The Talent Management Conundrum "to Grow or Buy"

1. By Bill Synnot Director, Aurora Consulting Group 18th floor, 300 Queen St., Brisbane, Qld mobile: 0418 196 707 fax: 07 3399 7041 email: bsa@rpl.com.au The Talent Management Conundrum"to Grow or Buy" As part of Local Government Association of Queensland HR Conference entitled “…workforce planning - vital for ensuring relevant, contemporary and capable workforce…”

2. Overview • Introduction, ie definition of talent • Global trends • Organisational trends • Talent, ie its organisational importance • Perceptions of local government • Generational issues Presentation Local Govt Qld Feb 2004a

3. (Overview cont,) • Strategies to handle talent management • Mentoring • Succession planning • Summary • References and acknowledgments Presentation Local Govt Qld Feb 2004a

4. Introduction With the rapidly changing, turbulent world environment, organisations are faced with many choices for investing in the workforce to best meet their emerging needs Some choices include • Enhance the capabilities of your existing workforce and/or • Attract the most suitable people from outside and/or • Use outsourcing to handle emerging needs and/or • Use shared services with other organisations Presentation Local Govt Qld Feb 2004a

5. The discussion in an ideal world could revolve around which is the most • Effective (right thing to do) • Efficient (doing things right) • Equitable (fairness) Unfortunately, other factors like politics, personalities, etc interfere Presentation Local Govt Qld Feb 2004a

6. Definition of Talent "... the sum of a person's ability - intrinsic gifts (skills, knowledge, experience, intelligence, judgment, attitudes, character and drive). Also, the ability to learn and grow...... great talent management isn't about great HR processes..." Ed Michaels, Helen Handfield & Beth Axelod, War of Talent, as quoted by Melissa Montomery, 2003 Presentation Local Govt Qld Feb 2004a

7. Some “Big Picture” Trends (not fads) • Impact upon Talent Management of - Localisation v. Globalisation - Scarce v. Abundant Resources - Economic short-termism v. Sustainable Development - Materialism v. Spiritualism Presentation Local Govt Qld Feb 2004a

8. (Some “Big Picture” Issues or Trends (not fads) – cont.) - Administration/Management v. Leadership - Changing Demographics (age, gender, etc) - Industrial Worker v. Knowledge Worker • Social Cohesion (sources: Bill Synnot, 1999a; Peter Drucker, 2004) Presentation Local Govt Qld Feb 2004a

9. More Specific Trends that will Impact on Local Government’s Talent Management • Privatisation of some local government activities • Changing community expectations • Changing demographics or population profile • On-going legislative reform • Changing nature of industrial relations • Information and communications technology Presentation Local Govt Qld Feb 2004a

10. Privatisation • Privatisation of activities traditionally performed by local government, such as garbage collection, building/construction approvals, etc • Linked with privatization is the need to improve commercial practices and skills of management in local government Presentation Local Govt Qld Feb 2004a

11. Changing Community Expectations • Customer service • Additional services expertise required by expansion of local government functions to include • local and regionalplanning • environmental protection • pollution control • natural resource management • community services • economic development, etc Presentation Local Govt Qld Feb 2004a

12. Changing Demographics or Population Profile • Aging population • Increasing number of retirees and/or semi-retirees heading for coastal and regional areas • Rural exodus continues • Shortage of people with appropriate skills in regional areas Presentation Local Govt Qld Feb 2004a

13. (Changing Demographics or Population Profile cont.) • Increase in flexibility of staff working conditions • Increasing participation of women in the workplace This is putting more pressure on local governments to provide extra services such as health care, child care centers, etc that are traditionally not a local government activity Presentation Local Govt Qld Feb 2004a

14. On-going Legislative Reform • National Competition Policy • Devolution of government activities from Federal and State levels to local government • Changing government priorities including allocation of financial grants Presentation Local Govt Qld Feb 2004a

15. Changing Nature of Industrial Relations • Outcomes of ad hoc legal challenges changing industrial status quo, such as EBs • Increasing litigation around the industrial relations issues, eg unfair dismissals Presentation Local Govt Qld Feb 2004a

