Talent Debt: The Cardinal Sin of Talent Management

By Shefali Salwan, Co-Founder, Bill Allen, Senior Partner, and Steve Courington, GM Talent to Value Academy

Traditional Talent Management = Talent Debt

In the software space, a lot has been written about "tech debt." It is the implied cost of having to go back to the drawing board because an easy solution was chosen, and the problem was not fixed. As this debt accrues, existing problems get worse and cost more to rectify. The opportunity to choose a better approach to fix the problem in the first place is lost. The same applies to talent debt.

Few people talk about talent debt – but they should. We define it as the implied loss of value creation by not having enough talent properly placed to deliver value. Talent debt results from a disconnect between a role, the work performed in the role, and the talent placed in the role.

Both tech debt and talent debt result in value destruction. We'll leave the tech debt to someone else to handle. Talent debt is caused by failing to systematically and explicitly connect the talent pipeline and decisions to value creation.

Begin & End with Value

The decision to ensure the right people are in the right positions almost always starts with talent. But it should not. The focus should be on value creation and then on the talent needed to deliver that value. Often, organizations think of the hierarchy of roles and over-index on talent discussions. This is the wrong approach and leads to talent debt. They should start with value – each and every time.

This means the organization must define what work must be done to deliver value and then place the right talent in critical roles who can deliver that work. This methodology identifies the most valuable roles – not necessarily the most important roles, which usually are at the top of the organization.

To create value, you must put value first – value before talent.

As Sandy Ogg, our partner and the Founder of CEO.works, has put it:

Not having enough of the right talent where it matters is like trying to run a Ferrari with cheap gas in the tank. It's a formula for frustration and poor performance.

Formula for Success: The Talent to Value™ Process

Companies that are dynamic in terms of how they allocate talent provide far greater returns to their shareholders (see McKinsey & Company's The Key Role of Dynamic Talent Allocation in Shaping the Future of Work).

The traditional approach – talent in a vacuum of a talent pipeline – delivers financial underperformance and creates talent debt. How does the Talent to Value approach change this equation? It follows 5 points of departure from traditional talent management.

• Where is the value being created for the company?
• What work is being done to deliver that value?
• CEO.works Insight: We often find misalignment on the value hotspots even when CEOs, CFOs, and CHROs can't imagine this is possible. High levels of alignment are required for success.
  

• Which roles perform the work that delivers the value?
• Where are these roles in the organization's hierarchy?
• CEO.works Insight: Rarely are there more than 50 roles in a company that create the bulk of the value; more often, it is between 25 and 40.

3. Roles and Work Before Talent: Undiagnosed role risk and misaligned/difficult work cause even the best talent to struggle.

• Roles are awash in risk. Does the role have enough authority to make decisions that are going to deliver value? Is there capacity to get the work done on a timely basis and produce good quality? Was there alignment or resistance in the organization to deliver the outcomes in the role?
• And that's all before you get to work. Is the work new? Is it particularly difficult? Is it novel in some way? Is the organization going to support this work?
• CEO.works Insight: 70% of talent derailments are caused by unrecognized or hidden role risk or misaligned work.

4. The Forest (of Risk) Versus the Trees: Seldom are role- and work-related risks isolated in individual roles; they are usually systematic and often pervasive and create systematic execution risk.

• What are the patterns of risk in the organization?
• Are there diffuse decision rights, capacity, and capability gaps? Subsurface resistance and misalignment? Conflicting incentives? Internal complexity? New work? Unrecognized competitive intensity?
• CEO.works Insight: All organizations have risk hidden in plain sight. The choice is to recognize and address them – as opposed to ignoring them.

5. Mobilize: Stop admiring the problem and fix it.

• Where are the biggest risks to value, who has the authority to fix them, and what is the most direct approach to solving the problem?
• How do we systematically reduce risk with the least possible disruption?
• CEO.works Insight: A precise and practical understanding of the problem saves time and organizational energy – if you take the shortest and simplest path to value.

Once the lightbulb goes on and a business puts value first, it begins the process of identifying talent debt and allocating talent to value!

This begins with unpacking the investment thesis/strategy and those all-important value hotspots. We supercharge the execution of these hotspots by connecting the hotspots and the actual work required to talent selection, talent allocation, and talent mobilization to achieve maximum impact. Talent to Value enables the business to capture the most possible value in the least possible time, with the fewest possible interventions and the least disruption in the organization.

Talent to Value Academy: Identifying and Confronting the Sources of Talent Debt

Engage with CEO.works through the Talent to Value Academy. Learn to avoid the traps of talent debt through a powerful playbook and a learning experience based on Learn, Do, Practice, and Master through certification over a six-month period. Outcomes include the following:

• The List – Learn how to develop a list of critical roles linked to value.
• The Role Talent Card – Learn to align on work, role risk, and talent fit.
• The Human Capital Balance Sheet – Lead the way to addressing the hottest issues with the fewest steps, creating tremendous leverage.

To learn more and begin the journey of avoiding talent debt and mitigating execution risk, contact the CEO.works Talent to Value Academy at T2V@CEOWORKS.com.