Risks of One Horse Talent Management Strategies

Succession Planning conventional thought will argue that you need to develop an internal pipeline of future talent. Period. A recent article in the national Post (22 Dec. 2010, page FP13, titled: Succession Planning Now for the Tighter Labour market Ahead) outlines this conventional leadership talent management strategic approach:

“Inasmuch as employers can start to identify which individuals might move into which particular roles in the future, the more likely they are to constrict or shorten that timeline.”

A couple of key issues jump out for me:

  1. Implicit assumption that roles are more constant (they are not and this is acknowledged later in the article)
  2. Explicit focus on relying on internal employees to meet future succession needs (the risks of a one source based strategy I have outlined elsewhere)
  3. Being intentional enables organizations to shorten the “getting ready” efforts (I completely agree this is easier to accomplish)

Later in the article:

“Ongoing training and development helps keep the talent pipeline moving and ensures there is a competent pool of employees to promote from within.”

What jumps out for me includes:

  1. Explicit assumption that keeping the system moving takes investment (t&d) only. Makes no sense at all. A system requires inputs AND outputs. So either the the pipeline is a continuous 1 to 1 (supply and demand – highly unlikely). Or, you will always have suitable matches to needs as they arise (I also find this unlikely too – life is never this neat).
  2. The organization has the capacity to create and sustain “pools”. I find this requirement more difficult for smaller organizations (they don’t have the numbers of positions and their economics often mean they have tighter financial constraints regarding supernumerary (surplus/reserve) positions.
  3. Most training and development efforts are wasted (more politely – have limited demonstrated ROI). Where they are done more successfully, they are applied to more strategic roles because the stress is on development through various leadership/business experiences accomplished with special assignments, and transfers into different roles. Most organizations are “tight ships” in that they have minimized the number of leadership roles, so any movement of incumbents outside of attrition can be felt on the bottom line because you will have a leadership group that is less than optimum from a operational performance perspective.

As a matter of principle, I recommend that clients when dealing with important TM issues have three strategies in place. The first is the core strategy that we believe will meet our needs most of the time. The second and third strategies are operationalized (i.e., in-use, not, on-the-shelf) contingent strategies that we can ramp up and down/dynamically change our reliance on to meet our gaps in capacity. Why do I have this principle?

  1. I do not believe it is prudent to rely on a singular approach when dealing with issues that have significant underlying uncertainties and risks. People issues have these underlying U&R. First we do not own people – we lease access to their abilities, regardless of the commercial arrangement (employees – contracting – purchase goods and services).
  2. People have their own priorities and these can be counter to the organization’s at surprising and sometimes awkward times.
  3. Having the ability to the on hand ability to look to another option can be a real blessing when surprises happen.
  4. Having the core strategy account for about our estimated 80% TM need provides some protection us from over investment risks (i.e., having to lay people off)
  5. Having two operationalized contingent strategies builds greater variability in our TM cost structures which can be welcomed when the organization hits business activity storms.

Clients don’t always choose to agree with my principle, but when they make the choice they are more aware of the U&R trade-offs they are making. What I find disheartening is clients are lead to the belief that there is only one really sound way to meet their TM needs (apart from doing nothing and hoping for the best). This is a real disservice when the organization’s HR and/or TM consultants encourage this “One-Horse” strategy.

Larger organizations have greater capacity to implement and rely on the One-Horse TM strategy, what about smaller organizations? In my mind this conventional approach is not a good strategic fit in terms of capacity (places to do the development) and is more disruptive operationally which has the more possible impact on cash flow. Cash flow is critical in that if you can’t meet your current commitments you go bankrupt.

The question then becomes: What TM strategic approach would make more sense for smaller organizations?

The answer lies outside the organization, i.e., outside talent markets. By definition, organizations have less control over that which lies outside of their organizational system boundaries. Not having control is not the same as having no influence.  Not having influence is not the same as being a “victim in waiting”. The TM strategy for smaller organizations is to economically use their limited influence to succeed in meeting their TM needs.

It may seem like a dilemma, but I believe smaller organizations have more degrees of freedom to meet their TM needs because they have greater limits on meeting these needs internally.

I would be interested in your thoughts on this.

Final thoughts on the One-Horse TM strategy: When done well in the appropriate context this can be an incredibly robust strategy. Most of my TM work has been helping clients accomplish this outcome.


    About 123stilllearning456

    As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
    This entry was posted in Decison Making, Risk & Uncertainty, Talent Manangement. Bookmark the permalink.

    2 Responses to Risks of One Horse Talent Management Strategies

    1. I love browsing your website because you can constantly bring us new and awesome stuff, I think that I should at least say a thank you for your hard work.

      – Henry

      • Thank you. Part of what I try to do is to look at longstanding issues from a somewhat novel perspective. Right or wrong, this can be helpful to us to see possibilities that we couldn’t see before.

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