In 1969, educator Dr. Laurence J. Peter and Canadian playwright Raymond Hull wrote The Peter Principle, which famously stated that "In a hierarchy every employee tends to rise to his level of incompetence ... in time every post tends to be occupied by an employee who is incompetent to carry out its duties ... Work is accomplished by those employees who have not yet reached their level of incompetence."
That’s a pretty disheartening thought for advisors focused on growing their business for the future, yet more than 40 years later, research on leadership transition conducted by the Harvard Business Review showed 70% of employees lack the critical attributes required for success in future roles. Among high-potential employees moving to new positions within the company, 40 % of those moves end in failure. In essence, most companies have tools and processes to identify talent but they lack a process for ensuring the right talent gets moved into higher-level jobs. Instead, they may “reward” their best performers by giving them higher-level positions, unintentionally moving them out of the role that best suits them.
Talent management could be considered the antidote to the infamous Peter Principle. Talent management is a formalized process used to identify and facilitate development of employees and leaders for the future of your practice. Talent management guides you in assessing the strengths and development needs of your employees and identifying employees with high potential for future professional and leadership roles within your practice. Through talent management, you create an action plan for developing the competencies that will be critical to those roles, which improves the ability of your practice to meet your business objectives.
Harvard Business Review’s research identified the critical attributes for future success:
- Ability: The intellectual, technical, and emotional skills to handle increasingly complex challenges
- Engagement: The level of personal connection and commitment employees feel towards firm and its mission
- Aspiration: The desire for recognition, advancement and future rewards and the degree to which the employee’s wants align with what the company wants for him/her
Failure to properly consider these attributes sets up your employees for failure, costs your business time and money and creates disengagement and disillusionment on the part of the employee who has been miscast. As you go through the TA process, keep in mind the purpose: assessing talent and development needs; identifying employees with high potential for future assignments; and building succession plans for critical roles within the practice.
A talent management plan for your business starts with a talent assessment, i.e., assessing the talent you need to grow your business. You will be developing that talent over time, so your assessment should take a long-term view: what skill sets and competencies are needed to successfully meet your business goals and initiatives?
The next step is to review your current staff and determine in which competencies they have strengths and where there are gaps. Then decide what actions can be taken to close the gaps: additional education or training, mentoring, motivation or even hiring. Create a talent development plan for each of your existing employees. If you identify gaps which may require a new hire, create a job description that includes the critical competencies for that role.
Your employees are one of your greatest assets. If you are not developing their talent and skills, that asset is depreciating. Take the initiative now to start planning for the practice you want in the future.