The quest for Talentnomics

Poor talent alignment and unnecessary recruitment costs have cost India a record Rs 22.3 billion*. While these are just indicative figures, the need to have a strong talent pipeline is being felt more than ever with organizations witnessing top level upheavals amid fast-paced business competition. However, organizations are still playing catch-up when it comes to having a strong and reliable succession plan in place. Even organizations that have a talent pipeline lack focus and strategy on who will be the next successor for varied reasons.

The absence of a leader or continuously changing leadership in an organization could cause havoc in terms of morale erosion, consequent attrition or business deviations. Take, for example, software major Infosys. Last June, founder N. R. Narayana Murthy returned to the company amidst clamour for his presence as the company’s profits slumped over many quarters. As soon as he came on board, many senior and top-level executives started leaving the company. The exodus soon became more pronounced when S. D. Shibulal, who is the current CEO, announced in April 2014 that he would retire in early 2015. Since then, Infosys has been on the lookout for a CEO. Similarly, Jet Airways has witnessed the exit of five senior executives within a year. The CEO post of Jet Airways has seen at least three changes since their stake sale to Gulf carrier Etihad in April 2013. Right after the announcement of the Jet stake sale, Nikos Kardassis quit the Naresh Goyal-promoted carrier over some alleged differences with Goyal. Then, Gary Kenneth Toomey had quit in January 2014, barely seven months after taking charge of the airline. The airline had been without a CEO until May 2014 when Cramer Ball was appointed.

Both these cases point to one thing: If there is no clear direction from the top regarding leadership exits, then it sets the tone for the rest of the organization. The lack of a clear strategy can lead to heartburn among the leadership and in turn prompt them to leave. A deficient succession plan not only reflects the uncertainty in an organization but also points out to its poor talent development capabilities. Prajakta Kanaglekar, Leader in Leadership Programs, GE India, said, “The presence of a strong leader is of utmost importance, as the leader is the custodian of the values and culture. This in turn, impacts the overall shareholder value, organizational productivity and growth.”

A recent Succession Planning and Talent Development Survey by The Rock Center for Corporate Governance at Stanford University and The Institute of Executive Development (IED) reported that only 25 per cent of their respondents agreed that there was an adequate pool of ready successor candidates for the CEO position at their companies. The situation in India is far worse as most organizations lack a strong talent pipeline to enable smooth leadership transitions even though senior leaders believe that succession planning is vital.

There are a few blockages that significantly prevent the free flow of talent in organizations. Organizations face issues such as mindsets, attitude, approach, lack of foresight and understanding of future organizational requirements etc. on multiple fronts. The abundance of so much information and the prevalence of social media is testing companies’ ability of not just its knowledge processes, but also their abilities to adapt it to their contexts.

Jayesh Pandey, Lead, Human, Capital and Organization Effectiveness-India at Accenture, says, “There is abundant information on processes and methodologies to build and scale talent pipelines, but the real problem that organizations face is in customizing them to fit into their own context and business requirements.”

Succession planning, especially in Indian context, is seen as a measure for mitigating risks whereas this is the first step where organizations can go wrong. “There is an urgent need for a fundamental shift in the organizations’ outlook towards succession planning. Succession planning is not about mitigating the risks involved in the loss of a leader–that is a defensive outlook. The correct way is to build a talent pipeline and begin deploying talent to harvest the growth potential that the market offers. The approach should be such that while we are developing talent and providing them opportunities, we are also mitigating the future risks,” said Pandey.

Organizations investing hugely on talent development may be missing out on aligning and assessing those efforts with future organizational requirements. It also indirectly displays the lack of foresight and proactive planning for the future skill requirements. “There is a tendency to pursue unconnected talent management initiatives. These, too, happen in fits and starts. It is a rare company that has a well thought through talent management system, which survives good times and bad times and HR and leadership changes,” said D. Rajiv Krishnan, Partner & India Leader People & Organization Advisory Services, Ernst & Young.

There may be several other reasons for organizations not being able to create a strong talent pipeline but the impact of not having one can go beyond measures. It impacts both externally and internally. Kanaglekar said, “A good leader is like a radar for an organization, giving it direction and ensuring it stays on course. The leader sets the tone in the external community either echoing confidence or uncertainty. Internally, the leader drives vision, productivity and employee morale. The existence of a strong leader percolates down the levels, aligning the whole organization to its vision. Therefore, the absence of a strong leader impacts all of this.”

In addition to this, there is the tangible and intangible cost attached to a leadership vacuum. Sundara Rajan, Director at Thomas Assessments India, said, “There are tangible and measurable costs like slowdown in growth of sales and profits and the intangible ones like drop in morale and a sense of confusion and loss of confidence among the ranks. The intangible does a greater damage to the organization as lower level employees perceive an unstable environment in case a leader quits and tend to seek other stable environments.”

If we were to evaluate the cost of business leadership crises on the whole economy, the amount would be enormous. “We recently conducted a joint study with PwC on talent adaptability which suggests that poor talent alignment is costing Indian companies as much as Rs 508 billion in lost productivity, said Irfan Abdulla, Director-Talent Solutions at LinkedIn India.

