A combination of factors means that finding the right talent is tough.  The absence of talent is a serious threat to the sustained success of many businesses. As a result, senior teams need to focus on developing effective and innovative talent management strategies that maximise their existing talent pipeline, while, at the same time, locating and exploiting new talent pools.

Given the importance of talent management, it is no surprise that organisations want to know how to implement best practice in this area.  There is, however, no simple solution. In fact implementing an effective talent management process is surprisingly challenging.

Getting in shape
To start with effective talent management requires senior management buy-in. A significant challenge is getting people in place in to deal with the talent sourcing. Fortunately, attitudes in the boardroom appear to be shifting. Findings from the recent annual Accenture CEO survey, for example, show that CEOs acknowledge the importance of working more effectively with both their finance directors and the HR function, to deliver a coherent talent management framework.

Some forward thinking organisations are switching HR strategy from the reactive centralised resourcing approach, to a more proactive approach thinking about building talent pools and talent pipelines. This is the beginning of strategic sourcing planning.

Another structural factor is the short-term position that many HR functions are in, in terms of deliverables and measurables. HR functions are often under pressure to hire and to do it quickly, and are measured on factors such as the number of open vacancies. With the increased outsourcing of recruitment, and other HR processes, there is an even greater focus on the numbers when measuring the performance of outsource providers. This is no environment to create a talent pipeline founded on quality.

Then there is the change of mindset required. Talent management in many organisations means graduate recruitment, and talent planning happens in very business or role specific ways. For example, an organisation that cannot source civil engineers will construct a global programme for civil engineers. Joining all the aspects of recruitment together into a cohesive talent planning framework is a very challenging task for many organisations.

However, there are some fundamental components of an effective talent management system.  In many cases they have been pioneered by US companies. Whether the success of US corporations in this area is down to better quality of management, greater R&D investment, or other factors, remains the subject of debate. But European organisations should take note.

Focusing on critical talent
One key component is a focus on critical talent; those individuals in the organisation that make a difference. That critical talent is no longer just graduate hires, but covers a range of talent segments required in the organisation.

European companies might do well to follow the lead of General Electric (GE) in the US, a leader in global talent management. In a way GE is ruthless about its approach to talent planning. The company identifies a key cadre of people – the top ten per cent, as a fundamental component of its talent planning. GE also makes sure that the top ten per cent have clear line of sight on their career plan and, as part of doing that, the company has to consider how, when and where they are moving this top talent.

At the same time, people who don’t perform are not sustained within the organisation. Dealing with consistently poor performers saps energy and time in an organisation, meaning not enough time is spent on the good performers.

At GlaxoSmithKline, the senior team are very clear about identifying a group of leaders for the future. The cadre of leaders is assessed annually, when GSK decides whether each individual should remain part of the high potential group, looks at where that person is going, and maps potential paths for them within the organisation.

Tesco, the supermarket retailer, is another company pioneering good practice with its talent spotting initiative introduced in 2002 under the direction of the then group HR director, Clare Chapman. The company has 367,000 staff across the globe, with over 2,300 stores and is looking to hire 11,000 employees in 2007, including up to 150 graduates. As part of the talent management programme, employees have a performance review and a personal career plan with objectives set annually. Last year about ten per cent of the workforce was targeted for training and promotion.

There are three elements to talent spotting according to Tesco: resource planning, career discussion and talent planning. Every manager is “coached in how to create the right environment for spotting talent,” the company also ensures as part of its future resourcing requirements, that it identifies those employees ready for greater responsibility and tries to meet their career aspirations as expressed in the annual career discussion.

Exploring new avenues
Putting the appropriate resources into the recruitment process is vital. Another US corporation is setting best practice here. Tech giant Google has staff turnover of just three per cent.  It is not unusual to have 12 interviews before joining Google, ensuring that when someone joins they are absolutely right for the company. It creates a positive environment for the people working there, who, knowing that they are chosen so carefully, have no doubt that they belong in the organisation.

There is no question that companies get a significant return on money invested in the recruitment process, provided that they get the process right, filtering applicants to ensure cultural and organisational alignment upfront, making sure that the right people enter the organisation.

Something else organisations need to do, is to be innovative about sourcing employees. Online social networks are a good example of how organisations can tap into current technology and trends to find staff.  As is often the case with the internet, the US leads the way. News reports highlight organisations like accountancy firm Ernst & Young and the CIA as actively using social networking websites such as Facebook to recruit new talent.

Other organisations use online networks to leverage changes in demographics and tap into a generation of reluctant retirees. Once again it is US companies setting the agenda. YourEncore, for example, is an open network Procter & Gamble helped to set up with pharma firm Eli Lilly. The network connects member companies to a database of well over a thousand high performing retired scientists and engineers from over 600 companies.

GE and several other companies offer phased retirement programmes, the key here is to acknowledge that retirees may still want to a role that stretches them, not just a shelf stacking job. In the UK three-in-ten employers plan to rehire retirees from other companies or provide incentives for workers approaching retirement age to stay with the company longer, according to a CareerBuilder survey released in January 2007. The challenge is addressing issues such as, how adaptable are retirees and midlifers in terms of taking on a second career, and what kind of salaries do they expect?

Tied to the demographic trend is the issue of flexibility of working. The more flexible employers are more likely they are to attract talent.  Generation X needs flexibility to address work life balance issues, the MySpace Generation has different life values and little concept of, or interest in, the old nine-to-five, five days a week full-time working patterns.

There is no doubt that organisations in Europe will need to create new HR roles, redefine existing employee roles, and develop innovative talent sourcing strategies, if they are to keep the talent pipeline flowing, and stay competitive with those organisations in the US leading the way in talent management. While many are already making progress, others have some way to go. But sustained success is not an option without addressing the talent management issue.

Reputation, reputation
Finally, companies must consider employer reputation – a key weapon in the recruitment battle. In a tight market, talent chooses organisations, rather than the other way around. Companies must project their values and vision in a consistent way throughout the organisation, and not shirk from issues high on the public consciousness, sustainability is a good example.

Many people, including some of the brightest MBAs and future leaders on the planet, care about sustainability issues. They want to work for a company that shares their world view. Justifiably so. Admire the conviction of Yvon Chouinard, the founder of the green minded outdoor clothing and equipment company Patagonia – the people queuing up to work for him do. Etched into the front doors of the company’s HQ in California is the following quote by Sierra Club executive director David Brower: “There is no business to be done on a dead planet.”