The talent management challenges of industry

Insight shared by:

Kiddy & Partners

Across multiple sectors globally, 43% of firms attribute their failure to achieve key financial targets to ineffective human capital management. Furthermore, rapid change in industries, markets, and customer expectations across many sectors has created a gap between many employees’ current capability and the job demands facing them.

Rapid technological progress means that skill sets can become rapidly outdated, a situation that is particularly problematic where competitive edge depends on employees embracing new technology. This presents a number of challenges for HR, Talent, and L&D specialists, and given the pace of change, existing management development research, knowledge, and practices may be inadequate to address them. 

Fresh approaches are needed in talent management, and few industries face tougher challenges than engineering, an industry beleaguered with talent problems old and new: a skills shortage that shows no signs of abating and now a rapidly changing technology, which threatens to outpace any organisation’s change capacity.

This article outlines a number of valuable talent management lessons identified by Kiddy’s research into the talent management challenges facing HR Directors and Heads of Talent in engineering-led organisations.

Future-proof your talent development strategy

No industry is unaffected by technological change, and given the current rate of progress, skill sets can become rapidly outdated. Subsequently, many firms are finding that employees are ill-equipped to face the rapidly changing demands of their industry. In the case of engineering, for example, it is argued that the degree curricula have failed to keep up with the pace of change in the industry and in the nature of client demands, creating a distinct lack of work readiness amongst new recruits. Interviewees in Kiddy research identified that:

“There’s a 2 year period between a grad coming in before they become fully productive.”

With intensifying competition, firms can’t afford this. Most employers experiencing skill shortages experience a direct financial impact through either loss of business to competitors, or increased operating costs. This places an onus on HR, Talent, and L&D professionals to design future-proofed development strategies.

An example of a firm taking steps to future-proof their talent pipeline is Zurich Insurance, where business leaders have created role profiles for the next 3-5 years, taking into account industry trends, regulatory trends, data, technology, and other relevant influences. These profiles have then been used as the foundation for building the right talent pipelines for taking their business forwards.

Ensure that you engage the ‘magnificent middle’

Our research identified growing divisions between the ‘HiPo’ or ‘emerging leader’ population, on whom the majority of talent development investment is typically focused, and the longer-tenured middle-manager group. In the words of one interviewee:

“It comes down to the new guard, old guard… There is something about educating some of the older population. There’s a mindset chasm between the two.”

In addition, research reveals a dramatic decline in engagement among middle managers in comparison to both the team members below them in the hierarchy and the managers at the top. Those in the middle also suffer higher rates of depression and anxiety than those at the top or bottom. Concerning, since middle managers are a critical group in terms of employee engagement and overall performance.

Not only does the middle manager population present a neglected group in terms of their own development, but if not integrated into the talent management and development process, there’s a risk that the middle manager population becomes a barrier to maximising investment in up and coming talent. Managers are key enablers of talent mobility, which is essential in order to maximise human capital in a changing environment and flex resource to where it’s needed. As described by one interviewee:

“There is something about educating some of the older population… break through that myopic mindset and cut across all that protectionism that exists. Instead, recognising that for the good of that individual, for the good of the organisation, we’re going to facilitate a move from there to there, and it’s going to happen in the next 6 months.”

There can be a clash in expectations between longer-tenured employees and new entrants regarding issues like career development and pace of progression. As identified by this interviewee:

“Retention and career development is problematic. Very senior people in our business will typically have been here for 30 years or more, with a mindset around development influenced only by their own experience… slow and steady career development. The expectations of people coming into the industry are very different now and we have this cultural gap where senior people do not understand the challenge.”

Our research also identified this clash in expectations as a potential barrier to cross-functional talent mobility, a fairly unfamiliar concept for many senior managers and leaders in the sector whose own career trajectory had typically been progression via the traditional ladder route within a single technical specialism. However, the growing need for cross-functional collaboration in many sectors, plus the pace of change in terms of areas where resource is needed, demands greater cross-functional talent mobility. Since managers are a key enabler of internal talent mobility, this is a clash that cannot be ignored. Unfamiliarity, or a lack of buy-in regarding the importance of cross-functional talent mobility leads to talent hoarding, and ultimately, a failure to maximise the human capital within your organisation.

