Talent management now features prominently on the CEO's agenda, according to a white paper by the Economist Intelligence Unit, in co-operation with Development Dimensions International (DDI), a global human resources consulting firm. Once only of concern to human resources (HR) departments, it is now among CEOs' most pressing responsibilities, taking more than 20% of their time. The overall view is summed up by Tom Wilson of US insurance giant Allstate Corp.: "The most important thing I have to worry about is people."
Leaders of large business organisations are more responsible than ever for talent management, although their actions are not necessarily guided by an overarching strategy, the research suggests. They are spending as much as half their time spotting, preparing and monitoring promising executives, and in many cases, participating directly in development activities, such as mentoring and teaching leadership skills. They are convinced of the ties between strong talent management and their financial success although they have moved beyond attempting to quantify these precisely. "Our ultimate financial results are a reflection of the success or lack thereof of our development programme," says William Hawkins, COO of Medtronic. "At the end of the day, what differentiates us from some of our competitors is the quality and capabilities of our people."
"Top executives now consider talent management one of their highest priorities," says Nigel Holloway, research director, Americas, at the Economist Intelligence Unit. "They are motivated to develop great executives because of the competitive advantage it brings to their companies."
"The findings underscore that it is no longer a case of whether talent management is on the Board agenda, but ensuring the CEO receives adequate strategic support in tackling the issue. This shift in focus provides an opportunity for HR VPs to get closer to the CEO and be an essential contributor at Board level," says Matt Paese, VP Executive Solutions at DDI. "CEOs spend substantial time on activities to build leadership capability, but HR's role is to connect these in a coherent strategy based on business needs."
Among the key findings:
* Seven of the 20 executives interviewed spend at least 30% of their time on talent management and another eight estimated their commitment to be at least 20%.
* Although the executives interviewed engage in talent development activities and succession planning, much of their involvement is ad hoc and does not stem from a formal plan explicitly linked to corporate goals.
* While they say that strong talent management leads to improved financial performance, they do not measure return on investment explicitly.
* All the executives interviewed write formal evaluations of the people who report directly to them, usually half a dozen senior managers. They say that performance reviews are a key part of their companies' approach to talent management, ensuring their organisations identify the best candidates and spot weaknesses in their executive pipeline.
* Most of them evaluate leader behaviour as well as results, and some look for other opportunities to spot potential early.
* Many help promising executives develop their skills by providing coaching or mentoring through promotions and important work projects.
* A few firms use formal assessments to determine leaders' readiness for future jobs and as the basis for a targeted approach to personal development.
About the Research
The EIU interviewed 18 chief executive officers and two chief operating officers from major publicly traded and privately held firms in four months through April 2006. The organisations cover 10 countries, including the U.S., the UK, France, Japan, China and Australia and cover a wide range of sectors. Most of them generate at least $1 billion in annual revenue.
The interviewees included Michael Critelli, the CEO of Pitney Bowes and John Swainson, the CEO of CA (formerly Computer Associates).
About the Economist Intelligence Unit
The Economist Intelligence Unit, the business information arm of The Economist Group, publisher of The Economist, is the world's leading provider of country intelligence, with over 500,000 customers in corporations, banks, universities and government institutions. Our mission is to help companies do better business by providing timely, reliable and impartial analysis on market trends and business strategies.
About Development Dimensions International
DDI specialises in helping multinational organisations develop and execute leadership strategies at all levels, and works with many of the world's top companies including Toyota, Shell, Citigroup, Philips and Novartis.
The CEO's role in talent management: How top executives from ten countries are nurturing the leaders of tomorrow
is available free of charge at http://www.eiu.com/TalentManagementCEO