What’s next for managing talent?



Dave Ulrich
11/12/2018

The professor (JB Ritchie) who introduced me to Organization Behavior, and subsequently became a lifetime mentor, captured my imagination with the adage, “Organizations don’t think people do.”  Throughout my career, I have examined how organizations shaped people’s lives and how people delivered organization outcomes. These personal passions and professional interests are captured in the field of study broadly called “talent.”  

Talent Managment

The study of talent has become a broad-based industry of ideas with impact.  Scholars work to define talent; consultants turn talent ideas into tools; business leaders and HR professionals adapt talent tools to deliver value to how people think and act in organizations.  In this article, I want to explore how talent insights might evolve around three questions:  [1] Why talent matters more today than before?  [2] What is the evolution of thinking about talent, particularly, around employee sentiment?  [3] How can leaders better use talent insights to improve personal and organization outcomes?

By answering these questions, I hope to imagine future talent frameworks and actions.

1.  Why talent matters more today than before? 

Most would agree that talent matters.  The primary stakeholders for talent outcomes have traditionally been inside the organization.  Investments in talent resulted in greater employee productivity and well-being often measured in absenteeism and turnover as well as workforce surveys.  In addition, better talent indicators impact business strategic success and financial performance.                           

Going forward, the value of talent will also come from how talent choices affect those outside the organization, not just inside. Let me suggest three emerging stakeholders to focus on in shifting talent from being primarily an internal activity to one that provides valued outcomes outside the organization.

Talent matters to boards of directors. In a recent meeting of the National Academy of Corporate Directors conference, a group proposed that the compensation committee of the board be expanded and changed to become the talent, leadership, and culture committee. This committee would have a charter to evaluate not only the organization’s compensation practices but its processes around leadership, succession, talent review, culture, and talent risk management as well. A broader “talent” mandate at the board level signals its importance to business leaders throughout an organization.

Talent matters to customers. In the past few years, we have argued that leaders are most effective when their behaviors reflect customer promises. When a firm brand translates to a leadership brand, leaders create more value for targeted customers as well as employees. We know that employee engagement (however measured) is a lead indicator of customer engagement. For example, customer net promoter scores are highly correlated with employee commitment scores. Employees should focus on delighting customers and developing the skills that customers value.

Talent matters to investors. Many investors are increasingly looking to predict and capture long-term value from a company. To do so requires looking beyond financial results (e.g., earnings, EBIDTA) to intangibles (like strategy, brand, technology, and systems) and talent, leadership, and culture. In our research, we found that about 35 to 40 percent of a firm’s market value was tied to financial results; 30 to 35 percent was tied to intangibles (like strategy, brand, and supply chain); and 25 to 30 percent related to the quality of leadership (surrogate for talent). A higher quality of talent should reflect a greater investor confidence that an organization can deliver intangibles to consistently create financial results.

Talent matters even more today because competitors can more quickly copy access to financial capital (through crowdfunding platforms like Kickstarter and other financial sources), insights on customers (though ubiquity of information through big data), innovations on products and services (through reverse engineering and shared designs), and implementation of new systems (through automation).  It is more difficult to copy talent and organization; they become non-imitable sources of firm uniqueness that deliver value to all stakeholders.

2. What is the evolution of thinking about talent, particularly, around employee sentiment? 

Over the last 50 years, there have been 1,000’s of ways to answer this question by defining talent. A simple typology of talent includes both competence and commitment.

Competence deals with the knowledge, skill, and ability of employees.  Increasingly, competence includes not only employees, but technology-enabled systems (robots, artificial intelligence, internet of things).  Competence also includes full time employees as well as contingent or gig workers (outsourced work, part time workers, contract workers).  Employee competence matters and has spawned innovations in how to bring people into the organization (setting standards, sourcing talent, securing talent, orienting talent), to move people through an organization (career planning, training, managing performance), and to retain and remove the right people.  Clearly, there are new insights about bringing people into, moving them through, and removing them in organizations.   But, often the greater talent challenge is about ensuring employee commitment.

Commitment is about ensuring that competent employees allocate their discretionary energy (broadly called employee sentiment) to the accomplishing work outcomes. 

Without doing justice to this work, let me offer a brief summary of some of the key topics in managing employee sentiment (see Figure 1).

