By Dr. Natalie Koeppe, Head of Talent APAC & Greater China, Adidas
‘Is COVID-19 Changing Our Views on Talent Management?’ was published in the summer 2020 edition of the German Chamber Ticker. Editor: Noga Feige, Senior Editor of the Ticker Magazine.
Talent Management, an integral part of HR in organizations for decades, is experiencing a change in current times of crisis. While talent attraction, development, and retention have been defining the talent management agenda of organizations in the past, the focus started to shift towards how talent management can support a business facing an increasingly VUCA environment. VUCA began to trend across the business landscape during the 21st century, mapping the talent management of organizations against the degree of readiness to cope with volatility, uncertainty, complexity, and ambiguity. Under the influence of COVID-19, the talent management focus swiftly shifted to support business recovery and the continuity of management tasks. This shift has the potential to change the term talent and the way organizations practice talent management for years to come.
Talent Management Prior to the Crisis
Talent management has been around for decades. Concepts range from key positions, talent pipelines, and pools, to keywords like high performance and high potential management. However, the approaches have one common purpose: matching a key position with the right person having the right skills in a timely manner. Talents in this context are commonly understood as individuals showing high growth potential, as well as high performance, in their current role. Both are often linked to a unique or rare set of skills and abilities that are hard to find on the external market. While talent itself is being assessed through performance and potential analysis, critical issues arise from the link of talent to key positions, leading to so-called “key talents” or “critical talents.” These employees are known to be contributing directly, significantly, and positively to the company’s value, while influencing the company’s strategic future.
Some organizations are taking a holistic approach to talent management, focusing on the entire talent life cycle, including talent attraction, recruitment, development, and retention while others concentrate their efforts on key areas, such as nurturing a strong succession bench for critical positions. Naturally, when looking at a single-digit number of critical roles and only a small, elite group of high performers in the organization, the approach to talent management becomes rather exclusive, supporting dedicated investments into the strategic organizational human resources – the talents.
Could the crisis change this classic understanding of talent management for good?
Impact of Crisis on Talent Management
By the end of April, when this article was written, the (first) curve of infection was flattening worldwide, and countries were extensively starting to estimate the pandemic’s development and its impact on business for the near and distant future. The first few months of 2020 saw an impact on talent and talent management across organizations, particularly in the following areas:
Talent hiring: while many companies are holding on to old processes, structures, and habits, leading companies are using this time to architect the ‘new normal.’ Research on companies pulling through during recessions suggests that the key to a stronger post-crisis position is a strategic and selective focus on investments. While many companies are installing strict cost control mechanisms, scaling back on recruitment, and driving downsizing, those organizations that balance their “hire and fire” approach are performing significantly better than their competition. A study by Boston Consulting Group suggests that in previous cases of crisis, a highly selective hiring approach of key talents was one of the most effective crisis measures reported by more than 3000 executives from 30 European countries across multiple industries (BCG, 2009, ‘Creating People Advantage in Times of Crisis’). This was confirmed by another study from Harvard Business Review, showing that companies balancing cost control and investments in a progressive manner, improving operational efficiency, and boldly investing in new business opportunities have a higher likelihood of coming out as post-crisis winners (HBR, 2010, ‘Roaring Out of Recession’).
How could companies proceed with strategically-selective hiring?
Focus on external key talents: Analyze which key talents on the market you have been looking at in the past, but have not been able to attract. It is possible that those talent who have not been interested in joining an organization before will now be open to consider a position, as their personal or professional circumstances might have changed.
Target key sectors and industries: Particularly in times of crisis, companies should focus their sourcing and hiring efforts on scouting top talents in key functions, predominantly in hard-hit industries (such as aviation, the hospitality sector, or the start-up scene).
Hire for soft skills and potential: While the concept of hiring based on potential (to perform in future roles) rather than past performance has been known for years, it seems that the crisis has emphasized the need for it even more. Candidates with a ‘growth mindset,’ who have the ability to adapt effectively to changing circumstances and apply soft skills like change management, collaboration, communication, influencing techniques, and inspirational leadership – now move to the top of the selection criteria. Investigative, behavior-based questions such as “Could you tell me how you managed your team through a transition?” could support the selection process.
Critical roles and succession: In times of crisis, it is crucial to review the key players and reassess their skills and potential in the face of the business’s revised requirements. The past weeks have given organizations an opportunity to get an alternative view on leaders, observe their performance in crisis, and raise the question: “Do we have the right successors in place for our critical roles?.”
