To tell or not to tell? Should employees be told they are viewed as top talent? If so, does this create the expectation they will receive more development opportunities and faster promotions? What about when other talented employees are not informed they are seen in this way? Does the company risk losing key employees if they don’t think they have a bright future with the company, or think others have erred in judging their performance and potential? These are just a few questions talent leaders and other human resource executives need to address when creating and implementing the company’s talent pool strategy and development programs.
Retention of Talented Employees
Keeping high-quality, top-performing individuals is a priority for organizations. Since talented individuals tend to be ambitious, they want to see signs they are moving upward in the organization, and they thrive on positive reinforcement of their value. Often, they are impatient for their next opportunity, eager to receive extra job assignments and want faster promotions. In the 2010 article “Employee Engagement: The Key to Improving Performance,” published in the Journal of Business and Management, writers Solomon Markos and M. Sandhya Sridevi said the focus on talented employees creates an employee-organization attachment. By informing employees they are seen as top talent, the company is likely to create higher retention, enhanced productivity and increased commitment scores.
On the other hand, valued employees who aren’t told they are part of the top talent pool may falsely conclude they do not have a future with the company. If they do not see a forward path, they will look elsewhere. As a result, companies will lose key contributors.
Although some companies state they are transparent with employees about the opportunities that exist in the talent pool, managers can and do drop the ball when it comes to communications. When some employees are told they are marked as high potentials, and others who should have been informed are not, the absence of information creates dissatisfaction. Even if they do not leave, these employees can become disenchanted, discouraged and less productive. In essence, they become more of a burden than an asset to the company.
In 2007, the Center for Creative Leadership conducted a talent management survey with 199 upper-middle managers and executives attending a leadership development program. The survey revealed the majority of respondents — 77 percent — thought it was important to formally identify talented employees in their organizations. This group of employees was less likely to look for other jobs than those who were only informally recognized. Also, 84 percent agreed that companies should invest heavily in talented employees because they are more committed and engaged in their company’s success.
There is another bonus to transparency when it comes to the talent pool. Top-potential employees who have access to more training and development programs tend to use this knowledge when interacting with those they manage. They pay it forward. They have better skills and are more adept at identifying other high potentials, and thus can assist in others’ development.
Since it is often easier, more productive and less costly to fill open positions with internal candidates, having a pipeline of qualified individuals represents a sound business decision. The estimated costs of hiring an outsider to a position vacated by a high-performing employee are 100 percent to 150 percent of that employee’s salary, according to the article “Rethinking the ‘War for Talent,’” written by Deepak Somaya and Ian O. Williamson. They also point out departing employees take company-specific knowledge with them to the new company, while decreasing the talent of their old company. On the other hand, telling employees they are considered top talent can help a company save financial and personnel resources.
Some organizations maintain there are too many risks involved in telling employees they are considered top talent. They believe if employees don’t know there is a talent pool, no one will feel slighted. Secondly, they think productivity and retention will not be adversely affected. Neither position is true.
Ambitious employees are savvy. They look for a differential investment on the company’s part as an indicator they are being groomed for the future and that they are worthy of real investment in their careers. They are well-informed about talent pools even if management is not publicly discussing them. They hear rumors and know they exist.
This raises an ethical dilemma. Should managers be advised to withhold information if employees ask directly about a talent pool? What if they ask if they are in the pool? Knowing how to answer these questions is critical. Rather than misleading employees, a more productive solution is to answer honestly. Many companies provide written talking points to their managers on how to effectively manage what can be a challenging dialogue. This is accomplished by talking privately with these employees and clearly explaining what the performance expectations are for top performers. Then, provide opportunities for employees to improve their performance by mutually creating goals addressing areas of deficiency. Finally, managers should provide an encouraging and motivational message during this conversation.
In his book Winning, Jack Welch describes three categories for performers: the top 20 percent who are the talented employees, the bottom 10 percent who are the poor performers and the middle 70 percent who are valuable employees, but do not — yet — possess the skills to be considered for the top talent pool. According to Welch, “managing the middle 70 is about training, positive feedback and thoughtful goal setting. If individuals in this group have particular promise, they should be moved around among businesses and functions to increase their experience and knowledge and to test their leadership skills.” He said employees need clear feedback on how they can improve their performance, so they have a legitimate opportunity to make the talent pool in the future. “You simply cannot manage people to better performance if you do not give candid, consistent feedback through a system that is loaded with integrity.”
Building the Talent Pool
The first step in assembling a talent pool is to determine the makeup of the group. Important questions to answer immediately include: What are the inclusion criteria for potential top-talent employees? Also, who identifies eligible employees for the talent pool? The composition of the pool needs to be carefully considered so managers can objectively review the pool to ensure fair gender, ethnicity and diversity representation.
Secondly, make sure there is a quality control process for those who assess talent. If they rely solely on managerial judgment and performance ratings to decide on an employee’s eligibility, the company is at the mercy of managers’ assessments. Some managers may have inherent or underlying biases or simply be unskilled in assessing talent. When this happens, the talent pool might be composed of employees who do not represent the most qualified or strongest candidates.
The solution is to use open conversation in a talent review meeting. By assembling judges — other managers and executives — as well as the manager who nominated the employee, the employee’s work history, accomplishments, behavior, leadership ability, improvement areas and other relevant insights and information can be discussed. Then the employee’s manager can present a thorough explanation on why the employee should be considered top talent, supporting this with data from talent-related measures.
Also, top talent employees often do more than produce outstanding results. They frequently demonstrate advanced learning agility. Using results from both subjective and objective talent assessments provides the talent pool judges with crucial information needed to make their decisions. When a manager’s report is contrary to the assessment data, open discussions provide a clearer picture of the employee’s abilities. Unchallenged biases can leave the talent pool vulnerable to improperly vetted employees. In these cases, the judges can reconcile the discrepancies to make sound decisions.
When companies make the decision to be transparent about their talent pool development, talent management is more likely to become a strategic organizational objective and part of the company’s culture. In this environment, talent management is discussed at all executive levels of the organization, and processes such as coaching, mentoring and training programs are implemented to assist with this objective.
Talent Pool Transparency
With the current trend toward increasing transparency in financial reporting, corporate governance, compensation practices, vendor and other relationships, companies are becoming more comfortable with transparency in their organizational development and effectiveness initiatives, which includes talent pool practices.
Contributing time and resources to promote top talent is similar to any other financial investment, whether it is related to technology, new product development or real estate. Companies want to spend their money where it will generate the highest return. What better area to do this than with an investment to develop the company’s future leaders?
While this type of initiative means making difficult decisions about identifying, supporting and retaining high-potential employees, it is a corporate imperative. Using a transparent approach, backed by subjective and objective assessments, talent leaders can build top talent pools composed of individuals who know they are shining stars at work. They ensure qualified candidates feel valued and enthusiastic about the future, and engaged and committed to the organization.
Ron Lawrence is the vice president of organization development for apparel company VF Corp. He can be reached at email@example.com.