Figure 1:

Evolution of Talent Sentiment Concepts

evolution_of_talent_sentiment_concepts

Why this cursory and brief historical overview?   First, the study of employee sentiment is not a new topic.  Generations of organization scholars have worked to inform organization leaders on how to inspire and fully engage their people.  Second, too often, efforts to improve talent fail to respect and build on previous work and thus reinvent and reinforce what others have done.  Without building on previous work, “new” insights are like old wine in new bottles, or revisiting old ideas with new terms, and not really making progress.   Third, it is helpful to understand the past so that we can discover new ways to help employees give their best efforts at work.   

3. How can leaders better use talent insights to improve personal and organization outcomes?

The legacy of approaches to talent sentiment in Table 1 help capture emerging themes of the past that may frame approaches for future talent management.  The future of talent in organizations is shaped by the trends shaping organizations, including social and global diversity, rapid technological change, industry transformations, political dynamism, social responsibility, and demographic shifts.  These trends give employees increased choice and flexibility about where, when, and how they work; encourage relatively simple typologies that quickly capture employee attention; and redefine what organizations offer individuals to increase their sentiment.  

Based on the past and responding to the future, organizations give employees a sense of:

  • Believing: An employee finds personal meaning from organizations because employees realize that their personal values derive from and align with the organizations’ purpose and values.
  • Becoming: An employee learns and grows through participation in organizations because they enable employees to pursue new talents through opportunities.
  • Belonging: An employee has a personal identity and develops new relationships because organizations put employees in contact with others.

By meeting belief, become, and belong personal, employee needs, organizations increase employee sentiment that delivers value to customers and investors.

Believe.   People’s search for meaning is not new and was captured brilliantly in Victor Frankl’s classic book about meaning in horrendous World War II settings.  The search for meaning has become very more important for employee sentiment.  In recent years, the need for meaning has been characterized in a three step logic: 

  • Step 1 is happiness found from activity (what is done);
  • Step 2 is experience (how it is done);
  • Step 3 is meaning (why it is done).

This three step process draws on insightful work from positive psychology (see work by Martin Seligman, Mihaly Csikszentmihalyi, and Sonja Lyubomirsky)  to describe how people respond to stimuli:

  • Activity: Be motivated by pleasure.
  • Experience: Get into the flow of an activity.
  • Meaning: Find personal purpose from the activity.

This simple 3-step logic begins to reframe the impact of many of life’s events.

  • Eating and food:
    • Activity: Eat food (vending machines, fast food, or quickie breakfast).
    • Experience: Have a meal (restaurant experience with good service; fancy meal).
    • Meaning: Have a meal with family and friends; use a meal to celebrate a significant event (Thanksgiving in the U.S. or Ramadan meals in Muslim settings).
  • Shopping:
    • Activity: Buy a product (online or in-store).
    • Experience: Have a great shopping experience (online by companies anticipating your needs; in-store by employee service).
    • Meaning: Find personal value from the shopping experience (I look or feel better because of what I bought).
  • Music:
    • Activity: Listen to a song (often on one’s playlist with headphones).
    • Experience: Attend a concert to sense the artist and followers.
    • Meaning: Have the music remind you of something that matters in your life (my wife and I had “our” music artist, Nana Mouskouri: we attended her concert [with a lot of really old people], which reminded us of our younger affections).

This three-step evolution shapes how we respond to our world, evolving from what we do to how we do it to why we do it. In all of these cases, meaning matters and moves beyond simple engagement to real contribution.  In regards to talent, the same three steps apply.

  • Activity: Help employees to be satisfied.
  • Experience: Build employee commitment or engagement.
  • Meaning: Inspire employees to sustain personal commitment through the taking ownership of their work and finding real meaning from it.

When employees find meaning from their work, they not only find increased personal well-being, self-confidence, and physical health, but they are also more personally productive.

For example top new entrants to the workforce often differentiate potential employers by the organization’s social responsibility.  Organizations that give back through products, services, philanthropy, and other means often attract and retain the best employees.  This social commitment shows up in a “triple bottom line” of profit, people or planet.  And, investors pay increasing attention to Environmental, Social, and Governance (ESG) issues.   Leaders who include beliefs and values as part of their business message will create more meaning for employees.

How to put belief into practice

Leaders make belief practical to employees by becoming meaning makers.  They help employees connect their personal values to the organizational values. 

