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Article Excerpt
This article introduces the concept of the branded talent developer, an organization that emphasizes the career and developmental opportunities it offers as a means of gaining competitive advantage in the war for talent. The authors describe the financial and operating advantages earned by these organizations in attracting and retaining talented employees. We also characterize the nine qualities that differentiate branded talent developers from other organizations, and the difficulties inherent in building and preserving a reputation as a branded developer. Finally, we discuss the several important roles played by HR professionals in establishing a talent development brand.
In exchange for what prospective and current employees give to an organization--time, skills, performance, commitment--there is a corresponding "get" for the employee. Organizations market this "get" in various ways. For example, investment banks promise to pay high performers unusually well. A recent New York Times article (The New York Times, 2006) described the "Goldman Sachs premium" this way: "Goldman's compensation per employee ... is about $623,418 ... Lehman spent the equivalent of about $314,000 for every employee, and Bear Stearns spent about $320,000."
Some companies emphasize career and developmental opportunity. The best are able to turn their commitment to development into a source of advantage in recruiting, engaging, and retaining employees. We call these companies branded talent developers. For example, Exxon Mobil is highly regarded within the energy industry for its investment in employees, and this investment is a company guiding principle: "The exceptional quality of our workforce is a valuable competitive edge. To build on this advantage we will strive to hire and retain the most qualified people available and maximize their opportunities for success through training and development."
P&G is another company known for hiring employees right out of school, and developing them through progressive work assignments and training. It would be unusual for P&G to bring in external talent at other than junior levels, except in the rare case of an acquisition like Gillette, and almost unheard of to bring outsiders into senior executive positions.
Ketchum, the global public relations firm, also competes for talent by marketing its commitment to development. As the Ketchum website points out: "Ketchum prides itself on its reputation for providing the best learning opportunities in the industry." The 2004 Holmes Agency Report Card described the firm as a leader in employee training and cites its developmental opportunities as a prime reason why employees of competitor firms find Ketchum attractive (Holmes Agency, 2004).
Many companies espouse superior development opportunity, yet few sustain this commitment over the long term. The following sections describe the benefits of being a branded talent developer, how companies go from rhetoric to action in sustaining branded development, and outline the important ways that HR contributes to brand building.
The Benefits of Being a Branded Talent Developer
Companies that establish standing as a branded talent developer appear to benefit in several ways. First, they are more likely to attract, hire, and retain individuals who have the skills and attributes they require or wish to develop. This recruitment and retention advantage should not be surprising. A large literature review, including a recent study by Towers Perrin (Towers Perrin, 2005), identified career development as a prime factor in attracting and retaining employees. Fortune's "Best Companies to Work For" survey suggests that developmentally oriented organizations are more likely to be seen as attractive employers (Fortune, 2006). Charlotte and Laura Shelton's research (Shelton & Shelton, 2006) also demonstrates the particular relevance of development for the emerging professional workforce: "The top three things (they) want in a job are positive relationships with colleagues, interesting work, and continuous opportunities for learning."
Branded talent developers also appear to meet their talent needs, accomplishing this at a lower overall cost. By focusing primarily on junior employees, they avoid the costly practice of experienced hires. Building deeper relationships with talent pools provides a "first-pick" advantage, consistently enabling them to attract stronger individuals. Their attention to rigorous process and clear competency criteria results in fewer hiring "failures" and greater rates of employee retention. For example, Gallup's Q12 research provides at least indirect support for the relationship between a focus on talent and talent development and employee retention (Welch, 2004).
Third, branded talent developers are better positioned to pursue an organic growth agenda successfully. As a number of thoughtful observers have noted (Gubman, 1998; Frank & Taylor, 2004; Michaels, et al., 2001), staffing and skill gaps are typically described as a significant impediment to successful growth and expansion. Branded talent developers solve this problem by strongly connecting developmental activities to business plans, more rigorously assessing their human capital, and building skills for the future as well as the present. For example, GE's chairman Jeff Immelt recently mentioned:
The initiative we're driving now is organic growth. If that's your initiative, it doesn't make sense to be training people exactly the same way you trained them in the past. So we identified about 15 companies that had grown at three times the rate of GDP, and asked them what they had in common. It was five things: external focus, decisiveness, inclusiveness, risk-taking and domain expertise. So we reoriented the way we evaluate and train along those lines. (Fortune, 2006)
As Immelt's comments suggest, the focus of GE's developmental activities is geared specifically on the competencies that are crucial to the company's future business needs for performance, rather than focused in broad, generic areas.
The best branded talent developers appear to earn a valuation premium for the quality of their leaders and leadership system. As we argue elsewhere (Ulrich & Smallwood, in press), these organizations are more able to generate greater investor confidence in their ability to execute a growth strategy successfully.
What Differentiates True Branded Talent Developers?
Over the past several years we have become interested in how organizations build "leadership brand," a reputation among investors, customers, and other stakeholders that the organization does a superior job of developing leaders and leadership (Ulrich & Smallwood, in press). In the course of this research, we have observed a number of organizations that justifiably earn a strong reputation for development generally, rather than solely in the area of leadership. This research has led to a broader interest...
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