December 9, 2019
December 9, 2019
A company’s ability to attract and retain highly skilled talent is closely intertwined with its ability to execute on its business strategy, innovate, and stay competitive.
Given this, it stands to reason that talent strategy would be an agenda item for all boards of directors—but it’s not. And too often, talent strategy becomes a priority for boards only after a talent crisis hits the company, such as the unexpected departure of a senior executive.
The board’s interest in understanding talent strategy is even more important in a technology and business landscape in which the nature of work is changing constantly and dramatically. The World Economic Forum projects that about 75 million jobs will be lost by 2022 due to automation, while about 133 million new jobs may also surface in response to people, machines, and algorithms working closely together.
Recently, I took part in an NACD webinar, “Talent Strategies for High-Growth Companies,” which discussed the board’s oversight role in the company’s approach to talent management. Based on that discussion, here are a few questions for boards and senior executives at high-growth companies to consider, as their organizations work to achieve the right mix of skilled talent and other critical resources:
Does the company have a formal talent strategy, and if so, is it linked to the overall business strategy?
In many businesses, hiring is based on a “see a need, fill a need” approach. However, that does not necessarily constitute a talent strategy. A board trying to understand how the organization recruits, retains, and develops its talent may want to think about whether that approach is helping build a foundation of skills and expertise to support the business in the future.
At the very least, are current talent management strategies linked to the company’s overall business strategy? It is also important to consider if the current approach to staffing is the best one. For example, are full-time hires necessary for some roles, such as those that could potentially be eliminated in just a few years due to emerging technologies like artificial intelligence? How might technology change those roles, such as creating the demand for new skill sets? And would it be better for the company to explore outsourcing routine functions so it can focus on building a core team of first-rate talent devoted to higher-value work?
How deep is the company’s bench?
High-growth companies, like startups, often run lean. So, not having enough—or the right—talent in place when the business needs to scale is a risk. Boards, therefore, may want to assess whether the company has adequate talent reserves, not only at the senior or C-suite level but in all critical areas.
Also, is that talent being developed appropriately, so that people can step up to new roles and responsibilities when needed and with relative speed and ease? Does the business prioritize and take a thoughtful approach to succession planning, including below the C-suite level? And does it invest in training—including reskilling and upskilling, if applicable—and other programs like job rotation and mentoring?
Another element of bench strength that boards may want to assess is the company’s access to external resources. Can the company quickly assemble specialized talent and deploy it for as long as needed, such as through a managed business services arrangement, when business demands rise, or new opportunities emerge?
Does the company have a corporate culture designed to attract talent?
Despite the challenges of acquiring skilled talent in a tight hiring market, high-growth companies tend to have an advantage, since many in-demand candidates are eager to hitch their star to a “high-flyer.” But more than that, talented people typically want to work for organizations that have a strong mission and vision and where they know that they can make an impact.
So, in their oversight of the company’s talent strategy, boards should consider what the business is doing to make itself a talent magnet. Corporate culture plays a big role here, of course: Is the business fostering an organizational culture that promotes creative thinking and innovation? Does leadership communicate the company’s vision effectively, not only to the internal workforce but also externally, where potential hires can hear that message? And how does the company help its workers to promote work-life balance, which many professionals covet?
Environmental, social, and governance (ESG) reporting can also help high-growth companies—and any business, really—to stand out as an employer of choice. In fact, many tech firms are embracing ESG reporting as a tool to attract talent and build their brand and reputation. Through ESG reporting, organizations can share their progress on diversity and inclusion initiatives and other issues that today’s workers, especially millennials and Generation Z, care about deeply. The board has a role to play here, given that board risk oversight may be required for ESG reporting.
How can the board stay attuned to the organization’s changing talent needs?
We see many boards looking squarely at human resources (HR) leadership for help in understanding the company’s talent strategy and requirements. This makes sense. But boards should ensure they are getting information that goes beyond how many positions the company needs to fill, and the progress the business is making toward achieving its current staffing goals.
Ideally, interactions with HR leaders will include some discussion of the company’s evolving talent needs and what dynamics—such as technology innovations, emerging industries, new competitors, and changing customer expectations—may be driving them. This type of ongoing dialogue can help the board ensure that the company’s talent strategy aligns with its business strategy, and that the organization takes a proactive approach to sourcing top talent and building its workforce of the future.
Gordon Tucker is a managing director and the global technology, media, and telecommunications industry practice leader at Protiviti.