When England last had a good team (2003) there were seven leaders in the team, all of whom had come up through the team at roughly the same time, at the same age, and were World-class.  Then they all retired at the about the same time (along with the head coach) and results seriously deteriorated.  The problem was compounded as those leaders had been the products of a development programme that was designed to be sustained, but was never continued when Clive Woodward left that same year.  It turned out to be a one-off programme and after 2003, England started to take a short-term view as results started to deteriorate.  Instead of developing future leaders they preferred to look to older, iconic individuals (without necessarily the right skills/values) hoping that they might inspire the younger team members to get the right result in that given week, to try to ease the mounting pressure from press and supporters.

The talent development programmes under the RFU are exceptional, but not for leadership and at the 2011 World Cup the England team hit the big brick wall that under-investment in the future had made inevitable.  Under an “iconic” and untrained head coach, the team mistook longevity of service to be the key leadership quality, when in fact longevity just turned out to mean “tired and unambitious”.

Perhaps the key organisational product of leadership is context, yet all too often our senior people are reasonably bright, politically adept but act like deer in the headlights when faced with incomplete data, a lack of clarity and an absence of being told what they should do from Board level. Result? Large parts of the organisation either doing nothing because they don’t know what to do, or trying to do everything because nobody has told them what not to do. This isn’t the fault of those further down the organisation – they just want to do their best at work, be rewarded for it and have fun. This is a leadership issue which has arguably been propagated by an approach to talent which fails to adequately distinguish between senior management and business leadership. The assumption is too often that having enough of one means you automatically have the other. But I just don’t buy this, and neither do some other organisations out there.

In today’s corporate world, as in film-making, black and white is a thing of the past. It has been replaced by shades of grey, paradoxes, conflicts, trade-offs, uncertainty and more-for-less. This is an environment where tolerance of ambiguity, judgement, pragmatism and flexibility are the new value differentiators at leadership level. Being able to work with minimal data, make the percentage-play, be directionally tactical, provide decision-making filters and balance complexity with impact, risk and speed are vital. Yet how many organisations really engage with topics like this (and their implications on organisational structure, assessment, development and career pathing) as opposed to more traditional “leadership competences” – many of which, in 2012, I would expect from most managers?

It’s been my experience that this issue lies close to the DNA of business effectiveness, pretty much independent of organisational type or sector. I would argue that focusing on these translation capabilities will bring greater benefit than simply promoting experienced managers with acceptable communication skills. I would go so far as to say that if you don’t consider this, there’s not much point doing all the other stuff since it won’t really make much difference since, as the saying goes, the “problem is the problem”.

But then again, I’m apparently a bit of a maverick!

Much has been written (and in some cases, practiced) about the value of leadership competencies. Typically exerting a behavioural element, these seek to understand how someone is likely to react in a given situation. Whilst they have been broadly accepted by organisations, they have one major limitation; they rely on the assessor being able to observe situations that will be relevant in the future; but how do you know what the future will be?

In search of a better solution, organisations have extended their range of assessment tools, seeking to assess values, IQ and EQ (Emotional Intelligence; as popularised in the last decade by authors such as Daniel Goleman) to help explore the myriad of different leadership dimensions. However, whilst this tells us a lot about a leader, how do you find those who can successfully reinvent themselves and continually seek to adapt and remain relevant for the world around them?

Learning agility

Learning agility is a concept increasingly being discussed amongst HR and leadership circles. Whilst it’s not a new concept (academics such as Lombardo and Connolly have highlighted the power of learning agility for over a decade) its acceptance in the mainstream remains slow.

So what’s the fuss with learning agility and why add it to the repertoire of other tools already engulfing your business?

In a recent book published by the Centre for Creative Leadership titled, Lessons of Experience, the authors found learning agility was a good predictor of leadership performance. After interviewing roughly 200 executives, they discovered that the most successful leaders were able to move out of their comfort zone, take risks, learn from mistakes, and begin anew as they encountered new assignments.

