Strategic Talent Management

The emergence of a new discipline

A view from the FTSE 100

Strategic Talent Management

The emergence of a new discipline

Executive summary
If we dont connect business and talent strategy, we will be nothing more than a typical HR unit, focusing on activities and not on impact and outcomes. Activities or outcomes whats your focus? The cumulative impact of global demographic trends, combined with on-going economic uncertainty and aggravated by a critical skills shortage creates a powerful talent triple whammy facing business. In response, forwardlooking companies are bringing talent, particularly leadership talent, to the top of the agenda and are assigning responsibility for aligning business and talent imperatives to a senior talent executive. We are beginning to see the steady emergence of a new discipline of Strategic Talent Management, led by a Head of Talent or a similarly titled role. In order to increase our understanding of this relatively new role and its challenges, we approached the leading practitioners in FTSE 100 companies, in the latter half of 2011, to conduct research and in-depth interviews. The results are intended to serve as a guide for CEOs and Heads of Talent when evaluating their approach to senior talent management.
We found that the drive for structured talent management generally comes from a CEO who has recognised the importance of attracting and developing a superior pool of leadership talent that will enable the business to deliver on its strategy. A flat world produces a number of tensions that Heads of Talent are expected to resolve. The drift of business from the West to East creates demand for a diverse set of leadership capabilities. Some senior executives readily understand that talent is a central enabler of strategy and that great talent management can be a source of sustainable advantage. A good number though, still regard talent development as a hygiene factor. Talent management in these companies can become an exercise in gap-filling and tactical recruiting. Our research convinces us that CEOs will continue to appoint a Head of Talent as a way of combatting this reactive mentality and creating awareness of the importance of talent to corporate success. It is for this reason that Heads of Talent tend to be viewed as distinct from the rest of HR, even when they report to the companys top HR executive. But despite the advantages of being CEO appointees, many of the Heads of Talent we spoke to are struggling with paradoxes and ambiguity as they attempt to create alignment between business and talent strategy. They are often tasked with bringing consistency to talent management across decentralised business units, but they

2 Strategic Talent Management: The emergence of a new discipline

5 years
have little or no power over hiring or promotion. They are balancing the strategic, external talent challenges facing the company with tactical and internal challenges, often with only influence to help them. The global economic crisis and the huge increase in unemployment have not made their role any easier. Counter-intuitively, there is still a marked shortage of people with the skills required to lead global companies. The concerns of baby boomer and generation X executives are important, but the future of most companies rests with the next generation. In the context of these challenges, there is a need to share best practice to create the conditions for success. Based on what we have observed and the insights that we have been able to glean, we have developed a framework called the 7Ps which will be helpful in structuring the role of a Head of Talent: Pressures, Purpose, Person, Profile, Power, Process and Pools. Overall, our research revealed an embryonic but emerging business discipline with little consistency around objectives or methodology. We discovered a complex set of factors, many of them contradictory, affecting performance and success. Even with the high stakes attached to successful talent management and the right framework to help them succeed, winning Heads of Talent will still have to be diplomats rather than commanders, achieving results through relationships and persuasion. Encouragingly, we found many Heads of Talent who had adopted this approach. Heidrick & Struggles role as a leadership advisor to global organisations gives us a privileged perspective on these emerging trends and we undertook this study to start an on-going conversation with CEOs, senior leaders and Heads of Talent on how to maximise the business impact of leadership talent.

average length of time Head of Talent role has existed in the company

3 years 17% 157 90% 23

average length of time current Head of Talent has been in the role

Heads of Talent that report to the CEO

average size of top talent pool managed

whole career spent in HR

number of different job titles identified in our survey for the role

6 out of 10
average score in answer to: How well do you think your organisation manages talent?
Heidrick & Struggles 3

Introduction

There is a growing body of evidence to support the idea that companies that align business and leadership talent imperatives have a greater chance of sustainable success. It feels intuitively correct; if you have the right leadership talent in the right place with the right skills and behaviours, then the odds of successfully executing on your business strategy are high. Many of our CEO clients agree and have moved leadership talent to the top of their agenda, assigning responsibility to a senior executive.
At Heidrick & Struggles, our belief is that these Heads of Talent have an important role to play in improving corporate leadership, and that an effective Head of Talent could have substantial impact on a firms competitiveness. We wanted to test this theory by learning more about these senior talent executives: who they are, what they do, the agenda they address, the context within which they operate and what constitutes success in their role. Top talent executives from 24 FTSE100 companies helped us in our research. The firms we surveyed use a wide range of titles for these leaders, but in this report we will refer to them as Head of Talent.1

