Talent Management: Preventing the Loss of Key Talent

 Preventing the Loss of Key Talent, Talent Management, Turnover  Comments Off on Talent Management: Preventing the Loss of Key Talent
May 022012

Talent Management: Preventing the Loss of Key Talent

Talent Management: By Edward E. Lawler III , 4/26/2012, Via Forbes Magazine 

The economy is getting stronger, and as a result, more and more individuals are looking for better jobs. A recent survey by Lloyds found that executives believe a talent shortage is the number two risk facing business today, up from twenty-second place in 2009. There is no doubt that organizations need to increase their focus on retaining the right talent and creating systems that encourage their talent to develop the right skills.   By making the right moves today, organizations can greatly reduce the risk of losing top talent and assure that they will be able to respond effectively to the business opportunities a recovering economy offers.

What should companies do? Should they return to their pre-recession approach to talent management or significantly change the way they manage talent? I think it is a great time for organizations to adopt a new approach to talent management. It is definitely not time to go back to business as usual. All too often the talent management practices and the overall HR practices of organizations have made them rigid and unable to respond to significant changes in the business environment. Witness the problems that most organizations had adjusting to the recession. Witness also the problems they have had adjusting to disruptive technologies and changes in customer preferences.

As one CEO said to me about his HR department and their approach to talent management, “I call HR the ‘BPU’.”  Needless to say, I followed up by asking him what BPU stood for. His response was “Business Prevention Unit.” He went on to add, “Every time I ask HR if I can make a change, they tell me about the problems it will create and throw cold water on the idea of altering our talent management approach.” He also complained that they go on to advocate such things as treating everyone the same and promising long-term career development opportunities to individuals in order to assure fairness and retention.

The problem with the traditional approach to talent management is that it creates an inflexible, difficult to change organization. It makes it hard to change the competencies and capabilities of the organization when it needs to change its products and services. All too often, talent management policies and practices become BCPP, that is “Business Change Prevention Policies,” and HR functions become the CPU, the “Change Prevention Unit.”

What kind of practices do organizations need to adopt in order to increase their agility and position them well to profit from the recovery?  In order to be more agile, they need to adopt talent management practices that allow them to change the skill set of their employees and motivate them to change their behavior. They should not be adopting practices that are focused on retention. The key practices that will accomplish great agility include abandoning the traditional job description approach to talent management and adopting a skill based pay system that includes pay for skills and skill acquisition. A market pricing approach is needed that will reflect the individual’s value in the market, not his or her job’s value in the market. Skill based pay does a much better job than paying according to “what their job is worth” of retaining those individuals who are critical to the organizations skill needs. Jobs don’t have a worth; individuals do, and at a time of economic expansion it is particularly important that individuals be paid what they are worth in the market.

How about long-term employment relationships and job security? It is time to accept the fact that job security is not something that most organizations can promise or should promise. Individuals should be given realistic security commitments and accurate information about their continued employment but they should not be given some vision of “tenure.” To be specific, they should be told that as long as they perform at a high level and their skills are needed by the organization, they will have a job. They should, of course, be given information about the type of skills the organization needs and the need the organization has for agility and change. Promising individuals a job regardless of what happens to the business environment is the wrong practice. It does nothing to encourage people to change and ultimately in a rapidly changing world proves to be a key change prevention factor.

Overall, the future belongs to organizations that can manage a flexible, motivated work force. This can only be accomplished by policies and practices that encourage talent to be agile while motivating them to perform well. Going back to the pre-recession policies that dominated large corporations won’t accomplish it. New practices are needed, and now is the right time to implement them.



Edward E. Lawler III is a distinguished professor of business at theUniversity of Southern California (USC) Marshall School ofBusiness and founder/director of the University’s Center for Effective Organizations (CEO), one of the country’s leading management research organizations. He’s authored more than 40 books, including his most recent –- Management Reset: Organizing for Sustainable Effectiveness(Jossey-Bass, March 2011).


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