In summary, the successful leaders continually learned, bent, and flexed as their work world changed i.e. they were agile learners.

Is learning agility the panacea we’ve all been looking for? We think not. A great leader who doesn’t ‘fit’ in the organisation or lacks the IQ to make well reasoned analysis and decisions will still fail. However, it stands to reason that picking those leaders who can learn from their experiences, be agile and adapt to the world around them stand a better chance of success in the long term.

It appears that the West is slowly losing its economic power as potential moves to new powerhouses in the BRIC countries and Goldman Sachs’ ‘Next 11’ and one of the effects of this is increasing pressure on HR to deliver new, more effective talent strategies. But according to one of the speakers at the conference, the industry will only succeed if it can learn to master an organisations changing complexity and speak the ‘language of business.’ 

Gyan Nagpal, former head of talent in APAC for Deutsche Bank and now CEO of the consultancy, PeopleLENS, emphasised the fact that corporate boards are looking for greater involvement and depth of insight from HR, which means it is now more important than ever that the profession presents its business case in a more structured and robust manner.

Gyan cited some excellent examples of the need for HR strategies to be more flexible and responsive, the ‘market rush’ in the Asia Pacific region being just one. As many companies hastened to take advantage of the emerging opportunities in this area, they stumbled across a key flaw; few major businesses had a proactive strategy to develop their workforces in line with the necessary capital and technological investments.

In order to get the buy in and investment from the board in these instances, it is down to HR to communicate and plan talent investments in terms business-orientated minds will quickly and clearly understand. But how can they do this when there is a disconnect between the HR and corporate functions which has grown since the implementation of the Ulrich Model?

Nagpal used a medical metaphor to describe the solution; prescription without diagnosis could be as dangerous in HR as it is in medicine (also the subject of his book, ‘Talent Economics’, due to be published at the end of 2011). Put simply, this means that HR practitioners will need to analyse both the macro and micro factors that impact an organisation and its target markets in order to formulate tailored strategies in a more scientific way.

According to Nagpal, analysis must also forget the sceptical idea that there is a truly global solution. A ‘one size fits all’ approach is never likely to address the real issues when cultural and contextual influencers will constantly change. Instead what is needed is a flexible yet tailored approach which provides HR with a clear investment recipe for scarce corporate resources.

With this in place HR will be in a better place to achieve the long desired complete credibility with business leaders around the globe.

Organisations globally are working extremely hard to put values at the hearts of their businesses in order to try to meet the demands of growth, scarcity of skills, changing markets, increased competition etc etc etc. Aligning talent programmes to business goals, with people the key to achieving short, medium and long-term ambitions, leaders have had to live and demonstrate values like never before, with their most critical business partner; HR.

On September 14th Ochre House hosts its annual symposium at Wentworth and this year it covers the topic: “Re-defining Business Value through a Talent Centric Approach”. For the first time we have business leaders joining with HR leaders, as the two have come to work inextricably in those organisations that are leading the way in aligning business strategy and talent.

We have heard that Newspapers have struggled, are perhaps outdated with the advent of the internet, but is it such an archaic industry that the leaders can behave like luddites? I think not, and I sincerely hope the NI staff vote with their feet.

We already all know the reasons why direct hiring is key- protecting your brand, managing candidate experience, improving retention, reducing costs of resourcing… I could go on! But we also know that you can’t do without good agencies that work as partners and are still an essential channel in attracting new, niche, external talent. Your PSL is a key partner relationship so manage it carefully, within clear parameters, with clear communications agreed. Or risk paying the ultimate price!

Where was HR during the crisis? If HR is truly strategic and business partner, where were we when the going got tough?  Why do I argue this?  Whilst it is true that the culture and values of an organisation are set by the CEO, HR can play the role of ‘critical friend (the parrot on Long John Silver’s shoulder). If we are truly playing the role of conscience to the organisation, than we need to have evidence and data to influence the debate.