Together with these executives, we identified a series of practices, tools and competencies that can help create the conditions for success within this role and for the company as a whole. In addition to the survey findings we have brought additional insights from Heidrick & Struggles leadership consulting experience, as well as from research conducted at Harvard Business School. The report is divided into three parts: A summary of our findings; a review of the context within which these talent executives operate and finally a few tips for attaining success. We hope that it will be useful both to CEOs when they consider how to execute on their talent agenda and to the senior talent executives who are responsible for making the alignment of business and talent strategy a reality.

see Appendix 1, A note on titles

4 Strategic Talent Management: The emergence of a new discipline

Part 1 Principal findings An embryonic but emerging discipline

The Head of Talent is still a relatively new role, and companies use their executives in a wide variety of ways
Most of the Heads of Talent we interviewed have been recently appointed, and some were the first Head of Talent their companies had ever hired. Unlike more established functional roles (CFO, Chief Marketing Officer, etc.) the Head of Talent is a newcomer and is rarely present on the executive team. We found that on average the length of time a Head of Talent role had existed in the company was five years and that many of the current appointees had been in the role for about three years. A good number of our interviewees indicated that they were still working out how they were expected to relate to their colleagues. A few companies have well-grooved talent management processes, but most are still exploring how they will select and develop high-potential managers, conduct regular talent reviews and report on their progress. As a result, we discovered great variety in the ways in which Heads of Talent operate and relate to line managers. Some are focused primarily on infrastructure for talent and leadership development processes, systems, and metrics. Others spend more time on specific development initiatives: business school programmes, projects that involve high potential managers, and the like. Still others spend time walking the floor, trying to keep highpotentials engaged and providing front-line intelligence to senior line leaders (fig 1). There are few patterns that a CEO can rely on when appointing a first Head of Talent, few models that a newly hired Head of Talent can easily adopt. As we will explain in Part III, this means that Heads of Talent must take the initiative in structuring their own roles.

figure 1 How do you spend your time?

Succession planning Training and development other Individual career management Recruitment Performance management Mobility management Compensation & Benefits

24% 22% 21% 10% 9% 7% 4% 3%

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A wide variety of Hot Topics that keep Heads of Talent awake at night
Interviewees split their Hot Topics into two categories strategic and external talent challenges facing the company and tactical and internal issues. There are few surprises on either list, but several of the mega themes resonated with our experience and wider research on leadership talent. Generally, we see that Heads of Talent are battling to create alignment between business and talent strategy:

Hot topics
Strategic
Diversity Demographics Aging population Generational mix Globalisation & Emerging Markets Global and Glocal talent model Relocation of business from West to East Identifying, attracting & retaining talent in emerging markets Mobility Willingness to move Skills gaps across geographies Critical skills gaps Global shortage of General Managers Lack of commercial savvy From product to customer-centric competencies Succession Internal/External pipeline Retention

Globalisation and Emerging Markets

A flat world produces a number of tensions that Heads of Talent are expected to resolve. The drift of business from the West to East creates demand for a diverse set of leadership capabilities that can not only bridge the gap between established western management approaches and emerging eastern ones, but can also manage the balance between what can and needs to be done at the centre and what should be done locally. Many of the interviewees talked of developing a new glocal talent model, blending global consistency with local delivery needs. Many Heads of Talent appear exasperated by the challenges of identifying, attracting and retaining leadership talent in emerging markets we say we are going into (emerging markets) but have no clue how to operate or source talent or how to expand our talent agenda in these new markets. Some told us that they had learned a hard lesson that what attracts talent in emerging markets is different from what retains it and creates performance. A few even fear that despite their best efforts half the investment will walk out.

