We have done a lot of work with sporting organisations such as Manchester City FC, the UK Tennis Association (the LTA), Arsenal FC and other leading sporting teams and governing bodies. Developing talent is their business. We’ve learnt from working with these organisations that you can apply some of the techniques and principles to business and reward to great success.
From the junior academy through the reserves to the first team, and from base pay through bonuses, long term plans, recognition and those non-financial incentives, this article will look at the parallels and necessary steps that reward, talent and senior management will have to take in order to realise the same benefits in the wider commercial world.
Move to an exclusive, not inclusive, world of talent
It’s important to get clarity and understanding of what talent really means at the heart of your strategy – and how it is defined at different levels. For example, the LTA produces a DVD for coaches showing how a ‘talented’ eight year old should hit a forehand. This level of definition keeps the talent funnel on track and doesn’t engender false hope at an early stage.
Define different levels of talent
Like many of our ‘footballing’ clients, we suggest creating three main categories in your workforce.
Academy – your future hopefuls who have raw talent and highly developed technical ability but haven’t yet had the chance to hone their business skills in a really challenging situation.
Reserves – those who have cut their teeth in a business environment and have started to apply their technical expertise and develop business competence – leadership, resilience, team performance etc.
First Team – those who have a proven track record with the ‘big stuff’ and can demonstrate that they have a longer term focus and history of achievement in different circumstances.
Whilst managing these groups it is essential to ‘harvest and weed’ as you go; different people develop at different speeds and some people will never fulfil their early potential.
Link reward to the appropriate level
Each of these groups is made up of individuals with different goals to those of their predecessors and to members of the other categories. It’s important therefore that you have contrasting and relevant reward arrangements for each group in your talent framework. And, crucially, they should be appropriate to their level and the contribution they make to your organisation.
Chuck out the ‘annual’ mind-set. Projects and growth may be happening at a different timing and cycle than one which fits comfortably with the annual pay review. Be flexible and reward according to the work completed and standards attained; an end of project bonus payment for example.
Keep base pay market data fresh and keep pace with them. The Academy incumbents are characterised by patchy periods of growth and development. Annual base pay rises may be too slow to reflect new skills and value to the organisation.
Build in recognition not just pay. At this level, it is important to show the individual that their contribution is important to the organisation. All the emphasis should be on building experience, adding to skills and providing challenge with a view to a long-term future.
Less focus on long-term pay solutions. Traditionally, this group have been rewarded through share options and long-term plans to tie them in. The disadvantage of this approach is that there is high wastage with any ‘Academy’ group and tying in a cohort at such an early stage of their career may result in a group of employees who don’t make the grade, become toxic, but can’t leave because their options haven’t matured yet.
Harvest and weed regularly. Keep an eye on your crops – accept that some won’t make it out of this group and others may mature and develop more quickly than you expect. Elite talent management is all about keeping close and flexible.
Base pay. Individuals are visible so more vulnerable to competitive poachers. Keep ahead of market and be confident that you really understand all the market pressures – particularly consider significant jumps in responsibility into a smaller firm.
Bonus. Linked to company performance and their individual skills. Rotate out of slow-growth business into high growth areas where they can make a difference to test skills and to create self-funded bonus opportunities.
Tie in long-term – stock or cash plan. This group may be particularly attracted by newer, sexier, high-growth businesses and opportunities. Give some financial interest in the long-term to help retain focus.
Continue to harvest and weed regularly
Ensure they really are first team players – use your talent standards to help understand their impact on the business now and the long-term value they represent.
Base pay. Make sure you understand relevant pay market and total remuneration mix. The mix is more important than base pay alone at this level.
Bonus. Linked to company performance – minor (20%) on their individual performance
Tie in long-term – stock or cash plan. With high-upside (or down-side for poor performance). Structure pay to reflect business strategy i.e. growth or profit.
Know it won’t be forever. The average tenure of a CEO in the UK is 4.5 years. The average tenure of a Premiership Football club manager is 2.4 years. Most of them never see the result of their five year plan. Go figure. From an employee point of view, the rewards are high during these years but so are the risks and some people never find another role at the highest level. It is understandable why CEOs expect and receive such high pay but the pressure to deliver the expectation they have created is then unsustainable for many.
Steps to make this happen
To make this work in your organisation you will need to answer a few questions.
- Reward professionals – you need to take a good long hard look at the work you’ve been doing in linking the talent management team’s work with your business strategy around pay. Does it make sense?
- Senior Management – are you proud of the way that there is clarity and clear goals around your talent management programme? Do your line managers understand the return on investment made in talented individuals in your organisation? No? Why not?
- Talent management professionals – is there a simpler way of presenting and stream-lining your scheme to enable a clearer line of sight between the contribution that participants make and the rewards they earn?
I’m not claiming that just by simply trying to emulate the sporting giants you can solve all of your reward and compensation issues. But, if you can address some of these issues and answer some of those questions it can certainly help you to put some perspective and structure around the problem; and then you can start to think a little about next season and your team selection.
This article is drawn from a chapter entitled ‘Rewarding Talent’ written by Deborah Rees in ‘The Compensation Handbook, Sixth Edition: A State of the Art Guide to Compensation Strategy and Design’