Businesses need to track and value their assets with pin-point precision. Many companies have the ability to account for inventory, product quality, operational expenses, profit margin and client demand as they have accurate metrics in place for each. But when measuring talent assets only a few companies are so meticulous, yet most view talent as a crucial driver of company performance and shareholder value.
Industrial psychologists, HR firms and leadership consultancies have, through decades of work and research, identified hundreds of variables that can affect job performance. But which are mission critical for the CEO and which drive engagement for the whole workforce? By leveraging the world’s largest set of data on talent – more than 2.5 million assessments of professionals and top executives – Korn Ferry has categorised the elements of talent and isolated the most potent facets.
Korn Ferry analysis has determined that human performance in the workplace is governed by four main factors: competencies, experiences, traits and drivers. These four areas are highly predictive of performance, differences, and correlated with all key talent variables: engagement, retention, productivity, leadership effectiveness and leadership potential.
It is well established that companies that accurately evaluate, develop, and engage their people outperform their competition, and yet many still need better talent intelligence to do so. Taking all four dimensions into account gives employers a high-resolution view of how any individual’s abilities fit a specific role – or a diagnosis of talent patterns across the enterprise.
This integrated approach immediately improves on standard HR analytics by focusing on the most salient findings for the individual or enterprise. It also reveals unforeseen links and disconnects between talent variables. Finally, it empowers organisations to build a transformational talent strategy that accelerates business performance.
Competencies are the building blocks of job performance– the essential ingredients of success at work. Competencies might describe management skills that contribute to better leadership including resourcefulness, courage or decision making. They can also include key functional or technical skills.
Most large organisations use a competency library as the basis for job specifications, leadership development plans, or annual performance reviews. Formal competency assessment, however, can add a high degree of accuracy to predicting job performance, even at the most senior levels. Recent research shows that Korn Ferry’s competencies isolate and capture exactly what matters for overall performance in a role. Depending on the leadership level, proficiency with these competencies accounts for between 43 per cent and 64 per cent of total job performance (Barnfield et al. 2014).
Adeptness with a particular competency may indicate natural talent, but most competencies can also be intentionally built up given time and a related job assignment. Some are harder to develop than others, but with the right motivation and support (coaching, stretch assignments, feedback) nearly all individuals can make measurable progress on competencies – good news for any organisation facing a skills gap. Whilst many companies attempt to measure such competencies, they often don’t take into consideration that some are more important than others at senior leadership levels than they are at lower levels.
Getting Beyond the CV
When assessing executives, companies must analyse beyond the curriculum vitae. People are often hired because they have achieved a certain job title, which is much less relevant than whether they have acquired specific experience e.g. leading a turnaround or developing strategy. Korn Ferry’s research shows that CEOs with strong experience in the four key areas of growing businesses, managing crises, developing strategies and managing finances are 8.5 times more likely to be amongst the top performers than all the rest of the CEOs in the study.
Organisations also need to assess experiences especially closely when hiring outside executives or preparing internal successors for senior roles. Indeed, experience shortfalls often are revealed at the worst time: at a critical moment, no one is ready to take on the key job with more responsibility. Ensuring that leaders – and future leaders – amass the right set of experiences is essential. Without a sufficient history of developed strategy, leading people, or owning a P&L, how could anyone be prepared to lead a business unit?
Ideal personality profiles look substantially different at each progressive level of management – a reason why companies must analyse ‘traits’. These include attitudes, such as optimism or confidence, as well as other natural leanings, such as social astuteness and general cognitive capacity. While traits are core to who a person is, they don’t represent a predetermined fate.
Personality, Behaviours and Values
Traits factor heavily into questions of leadership potential because personality profiles look substantially different at each progressive level of management. A good middle manager won’t necessarily succeed at the next level up and this is why in-depth assessment of traits is so important for identifying leadership potential and ensuring a company has a healthy supply of future leaders lower down the chain
The final aspect that is overlooked by companies is drivers. They are the deep internal values, motivations and aspirations that are crucial for cultural fit, employee engagement and talent retention. Drivers may be very specific or broad and they also may fluctuate based on an individual’s circumstances or stage of life. They are essentially the pivot point for the other three dimensions mentioned in this article: if driven, an individual may moderate personality traits, work to improve competencies, or seek out experiences to progress toward a professional goal. If you don’t understand what makes your executives tick then you can’t be expected to get the best out of them.
To get the best out of your talent strategy it is vital to measure these four dimensions holistically, to provide unparalleled accuracy in gauging leadership and talent. There are, however, talent assets that are not necessarily immediately measurable. Companies must remember that personality, character fit and likeability should be considered as an important talent asset. It is these intangibles – the ‘human factor’ – that can often prove the most costly with the exodus of ‘executive kingpins’ leading to additional departures later down the line.
People are vastly complex. And projecting how their talents will manifest on the job is intricate work. Yet without clear metrics, organisations cannot even benchmark their existing workforce, let along recruit the best talent and close leadership gaps.
Organisations measure their talent assets by many means including interviews, assessments, and performance reviews. These approaches may yield grainy knowledge about skill sets and hint at greater potential, but they rarely resolve into sharp focus.
To truly decipher its talent needs, an organisation should evaluate four specific dimensions of leadership and talent.
- What competencies does our strategy require?
- What set of experiences is essential for leadership roles?
- What drives our high performers?
- What traits dovetail with effective leadership?
Precise answers to these questions are the difference between just filling another job and transforming a business through talent.
Steve Newhall, Managing Partner at Korn Ferry Leadership & Talent Consulting