Create a purposeful organization.   As meaning makers, leaders help define a broader purpose for their organization.  The organization is not just a bundles of activities (step 1) or processes (step 2), but deeper meaning often connected to a deeper sense of values.  Southwest Airlines strives to democratize the skies with cheap fares.  Google aims to “organize the world’s information and make it universally accessible and useful”.  Unilever has a purpose of “making sustainable living commonplace” with goals around improving health and well being of all people while reducing environmental impact. 

Help employees become clear about their personal beliefs.  As meaning makers, leaders help employees answer personal questions like:  What do you want to be known and remembered for?  What do you want to contribute through your work?  What problems do you see that you would like to help with?  These questions help the employee recognize his or her personal brand and identity. 

Connect organization purpose with employee beliefs.  Leaders help employees recognize that their personal identity will be enhanced through their active participation in the organization.  Southwest Airlines, Google, and Unilever attempt to hire people whose personal beliefs align with the organizational purpose.  This alignment enables employees to find more meaning at work and thus more personal well being and productivity.  For example, Southwest Airlines has the highest pilot productivity in the airline industry.  

Become.  Good people want to become better.  Organizations are a unique setting for personal development. By giving employees opportunities for stretch assignments, training, and new projects, employees learn and become better.  When employees learn and grow in their work setting, they find more personal meaning. 

A number of ideas (learning agility, resilience, perseverance, grit) coalesce around the principle of becoming better.  The growth mindset concept advocated by Carole Dweck captures the essence of becoming.  She differentiated between a fixed and growth mindset as shown in Table 2.

Table 2:

Dimensions of a Fixed vs. Growth Mindset

(reference: Carole Dweck, Mindset)

Creating a growth mindset affects individuals how individuals become better, at work and away from work.  We often ask participants in a workshop to think of a time when they failed at something, and, to remember the angst and feelings of loss.  Then, we ask them to share what they learned from that experience, which are often remarkable insights.  They often tell us that these lessons learned from hard times are some of the most important in their personal growth. 

Growth mindset in organizations often comes from deactivating threats, approaching values, and connecting to people.  David Rock identified 5 social threats at work (Status, Certainty, Autonomy, Relationship, Fairness … SCARF).  When present, these threats trigger the brain to shut down and not be open to growth.  By neutralizing these threats, employees are more open to learning and finding meaning and purpose from work.

How to put become into practice

Leaders help employees become better by becoming growth leaders.  Growth leaders help both employees and organizations learn and grow.

Focus on learning.  Both individuals and organizations learn when they experiment, practice continuous improvement, seek next practice, and take risks.  Learning often comes after seeming failures where insights are gleaned and transferred to the next setting.   When leaders can avoid blame, punishment, and shame, they can often turn failure into learning by asking questions like:

  • What was hard today? How did you stick with it?
  • What bugged you today? How did you get around it?
  • What problem came up today? How did you try to solve it?
  • What did you experiment with today? What did you learn from trying it?

Growth leaders become better by not failing, but learning.

Praise risk and improve the process.  It is easy for a leader to praise the outcome of a project, “You exceeded customer expectations.”  But an exclusive outcome focuses does not encourage becoming better.  Growth leaders explore the process, “How did you exceed expectations?” then generalize those lessons to the next experience.  Dreams don’t work unless you do. 

Tell resilience stories.  In the wake of the 9-11 tragedy, researchers found that children who knew the stories of the family and ancestors were more resilient.  Likewise, employees who know stories about company history, exceptional customer service, or product efficacy will be more hardy, resilient, and able to become better.  Growth leaders create narratives that inspire resilience. 

Scan for positives.  At its best, criticism can overcome a single event; praise creates a positive process.   Growth leaders ask themselves and employees positive questions such as:

  • What was a happy surprise today? How did you or others help it happen?
  • What are three things you were grateful for today? How did you savor them?
  • What was hard today? How did you stick with it?
  • What problem came up today? How did you try to solve it?

These questions encourage what is right more than what is wrong.

BelongBelonging (being connected, joining a community, having a high-relating team) overcomes loneliness (social isolation) and predicts employee sentiment.  The U.S. surgeon general recently stated that loneliness is more serious a health problem than opiates.  In November 2017, the U.K. named a Minister of Loneliness to create policies to deal with the challenge of social isolation.

