Companies that lead the world in growth have something in common: a relentless focus on talent. They are very intentional about this. The executives who lead these companies have created high-performing operating systems.
The most important decision executives make is who they name as manager, at all levels in a company.
From decades of work with companies to implement these systems, Gallup has learned that the most important decision executives make is who they name as manager, at all levels in a company. When an executive makes the wrong decision, nothing fixes it.
The purpose of a talent machine is to name the right person as manager. As such, it is the silver bullet for organic growth. After reviewing some of the best work from companies Gallup has partnered with over the years, I have identified five core components of a high-performing talent machine.
1. A succession plan that works
A succession plan that actually works is a prerequisite for a company's survival. Yet many companies have no formal plan in place, have a plan that's dated and hasn't been reviewed recently, or only consider this topic in times of crisis. The result might more appropriately be called "replacement planning," in which someone is asked to fill a void at the last minute.
While replacement planning may seem more practical and achievable in the short run, it sets up your company for long-term failure. This is why succession planning must be dynamic and based on a pool of qualified leadership candidates -- and it must evolve as your company changes.
A succession plan that works must be part of a broad and unified vision that not only the CEO owns but also the entire senior leadership team. This plan -- which should be carried out in a scientific, mathematical, and systematic way and formalized in writing -- must be continually adapted as people move in and out of roles. You need to review your succession plan constantly and aggressively. If you do this right, you'll make far fewer mistakes in your decisions, and you'll upgrade the engagement of every employee.
A succession plan that works uncovers a company's leadership strengths and exposes its weaknesses. This system operates like a machine, driving crucial leadership decisions as the company moves forward down its desired path. When you start with talent and build an effective succession plan, you strengthen the company with every move you make.
Download the related white paper, "A Succession Plan That Works"
2. An audit of your talent pool
Most companies lack any way to audit their talent at all levels of the organization. But if you fail to relentlessly audit and upgrade your company's talent pool, it's almost impossible to achieve your mission and purpose.
A Gallup client recently dealt with this challenge. The company had a clear vision that was communicated throughout the organization. Yet the company was struggling, people were frustrated, and the organization was unable to fulfill its vision. Interviews and objective assessments with leaders at the top three levels of the company revealed that the organization's talent pool was too small and too weak to meet the challenges the company was facing. The leaders quickly realized that the organization didn't have the talent it needed to grow -- or even survive.
Once your company is able to audit the talent in your organization, you can begin to name the right people as managers; you'll be able to see which business units have the most talent and which units need more. This talent pool, in turn, feeds into a succession plan that works. A finely tuned talent machine should have at least three candidates ready to fill any given role when the time comes.
3. Raising the bar in recruiting and hiring
You've created a succession plan that works, and you have audited your talent pool at all levels of the company. But if you stop there, you're likely to fall short of creating wholesale cultural change throughout your company. Having the right recruiting and hiring strategy is another essential component in building a system that works. To raise the bar on the overall level of talent in your company, you'll need to significantly improve recruiting.
Bringing the right talent into your organization begins with getting the most talented applicants interested in working for your company in the first place. When companies weave a language of talent -- as opposed to listing the job requirements -- into their job descriptions, they can attract higher quality applicants into the process early.
Gallup's research with clients has shown that once candidates apply, objective and structured interviews can be much more effective at identifying candidates with the right talent for the role than screening résumés or ad hoc face-to-face meetings. This structure allows hiring managers to spend less time on the overall process and more time getting to know highly qualified candidates. These pre-hire assessments quickly feed into an individualized onboarding and development plan.
If you hire for talent but fail to develop it, stars may leave your company.
A few of the most advanced companies we work with have really raised the bar on recruiting and hiring. In addition to searching for the right talent for a given role, they are now hiring for two additional elements: culture and engagement. Once they've determined if a person fits a role, they add a few questions to the assessment process to predict how well an applicant will fit into their unique company culture. They also build a subtle indicator into each job interview that determines the likelihood that an applicant will increase the overall levels of employee engagement if he or she joins the company. While these are relatively new innovations, our early research suggests that they should provide an even greater competitive advantage.
4. Breakthrough experiences for high-potential managers and leaders
The companies Gallup has worked with have varied definitions for their high-potential managers and leaders. In some cases, they are defined as the 10 people who have the ability to join an executive team; in other cases, they are defined as anyone with management or leadership responsibilities.
For the purposes of helping companies build a pipeline of talent, we have applied a straightforward formula to determine the right number of high-potential managers and leaders you need. Look at your organizational chart and count the number of people in the top three levels of your company. Multiply that number by three. This total represents the minimum number of high-potential managers and leaders you should identify within your broader talent pool.
Once you have identified this group of high-potential managers and leaders through objective assessments, performance metrics, and other ratings, the next step is to provide intentional developmental experiences to help them grow. This process starts by conducting interviews with leaders in your company who are already stars. You must study this group extensively to determine what experiences accelerated their growth into leadership roles in your company. You're trying to find more people like them, so listen closely for significant experiences that sparked their growth.
Next, conduct interviews with executive stakeholders to find out where they think the company is going, what it will look like when it gets there, and how fast it needs to happen. These executives will be key to making that future a reality, so listen carefully to whether they're aligned with the CEO's vision, and assess their ability to make the necessary changes.
The product of these interviews will be a set of key experiences you will recommend for high-speed development of high-potential managers and leaders. Here are a few examples of breakthrough experiences:
managing others early in a professional career
attending a formal leadership development program
profit and loss experience/accountability for a division or business unit
international leadership assignments
had a strong mentor
These are just a few examples, and they can vary greatly by company. The key is to study these experiences objectively to determine which ones have the most powerful impact on your company's culture.
5. Ongoing development, engagement, and performance management
If you begin to hire for talent but then fail to develop it, stars may leave your company even faster than before you made that change. This is why it's so important to invest in each person you bring into your company:
Start with the basics. Make sure that all people you hire have clear expectations and know what they are supposed to do when they show up each morning. Across the organizations Gallup has studied, a typical work team has more than 40% of team members who don't clearly know what is expected of them at work.
Demand that the talented people you bring into your company have a great manager. Hiring talented people and assigning them to lousy managers will guarantee failure.
Rework your performance management systems so they feed into the overall talent machine. If you're hiring people and telling them to build their career on their strengths, they need to believe that you will follow through on this commitment. Help each person determine how to connect his or her strengths to your customers' needs.
Bringing it all together
These are the five key components of a high-performing talent machine. When you name the right people as managers and improve their development, you'll see how quickly your organization's culture changes. If you start with talent as the foundation, then bring as much objectivity as possible into every crucial talent decision, you will help your company accelerate growth for years to come.
Download the related white paper, "A Succession Plan That Works"