16. Rapid Change Through Information and Communications Technology • Internet (web, broadband, etc) • Mobile phones • Video conferencing • Digital • Wireless, etc Owing to these trends, there is a greater need for a skilled and capable workforce at local government level. This workforce needs to be continuously upgrading skills and expertise. Presentation Local Govt Qld Feb 2004a

17. Key Elements of a Peak, Agile and Innovative Organisation are • Customer focused • Increasing focus on leadership and less on management/administration • Entrepreneurial (based on innovation) • People orientated • Focused on decisive opportunities • Resilient (source: Bill Synnot, 2003) Presentation Local Govt Qld Feb 2004a

18. At Organisational Level, Some Specific Trends for Local Government • Increasing competition for skills, especially as the private sector enters the market that traditionally belonged to the local government • Great awareness of lifestyle issues by staff • Changing profile of the Australian workforce by gender, age, mobility, etc • Increasing labour costs • Rapidly changing work demands, such as continuous learning • Local government not perceived as an employer of first preference or choice by most young professionals • Tall poppy syndrome Presentation Local Govt Qld Feb 2004a

19. How Important is Talent for Organisational Success? • Based on a 10-year study of 160 organisations (1986 – 1996) to determine what was important for sustaining superior performance • There were 2 basic questions asked, ie i)Why do some organisations consistently outperform their competitors? ii)Which of the many well-known business tools and techniques (around 200) can help an organisation to be great? Presentation Local Govt Qld Feb 2004a

20. The Results of this Study found the “4 + 2” Formula • There are 4 primary management practices • (strategy, execution, culture and structure) • These 4 needed to be supplemented by at least 2 of the following secondary management practices • (talent, innovation, leadership and merger/partnership) • 4 + 2 was more important than what management techniques and tools used Based on this study, talent is an important factor but not critical Presentation Local Govt Qld Feb 2004a

21. The Definitions Primary Management Practices 1 Strategy (devise and maintain a clearly stated, focused strategy) 2 Execution (develop and maintain flawless operational execution) 3 Culture (develop and maintain a performance-oriented culture) 4 Structure (build and maintain a fast, flexible, flat organisation) Presentation Local Govt Qld Feb 2004a

22. (The Definitions cont.) Secondary Management Practices 1 Talent (hold on to talented employees and find more) 2 Innovation (encourage industry- transforming innovations) 3 Leadership (find leaders who are committed to the business and its people) 4 Mergers and Partnerships (seek growth through mergers and partnerships) Presentation Local Govt Qld Feb 2004a

23. What the Study Stated on Talent • One of the best tests for talent in an organisation is the ease with which a senior executive, who leaves, is replaced from within. • It is much cheaper to develop a star than it is to go out and buy one. • To develop a star is more reliable, because the organisation is getting a known quantity, and, in the post-Internet boom, worker continuity and organisational loyalty is important. • Talented staff are just as valuable and hard to replace as loyal customers. Presentation Local Govt Qld Feb 2004a

24. (What the Study Stated on Talent cont.) • Fill mid- and high-level jobs with outstanding internal talent whenever possible. • Successful organisations have a distinct preference for developing and promoting their own stars and an ability to retain their top performers. • Create and maintain top-of-the-line training and development programs that can prepare staff for new jobs in the organisation • Create conditions that encourage, rather than penalise, them for taking time away from their jobs for development. Presentation Local Govt Qld Feb 2004a

25. (What the Study Stated on Talent cont.) • Upwardly mobile staff are not solely responsible for preparing themselves for higher level positions; the organisation has a responsibility as well. • Design jobs that will intrigue and challenge your best performers. • Keep senior management actively involved in the selection and development of people, ie succession planning. • Talent-rich organisations tend to attract able people from outside the organisation. (source: Nitin Nohria et al, 2003) Presentation Local Govt Qld Feb 2004a

26. Perception of Local Governments by Graduates • A recent Australian survey showed that Local Government is not the preferred choice of employer by graduates!!!!!!!!!! • Over 75% wanted to work in the private sector • Local government was the “poor cousin” in the public sector after the Commonwealth and States • Furthermore, there is an increasing trend for professionals under 30 to work overseas, ie 146% increase in 10 years to over 20,000 in 2000 Presentation Local Govt Qld Feb 2004a

