i4cp’s latest survey of HR leaders on the future of work found that the ability to assess talent risk is chief among the most important skills HR must grow in order to help their organizations achieve long-term goals. The top three skills cited were the ability to:
- 59% - Compare business strategy and workforce data to identify areas of talent risk
- 57% - Identify the best talent to accomplish critical work
- 42% - identify and refine talent’s impact on how the company makes money
This isn’t the first time i4cp’s research has uncovered the depth of concern regarding talent risk in organizations today; an earlier survey found that 88% of high-performance organizations expressed concern about the talent risk among their technical and professional experts.
Most of them have not taken any major action to address this risk.
There are two main reasons for the increasing concern about talent risk. The first is that businesses are acknowledging that we are in a time of unprecedented change and unpredictability that render commonly held understanding of how markets, business, and management operate obsolete.
These forces (technological, political, environmental, social, etc.) compel leaders to rethink the ways their companies operate—from strategy, to values, to operating models, working with customers, and how work is performed. As a result, leaders are seeking ways to mitigate business risk.
But if businesses are going to seriously mitigate business risk, they must first address their talent risk, because:
- More than 50% of business expense is people
- Talent risk affects the big three business drivers every day: money, time, quality
- It’s about gathering different data (the money story) to make better talent decisions
The second driver of concern about talent risk is that we continue to experience an unprecedented, ongoing war for talent. The numbers of job openings in the U.S. are at historical levels—over six million—while the numbers of workers seeking full-time work are at historic levels.
The problem is a mismatch between the demand for highly-skilled talent and the under-supply of talent with the requisite skills. As a result, highly skilled individuals have lots of choices about who they work for and where. The talent risk issue is so severe that the National Association of Corporate Directors recently sounded the alarm, noting that board members must recognize that talent, strategy and risk are linked and as a result, they should require that management include a talent component in every strategic initiative brought before the board.
Talent risk management begins with a structured process to assess, prioritize, mitigate, and measure and monitor such risk. Unfortunately, only 45% of businesses have a process in place to address talent risk. And, most of these processes only address this issue very narrowly as the risk of losing top talent. A more comprehensive analysis of talent risk is to employ the talent mapping methodology, which looks at the entire talent supply chain (e.g., acquiring, developing, and retaining) for risk. Talent mapping takes a logical, systematic approach that involves three major steps:
1. Identifying the critical and pivotal roles.
- A critical role is one that is core for business success and involves skills difficult to acquire.
- A pivotal role is one that is core for business success, but not a difficult skill to acquire. Organizations that invest in developing this role will produce higher levels of productivity.
2. Analyzing the skill gaps for each critical and pivotal role.
- What is the current supply for each skill?
- What will be the future demand for each skill?
- Are there skills that will be needed in the future the organization does not have today?
3. Examining the talent risks and gaps that exist for each skill
- Who are the high performers for each skill? Why are they high performers? What can we do to insure we retain them?
- Who are the good performers for each skill? What can we do to make them high performers? What resources do we need to invest to widen and elevate their skills?
- Who is still coming up the learning curve? What can we do to shorten the time to full productivity?
Conducting a talent mapping analysis to identify where the risks are in the talent supply chain should be followed by the development of strategies to mitigate the risks uncovered. This may involve a better talent acquisition strategy, a new approach to talent development, or maybe processes to improve the quality of attrition. The last, but not least important step is to develop ways to measure and monitor the strategies to determine how well they mitigate the talent risk for the business. Read more about these steps, which are also featured in i4cp’s Talent Risk Management report.
Jay Jamrog is a futurist, and co-founder of the Institute for Corporate Productivity (i4cp).