Talent advantage exists when the workforce creates value in the marketplace.
By
Dave Ulrich
Rensis Likert Professor, Ross School of Business, University of Michigan
Partner, The RBL Group dou@umich.edu
Mike Panowyck
RBL Principal, The RBL Group
mpanowyck@rbl.net
Harrison James
RBL Principal, The RBL Group
hjames@rbl.net
Creating a talent advantage defines much of the human capability (talent + leadership + organization + HR) agenda. HR professionals often gain credibility and have an impact when they help create a talent advantage by answering such questions as why talent matters, how to improve talent, and how to prioritize talent.
Why Talent Matters
I frequently start talent discussions by asking, “If your organization has better talent, what will be the impact?” Figure 1 suggests four outcomes of better talent: business, customer, investor, and community results.
Emphasizing the outcomes of talent means that when an HR professional addresses talent presentation or discussion, it is critical to start (or quickly go to) the outcomes of talent, not the activity. Often, talent managers focus on their activities such as hiring, training, DEI efforts, compensation, communication, setting policy, etc. When these activities deliver results, they are grounded in the business. Talent is not just about people (workforce, employee, labor) but the results that occur because of investments in people.
Figure 1: Why Talent Matters
How to Improve Talent
Given that talent can create value for stakeholders, we have innumerable ways to turn employees, workforce, or people into “talent.” Through research and experience, we have identified three general dimensions of “talent”:
· Competence = having the right skills for today and tomorrow’s work (brain).
· Commitment = being willing and dedicated to work hard (hands and feet).
· Contribution = deriving meaning and purpose from the work (heart and soul).
Within these three dimensions, we have identified ten specific initiatives (see Figure 2).
Figure 2: Choices for Improving Talent
These ten initiatives have a long history of ideas, research, and best practices. Investments can be made for the ten initiatives to create talent advantage. In our work, we have identified actionable insights for each of the ten possible talent investments that include concepts (with resources such as videos, articles, posts, and white papers), tools for improvement (assessments and exercises), and metrics (measures to track progress). While they don’t cover every option for improving talent, these ten possible investments offer a practical framework for how to build sustainable talent capability.
Figure 3 captures the essence of each of the ten investment choices and offers a simple way to self-diagnose the extent to which an organization invests in the initiative. More rigorous diagnoses can be done through surveys (see Organization Guidance System) or AI/machine learning (www.g3humancapability.com).
Figure 3: Talent Advantage Self-Assessment
How to Prioritize Talent
Given that talent matters to key stakeholders (figure 1) and consists of many dimensions and initiatives (figures 2 and 3), business and HR leaders must determine how to prioritize talent investments. Often, talent prioritization is derived from surveys like the one depicted in figure 3 where leaders offer perceptions of what is done and what could be done.
We believe that advancements in analytics enable us to bring precision to the prioritization process with a simple formula designed to create value from talent (or human capability) investments through three criteria: status, impact, and differentiation (see figure 4).
Figure 4: Talent Opportunity and Prioritization Formula
Status:
Status comes from an evaluation of a firm’s current state by determining how an organization benchmarks on any initiative compared to others. Most management books, conferences, articles, and conversations rely on benchmarking to share best practices or cases that others can learn from. Low scores imply an initiative is a weakness and could be improved upon and is worthy of investing in; higher scores imply strengths to be maintained and leveraged.
Impact:
Impact focuses on the results of doing the initiative and the value created for key stakeholders. In our work, we have identified five key stakeholders of talent initiatives, each with a desired result or dependent variable (see figure 5). Impact then reports the extent to which each of the ten talent initiatives (independent variables) delivers these five stakeholder outcomes. This impact score could be perceptual (“What do we think?”) or it could be empirical with a database that allocates variance in the five stakeholder outcomes by investments in talent initiatives.
Figure 5: Stakeholder Value or Results
Differentiation:
Some initiatives are standardized processes where an organization simply matches the industry norm for parity without much room for differentiation. Opportunity comes when initiatives have a high variance from one organization to the next and the potential to differentiate and outperform others with targeted investments. The higher the differentiation, variance, or standard deviation, the more opportunity to improve. High status, impact, and differentiation scores signal where to invest in talent to have an advantage.
Talent Advantage: Summary
Most agree that talent matters, and most have experimented with talent initiatives. We hope our logic offers a system to build talent advantage by bringing rigor to talent value, definition, assessment, and investment. We hope this framework helps you build a talent advantage through competence, commitment, and contribution.
Let us know if you would like to learn more about adapting these ideas to your organization.