Training and development: talent management

The unremitting change that has affected the financial services industry in
recent years shows no sign of abating. Compliance has become the industry
watchword over the past decade, following a spate of high profile collapses.
Sarbanes-Oxley and similar legislation has placed enormous pressure on
companies, not only to comply with immensely complicated rules and regulations,
but to provide faultless transparency as they do so.

Regulatory compliance aside, the challenges that have faced financial markets
are many and fundamental, including major deregulation, relentless
globalisation, intensifying competition and steadily declining customer loyalty.
Fortunately there are things your company can do on the people side that make
the difference between mediocre and high-performance.

Credit Suisse recently reported that family-owned companies generate superior
returns and higher profitability than listed companies. Since 1996 their stocks
have outperformed their peers by 8% a year. There are three key reasons for this
superior performance. First, most families intend to pass their holdings to
their children, promoting a long-term strategic focus, rather than an obsession
with the next quarterly results. Second, they tend to avoid costly acquisitions,
extensive use of leverage, and trendy short-term strategies. Third, there is a
better alignment between management and shareholder interests.

Corporate credibility

This may explain the rise of private equity as corporations look to emulate
their success. But with the credibility of the corporate world at stake and
against this background we want to look at what high performance is and how it
can be achieved.

The annual Fortune study ‘The world’s most admired companies’ surveys 16,000
senior executives and directors, along with financial analysts, to identify the
companies that enjoy the strongest reputations within their industries and
across industries.

The survey, conducted by Hay Group, uses nine attributes of reputation to
determine the rankings: quality of products or services; wise use of corporate
assets; financial soundness; long-term investment value; ability to attract and
retain talented people; quality of management; social responsibility to the
community and environment; effectiveness in doing business globally and,
finally, innovativeness.

The first four Fortune attributes focus on what a business successfully
delivers in terms of quality of products and services and financial results.
Predominantly it is about business performance and results. Five out of the nine
Fortune attributes have to do with the people side of the business. These five
attributes account for a substantial part of the factors that determine the
world’s most admired companies and indeed high performance businesses.

When it comes to best practices, ‘most admired companies’ spread the
responsibility for developing people across all lines of business and share it
with line managers. The percentage of time managers at these companies report
spending on the management and development of people is much higher. We are
convinced talent development is one of the core leadership functions that can’t
be delegated.

Even with the current move toward “flattened” organisations, hiring the right
people for the right jobs, and then making sure you keep them and move them
forward in their careers, is critical. Companies need capable humans who are
thoughtful, who understand how to work with others and who have maturity and
emotional intelligence, qualities that are more difficult to develop.

We have seen a growing tendency in the corporate world to respond to business
upheaval ­ rapid change, globalisation, new technologies ­ by turning to
conventional leadership and management methods. Many leaders attempt to manage
this increasing complexity through ‘clear’ and ‘strong’ leadership from the top
and simplified top-down approaches. In today’s world many will fail.

Shared vision

Instead leaders should ensure engagement of people at all levels through a
shared vision. In such an environment leaders do three things. The first is that
they connect through trust.

They are aware that they have to build credit on their trust account before
they can spend any. The second is they align through meaning. They talk with
individuals about their purposes and how those individual purposes can be met
with the purpose of the organisation. In that way they align the real
organisation with the formal organisation. The third is that they sustain
through dialogue. They tell stories instead of being propogandists.

To maintain and develop a competitive position in the accountancy market,
leadership should not respond to increasing pressures and complexity by creating
more detailed rules and procedures or job descriptions. More importantly,
leadership should see it as their key task to create and nurture organisations.
In this way human capital and talent is given the space to manoeuvre quickly
when action is required to grasp new business opportunities and people are
empowered to respond to challenges since they know best what is required for
successfully managing them in their day-to-day work.

The role of leadership is to ensure that everyone understands the direction
the organisation wants to go and that people are engaged, not just with their
mind, but also with their heart. This combination will bring renewed energy and
will create sustainable competitive advantages.

Talent strategies for high performance

• Organisational change and restructuring – transform organisational
structures, leaving them better placed to face the opportunities and threats
posed by a rapidly evolving market

• Customer service – make call centre management more effective and improve
the capabilities of the people managing and working in them

• Leadership transformation – deepen organisations’ understanding of the
leadership capabilities required to make them market leaders, and implement
programmes to develop these attributes

• Talent development – create talent and career development processes to
enable companies to nurture talent for the challenges of the future as well as
the present

• Ethics – address the challenge of operating in a way that is both
performance oriented and ethical at the same time – a critical pressure in the
current industry climate

• Remuneration – have strategies to link remuneration to performance, and
satisfy the need for employee motivation in a way that will stand up to scrutiny
from the public and shareholders alike

• Role evaluation – organisations need to understand the huge changes the
industry is experiencing, and their impact on role accountability and career
development

High Performance Business Strategy, by Ap Eigenhuis and
Rob van Dijk, is published by Kogan Page, www.kogan-page.co.uk,
£35