Talent management improves business results
McKinsey & Company have executed a global survey with the outcome that talent management improves business results.
According to respondents, organisations with effective talent management programmes have a better chance of outperforming competitors than other companies.
The survey also tried to identify specific practices that are an indication of a successful talent management strategy. There is no one-size-fits-all approach but the survey results reveal three common practices that have a positive impact on the overall effectiveness of talent management. And as a result, on organisational performance.
Number one is rapid allocation of talent, number two the HR function’s involvement in fostering a positive employee experience, and the third, a strategically minded HR team. The survey results also point to underlying actions that any organisation can take to cultivate these practices.
1 Rapid allocation of talent
39%of respondents say their organisations are fast or very fast at reallocating talent as strategic priorities arise and dissolve. This practice leads to a 1.4 times greater likelihood of outperformance. To allocate talent more quickly, the survey results indicate three specific actions that meaningfully correlate with the practice.
The first of these is the effective deployment of talent based on the skills needed, which has a direct impact on the speed of allocation. Second is executive-team involvement in talent management. And third, organisations where employees work in small, cross-functional teams are more likely than others to allocate talent quickly.
2 HR’s involvement in employee experience
37% of respondents say that their organisations’ HR functions facilitate a positive employee experience. But those who do are 1.3 times more likely than other respondents to report organisational outperformance.
A couple of key actions underlie the HR function’s ability to ensure better employee experiences. One is quickly assembling teams of HR experts from various parts of the function to address business priorities. 24% of respondents say their organisations employ this characteristic of an agile HR operating model, and they are three times likelier than other respondents to report a positive employee experience. Second is deploying talent and skills in a way that supports the organisation’s overall strategy. One-third of all respondents say their organisations’ HR business partners are effective at linking talent with strategy in this way, and those who do are over three times more likely than other respondents to say the HR team facilitates positive employee experiences.
3 Strategic HR teams
The third practice of effective talent management is an HR team with a comprehensive understanding of the organisation’s strategy and business priorities. When respondents say their organisations have a strategy-minded HR team, they are 1.4 times more likely to report outperforming competitors. Also, they are 2.5 times more likely to report the effective management of talent.
The factor that most supports this practice is cross-functional experience. When HR leaders have experience in other functions, including experience as line managers, they are 1.8 times more likely to have a comprehensive understanding of strategy and business priorities. Also important is close collaboration among the organisation’s chief HR officer, CEO, and CFO. Fewer than half of all respondents say those executives work together very closely at their organisations. However, those who do are 1.7 times likelier to report a strategy-minded HR function.
The findings also point to the importance of transparency with all employees about strategy and business objectives. Respondents who say their organisations’ employees understand the overall strategy are twice as likely to say their HR team has a comprehensive understanding of the strategy.
Effective talent management and the practices that best support it contributes to a company’s performance. Rapid allocation of talent, the HR function’s involvement in fostering positive employee experience, and a strategic HR function have the greatest impact on a talent-management program’s effectiveness.