Q: What does your CEOs know about talent assessment?
A: Nothing and everything.
Let me explain.
Most CEOs don’t have time to focus on the details of their firms’ talent assessment strategy. In addition to inspiring and leading their troops, CEOs must set strategic direction, which means grappling with big0picture issues like:
- Profits: Bringing in revenue is mission critical to any business
- Customers: You can’t have a business without them!
- Growth: Even for less aggressive companies, growth is essential for building valuation
There are two key ingredients that are core to both the above concerns: metrics and people (aka talent).
Metrics: The job of the CEO is metrics driven. The buck literally stops on his/her desk and the ability to use data to support and evaluate strategic decision making is essential. Analytics and feedback are becoming essential tools for running a business effectively.
People: CEOs realize the value of talent to achieving their mission. But the general consensus is that they are unprepared to meet the talent challenges that will define the success of their businesses. Recent surveys of business leaders by PWC and Deloitte both identify major gaps between the perceived value of talent and the readiness of organizations to manage it.
CEOs are increasingly focusing on both people and metrics. Talent assessment is the science of measuring people in order to predict their ability to drive business results. It represents the intersection of people and metrics. When you look at it this way it is a no-brainer that talent assessment should be a critical part of any CEO’s game plan.
Yet talent assessment is generally an afterthought. It’s often bolted on at the tail end of bigger concerns related to HR technology systems, if it’s even used at all. Talent assessment is almost never seen as a strategic tool that can help drive measured impact.
The strategic value of relating people-related data to business metrics is no secret to us I/O psychologists. We have known the value add of talent assessment for a long time and we are finally starting to see an increasing amount of evidence that companies with sound talent assessment programs outperform those that don’t.
CEOs should have talent assessment top of mind and any CEO who says they are concerned about talent in their organization but doesn’t use talent assessments is not putting his/her money where their mouth is. This is an epic fail.
But hope springs eternal because CEOs already know enough about talent assessment to be beyond dangerous. Talent assessment is actually in lockstep with a CEO’s priorities. Here’s why:
Profits: CEOs know that getting the right talent in the right place is critical to all business outcomes. Talent assessment has a proven track record of doing exactly this. Talent assessment is finally getting the supporting cast it needs to shine. Here are two important trends that are helping CEOs gain a line of sight to profits.
- Internal HR analytics capabilities: Companies are rapidly building internal capabilities to own and manage their myriad streams of data. Those that are connecting the dots are using people analytics to create value. This trend will continue to gain momentum.
- Integrated talent management: Silos are for farmers! An increasing number of companies are finally realizing the value of taking a holistic and integrated approach to talent. This methodology sets the stage for success by building out a foundation for data collection across the entire employee lifecycle.
Customers: Customer acquisition and retention is directly related to branding activities. CEOs are realizing that building and maintain a brand is an all-encompassing activity that must extend to talent acquisition. Job candidates are customers who share their experiences (positive or negative) very easily. When it comes to building a killer employment brand, differentiation will live through customer engagement and retention.
- Engagement: There are a host of new talent assessment products emerging that are all about driving candidate engagement. These assessment products are actually providing extra value via their ability to both entertain and measure key applicant traits simultaneously. This drives customer engagement by helping the company brand come to life in a way that candidates will talk about, while at the same time selecting in applicants who have what it takes to fulfill the brand’s promises to customers.
- Fit: Everyone is talking about it, but what does it really mean? The term can mean many things to many people, but in the world of an I/O we are talking about it as: how people fit with their jobs and their work environment. No matter how you define it, fit is all about the things we I/Os love to work with: understanding jobs and organizational culture and then measuring people vs. these things so the right person can be routed to the right place. CEOs understand fit as a way to drive brand through employee engagement. Fit is also critical for identifying and filling skills gaps — another key area of focus for CEOs who care about the future of talent within their organization.
Valuation: Talent is continuing to define valuation of companies via its impact as an intangible asset. My friends Linda Brenner and Tom McGuire are onto something in their new process for demonstrating that talent is the engine that creates value by building intellectual capital. Intellectual capital creates differentiation and drives the market value of company. This viewpoint is directly relevant to talent assessment because it depends on both people and metrics. Measuring and understanding the collective skills of an organization’s talent provides a framework for viewing key metrics of organizational success. Hello talent assessment! This is the chance you’ve been waiting for!!
Ask any CEO about talent and they will definitely tell you that it’s critical to their company’s success. But how many CEOs are really raising the bar for how the organization attracts, hires, and develops talent?
While CEOs may not know much about the specific ins and outs of talent assessment, they know everything they need to know about why it is a crucial asset to their efforts. So those who leave talent assessment off the agenda as a core HR strategy are missing a significant opportunity. Losing candidates and customers to the competition is an epic fail for any CEO. That’s why talent assessment will continue to be a differentiator for those who value it.