Leadership Matters
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By Laura Croucher

Although it is an increasingly important term in modern business – from strategic planning, to project implementation, to board oversight – “risk” has not yet become common parlance for HR professionals.

That seems odd given the impact talent can have on organizational capability, capacity, cost, connection and compliance. In fact, according a recent global survey report, Time for a More Holistic Approach to Talent Risk, talent-related challenges pose significant risk to organizational capability and capacity. In the survey, over 1,200 HR, talent, learning and business executives indicated they face particular challenges in developing future leaders, improving internal bench strength and recruiting top talent.

Most important talent risks to capability and capacity

Certainly, talent issues have come to the forefront in recent years, with analysts projecting impending talent shortages in numerous industries and framing the issue as “the war for talent,” “the labour crunch” and various other ominous phrases. Nonetheless, specific discussions of risk are traditionally focused in departments such as finance, project management and, of course, risk management.

Notably, when directly queried, HR professionals are more than willing to frame talent issues as risk issues. The question is: When will HR professionals begin to apply these terms more consistently to talent planning and the larger corporate context?

Indeed, if HR professionals are to more effectively attract attention from the board and encourage their active engagement in the function’s most pressing talent concerns, framing those issues more consistently as risks is an approach worth exploring.

Business-speak gets business results

It may be time for HR professionals to stop talking so persistently in the specialized language of the field, a language that too often serves to segregate the function and its issues from the larger business – at least when communicating HR issues to executive management and the board.

Moving from HR-speak to business-speak and looking at talent from the broader risk perspective can be an extremely valuable tool, not only for building credibility around the department as a strategic contributor but also for more effectively communicating critical information in ways that will resonate and evoke response and cooperation.

This rethinking of terms and drivers represents a change in direction for HR departments in general, one that will also require a significant shift in the way talent management plans are developed. If you think about it, the very capabilities on which most HR departments pride themselves may indicate that they aren’t managing talent risk very well.

HR departments often excel in areas such as recruiting and performance management. However, when these requirements dominate HR activities beyond all others, it may indicate that the function’s understanding of the larger business, its strategic priorities and the true risks talent issues pose to that strategy may be lacking.

In other words, a better understanding of talent risk with respect to business goals and risks when developing a talent management plan can change and improve the way HR professionals execute more traditional HR duties. At the same time, it can contribute to overall strategic drivers such as greater profitability and increased market share. HR departments need to ask some key questions, such as:
• What exactly are the larger business risks?
• Do we have an infrastructure in place to manage talent risk within a broader corporate framework?
“Talent risk management” – followed by measuring talent risk impacts on the organization – is a key component in developing an effective overall talent strategy.

Understanding talent risk is a key, often overlooked, part of any talent strategy

Even though the complexity of simply doing business in the global economy has increased exponentially, many HR departments still take a relatively compartmentalized approach to talent management. It’s critical, however, that HR moves from point solutions to a more holistic, strategic approach to talent management and risk. Focusing on recruiting star talent, while important, is simply not enough. The research indicates that organizational size and sector has little effect on organizations’ perception of talent risk-related issues, meaning virtually any business can benefit by more effectively factoring risk – both talent-specific and in the broader business context – into the talent program development process.

Laura Croucher is partner, Advisory Services, and People & Change National Service Line leader with KPMG.

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