Operational
Workforce planning Business ambivalence Dont get the talent management thing Resist forced distribution and performance management Career transitions Sizing roles to smooth career moves Internal rotations and transfers Quality of talent professionals Development plans and internal coaching Talent metrics, data and tracking Change fatigue

Succession and Leadership Pipeline

Heads of Talent tended to confirm our experience that succession planning at all levels, but particularly at the top, is reactive. The following quote, taken from our 2011 Board Study,2 reflects the situation A companys leadership talent is its single most important asset and has become a critical governance topic for boards. In general, the time and effort devoted by the board to the development and

2 European Corporate Governance Report 2011 Challenging board performance, Heidrick & Struggles, 2011

6 Strategic Talent Management: The emergence of a new discipline

succession of its senior leaders is inadequate. The statistics are quite worrying too only 58% of boards we surveyed in EMEA had an effective CEO succession planning process and 46% had a vetted and viable candidate who could immediately step in as CEO if necessary. In the face of the critical skills shortage we explore later, many companies want to mitigate their leadership risk by aligning their talent agenda and pipeline practices to create succession ready pools, both inside and outside the company. Interestingly, we noted that few Heads of Talent had responsibility for creating and managing external talent pools.

Most Head of Talent roles manage a relatively small talent pool

The typical Head of Talent does not look after all of the talent in the company, but an executive or top talent pool that is a small proportion of the employee population. Our research and that of other firms (starting in the mid1990s) showed that these top pools averaged 150 leaders, regardless of the size of the company, with most of them numbering under 250. Despite over a decade of mergers and substantial growth in the size of many companies, this number has not changed. The average Head of Talent we interviewed had just over 150 people in their managed talent pool. The people in these relatively small talent pools are the group leaders or high potentials or critical list: the name varies across companies, but the intent is to focus on those who have the potential to grow into larger roles. The 9-box matrix that plots each manager on axes for performance and potential seems to be a favourite tool of the talent managers we interviewed. In many companies, the list of high-potential leaders is derived from this matrix. One reason for the popularity of the 9-box matrix, we think, is that it is relatively easy for talent managers to use and to explain to their CEOs and business colleagues. We were surprised to learn that, in the majority of companies we looked at, the people on the list arent told that they are on it; the existence of the list may be acknowledged, but the list itself isnt made public. This may be to avoid internal discord; it may also reflect a lack of confidence in the process on the part of talent managers. In some cases, corporate talent managers have the ability to redeploy high-potential leaders from one unit to another. But in most companies, hiring and redeployment depends on line managers, with talent managers playing an advisory role. Our research also suggests that many companies could improve the way they allocate leadership development resources. On average, 70% of funds spent on leadership development go to formal training; our view is that this ratio should be reversed, with 70% allocated to experiential, job-related development. We were therefore encouraged to hear many of our interviewees speak

A common theme for the Head of Talent is the creation of consistency across decentralised units
Many of our interviewees conveyed a history roughly like the following: As a result of decentralisation and corporate downsizing, line managers became responsible for hiring, developing and retaining talent in their units. This had the advantage of making the line managers accountable, but it often led to inconsistencies. Many respondents told us that their CEOs now wanted an integrated and consistent approach, more often driven by a desire for effective rather than simply more efficient senior talent processes. The CEOs could see that some divisional leaders did a great job in building their teams to the point that they could act as net talent exporters to other parts of their organisations; others experienced high turnover and had to look outside their units for succession. Achieving more consistency across units thus became part of the mission for many of the Heads of Talent we interviewed. At the same time, our interviewees did not expect the return of big central HR. The Heads of Talent we interviewed typically ran very small teams. Most had power that was indirect. There were few big budgets in fact the majority of Heads of Talent didnt know the proportion of the overall HR budget that they were allocated. They were expected to increase consistency across business units, to identify and deliver a more integrated corporate talent strategy. But most of the power in the companies we looked at rests with the line leaders, a theme we return to later.

Heidrick & Struggles 7

of project-based work, in which high-potentials are encouraged to work together on strategic issues. Others described how they got involved in relocation, mobility, special training programmes and career counselling. Our interviewees spent 22% of their time managing training and development programmes. That strikes us as about right, given the 70 / 20 / 10 rule of thumb.

The systems in other companies are more complicated. One Head of Talent prepares an annual People Balance Sheet, bringing together all people metrics in the company and trying to link talent health to business strategy. Building on that approach, such a scorecard could include: head count (changes over time) rate of talent change (external/internal moves divided by headcount, attrition ratio at the top) talent mix analysis (potential against performance) proportion of new joiners to the entire employee group tenure in position or company, measured by year bands Several companies measure line managers on talent management activity; the resulting score figures in the managers bonus. The majority of the Heads of Talent we interviewed did not try to relate their talent measures to the companys financial output or share price performance. Rather, they focused on operational measures: completion of assessments, number of talent reviews done by line managers, participation in leadership development programmes, and ratio of external hires. As one of our interviewees commented: Its difficult and often meaningless to try to calculate ROI on talent initiatives. Instead, you need to look at what you are doing relative to your industry and competition and see whether its making a difference. Succession figured prominently in the metrics that several Heads of Talent employed. A Head of Talent explained: I have a clear picture in regard to external hiring numbers at the top level, and the impact of that on the business. I want to see around 10 internal appointments rather than hiring externally by Christmas. Its better to move people around, rather than to bring them in from outside. We are thinking of setting similar targets for 2012.