27. WHY!!!!!!!!!! • What are the measures to counter this perception? Some suggestions - “Sigrid factor” - seek and win impressive awards - identify and publicise “high flyer” that have and/or are working in Local Government - willing to invest in training, - provide exciting career paths, etc Presentation Local Govt Qld Feb 2004a

28. Generational Issues (motivation) • Silent/veterans/oldies - born before WW2 • Boomers – born (1945 – 1960) • Xers – born (1960 – 1980) • Ters/nexters - born (since 1980) (source: Bill Synnot, 2003) Presentation Local Govt Qld Feb 2004a

29. OLD WAYS HR is responsible for people management We provide it with pay and benefits Recruiting is like purchasing NEW WAYS All managers, starting with the CEO, are accountable for strengthening their talent pools We shape our organisations, our jobs, even our strategy, to appeal to talented people Recruiting is like marketing Guidelines to Handling the Transition to the Information Age and Winning the Talent War ( Presentation Local Govt Qld Feb 2004a

30. New way (cont.) We think development happens in training programs We treat everyone the same and like to think that everyone is equallycapable McKinsey Company, The War for Talent, 1997 as quoted in Melissa Montomery, 2003 Old way (cont.) We fuel development primarily through stretched jobs, hedging and mentoring We affirm all our people, but invest differentially in A, B and C players Guidelines to Handling the Transition to theInformation Age and Winning the Talent War (cont.) Presentation Local Govt Qld Feb 2004a

31. Some Suggested Strategies to Handle Talent War • Staff the work, not the jobs • Pay for performance (results and behaviours), nothing else • Turn managers into mentors/coaches • Train for the mission, not the long haul • Create as many career paths as you have people (source: Bruce Tulga, Winning the Talent War as quoted in Melissa Montomery, 2003) Presentation Local Govt Qld Feb 2004a

32. Some Comments on Mentoring Introduction • Great mentoring relationships are reciprocal • Mentoring involves elements of being a coach, guardian, networker and counsellor • Traditionally, mentoring has involved an older, more experienced person (mentor) with a younger, less experienced person (mentee) • On the other hand, there is “reverse mentoring”, such as with young computer nerds (mentors) mentoring senior management (mentees) on how to use the Internet, etc , eg GE Presentation Local Govt Qld Feb 2004a

33. “…I have a 23 year old spending three to four hours a week teaching me how to use the Internet - I am the mentee… ...asked our top 500 leaders to get Internet mentors, preferably under the age of 30…” Jack Welch as quoted in Bill Synnot, 2003 Presentation Local Govt Qld Feb 2004a

34. Principles of Mentoring • Almost anyone can be an effective mentor • A mentoring relationship must be voluntary on both sides • Mentors don't provide solutions: they facilitate learning • Mentors can only exist in an organisation imbued with integrity • Mentoring relationships are not necessarily permanent • Mentoring "fast growth" people is a high-leverage strategy Presentation Local Govt Qld Feb 2004a

35. Mentoring involves a genuine commitment to development and learning • Mentoring brings out the best in each other Be Wary of Pseudo-mentoring Mentoring is not about • the development of "political" connections • building a power base • “blind” loyalty Presentation Local Govt Qld Feb 2004a

36. Additional comments - bad mentoring involves - dictating what to do. This is not the mentor's job - trying to sell something or being evangelical - providing solutions - the idea is to facilitate their development - being confrontational before the relationship has been able to develop - encouraging dependence or trying to prolong the relationship Presentation Local Govt Qld Feb 2004a

37. Some Comments on Succession Planning Introduction • There is an alarming lack of succession planning in Australian organizations. “...49% of Australian companies hadn’t begun to think about succession planning...” AFR, 2002 as quoted in Bill Synnot, 2003 • Furthermore, around 40% of senior managers in Australia will retire over the next 5 years. Presentation Local Govt Qld Feb 2004a

