managing in the new millennium

Patricia M Buhler; SuperVision; Burlington; Feb 2004 the new challenge for management in the 21st century: leadership There is a silent talent war being waged in American business. As organizations acknowledged that a management shortage was looming on the horizon, steps were outlined in the astute companies to begin preparations for meeting this challenge. These future-oriented plans address a variety of issues to win this talent war. To be successful on an ongoing basis, new management must continuously be developed. Continued success means organizations must ensure that talented individuals are at the helm of the organization, critical teams, departments and divisions. Companies, then, must identify potential talent and then develop them. This is a lengthy process. Talent is rarely discovered overnight, but rather it is nurtured and developed over time. Two Roles: Management and Leadership When identifying talent, companies must determine what they need. The first step in the talent war, then, requires identifying what skills these talented individuals must possess. While Corporate America uses the terminology managers, what they really need are leaders. The two terms reflect two different roles that are filled in the organizations - both of which are important. Companies today need those who can promote change. These are the real leaders. Managers, on the other hand, fill the role of stability. Maintaining the status quo (the role of managers) causes an organization to fall behind if not paired with the role of promoting change. As the world continues to change, stability implies the organization is being passed by as it stands still. While companies need both stability and change, there are more individuals who can fulfill the role of promoting stability. Yet change is the order of the day. Therefore, organizations need more leaders those whose role it is to promote change. This implies progress and provides an opportunity for growth. Promoting change is indeed a much more difficult role with far less talent currently available to fill it. Succession Planning Once the firm knows the skills they need, they must then determine if they have enough of these talented individuals. Through the use of a transition matrix (also known as a Markov analysis), the company can identify where the likely shortages (or surpluses) in management are likely to occur within the firm. This technique identifies the historical transition of people into and out of positions in the organization. The Markov analysis tracks the percent of employees who are remaining in a specific position from year to year. It also tracks the number who are promoted out of the position, those who are demoted while in the position and the number of employees who are terminated. This creates a more detailed and comprehensive picture of employee movement than the simple staffing tables used by some organizations. The search for talented individuals, then, must occur both inside and outside the organization. That is, firms must decide if they want to make or buy their management talent. Making talent requires an investment. Individuals with potential (but not the specific skill set required) are hired and then they

undergo training and development to acquire the necessary skills. Buying management talent requires locating them (often by luring them away from other firms) and paying a premium for the skill set they possess - and the organization needs. These individuals, then, must be oriented to the organization through a socialization process to learn the "company way" of doing things. Nearly one-third of top executive positions are expected to turn over within the next five years. This means companies must begin to identify their talent (or lack of talent) now. Succession planning is proactive in nature. Rather than waiting until positions are actually open, the firm identifies those management positions that will be open over the next few years. With this knowledge, the firm can then take steps to determine which individuals can be groomed for these openings. An action plan must be developed to ensure that this is a priority in the organization. An organization must put its money where its mouth is. Only those actions that are rewarded will be given high levels of importance. The critical nature of succession planning and talent identification can be supported with incentives. Those firms that make this process part of the performance appraisal system will be more successful in their efforts. The current management team must also be trained in identifying and developing talented individuals with potential. This requires full knowledge of the strategic direction of the firm and the organizationwide competencies. Current managers can only be successful in identifying the future talent with full knowledge of the overall strategy of the firm and insight into the human resource plan. Once the competencies have been outlined that will help the firm achieve their strategic objectives, the current management team can begin to search for that talent in-house. A skills inventory (also referred to as a skills bank) can be a useful tool in tracking skill sets in the current workforce. This helps identify critical skill sets. While the Markov analysis focuses on the number of people in specific positions within the firm, the skills inventory monitors skill sets of individuals currently in the organization's workforce. This does, however, require constant updating to ensure timely information is' available. Generally, the human resource department will track this inventory and is responsible for a timely updating. For instance, as employees attend a seminar, complete a college course or receive professional certification, they are asked to send notification of these accomplishments to the human resource department. The skills inventory is then updated with this information. Developing Talent Just as organizations must consider the development of their next competitive advantage and have it in the pipeline as soon as the current one is relied out, companies must address their human resources in the same way. Since people can be the source of the organization's competitive advantage, the next batch of talent must be in the pipeline - being developed to roll out when needed. This is, perhaps, easier said than done. It requires that organizations continually monitor their employees - in particular the knowledge, skills and abilities possessed by their workforce. Knowing where shortages are likely to occur is only the first step. Companies must then have a strategic human resource plan that identifies how they are going to fill these shortages. Succession planning is all about identifying those individuals who have the potential to be promoted. The firm can begin to assess and monitor their potential for being promoted and capacity for management development. The company may even place them in a formal management

development program or an "assistant to" position to begin their grooming. Management development programs are specifically designed to groom management talent for their future positions. While generally very competitive in terms of admission, these programs provide company-specific skills development. Regularly scheduled classes may even be held with instruction to supplement on-the-job training. These programs can, then, be very effective in ensuring their management candidates are well rounded. Many companies even require a rotation of assignments through a variety of functional units. This helps to develop broad-based skill sets in management candidates that have a good overall understanding of the business as a whole. In addition to company specific knowledge of functional units, the more effective management development programs also provide training in general management competencies. These may include skills in conducting performance appraisals, administering discipline, conducting employment interviews, motivating employees, communicating effectively, using active listening and improving time management. Talent can be nurtured and developed both formally and informally in the firm. Many organizations have been successful with formal mentor programs that pair a seasoned executive with a management trainee. These formal programs often involve regularly scheduled meetings discussing the young professional's career development. An action plan is often developed with strategies identified that focus on how to acquire the necessary skill set for success. Informal mentor programs can, however, be just as effective in developing talent while serving as an informal advisor and guide to career success. In those organizations that do not have formal management development programs, the informal mentors become even more critical. Firms must also develop a strategy to retain the talented managers and trainees that were identified and groomed. As most organizations invest in their future, this investment must extend to their human resources. A Final Note: Attention To Diversity When identifying talent for the future success of the organization, diversity should be taken into consideration. While it is human nature to surround oneself with those who have similar characteristics and skills, today's organizations need a diverse management team. This diversity pays off with a number of critical benefits. Diversity brings a variety of talents to the table. This ensures the management team's skills complement one another (rather than provide redundancy) and that there are no gaps in skills needed. Additional customer insights are also gained with a diverse management team. A more comprehensive picture of the whole firm is gained with diverse managers. Finally, greater creativity and improved problem-solving are achieved with diversity on the management team. Companies cannot delay in crafting their strategy to meet the challenge of the management shortage. This challenge is here and only the astute companies that take a proactive approach will find themselves with the necessary talent to fill the management shortage that looms on the horizon.