Heads of Talent see relationship building as being a key competency for their success
We asked Heads of Talent to identify the three key competencies that underpin success in the role. Some of the interviewees focused on technical skills and experience of HR processes and approaches but many identified relationship building, commercial acumen and internal awareness as top of their list. Our research suggests that a majority of our interviewees are strong in the relationship and associated influencing skills and have built deep and advisory-type relationships with their colleagues. But as we will discuss later, many have yet to fully develop and demonstrate the commercial acumen that would bring organisational buy-in and credibility. Other key competencies that were raised include: selfconfidence, resilience, strategic thinking, adaptability, customer orientation.

Heads of Talent measure performance, using primarily operational metrics

We asked the Heads of Talent how they measured their own performance. Each had come up with some system of metrics, though several were just beginning to develop these and discuss them with line management. There was a considerable range in the elaborateness of talent metrics. One Head of Talent said: Were a very lean organisation so its easy to follow the people in my pool and get a good sense of whether they are happy or not. Another commented: The CEO can see the value of our work in our leadership presentations, and now theres a waiting list for our development programmes. The CEO doesnt need convincing.

8 Strategic Talent Management: The emergence of a new discipline

Most Heads of Talent feel their companies could do a better job

We asked Heads of Talent to rate their firms overall performance on talent management from 1 to 10. The average overall rating, and the most common, was 6 out of 10. A few felt they were doing very well, but most thought that they could improve: We need to be more joined up, said one, referring to line management. Another manager stressed implementation: Right now Id give us a 3.5 or 4 out of 10. But over the next two years, I expect it to go to an 8. Our plans have huge potential; now its about how we take the ideas and make them happen. Asked to evaluate a set of specific talent practices, Heads of Talent felt Mobility management and Training and development were areas where there was room for improvement (fig 2). Several Heads of Talent reminded us that they operate through line managers, rather than directly, and that metrics should reflect this. I dont want to take credit for someone elses work, said one.

The CEO can see the value of our work in our leadership presentations, and now theres a waiting list for our development programmes. The CEO doesnt need convincing.

figure 2 How Heads of Talent rate their company, by area

To be improved
Compensation & Benefits Individual career management Mobility management Performance management Recruitment Succession planning Training and development

Standard

Good

Excellent

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Part 2 Contradictions, ambiguity and credibility

As we reviewed our research data, we were struck that Heads of Talent operate in an environment of contradictions and significant ambiguity. A few of these contradictions really caught our eye:
Even when they succeed in luring talented managers from other firms, CEOs cannot be sure that the superstars they hire will perform well in their new environment. Research by Boris Groysberg of the Harvard Business School suggests that superstar talent is rarely as portable as we imagine.3 A company hiring a star performer from outside should, on average, expect him or her to underperform, significantly, and for several years, unless steps are taken to quickly and effectively integrate the new executive into the company culture. So it appears that the War for Talent is not over; the battle lines have just changed. Talent management has become more than just acquiring new executives and is increasingly focused on developing, motivating and retaining them. Our work shows a steady trend toward recruiting to the top team from within and organic development of leaders. However, we still see that many companies do not yet have these deep leadership resources to draw upon or prefer to trade in the talent market to meet their needs. Heads of Talent have significant work to do, even in these tough times.

