LEAD STORY

Managing Talent in Tough Economic Times or Talent Management for Competitive Advantage

Peter McAteer, Vice President & Managing Director, Corporate Learning Harvard Business Publishing

During the past several weeks, the financial news around the globe has been alarming to many. Your employees and customers are probably anxious about the future. We are watching the markets closely as well, but at the same time, we view talent management as a long-term strategy. It holds true that in the long term, the companies that we perceive as well-run – with good intrinsic value for their customers and shareholders – will be successful. We believe that talent management and leadership development are central to delivering this value and achieving long-term results.

While day-to-day tactics may need to adapt in this economic climate, a good talent management strategy is still about understanding your competitive advantage and investing in talent directly related to this advantage. The most appropriate measure in a down market is not against historic performance but performance relative to peers. Are you sustaining your presence in the market relative to your competition? Customers and employees will migrate to the winners.

In a recent global study conducted on our behalf by the Human Capital Institute, 72% of the 564 organizations surveyed saw their leadership development budgets increase or stay the same from 2007 to 2008. Time will tell if this trend continues, but the numbers also showed that within leadership development the two areas of investment growing at the fastest rate are personal leadership and talent management.

It’s clear that leadership within our organizations will be what helps them succeed – even during tough times. In their book, Leadership Brand, Dave Ulrich and Norm Smallwood cite research that illustrates the impact of strong leadership within organizations:

• Return to shareholders for top talent firms is 22% higher than those rated as having average talent
• Up to 45% of organizational performance is due to differences in executive leadership
• Top leaders can have 94% more productivity than average

So, if you are an optimist like me (and the second title above is the one you gravitated toward) you have probably already identified some things that you can do to help your organization in this economic climate. Here are just a few ideas:

• Be opportunistic and go after the strong talent now available in the market;
• Focus your talent strategy on your core, what makes your organization unique ; and
• Start developing talent not for what your business needs today, but for what it will need tomorrow.

Do you have additional ideas you’d like to share? Send them my way pmcateer@harvardbusiness.org, and I’ll try to include them in a future column.