Companies Risk Losing Their High-Potential Talent, Says New Research From Oliver Wyman’s Delta Unit

Many companies are doing a poor job of paying attention to their top executive talent, according to a survey of U.S. heads of corporate talent development and human resources by Delta Organization & Leadership, a unit of Oliver Wyman.

Overall, the survey findings further show that organizations are weak in several areas with respect to selecting, developing, securing senior executive oversight for, and tracking the progress of their high-potential talent. Key highlights include:

• Only 13 percent say they are keeping their high-potential talent regularly informed of their status
• Only 13 percent say they have a formal assessment process to ensure high-potential executives are objectively selected
• Only 13 percent say their senior executive team is held accountable for the successful movement, succession, or retention of their high-potential talent
• Only 10 percent say they have specific ways to measure how high-potential executives are progressing in moving into new roles or assignments
• Only 5 percent say they have specific performance targets for filling key executive job openings with high-potential talent
• A mere 3 percent say they have formal measurement tools for showing the impact of high-potential talent development programs on executives’ actual performance

"In today’s economy, with the best companies reeling and struggling to adapt, they can’t afford to take risks with their best talent, who represent the key to recovery,” said Steve Krupp, Partner and leader of the Executive Talent Management practice at Delta Organization & Leadership. "Yet this research suggests that these future leaders in many cases don’t even know who they are. Too often they are not getting the communication, attention, or development to give them confidence about their future. As executives put their heads down to grapple with uncertain times, plunging stock prices, and frozen markets, they can’t forget their high-potential talent, who may also be seeking their own bailout plan.”

The survey was conducted as part of in-depth discussions with 62 U.S.-based corporate talent and HR chiefs at roundtables focusing on the global executive talent shortage. Participants were introduced to best practices in high-potential talent development and had a chance to engage with a panel of experts on the challenges they face today in identifying and preparing leaders for the future.

Lack of Transparent Communications to Top Talent

Many companies are doing a poor job of clearly informing their high-potential executives of their status within the organization, according to the survey findings.

In earlier discussions Delta Organization & Leadership had with companies that have recognized the importance of transparently communicating with their high-potential executives, many indicated that they have experienced higher retention rates. "We’ve been fortunate to retain our high-potential talent, and we believe that transparency plays a key role in that,” said Marc Effron, vice president of global talent management at Avon, a company that has adopted best practices around being transparent with their high-potential talent. "It seemed natural for us to tell our high-potentials how much we value them. After all, if we don’t tell them, we risk that headhunters or our competitors will tell them first!”

"This data reflects the feedback of many organizations, who have been telling us that, regretfully, it’s very painful when the best and brightest talent only find out they are viewed as high-potentials during their exit interview,” adds Krupp.

High-Potentials Not Viewed as Corporate Assets

The survey findings show a disconnect between what senior leadership says and what they actually do with their high-potential talent. For instance, while 50 percent said that their CEOs are visible champions for developing high-potential talent within their organizations and another 68 percent said that their CEO and executive team participate in identifying high-potential talent, only 29 percent said their senior executives follow through on directly overseeing developmental projects and progress for high-potential talent. Further, only 24 percent stated that their high-potential employees are viewed as corporate resources to be deployed based on the organization’s needs versus the preferences of divisions or functions, suggesting a lack of strong oversight at the top in nurturing high-potentials and directing them towards opportunities based on the best interests of the company overall.

Inadequate Roles and Support System for Development of High-Potentials

Less than half the survey respondents said that their organizations are providing either the right job roles and experiences or internal support networks and learning programs to equip high-potential talent to become the company’s future leaders. While 34 percent said that their high-potential talent are provided roles and experiences that ensure they develop the capabilities needed to execute the company’s strategy, only 18 percent said that high-potentials’ job assignments are used to develop and prepare them for business-critical roles. Further, while 32 percent said that their organization provides mentors or coaches to guide the development of their high-potential talent, only 26 percent stated that their high-potential employees receive the support and sponsorship they need from top leaders to accelerate their development. Only about one-third](34 percent) said there are a variety of learning opportunities, support mechanisms, interactions with senior leaders, and exposure to strategic issues that are made available to high-potential talent.

Methods for Identifying High-Potential Talent Unclear

According to the survey findings, many organizations do not have clear, defined processes for making sure they know how to select their future potential leaders or whether they have already chosen the right candidates for development, raising the risk that they may not identify the right people within their companies.

For instance, while 37 percent responded that their organizations have clear criteria for identifying high-potential candidates that are tied to business needs, only 29 percent assert that their high-potential employees are selected in accordance with future as opposed to current business needs. Only 39 percent clearly stated that their organization’s development efforts are focused on a small group of people who have the greatest potential to play mission-critical roles.

High-Potential Staff Development Programs Lack Focus

According to the findings, companies either do not have structured development programs to grow their high-potential talent, or the programs themselves are missing key components to equip high-potentials for leading their organizations through the range of future business challenges. Only 21 percent of the survey respondents said their organizations provide each high-potential employee with an individual development plan to accelerate readiness for growth. Within that group, an equally low percentage said that the individual development plans actually target developmental experiences or assignments that are required for a specific role. On the development methods used for high-potential talent, only 29 percent said that their organization integrates multiple methods (e.g., rotational assignments, coaching, action learning, classroom instruction, etc.) to develop high-potential talent. Even fewer (21 percent) said high-potential executives are grouped together to participate in a shared learning process that includes forums, support systems, and exposure to executives, strategy, and thought leaders in order to accelerate development. Only 13 percent said that they feel their programs develop whole, multidimensional leaders.

Measuring Success of High-Potential Development Programs Remains Elusive

The weakest area of the findings was how organizations can know whether their high-potential talent development efforts were working or not, as the key survey highlights demonstrate. Further, significantly less than a majority of the survey respondents (34 percent) said that their organizations track the retention of high-potential talent.

The survey findings follow earlier in-depth discussions conducted by Delta Organization & Leadership with companies that employ best practices around high-potential executive development. These best practices include:

• The CEO must own and sponsor the process
• Treat key talent as a corporate asset
• Make the process transparent
• Build a structure to support your talent strategy
• Target mission-critical roles
• Establish strong support systems
• Define criteria for identifying high-potentials
• Develop an assessment process to guide selection
• Focus on the vital few candidates
• Generate individual development roadmaps
• Provide an integrated learning process
• Develop whole leaders – people who exhibit three-dimensional capabilities to lead organizations, using their head, heart, and guts to face new and complex global business challenges

About Oliver Wyman

With more than 2,900 professionals in over 40 cities around the globe, Oliver Wyman is an international management consulting firm that combines deep industry knowledge with specialized expertise in strategy, operations, risk management, organizational transformation, and leadership development. The firm helps clients optimize their businesses, improve their operations and risk profile, and accelerate their organizational performance to seize the most attractive opportunities. Oliver Wyman is part of Marsh & McLennan Companies (NYSE: MMC). For more information, visit www.oliverwyman.com.

About Delta Organization & Leadership

Delta Organization & Leadership, a unit of Oliver Wyman, works collaboratively with CEOs and senior executives to meet the challenges of building talent, accelerating organizational performance, and driving business success. Our Executive Learning Center provides top-tier executive education around the world, designing and implementing customized programs that develop the leaders companies need to compete and grow. For more information, visit www.oliverwyman.com/delta.