High unemployment and the critical skills gap

The global economic crisis and the huge increase in unemployment have led some to think that talent is readily (and cheaply) available. My CEO sees the recession as a great opportunity to pick better people, but there is a challenge to keep the talent management momentum up and ensure that we match the right people to the right opportunities. Our interviews and Heidrick & Struggles broader work confirm that high quality leadership talent is not easily found. It is true that there is currently a glut of job-seeking graduates, but experienced CFOs, divisional general managers and CEOs remain challenging to secure. In difficult economic times, candidates with good jobs are cautious about changing firms. Companies have to fight hard and pay well for talented managers. The situation is uneven across industries and roles, but many sectors still experience sellers markets for talent. Heads of Talent told us that they are struggling to find executives with the right level of leadership experience and capability. The world seems to be running out of general managers that can run everything P&L, supply chain, talent it appears people are specialising too soon. We also heard that companies are finding it difficult to source talent with commercial savvy, capability around brand building, marketing and brand behaviour. Increasingly, as companies migrate from product to customer centric approaches, Heads of Talent are looking in vain for those with client relationship building skills.

Serving the CEO agenda and the lack of airtime

The drive for improving talent management generally comes from the CEO, who as we identified earlier is looking to increase effectiveness and impact of senior talent on business results. We found that relatively few Heads of Talent (around 17% of our sample) reported directly to the CEO, with the vast majority reporting into the HRD (fig 3). Contact with the CEO and other senior line

3 see Boris Groysberg, Chasing Stars (Princeton, 2010); Heidrick & Struggles and The Economist Intelligence Unit, The Global Talent Index Report: The Outlook to 2015

10 Strategic Talent Management: The emergence of a new discipline

figure 3 Who do you report to within your company (position title)?

HR Director CEO more senior Talent Manager

17 4 3

executives also appeared ad hoc and relatively infrequent. A number of interviewees talked of being around when the CEO or the EXCO were in town or of briefing the CEO before the annual talent update to the board. Those with direct reporting status or strong professional relationships with the CEO felt that visibility gave them an edge in dealing with some of the difficult senior talent issues they faced.

HR or business role
We also found ambiguity around the positioning of talent management, with many suggesting that sitting within the HR function impacted credibility and acceptance by the business. Interviewees told us that engagement was higher where they demonstrated commercial savvy and spoke business rather than HR language. The challenges we face are all internal. Theres a real ambivalence around talent here, the business is just not interested. Others felt that positioning talent in the HR function only served to confuse internal clients: If talent is everywhere and everyone has it whats the difference between Talent Management and HR? Finally having often been asked by the CEO to bring transparency to senior talent management processes, our respondents were surprised that the list of Hi-Pos (high potentials) was a closely guarded secret, sometimes even secret from those on the list. Executives in the top talent pool are critical to the success of the company, but their names are often not known except at the very top. In the next section, we explore ways in which Heads of Talent can learn to navigate this ambiguous environment.

Responsibility without authority

CEOs expect their Head of Talent to create consistency between line divisions, but rarely give them direct authority over hiring, promotion, deployment or retention. They were expected to increase consistency (as well as efficiency and effectiveness across business units) to identify and deliver a more integrated corporate talent strategy. But most of the power in the companies we looked at rests with the line leaders. Our Heads of Talent confirmed this when we asked them what made a successful Head of Talent. Moreover, they told us the winning talent manager operates through influence and suggestion rather than by exercising power. Interpersonal skills were critical we learned, as was the ability to build trust. Heads of Talent explained their need for resilience, tenacity, energy and the ability to deal with setbacks. The Head of Talent must therefore take a lead without formal authority.4

4 for more on leadership without authority, see Ronald Heifetz, Leadership without Easy Answers (Harvard, 1998).

The challenges we face are all internal. Theres a real ambivalence around talent here, the business is just not interested.

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Part 3 Creating the conditions for success

Our interviews suggest that the most successful Head of Talent will take the lead both in defining what success looks like for them and the company and in creating alignment between themselves and their colleagues about their role. Winning Heads of Talent will be diplomats rather than commanders, achieving results through relationships and persuasion. They will forge strong ties with their colleagues in line management, and they will work to link talent strategy with business strategy.
capabilities you have today where youre good and not so good. So, well have to fill out those capabilities. In addition, youll need a different cost structure because your margins are going to start to be squeezed. Lets talk about where you have people and why youve got so many of them in high-cost locations. 5 By taking the lead in this way, the Head of Talent can catalyse a productive discussion about talent in the company, and about the value that the CEO and other executives expect their Head of Talent to contribute. It is worth revisiting this value proposition periodically, to ensure that the company and Head of Talent remain aligned on the value that this role is to deliver.

Achieve alignment around seven key dimensions

Alignment around the Head of Talents expected contribution is critical. Our interviews suggest that it is also important to seek consensus around the ways in which the Head of Talent will work with other executives in the company. The following checklist 7Ps will be helpful in structuring the role of the Head of Talent.