38. (Some Comments on Succession Planning cont.) • A USA study (1998) found “…companies with formal succession planning systems in place exceeded the expected performance of their peer companies by 16 per cent, while those without under-performed by 7 per cent…” Andrew Cornell, 2003 as quoted in Bill Synnot, 2003 A more recent study supports this, ie “...less than 15 percent of companies that had a structure for developing leaders and putting them in the right jobs averaged shareholder returns of more than 10 percent above their cost of capital over 10 years. Those with little emphasis on the succession averaged less than 1 percent return...” Andrew Cornell, 2003 as quoted in Bill Synnot, 2003 Presentation Local Govt Qld Feb 2004a

39. (Some Comments on Succession Planning cont.) • Succession planning involves helping employees with a career path and developing the skills they need to grow into new roles. It is important to hold individual executives accountable for developing their replacements “... not only should employees be interested in their own career paths, but they should understand that they can greatly impact their own success by providing their manager with a solid transition plan – including qualified replacement...” Chris Moody as quoted in Bill Synnot, 2003 Presentation Local Govt Qld Feb 2004a

40. (Some Comments on Succession Planning cont.) • Unfortunately, succession training on the individual level is often ineffective because managers do not develop a well-considered plan and do not devote enough time to carry it out. Presentation Local Govt Qld Feb 2004a

41. How to Lay the Basis for a Succession Plan • Weave successor development into the organization’s mindset • Start identifying and developing successors right away • Prepare your organization • Give successors all the information they need • Work with your successor to set goals • Let go, but keep the door open for a while Presentation Local Govt Qld Feb 2004a

42. (How to Lay the Basis for a Succession Plan cont.) One of the advantages of doing this correctly is that it leaves a favourable last impression, ie. you did the right thing by the organization and your successor. Presentation Local Govt Qld Feb 2004a

43. In Summary, a Comprehensive Succession Plan should • Transfer knowledge and new skills as quickly and efficiently as possible • Positively position the successor among all the affected stakeholders • Create an attitude of excitement about the new opportunities that will result from the change in leadership • Allow you to leave when you are happy that things are in capable hands Presentation Local Govt Qld Feb 2004a

44. Summary To answer the conundrum, ie talent – to grow or buy • Talent management is important but not as critical as strategy, execution, culture and structure • Generally, it is of secondary importance whether you grow it or buy it • On the other hand, only buy talent if the organisation does not have it and/or is unable to grow it in the time required Presentation Local Govt Qld Feb 2004a

45. “…Talent will only multiply in an inspiring organisation…”Bruce Tulga, War of Talent as quoted in Melissa Montomery, 2003 Presentation Local Govt Qld Feb 2004a

46. References and Acknowledgements • Peter Drucker, (2004), Peter Drucker Sets Us Straight, Fortune, January 26, 2004 • Catherine Fox, (2004), Up the Greasy Pole is the New Way to Go, Australian Financial Review, February 10, 2004 • Malcolm Gladwell, The Talent Myth, Australian Financial Review, 2003 • Tony Goode, (2004), Personal Communications • Melissa Montomery, (2003), Say Hello to “Talent Wars”, The Galt Global Review, November 29,2003 • Ann-Marie Moodie, (2004), The New Loyalty, Management Today, AIM, February, 2004 • Nitin Nohria, William Joyce & Bruce Roberson,(2003), What Really Works, Harvard Business Review, July 2003 • Marcus Priest, (2004), Why Australians Won’t Come Home, Australian Financial Review, January 17 – 18, 2004 • Bernard Salt, (2003), The Big Shift – Welcome to the Third Australian Culture – The Bernard Salt Report, 2nd edition, Hardie Grant Books • Bill Synnot, (2003), Successful Organisational Transition (includes Organisational Transformation, Renewal and Revitalisation, Repositionin, Change management and the Human Journey of Change) to Create the Peak-performance, Agile and Innovative Organisation for Handling the Future, (6th edition), Aurora Consulting Group • Bill Synnot, (1999), Major Global Influences at the Start of the New Millennium, Not-for-Profit Seminar, Aust. Soc. of Cert. Practising Accountants (Qld) • Allen Vincent, (2004), Personal Communications Presentation Local Govt Qld Feb 2004a