Let’s look at the reward framework for an organisation; HR can play the role of strategic and advisor and able to execute the policies. In the case of banking, for years there has been evidence that paying higher and higher bonuses does not encourage the right behaviours, nor necessarily retain top talent. But in Investment banking the argument has been lost. Does it now seem like a failure that government is now at the centre of the debate and potentially setting the agenda? Is this a function of the lack of influence HR has in an organisation or that the Banking giants really are out of control and need greater regulation?

If we leave it to government to set the terms of the debate, HR will once again be forced to play the role of reluctant executioner and be given a back seat in business.

In recruitment we can set recruitment frameworks and targets that ensure diversity, values and inclusion are better tested, measured, to ensure that outcomes are changed and inform better decisions. L&D can measure the changes in output and behaviours from certain interventions and outcomes. So does HR hide these factors from the business? Are we really forced to be on the back foot forever – because we really don’t add value?

Where HR departments have not only embraced metrics but used the analysis to influence the debate is surely the way forward. If business likes to use numbers to manage the business, why not HR, in managing themselves?  If we were measuring the number of disciplinaries, tribunals, grievances, and set targets to reduce them, we might get to the root cause of the problem and begin to tackle underperforming managers, systemic victimisation and improve engagement and ultimately output and productivity.

Had these principles been applied, might we have avoided the banking crisis? Maybe not but….It’s food for thought…

Our guest blogger this month was Jon Hull, Resourcing Manager at Electrocomponents plc. Thank you for your great insight.

Furthermore, in April, IBM predict that their current employee based would be reduced to 1/3 of its current size by 2017 through contingent labour and the concept of crowd sourcing.

Why the growth in contingent labour? Business leaders usually cite three reasons:

1. It allows access to expertise quickly, especially that which is difficult to recruit. This is especially true with professional level contingent labour which may be substitutes for consulting organisations.
2. It enables flexibility in the labour cost base; by being able to turn resource ‘on’ and ‘off’ as required. However, this is more a theoretical benefit as the loss of knowledge can be a challenge in many organisations. Furthermore, the replacement of a relational commitment between employee and employer with a transactional one between a supplier and customer can actually reduce organisational agility; ‘suppliers’ are less likely to buy the vision and go the extra mile.
3. Overall costs can be reduced – especially true in labour arbitrage plays where the contingent solution may actually be achieved through business process outsourcing.

What’s the implication for talent?

So what does the rise in a contingent workforce mean for the individuals? In my view, there are three key factors:

• Individuals will increasingly need to understand and communicate their value to prospective customers. As mini enterprises, every individual will need to have a clear value proposition and be effective at communicating this to their target market.
• Depth of expertise will be increasingly valued. In order to differentiate from the crowd, individuals will need to demonstrate a unique selling point and this will increasingly be realised through their expertise. This can only be a good thing for individuals (who will have to constantly reflect on and build their strengths) and organisations (who will benefit from this higher level of expertise).
• Career development becomes an individual’s problem. Building on the theme above, individuals not organisations will take responsibility for development. Whilst this may take a cultural shift (especially in organisations that have struggled to modernise their HR practices) it does ensure individuals maximise value from the development (wouldn’t you if it was your own money?).

Good or bad?
So as an employer or employee, how do you think the rise of the contingent workforce will affect you?

The furore over the last weeks has centred around individuals and what they are worth to an organisation. In the management of talent what is the role of the manager? Is that role now overrated? And how important is the team, related to performance? Can organisations do a ‘Chelsea or Man City’ and just acquire talent at the highest cost and expect to succeed?

Arsene Wenger/ Alex Ferguson/Jose Mourhino – why do they have a track record of success and a record of player loyalty? Have they always recruited the ‘best talent’ or developed it? Arguably they manage  big clubs with lots of money. Is that always a reason for success? – RS is a marketleader,as are many companies and the biggest asset is always quoted to be the workforce. How do we really manage our talent? Who does this best and what really matters? There are some fundamentals but do we really pay attention to them?