Define your own value proposition

As we noted earlier, there are very few blueprints that companies can rely on when they bring a Head of Talent into the organisation. The winning Head of Talent will therefore take the lead in proposing the value that he or she intends to add to the company, and what it will take to deliver that value. Beth Axelrod was the first Head of Talent appointed by WPP; she is now the global head of HR for eBay. In an interview about her experiences, she explained how such a conversation might begin: Youre trying to drive ad sales from X to Y. You need growth to come in these particular areas. And for the growth to come in these areas, lets talk about the implications for talent and for the organization. Then, lets talk about what

Pressures
How immediate are the companys talent issues? Where are talent problems interfering with corporate performance? Where are the pain points that existing leaders (in HR, in the line, etc.) seem unable to address?

Purpose
Why has the company hired a Head of Talent? What are the problems that they are asking the manager to

5 The challenge of hiring and retaining women: An interview with the head of HR at eBay, McKinsey Quarterly, September 2008.

12 Strategic Talent Management: The emergence of a new discipline

solve? Are they primarily about recruitment, retention, succession? The purpose of a Head of Talent will depend on many things: the companys culture and its traditions, the capabilities already present in HR, and the willingness and ability of line managers to act as talent managers themselves.

companies? There is no right answer here; alignment is what matters.

Pools
Finally, which talent pools will the Head of Talent manage? Some companies divide their pools; one large industrial company for example, has one talent manager for roughly the top 100 and another for the next 250. It is essential that everyone on the top team understands who falls into the Head of Talents portfolio, and what interaction he or she will have with them. Few of our interviewees had responsibility for external pools, a key source of ready now talent. We saw several Heads of Talent use this type of checklist to define the current position of their role and impact and set a plan for the future. In the appendix we offer a template for CEOs and Heads of Talent to use to review the current situation and future goals of their senior talent management strategy.

Person
What skills should the Head of Talent possess? What experience should he or she have? For example, a leading investment bank has regional talent leads (Europe, Asia, and North America) who dont have wholesale banking experience. But the CEO recently decided that the global Head of Talent needed to be deeply rooted in investment banking to facilitate easier communication with people at headquarters.

Profile
What internal and external profile should the talent manager maintain? Our interviewees emphasised the importance of getting around the company, meeting their portfolio executives in person. A CEO who wants such a broad internal profile for the Head of Talent will need to support the executive in gaining access to diaries, key internal business events and even some client facing meetings. The CEO and Head of Talent also need to agree on the right external profile. Some of the Heads of Talent we interviewed have relatively modest external profiles, but communicate widely within their companies.

Operate as a diplomat, well connected to colleagues

With very few exceptions, Heads of Talent operate with little formal power. They succeed or fail primarily through influence and persuasion. The winning Heads of Talent seem to get two things right. First, they get plenty of air time with their colleagues not necessarily the CEO, but certainly the executives who matter. One Head of Talent told us of an open, continuous dialogue with the business in terms of people asking what they need and what I and my team can deliver. Many Heads of Talent meet regularly with line executives to conduct succession and development reviews. This is a role where walking around and talking can be essential to success. Most Heads of Talent had somewhat less frequent access to their CEOs. In many cases, these meetings took place less than once a month, and often with a corporate executive team or executive committee. A formal report to the board or executive committee was often a motivator for meetings between the Head of Talent and CEO. Second, successful Heads of Talent are diplomatic, managing their relationships like politicians. One interviewee said: I have profile with the business heads. I knew it was important to have high impact early on,
Heidrick & Struggles 13

Power
What decision making powers does the company want to invest in its Head of Talent? Will they have veto over senior hiring decisions? Over deployment of leaders in high potential pools? Where will the Head of Talent have to operate through persuasion and where through direct decision making?

