Top 10 keys to corporate talent development
As we emerge from the longest recession in our nation’s history, America’s corporate boards of directors are hard at work navigating the challenges to achieve, growth, profitability, sustainability and trust.
Boards know that having the right team of executives is critical to a successful strategy; however, the talent pool of executives, who can help accomplish those goals, is declining for the first time in decades. At the same time, in many industries, more than half of a company’s expenses now relate to personnel. Those two reasons alone are motives for companies to develop strategies to ensure that they recruit and develop the best talent available.
The National Association of Corporate Directors (NACD) is stepping up its efforts to research problems facing companies and their boardrooms and to develop solutions through its elite Blue Ribbon Commission (BRC) reports. Its most recent BRC report, Talent Development: A Boardroom Imperative, goes well beyond the traditional board disciplines of corporate governance, compliance, risk management and executive oversight to bring useful advice to address what is perhaps the most important criteria for a company’s success: getting the “right people on the bus.”
In an era where recession has prevented potential talent from being discovered and developed quickly and effectively, this BRC addresses the issue with its tested and proven methodology using peer-to-peer research channels within its national membership bench to dig deeper into this area of strategic imperative. This level of best practices R&D would be prohibitive for companies to identify and implement on their own.
Although the 28-page BRC report contains detail and tactics, its “Top 10 Imperatives for Effective Oversight of Talent Development” provides a great snapshot of where boards can start in their quest to ensure their companies are well positioned to create sustainable growth and competitive advantage:
- To meet future challenges, successful organizations establish multi-year, multi-level internal pipelines of talent. It is vital that the board recognizes that talent, strategy and risk are inexorably linked.
- Oversight of the company’s talent development efforts should be a full board responsibility, with the actual planning and execution owned by management. The standing board committees can oversee the talent development associated with their respective areas of oversight.
- The full board should view human capital through the lens of strategy and risk, with committees providing input to the board on talent development in their respective areas as appropriate. In addition to reviewing the talent factor related to every strategic initiative, the board agenda should allocate time – at least annually – to take a deep dive into human capital development.
- Directors should request that management provide a talent component in every strategic initiative presented to the board. Just as an institution is built on the flow of talent upward and across the organization, oversight can be viewed as cascading downward. The talent discussion must be ongoing and supported by a variety of metrics.
- To ensure that talent receives the necessary time and focus, boards should consider drafting talent oversight and succession planning into official corporate documents such as corporate governance guidelines, board and committee charters or proxy statements.
- The company’s hiring philosophy, employee retention and incentive programs, and corporate culture should all align to support a robust talent pipeline and long-term talent strategy. Company size and stage of growth are critical factors in establishing a hiring philosophy as smaller companies may find it more challenging to rely on the same hiring strategy as larger companies.
- On-boarding programs are necessary for all employees, whether they are internal promotions or external hires. Mentoring programs can provide critical support and nurture employee development.
- The Human Resources function should serve as a strategic architect for talent development – supporting business units and functions in the development of their respective talent pipelines. The relationship between the board and the Chief HR Officer or other leader needs to be strong and based upon candor and accountability.
- CEO succession planning should be a continuous and rigorous process; the board should begin identifying potential successors soon after a new CEO is selected. While the average CEO tenure is currently about five years, the board should view succession planning as continuous, rather than dedicated to an expected transition.
- Third-party perspectives can help the board ensure objective CEO succession. Board oversight of this process needs to go beyond organizational charts and dashboards that are often subject to political and emotional issues, which can become blind spots for directors.
“Since our chapter was formed a decade ago, the deep research and reporting conducted by NACD’s Blue Ribbon Commissions result in educational programming and publications that continuously benefit our directors in Colorado,” says Bill Heck, NACD-Colorado Chapter President and principal of the Harlon Group, a performance and compensation consultancy. “Talent management, in particular, is the latest area where our corporate boards must push the envelope and move ahead of the curve in support of finding the right people at all levels of management. This goes beyond CEO and other C-suite succession to include developing key players throughout the organization in this new era of global channels, social media and digitalization.”
This new report and its recommended methodologies to develop talent will increase the odds for success of Colorado companies as they compete for finding the agility and skills needed in the talent pool existing in today’s environment. In the final analysis, a company’s success depends on people.