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The CEOworks Team July 22 2020 7 min read

Embracing Risk in Talent Management

By Bill Allen & Shefali Salwan

We in HR live with a paradox. Most of us entered the profession because we believe that humans beings can develop and grow. Indeed, we have many ways to measure and mark the progress of individual talents. Yet, even with this data in hand, many of us are still reluctant to take a chance on people. We tend to assume that placing someone who has not already done what we need them to do in a role that’s critical to the organization would be a big risk, one usually not worth taking. This risk aversion only intensifies the issues around race and gender that we see dominating the news today. It is time we seek out risk in our talent management practices.

Most of us got to where we are today because someone confidently took a chance on us, in spite of having known it might not work out. That person knew we weren’t perfect for the job: we were a work-in-progress. But they thought the risk was worth it.

Shefali, an active proponent of diversity throughout her career, was once told an interesting story about the president of a North American lumber company. This male-dominated industry, notorious for its hazards, has an excessively high rate of fatal work injuries. For the longest time, the biggest problem that this senior executive leader had was worker safety. The answer to his problem came from taking a chance on someone.

One day, he decided to hire a woman lumberjack. As he was training her how to operate safely in the field, he realized that, unlike the rest of his entire male workforce, he never had to tell her anything twice. She immediately got it and consistently applied what she had learned. Soon she was less of a risk in the lumberjack role than her male counterparts. And so, over time, he replaced all the male lumberjacks with women. The company’s insurance claims—and costs—went down. Productivity went up.

Reorienting our talent practices towards value, using the Talent to Value method, has made it possible to not only precisely identify the risks in particular roles in a way that gives people—no matter what their race, gender, or position—a real chance. It also makes it possible to quantify and mitigate those risks to better set them up for success.

Calculating Risk

Traditional talent management practices don’t articulate the value of the work to be done to the organization. They don’t identify the risks involved with a specific role. They don’t assess talent based on evidence relative to that role. And, rarely, if ever, do they mitigate risks.

The Talent to Value approach shines a light on where we need to be fair by doing all these things. The process is disciplined, intentional, and outcomes-oriented.

First, rather than going with some imaginary idea of what the right talent would be for a generic role, it starts by intentionally looking at the three to five specific outcomes that must be accomplished by anyone in a specific role (what we call the Jobs To Be DoneTM). These absolute requirements are tied to specific contributions to the company’s value agenda. This gives you a very clear and precise picture of what “good performance” would look like and removes the option of filling the role with a generic “good guy”. A new Chief Technology Officer role, for example, might be responsible for, among other things, delivering a digital transformation worth $106M annually, plus delivering $600M in savings by shifting the footprint of the business and simplifying the third-party supplier landscape over a four-year period.

Second, the context in which this work must be performed is considered, including the organization’s culture and operating framework, as well as the business environment. This gives you a relatively unbiased view of the challenges any talent will encounter going into the role and what it will take for them to win. That CTO role, which will be operating in a tense talent market, will be competing with technology powerhouses for digital experts—and that could slow down the company’s transformation and put 5% of sales growth at risk.

Third, running all this information through the Talent to Value dashboard shines a light on the risks inherent in the role and the risks involved in placing a particular talent in that role. A plan to mitigate the most important risks through one or two strategic interventions is developed. For the CTO role, all of the risks were on the role side. And so, the risk mitigation plan involved providing much needed investments in new organizational capabilities and technologies, implementing agile ways of working to increase capacity, and adjusting decision rights to better align with the Jobs To Be Done. Executing these interventions, either with the organization or the individual, supports any talent put in the role and ensures they are caught when and if they stumble.

In practice, the Talent to Value process takes time. So far, it has been applied primarily to the most critical roles in an organization. However, we believe that, if the foundational ideas of specific value-oriented outcomes, risk seeking, and risk mitigation are applied more widely in talent management, perhaps, one day, they might help replace lingering old habits from our past that facilitate racial and gender inequities.

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The CEOworks Team

Articles created by the CEOworks Communications Team are based on content from Sandy Ogg, Sumeet Salwan, Shefali Salwan, and other team members.