Research suggests that we join a company but leave a manager. How can we be better managers and how much time do we spend managing rather than doing? A footballer manager’s role is arguably easier than ours in the modern workplace bacause we can always default to our area of expertise, whereas when the players walk over the white line…. so what is our role?

The Rooney issue was the epitome of what is talent worth and what role does management play in the modern world of work. Clearly, most of us are not dealing with the salary demands on this scale but as managers we deal with issues that are equally as challenging and how do we address them? What is our standpoint? If people deliver is that good enough or are we looking at the wider contribution/impact on the team/business.

Unsurprisingly, professional sports coaches look for a wide range for capability other than raw talent. During the run up to the 2003 World Cup Clive Woodward has been documented as not necessarily picking the ‘best players’ for the final squad but those who deemed as best for the end goal…. Difficult decision for any manager…

All managers have experienced the conflict between a high performer who delivers but has a negative effect on the team – How do we manage in that situation, do we really consider the impact on the wider organisation? Are there organisations that really manage behaviours and values? If so, how does this impact on how you manage? What is important and what are the consequenses?

Can we learn anything from Fergie and Wenger? How often have they ‘ let go’ of top talent (Beckham, Henry, Viera, Ronaldo) and still the club have prospered? Were those decisions any more difficult than the ones we have to make as managers week in week out? And even though our worlds seem quite different what are the key drivers when they recruit new talent?And what do they look for when developing that talent – Will that raw talent that might earn the an extra few goals a season make the crucial difference to overall performance of the team? Before we recruit from outside, the talent within our team, or have we just neglected it?

Our guest blogger this month was Jon Hull, Resourcing Manager at Electrocomponents plc. Thank you for your great insight.

The best organisations can clearly articulate their recruitment cost as a ‘cost per hire’ or ‘cost as a percentage of salary’. The second, more perplexing question is ‘how do you measure it’?

Most organisations will include the cost of recruitment agencies (the predominant source of the cost). Some will also include advertising, travel costs and the cost of the recruitment team but few will go beyond this, which can be a mistake.

Our research uncovered that more than 50% of recruitment costs are indirect. This predominately includes the cost of hiring managers and HR’s time in the process, which is an important role. However when managers are conducting 10 interviews for each hire, it’s easy to see how the costs stack up (we calculated the Hiring Managers time usually cost on average £2500 per hire). Whilst business leaders accept that interviewing is an integral element of a manager’s job, those who are directly revenue generating / working on billable hours will soon resent the cost of the lost earning opportunity. However the indirect cost in only the ‘tip of the iceberg’.

What isn’t measured can’t be managed!

Many organisations will rely on contractors / contingent workers to support their operations. However, a number will also use a contractor as an alternative to permanent recruitment and this is where the costs really mount up.

Firstly, we need to explore why managers choose the contractor route over permanent. Our research uncovered two key reasons:

- Headcount approval – usually hard to achieve for permanent hires but surprisingly easy for contractors

- Talent availability – managers frequently comment that it’s easier to secure a good quality contractor over a good quality permanent employee

Back to the costs; let’s assume most contractors charge a 30% premium to their equivalent permanent salary and that an agency margin adds another 20%. On average therefore the cost of recruiting a contractor over a permanent can easily be 50%. And if the contractor stays for many years so does the cost. Our analysis suggests that the margin paid to contractors can be upto 5 times their annual spend on permanent recruitment. Add in the premium contractors charge and most organisations will be wasting many millions. If that wasn’t enough, many organisations are poor at tracking their contractor headcount.

We’ve undertaken numerous projects with customers to help assess and understand the true cost of contractors. In a recent engagement we identified that the actual number of contractors was 300 percent that which the client was aware of. In monetary terms, over £60million was been spent on contractors which the business was unaware of; £20m of which was as associated with the contractor premium and agency margin.

Brining this analysis through to its logical conclusion, we can see that the organisation was spending £20m on recruitment which it could have saved.

This begs the question; do you really know what your cost of recruitment is?