By Shefali Salwan, Co-Founder, Bill Allen, Senior Partner, and Steve Courington, GM Talent to Value Academy
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.
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.
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.
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.
1. Value First: Value creation occurs in 4-6 hotspots, sources of value creation that link to critical roles.
2. Break The Hierarchy: A handful of critical roles linked to value hotspots are frequently two, three, or four levels below the CEO.
3. Roles and Work Before Talent: Undiagnosed role risk and misaligned/difficult work cause even the best talent to struggle.
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.
5. Mobilize: Stop admiring the problem and fix it.
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.
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:
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.