Process
Where will the Head of Talent get involved in top executive processes and forums? To clarify, it is often a good idea to pose some challenging scenarios: for instance, suppose that the company wants to take over a smaller competitor. Will the Head of Talent be involved before the deal is agreed? Or will he or she read about it in the newspapers and then be told to help integrate top talent in both

and to build good relationships quickly. Many of our interviewees were quick to distinguish their roles from HR, feeling that not talking like HR gave them more credibility with line managers. All were aware that, in most cases, they were not the decision makers around hiring, retention or reward.

does this imply for these firms growth? How should talent risk impact an oil firms forward investment programme? It is easy for the Head of Talent, concerned with the executives they are responsible for, to develop an inward focus. We encourage Heads of Talent to look forward and outward, as well. The concerns of baby boomer and generation X executives are important, but the future of most companies rests with succeeding generations. These leaders have different views about work, communication and collaboration. A smart Head of Talent will get to know them and look carefully at their needs. The board of any company will be concerned both with implementation of its strategy and with risk to future performance and therefore, the CEO will also be so concerned. Focusing on these issues will help Heads of Talent keep their work directly relevant to the most pressing issues of the company. It will also keep the CEOs door open.

Connectivity linking business and talent strategy

Our interviewees recognised the difficulty, but told us that a strong Head of Talent will find ways to connect talent and business strategy. A few interviewees felt that they were running tightly joined up systems. According to one, Business strategy feeds talent strategy which in turn feeds succession. But the majority reported breaks in the chain linking business strategy and talent strategy, and they saw this as a problem. If we dont connect business and talent strategy, said one of the managers we interviewed, we will be nothing more than a typical HR unit, focusing on activities and not on impact and outcomes. We dont find this result surprising. In company after company, functional leaders finance, IT, marketing, HR struggle to connect their planning with the flow and direction of the business. The task is easier for the older functions; ones that CEOs know how to work and how to lead. For a relatively new area like talent management, line managers often dont know how to take the first steps in aligning it with their business strategies. As we suggested above, the Head of Talent needs to take the lead here. What is the best way to forge a strong connection with company strategy? A good starting point: work backward from the company strategy to the talent requirements it implies. Many global firms are seeing their areas of strongest growth shifting from North America and Western Europe to Asia, the Middle East, Africa and Latin America. What implications does such a shift have for executive talent? What does this imply for senior executive mobility? For leadership development in the company? Another approach we have found helpful is to work forward, looking at talent or leadership risk facing the company. The oil and gas industry, for example, faces a severe shortage of senior engineering leadership, because of demographic shifts and a decline in enrolment in petroleum engineering courses in the past. What risks
14 Strategic Talent Management: The emergence of a new discipline

Conclusion
A new strategic talent discipline is emerging but there remains confusion about the nature, scope and real business impact of leadership talent professionals and functions. Our research suggests that this discipline is in an embryonic state, still developing, working hard to create credibility and traction in the organisation and with critical business leaders. However, the Heads of Talent we met are taking the lead in communicating their value and mission to the business and using their influencing and diplomatic skills to seed change amongst the top population of their companies. They see their role as longterm in nature, aligning business and talent imperatives, drivers of behavioural and cultural change from within. To help improve the focus and impact of these efforts we propose a simple and practical checklist style diagnostic (appendix 3). Our 7Ps (Pressure, Purpose, Person, Profile, Power, Process, and Pools) is intended to help CEOs and Heads of Talent to map out the gap between their long term aims and current reality. Our hope is that it will help create greater clarity around the strategic importance of this key business role and function. I need to make talent meaningful to my colleagues, one Head of Talent told us. We think that this is good advice for every Head of Talent. n

About the survey

A total of 24 people participated in our on-line survey, all of them senior talent management professionals within FTSE 100 companies. To add further depth to these findings we conducted detailed interviews, either face to face or via telephone, with 20 of those respondents. Additionally, we leveraged Heidrick and Struggles network of senior talent executives to conduct more ad hoc and informal discussions around the themes we uncovered. The talent management professionals we spoke with represent a strong cross section of leading players and industry sector listed on the London Stock Exchange. The interviews and study were developed and produced by London based Heidrick & Struggles leadership consultants. We would like to thank all of the Heads of Talent for the time they have spent participating in the research.