Loneliness (social isolation) affects all age groups. U.K. research found that 200,000 older people have not had a conversation with a friend or relative in more than a month. For the younger, digital-native generation, technology often leads to superficial connections. It is relatively easy to “unfriend” someone; and Instagram and Snapchat generally show images of people doing happy and positive things, which only makes the viewer feel more lonely in comparison.  Those who spend more than 2 hours a day on social media feel more social isolation. 

Belonging draws on attachment theory, which essentially states that when someone has strong emotional attachment to another (person or organization), personal well-being increases. This improved well-being in turn increases personal productivity and overall organizational performance. Belonging requires work to invest in relationships, using technology to connect not contact, empathy between people one on one, and personal accountability for discovering relationships that matter.  Belonging is active, not passive; requires persistent work; endures over time; is tied to shared values; and shapes well-being.

How to put belong into practice

Leaders create connection when they help their employees feel a sense of belonging.  These community leaders help employees work better together as team or organization citizens. 

Recognize that belonging requires work. C.S. Lewis, the famous religious writer, characterized hell as a place where whenever people disagreed, they simply moved away from each other. Over time, everyone lived in moated and gated mansions far away from everyone else. Belonging requires the hard work of investing in a relationship. One leader had a morning staff call for fifteen minutes every day no matter where the employees were in the world. One of the reasons for this call was to update business issues, but an even more important reason was to form a team where people felt that they belonged.  Community leaders enable belonging by being able to disagree without being disagreeable, to have tension without contention, and to move from divergence to convergence and back again without personal enmity.  Conflict becomes an opportunity to strengthen relationships. 

Use technology to build connections, not contacts.  Technology makes the world a global village, but it is often a global village of increasingly isolated people. Like walking down the street of a large city, there are literally crowds of people, each person moving with purpose and direction. But crowds do not necessarily lead to belonging. Technology dramatically increases breath of contacts but not necessarily depth. Counting likes and followers or joining a group does not imply belonging.  Community leaders can use technology to connect if they personalize their use of technology. Instead of sharing scripted studio posts, one leader became more authentic by creating short weekly posts about his focus, priorities, and experiences.  Another leader, on an employee’s birthday, asks colleagues to share positive experiences with the employee through technology. This affirming exercise helped employees feel closer (more belonging) with their colleagues.

Demonstrate empathy.  Satya Nadella, CEO at Microsoft, has a new leadership mantra about empathy, which means understanding and feeling what others experience. He claims that empathic leadership leads to connection that leads to innovation that leads to better business performance.  Community leaders build empathy in their professional relationships by asking how people are doing, being aware of personal circumstances, and being willing to help others. One leader began his regular meetings with a brief personal interlude: “Who has a good news moment to share?” Another sends personal hand-written gratitude notes to employees. Another frequently asks herself, “How can I be helpful?” These empathic actions create a sense of personal belonging between leaders and employees.

Ensure that employees take personal responsibility for finding meaning.   Agency theory has changed how investors invest. When an agent acts on behalf of the owner, the agent often sub optimizes decisions. So investors want managers who are not just agents but active participants in investment decisions (ergo the rise of equity-based compensation, private equity, and other mechanisms to make managers into owners and not agents).   Community leaders create belonging by asking employees what they think, encouraging them to take ownership of innovation and personal work. Employees shift from being passive agents to active participants in organization actions. In employee engagement, this changes questions from “Do I like my pay, boss, or working conditions?” to “Do I do my best to earn my pay, build a relationship with my boss, or improve working conditions?” Marshall Goldsmith calls this active engagement, and it shifts the responsibility for belonging from the organization to the individual.

Conclusion:

My mentor was right, organizations don’t think, people do, and it is worth considering how to shape how people think, act, and shape organizations.  There is little question that “talent” shapes organization results more today than ever before.  Understanding and managing talent is an ever-growing field of inquiry that will help individual employees experience personal well being and productivity and organizations deliver value to customers and investors.  Rather than rediscover previous principles, it is helpful to move forward in upgrading talent. 

A primary agenda for talent is improving employee sentiment through shaping how employees find meaning at work through shared beliefs, helping employees become better through a growth mindset and learning, and finding a sense of belonging through create community.   These principles define new roles for leaders, meaning makers, growth sponsors, and community builders.  Through believing, becoming, and belonging, scholars, consultants, and business leaders can help people shape organizations that have profound impact on society.

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