The sharp downturn in the world economy puts that talent challenge in a new perspective. Fewer companies will be growing aggressively. Immediate shortages are likely to be less acute. But leadership becomes more urgent than ever in a downturn, and ensuring an adequate supply of leaders in the roles where they can make the most difference remains a vital priority. Downturns also put great leadership talent in play. That creates opportunities for companies to close their talent gaps and upgrade the quality of their leadership.
Building a talent-rich organization is by nature a multiyear challenge. But three specific steps will not only have an immediate impact on a company's talent supply, they will also lay the foundation for longer-term moves.
- The first is to quantify the leadership gap. Downturn or no, many companies don't have a detailed picture of the talent challenge they're facing. A rigorous analytic picture of the gap makes the challenge visible. Suddenly the talent issue can no longer be shuffled off to the human resources department; it is now on everyone's agenda, including that of the board.
- The second step is to deploy existing talent more effectively. Too many companies don't know who their top performers are. Nor have they placed those individuals in the jobs where they can have the most impact. Mismatches like these can cripple a company in a slowing economy.
- A third step-often overlooked-is to reduce the demand for talent. Organizations that simplify their processes and spell out accountabilities more clearly can simultaneously keep costs under control and make the most of the talent they have. Taken together, these steps help leaders address their talent challenges quickly and build longer-term commitment throughout the organization, which is what's required to sustain the flow of investment in leadership supply. Let's take a closer look at each one.
Quantify the leadership gap
A leadership gap is by definition a disparity between the supply of talent and the demand for talent, both now and in the future. Understanding leadership supply and demand is best accomplished through meticulous analysis of the current situation and careful projections of the likely changes in months and years ahead.
On the supply side, the place to begin is by looking at the basics. How many leaders do you have? What are your recruitment and promotion rates? What is the level of attrition- wanted and unwanted-and retirement? What factors will affect recruitment, promotion, and attrition rates in the foreseeable future? (For example, early retirement may seem less appealing if the downturn drags on.) You can do this analysis by region, by business and functional unit, and by key capability areas. The results provide a rich set of data allowing you to build or validate a talent-supply forecast. Just as important, analyzing the leadership gap this way helps to identify choke points that may require immediate attention.
The demand side begins with a similarly fundamental analysis. What will the business look like in a year, in three years, in five years? How many leaders will you need in each unit, geography, or functional area and what kinds of skills will those people need to have? Matching the supply forecast to the demand forecast shows in broad terms where the talent needs are likely to be most acute. It also helps pinpoint the effects of the downturn. Some business units and regions are likely to continue growing over the next couple of years. But others will be flat, and indeed may be net exporters of talent to talent-starved parts of the business. A detailed demand analysis will show both sides of this talent ledger, and will help avoid the trap of making across-the-board assumptions about impact of the slowing economy on a company's needs and sources for talent.