Shift managers’ mindsets from short-term to long-term resource planning

Our research revealed that often, managers prioritise current performance over longer-term talent development: “The day to day ‘we need to get it over the line’ tends to trump the longer term view.”

Perhaps fuelled by resource pressures, our research identified a general reluctance of managers to provide stretch opportunities to less experienced employees. Instead, the safe delivery of projects in the immediate-term is prioritised above attempts to develop employees’ capability for the longer-term benefit.

This is a key limitation affecting the health of prospective talent pipelines; one that both exacerbates and is exacerbated by the talent shortage, making it a difficult cycle to break. In the words of one of our interviewees:

“Getting people to think beyond the next deadline, beyond the next quarter, to think more strategically, and risk assure the business in that length of time… we can be particularly short sighted, focused on the next quarter to the detriment of other things.”

Having used key stretch assignments for many years to help strengthen their talent pipelines and succession planning process, Procter & Gamble provide a useful counter example. High potential employees move through a portfolio of senior-level jobs that are categorized according to strategic challenges, size of the business, and complexity of the market. Most managers are placed on important multifunctional task forces or project teams that are expected to challenge them, with mentor or management support provided to help make it a rich developmental experience. People and positions are then tracked, making in-house talent visible to business leaders, and every country, function and business is assessed for its capacity to find, develop, deploy, engage, and retain skilled people.

Questions to consider:

  1. To what extent do others in your organisation - the CEO, line managers, divisional heads, etc. – consider themselves as personally responsible for succession planning, employee development & career progression?
  2. How much visibility is there of talent needs and current capability levels across organisational boundaries?
  3. How effectively does resource flow – between roles, units and levels – to get talent to the right places at the right times?
  4. What are the short term and long term incentives (formal and informal) for managers in enabling talent mobility?

Recommendations for HR practitioners

To succeed in a rapidly changing environment, an organisation’s response to talent management must equally be transformed. The quality of its human capital and the way it manages its talent pipeline are critical in determining an organisation’s fate in this environment, presenting HR the opportunity to play a significant role, by overhauling their talent pipeline and maximising the value of human capital within it.

HR must ensure their approach to talent management is robust. Selection and development must to be refocused around a vigorous and future-focused understanding of the competencies need across your business moving forwards, aligned to your business strategy, and anchored into the values and behaviours consistent with your desired culture. By identifying the core capabilities needed to achieve the business strategy, and comparing this against current capability, a talent supply chain approach allows organisations to make informed “make and buy” decisions to determine what can be “made” in-house through development and what must be “bought” from potential partners through recruitment.

To enable this, HR has a responsibility to provide accurate data and insightful interpretation about who they’ve got, where, and how this capability compares to both current and anticipated business needs. Without rigorous assessment against those capabilities, firms can’t make effective decisions on human capital management.

Given the importance of maximising human capital in a tight talent environment and reducing the work-readiness lag, presents an important opportunity for enhancing organisational performance. New joiners must be supported effectively to accelerate their work-readiness on entering your business.

We recommend Fast-boarding, a high pressure, high paced induction process which uses tailored assessment data to streamline the entire process for speed and efficiency. An integrated assessment and development process identifies the precise development needs which will enable each individual to accelerate their performance, and immersive experiences such as bespoke simulations fast-track development of relevant capability. Employees are equipped with the mindset and skillsets required to become rapid learners, enabling them to respond and adapt to future changes. In addition, we help new recruits to understand your organisation’s culture, how to operate effectively within it, and how they can contribute to shaping the culture in line with shared values.

Finally, organisations wanting to make a marked improvement to their talent pipelines must recognise the talent challenge as an organisational change challenge. Managers, as key change agents, must be engaged in this process. Managers need to be brought in line with a system that looks across the entire business. They need educating in the benefits, to them and the whole firm, of providing people with more broad-based experience. They need to be rewarded for active and constructive participation in talent reviews and development planning. And, at the limit, there need to be sanctions imposed when it is clear that a business is hoarding talent or obstructing career moves that would benefit the business and the individual.

How can organisations move towards a more proactive approach to talent management?

  1. Be proactive, ensure that talent development is closely aligned not only to current, but also future, business needs
  2. Identify appropriately stretching opportunities which will help employees to develop their capability in line with current and future business needs
  3. Ensure that sufficient scaffolding is in place to support employees, following a ‘fail safe’ philosophy by having regular monitoring and review points in place to provide an appropriate safety net