potential forecasts, and succession and career planning); multi-rater assessments; and diagnostic tools that identify: high-potential employees, key position backups, key positions with no back-ups, positions with surpluses. Developmental resources are allocated based on the actual and potential contribution of employees to success. Monitor and fine tune your TM system.

Use three measures: Quality: Is the strategy delivering results as measured by the pipeline of top performers and highly qualified backups for key positions? Timeliness: Does the system work in a stated time frame or is it viewed as too protracted as a decision-making process? Credibility: Are managers and employees engaged by the system? Do people believe that the system is fair?

Our TM model consists of three linked elements: creed, strategy, and system. The model requires that the principles of the creed be embedded into the TM strategy and system by incorporating its doctrines into selection criteria, competency definitions, performance criteria, and development processes.

Attend Lance Berger's session, "Aligning Your Compensation and Talent Management Strategy with Business Priorities," at HRIQ's online Compensation & Rewards Summit 2011.