If you would like to contribute to the dialogue, contact us at leadershipsolutions@heidrick.com

Annabel Parsons Partner aparsons@heidrick.com Victor Prozesky Partner vprozesky@heidrick.com Caroline Vanovermeire Principal cvanovermeire@heidrick.com Dave Tullett Director Centre for Leadership Innovation dtullett@heidrick.com Rebecca Curran Associate Principal rcurran@heidrick.com Sarah de Corday-Long Associate Principal sdecordaylong@heidrick.com

Heidrick & Struggles 15

Appendix 1 A note on titles

We chose Head of Talent to refer to the top talent management executive in a company. The executives we interviewed have the following titles.
Director of Group Resourcing and Development Director of Group Talent Development Director of Organisational Capabilities Director, Group HR and EHS General Manager Human Resources and Legal Global Director of Organisational Development and Leadership Global Head of Talent, Leadership development and Change Global Learning & Development Director Global Practice Leader Talent Management Global Talent Director Group Head of Talent Group Head of Talent, Resource Development and Resourcing Group Head of Talent Management Group HR Director (2) Head of Leadership Development Head of Leadership, Talent and Learning Head of Resourcing and Development Head of Talent & Development Head of Talent Management Leadership Development Director Senior Talent Manager SVP Global Talent and EMEA Human Resources VP, Talent Management

16 Strategic Talent Management: The emergence of a new discipline

Appendix 2 Responses to our survey

What is the gender of the Head of Talent? (n=24)
33% 67% Male Female

How many years of professional experience do you have? (n=20)

0% 0% 32% 68% 05 years 510 years 1020 years 20+ years

Was your previous role within? (n=20)

85% 15% HR other function

How long have you been with the Company? (n=24)

63% 26% 11% 05 years 510 years 1020 years

Were you recruited externally or internally for this position? (n=20)

50% 50% Externally Internally

How long have you been in this position? (n=24)

33% 46% 21% 02 years 25 years 5+ years

What responsibilities do you encompass regarding the Top Population? (Select all that apply) (n=24)
25% 71% Compensation & Benefits Individual career management (promotions and rotations) 42% 58% 66% 91% 83% Mobility management Performance management (target setting, assessments) Recruitment (head-hunters, on boarding) Succession Planning (people reviews, etc) Training & Development (Corporate University, Development plans)

When did the Head of Talent (or closest equivalent) position first exist in your company? (n=24)
25% 25% 50% 02 years 25 years 5+ years

How many people do you have in your Top Population / Talent Pool? (n=24)
153 average Top Population

Who do you report to within your company (position title)? (n=24)

17% 71% 12% CEO HRD more senior Talent Manager

What is your level of study? (n=20)

40% 40% 10% 10% Degree Masters MBA n/a

Heidrick & Struggles 17

How would you rate your companys performance on talent management? (n=24)
Compensation & Benefits
13% 29% 50% 8% To be improved Standard Good Excellent

How many people report to you? (excluding personal assistant) (n=24)

8 average

What was your career path prior to becoming Head of Talent? (n=24)
90% 10% HR other

Individual career management

21% 33% 33% 13% To be improved Standard Good Excellent

How do you spend your time? (n=24)

3% 10% 4% 7% 9% 24% 22% 21% Compensation & Benefits Individual career management Mobility management Performance management Recruitment Succession planning Training & Development other

Mobility management
42% 33% 25% 0% To be improved Standard Good Excellent

Performance management
17% 17% 66% 0% To be improved Standard Good Excellent

In which industry does your company operate? (n=24)

29% 34% 29% 8% Consumer Industrial Financial Services Pharma

Recruitment
13% 33% 46% 8% To be improved Standard Good Excellent

% may exceed 100 due to roundings

Succession planning
13% 25% 50% 13% To be improved Standard Good Excellent

Training & Development

33% 21% 25% 21% To be improved Standard Good Excellent

18 Strategic Talent Management: The emergence of a new discipline

Appendix 3 Heidrick & Struggles Talent Management Diagnostic

7Ps
Pressure
What are the talent issues that are impacting performance? How are / should these be addressed? What do I need to ensure future success? What have I got today? What will I do to close the gap and keep it closed?

Purpose
What is the main focus of Head of Talent effort? Is it aligned with the key talent issues and the strategy?

Person
What skills and experience are critical to the role? Do these exist?

Profile
What is the internal and external impact of the role/ function? What brand promises exist?

Power
What are the decision rights held by Head of Talent?

Process
Where is Head of Talent involved in top executive processes and forums?

Pools
What is the size and definition of the talent pools? Is Head of Talent responsible for internal and external pools?

Heidrick & Struggles 19

Heidrick & Struggles is the leadership advisory firm providing senior-level executive search and leadership consulting services. For almost 60 years, we have been building deep relationships with the worlds most talented individuals on behalf of the worlds most successful companies. Through the strategic acquisition, development, and retention of talent we help our clients from the most established market giants to the newest market disruptors build winning leadership teams. www.heidrick.com

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