Managing talent isn’t just about sending the odd staff member off on a training day. It’s about recognising the real value of people
There is a weird paradox at the heart of the UK’s economy. The size of the nation’s human capital is undeniably massive. In 2010 it was valued at some £17.1tn – two and a half times the value of the country’s tangible assets. FTSE 100 companies spend more than £200bn on talent alone. Yet relatively little is known about how investing in talent can affect a business, and therefore the importance – and opportunity cost – of failing to retain the best talent. That’s according to a piece of joint research by CMI, CIMA, CIPD and UKCES called Valuing Your Talent, which explores how we can better understand the nature of human capital – or, to put it simply, the value of the people who make up our businesses.
So in 2015, what themes should companies be aware of in terms of managing talent?
1. Value the human
Unlike machines and intellectual property, human capital is trickier to value. The performance of your talent will depend on the culture of your organisation, so although you may have a grasp of the costs of things like talent recruitment and retention, unlike a machine the performance of your staff will fluctuate. Factors such as staff diversity, organisational culture and leadership capability will all affect how talent performs, and therefore, the return on investment in staff.
2. Record the human
Given the size and significance of human capital, one key insight of the research is to align talent with business model. Integrated Reporting (IR) calls for explicit emphasis on people-related issues that are viewed as central to an organisation’s ability to create value. These include intellectual, social and human. Learning how to measure and promote these themes is set to become a key issue as IR becomes more widespread.
3. Win their hearts
CMI’s Management Article of the Year showed exactly why morale matters to the bottom line: there is a clear link between employee morale and creativity and productivity. But not only are high levels of morale and employee engagement a good indicator for the performance of a company, they are fundamentally related to improved management and leadership. According to James Court-Smith, a senior adviser to the Engage for Success taskforce, a focus on engagement means that talent issues should be discussed alongside commercial and strategic discussions.
4. Understand the risks
CMI companion Professor Ian Reeves calls managing risk the ‘noblest science in business’. And with good reason – given the primacy of human capital, there are huge risks to any business that doesn’t understand people risk. In recent times, scandals in the banking sector, the media and even at the Mid Staffordshire NHS Trust have highlighted the hazards of poor working cultures. If the wrong behaviours become the norm, then it may give rise to substantial risks to the organisation. In order to stave off such risks, risk specialists Airmic recommend creating risk resilience through focusing on behaviour and organisational culture.
5. Sustain to gain
It is one of those buzzwords that politicians love, but sustainability lies at the heart of managing talent. Unilever demonstrates this in droves by constantly questioning whether its workforce can sustain the organisation’s €80bn revenues. Rather than assuming that it employs enough talent, the company’s HR department is on guard for skills gaps across the organisation in order to create talent. That way, Unilever is helping protect itself from the stall point associated with so many corporate behemoths that fail under their own heft.
If employee retention, skills gaps and lack of engagement are a concern at your organization, becoming a chartered manager will offer training and professional insights geared to solving such problems.