Managing talent in time of slowdown

Handling talent during slowdown

Jan 20 2009

To win in the war for talent, you need to create an ambience of learning, provide opportunities to grow, ensure fairness and, above all, invest in leadership that inspires and infects the team with passion

By Roopen Roy

George Clemenceau had said, “War is too serious a matter to be left to the generals.” Nothing could be more apt in the war for talent. It is too crucial a matter to be left to the human resource function alone. The CEO and the C-suite must be actively involved in the pursuit of talent — in mentoring, nurturing and ensuring the blossoming of outstanding people.

Talent management is a delicate art, which requires passion, dedication and above all an appreciation that outstanding people make all the difference in a competitive environment.

Many CEOs have faith in the assumption that a good HR manager and high compensations are the only keys to talent acquisition and retention. I do not wish to underplay the importance of good compensation and an efficient HR function. But they are foundation attributes. If your compensation structure is poor or your HR is dysfunctional, then you do not even get the opportunity to play the game.

But permission to play the game does not necessarily ensure your win. To win in the war for talent, you need to create an ambience of learning, provide opportunities to grow, ensure fairness and, above all, invest in leadership that inspires and infects the team with passion. Young people like to work in great places, not just good places, and no place can be a great place to work if the CEO and his team are not passionate.

In the talent game, bad talent drives out good talent. Just as outstanding talent needs to be carefully nurtured — poor performers and dead wood must be systematically weeded out. And this is where many leaders and CEOs fail to deliver. Culturally, perhaps, Indian business leaders find it difficult to deliver the message: “Your future is bright, elsewhere” promptly, hu-manely and openly, but without being personal. In many cases, poor performance results not from an innate incompetence of an individual, but because a square peg has been inserted in a round hole. Or perhaps the skill requirements or even the business has changed and the individual has not been able to adapt.

Of course, there are cases of personal problems, attitude or plain lack of ability to perform. Most business leaders find it difficult to grasp the nettle and look at talent in categories. On a scale of 5 — the 1 rater may the people who are outstanding and have great potential to grow. The 2 raters are those who excel in their work and are great performers. The 3 raters are those who meet all expectations. The rater 4s are those whom I call “purgatory” folks — they have to become at least rater 3 next year or slip into rater 5 whom I classify as ETL (encouraged to leave).

In companies, which employ thousands of people and where there are a large number of managers who evaluate it is often difficult to implement a consistent and fair system across divisions and geographies unless uniform evaluation methods are employed and some kind of “force fitting” technique is used to classify the ratings of people. For example, the company may decide that only the top 15% only can be 1 — rater, next 20% and 50% can be 2 and 3 raters, respectively. Of the balance 10% can be 4 raters and the bottom 5% are 5 raters who need to be counseled out. GE and Jack Welch were strong proponents of pruning year after year consistently — come rain, come shine and, ironically, it is one of the tried and tested techniques of retaining your best talent.

Companies which are over-managed and under-led usually do not have a fair and consistent way of moderating the rating process and are fearful of putting in place an appeals mechanism. But “normalising” or “moderating” across divisions, business units and geographies is key to consistency and an appeals process is crucial to ensure fairness.

In times of economic slowdown and turbulence, the core values of a company are usually put to severe test. Some companies mindlessly reduce headcount to curtail costs and often do it in an insensitive and clumsy way.

If the revenues are in jeopardy, it is only natural that the management would seek to reduce costs and adopt reduction-in-force (RIF) options. But care must be taken to preserve the core of the talent pool. Constant and candid communications are of great importance.

In stressful times, owing to economic slowdown or even brand dilution, the leaders must put their arms around their best people and tell them the true story.

If sacrifices are to be made, costs are to be cut and economies driven — the leadership must take a fair share of it to set an example.

The worst decision a company could take is to provide generous bonuses to the generals, while reducing the compensation and headcount of the foot soldiers and the cavalry.

If that happens it would justify J K Galbraith’s cynical view: “The salary of the chief executive of a large corporation is not a market award for achievement. It is frequently in the nature of a warm personal gesture by the individual to himself.” Talking the walk is the worst posture of the leadership in times of stress and slowdown.