The ability of an organization to be ready with a successor when a senior leader quits suddenly is the actual determinant of its future success. A strong and effective succession plan reflects the quality of an organization’s leadership pipeline and how it evaluates and aligns its talent with organizational success. Abdulla said, “Succession management is as much a part of the business planning process as any other function in an organization. Ensuring that the talent pipeline is well fed at all times means identifying talent continuously, even when there is no immediate need.”

However, here is how organizations who have been successful in creating and scaling up a healthy talent pipeline, do it:

A talent pipeline is no last minute fix-it solution; it is an ongoing long-term effort in ensuring a healthy talent pool at all times irrespective of the current requirements. “Talent identification and development should begin early in the employee life cycle when it is possible to draw up a long-term development plan for an individual,” said Krishnan.

Successful talent pipelining and succession planning depends a lot on commitment from all levels. Accenture’s Jayesh Pandey said, “Building a talent pipeline requires the right culture, mindset and an attitude with stewardship as one of the key cultural attributes. It requires team efforts beginning from the CEO and direct reports for being aligned, understanding and agreeing to the fact that they need to architect a professional plan for building a talent pipeline. Building a talent pipeline is more of a science than art. There are some secret ingredient to it but by and large it can be a well-defined and well-documented readily available set of actions that the management needs to take.”

Premlesh Machama, Managing Director - India at CareerBuilder, said, “It is easy for organizations to work towards a talent pipeline if they have a clearly defined business roadmap. This roadmap should clearly define the future growth path for the individuals and also the organization. The identified resources should be made part of either task forces for various projects within the organizations, which may currently be outside their domain but would prove helpful in developing skills that might be required in the future.”

Sir Arthur Conan Doyle in his final Sherlock Holmes novel ‘The Valley of Fear’ wrote, “Mediocrity knows nothing higher than itself; but talent instantly recognizes genius”. The same can be looked upon as one of the most intriguing attributes of a successful leader. As Kanaglekar says, “At GE, all leaders are responsible for developing their successors. We encourage our leaders to mentor team members adequately, so they are in a position to take on the leaders’ role as and when the need arises.” It also implies that organizations and leaders should be able to provide capability building opportunities to the top talent so that they can develop cross-functional expertise making them ready for future roles.

Talking of harnessing both internal and external talent for building a strong talent pipeline, Abdulla said, “Successful companies create a process which enables then to identify prospective talent that fits their future organizational requirements, regardless of whether the company has a job requirement for them or not. Companies trying to attract external ‘passive talent’, need to build strong relationships with prospective employees. To accomplish this, companies need to create and leverage talent communities within key labour segments. Increasingly, organizations are making use of social media to build this talent pipeline, especially for future leaders. This requires engaging both internal and external talent in knowledge and capability building conversations.”

Niraj Kaushik, Vice President, Applications, Oracle India, said as a part of the talent pipeline building process it is important to keep them engaged. He said, “Define and execute campaigns to engage candidates. Identify conferences, industry associations and social networks that match the critical role profile helping hiring managers and employees in relationship-building.”

Agreeing to the point, Abdulla says, “In your search for top talent, you are continuously collecting thousands of leads from many different sources. But staying connected to them may become a challenge. Our solution - ‘LinkedIn Talent Pipeline’ gives recruiters one place to track and stay connected with all of their talent leads. Talent Pipeline powered by LinkedIn’s professional network gives recruiters a way to build and leverage just-in-time candidate pools, keeping your entire recruiting team engaged and coordinated on a single platform.”

Smart organizations build their talent pipeline with a score of two successors below each critical role followed by one below each of the two successors. Sundara Rajan says, “A good talent pipeline has a “1-2-1” structure to it. At least one person is clearly identified and groomed for each apex position below which two persons are groomed in the pipeline for the top teams with each of them having one person developed further below them. Such a structure provides clarity and direction to the team on the future and also prepares the organization for the same.”

GE works with the same strategy. Kanaglekar said, “Once employees reach the executive level in the company, we provide them larger opportunities for growth. There are at least a few internal and external candidates identified for any critical position; so that in case there is a movement, we have a pipeline to plug in the gap immediately. At GE, senior leaders often undertake big cross-functional, global assignments; in such situations, we are able to develop a strong leadership talent pool for top positions.”

A talent pipeline is not just about identifying and developing successors. Top talent attracts bigger opportunities which if existing outside the organization will sweep the talent away. Pandey said, “Have a leadership team comprising the top 15-20 people. If you have analysed the next in line 30-50 people who are ready to replace them, then you need not wait for a crisis. Such talent can even be leveraged to expand the growth and reach of an organization manifold. It creates a huge opportunity for accelerating organizational and individual growth across sectors.”

In conclusion, rising competition and the highly volatile talent market is forcing organizations to focus more on their internal talentnomics to ensure sustainability and competitive advantage. As time goes on, the way markets exist and the way organizations function will change but it has always been talent that has been driving growth and competition and always will be. It is an innate nature of talent to recognize and attract opportunities and hence organizations need to strategize and build a robust talent pipeline to ensure they have a competitive edge. Although numerous global organizations have already set succession plans and processes rolling, a lot of Indian organizations yet face challenges in scaling effective talent pipelines. It’s time to learn from the rest and utilize it to your own best!