In the past, critical roles were typically defined based on a set of diverse ‘risk criteria,’ including, but not limited to, the degree of impact on the business (e.g., operationally, financially, functionally, etc.), degree of external availability of talent in the market, or the uniqueness of skills, competencies, and knowledge. Recently, the new criterion of ‘crisis risk’ has entered the criticality discussion of succession and talent pipelines. With COVID-19, the risk lies in the event of sudden unavailability of incumbents of critical roles. The ‘risk factor’ for senior leadership roles and other key positions is not new, and most companies have mitigation protocols in place. The new aspect, however, is the pandemic’s effect on multiple key positions simultaneously. For such cases, it is crucial to reassess the succession bench strength and ensure the talent pipeline continuity, by defining multiple (instead of one) steps for candidates with instant availability. Alternatively, organizations also could split a critical role and divide responsibilities among several step-in successors. This would support business continuity, while maintaining proper control during unprecedented times.
Additionally, globally mobile successors might require a reassessment. The impact of the crisis might be threefold: First, from a regional, macro-economic perspective, as borders remain closed and countries do not offer clear communication of timelines on travel restrictions, “next in line” successors might be immobile and need to be reconsidered. Secondly, once countries open their borders, the aspect of work permits and possible delays in their processing might add another layer of complexity for international succession pools. Finally, the talent themselves might have changed their minds in terms of mobility, as they might be reluctant to relocate to certain countries or regions. This might particularly extend to countries that have been severely hit by the virus and are only slowly recovering.
Development and retention of key talent: Once organizations have reassessed their succession pool, the development and retention of key talent move to the foreground. What can organizations do in times of crisis to develop and retain their talents?
Implement targeted development plans: As the requirements for skills and knowledge change in the face of future business outlook, closing the skill gap becomes a top priority. Targeted talent development plans could not only include temporary, cross-functional resource re-allocation, but also stretch assignments, which often arise from crises.
Transition to virtual learning & development: During COVID-19, the learning and development aspects of organizations are increasingly shifting to the digital sphere (partially due to cost control and mobility restrictions). Particularly in China, where classroom training is the preferred learning option, many companies find themselves unprepared to switch gears and drive development through virtual offerings. While driving the transition to virtual learning, organizations might need to take a step back and focus on ‘digital readiness’ first. Not only does this include providing access to the required hardware, software, and tools, but also upskilling and navigating the virtual/digital learning landscape, while pursuing self-paced, self-disciplined and self-guided learning according to individual needs. Organizations could provide introductory training to digital learning, as well as establish regular digital learning activities. While the need for virtual or remote learning opportunities is obvious, the need for a virtual talent development program might be a new challenge.
Invest in top talents: This might sound controversial – given the fact that in times of crisis cost control is predominant. However, investment in talent retention is essential in a VUCA environment. Keep in mind that losing your talent is more costly than retaining it. Once organizations start to recover from the crisis, recruitment costs are expected to mount. Thus, reviewing your talent retention practices now and setting up a proper retention plan is key in times of uncertainty, when the competition targets your high performers to support their business recovery. Adding to the monetary aspects of talent retention, companies, now more than ever, need to invest in the health and well-being of talent and their families. It might be the right time to review the annual leave policy, implement guidelines for working from home, start offering annual health check-ups to all employees, or invest in health insurance for your staff.
Hit by the pandemic, organizations will need to rethink how talent management will look in the future, asking themselves how to identify and develop their high potential (sometimes remotely), drive strong leadership across teams physically and virtually, and how to react to the potential case of losing a high proportion of their talent base at once. These issues will drive the talent agenda for years to come. Furthermore, talent will become more mobile, expanding beyond the scope of regional borders – particularly beyond functional borders and job grades. Ad-hoc short-term assignments and pooling of skills will become the new operating model. At the same time, the digital mindset and the advancement of technology will support even faster resource re-allocations through remote working opportunities.
While strategic investments in external talent are smart, it is important to take a closer look at your internal key talents now. Reviewing talents’ availability, capacity, and capability is necessary for understanding the organizational talent gap and ensuring a strong succession bench to master extraordinary circumstances. And while organizations are progressively cutting costs to stay operational, it’s also the right time for companies to reexamine their talent retention plans, as losing top talents now will cost organizations more in rehiring, when the cost of recruitment spikes post-crisis. Companies now have the chance to learn from the crisis, strengthen their organizational ‘immune system,’ and show resilience.
Dr. Natalie Koeppe is a versatile HR professional with a Ph.D. in International Management complemented by a Lean Six Sigma Black Belt. She holds a guest professorship at two European universities and is a regular speaker at academic and business conferences. She has been working in China since 2012 and last year joined adidas to drive the talent agenda across APAC.
