The worst headaches in risk management are those that both expose internal weaknesses and open up a business to external threats. And when it comes to managing talent, there's no shortage of companies falling foul of both.
On the one hand companies are reporting a shortage of personnel with necessary skills, increased global competition for talent and tight regulations controlling their ability to manage performance. But respondents also highlighted lack of focus on the internal talent pipeline – and a deeper functional failing around development.
No wonder talent management has crept up the rankings in the 2011 Ernst & Young survey of the top 10 global risks this year to number three. As the report puts it: "This risk shares the most precarious position on the heat map: at a high level of perceived impact, and with relatively more organisations indicating that measures to respond are, as yet, a work in progress."
This lack of focus is the key to increased risk around talent, according to Penny Stocks, partner in EY's advisory practice. "The issue often addressed with fragmented interventions – such as a discrete talent programme or recruitment policies," she says.
"They are valuable, but often they're not managed in a holistic way. And it can be seen as an HR problem, rather than a business strategy issue."
There are companies that seem to attract and develop talent effortlessly – typically sector leaders with strong brands, such as Apple and Google. "They make this work by transferring the external brand inside the company," says Stocks.
"Their employment model stretches outside the organisation – their boundaries are more permeable. It's more fragmented, too. For example, they're very good on maintaining relationships post-employment. So they've got out of the hire-to-fire cycle."
Equally, companies that take a long-term view of career development stand a much better chance of retaining and building up the pool of excellent people. "Talent works best when it has clear development goals and its achievements are recognised," says Alan McBride, former finance director, headhunter and now MD at finance search firm Camino Partners.
"It's becoming more common for companies to identify key talent and stretch them – for example, by giving them projects to run on their own," he continues. "That instils confidence, helps them develop influencing skills and allows them to deliver real impact – the kind of skills and experiences that will never come from training."
Think differently Going beyond the "full employment model" – embracing flexible and part-time workers, looking more creatively at consultancy and looking to embrace talented people even when they don't work for you – is the logical end-point of this more holistic approach to talent.
But there are steps along the way. "The employee value proposition should be developed and used to inform all the decisions around people, from recruitment through learning and development and onto the way leavers are treated," says Stocks.
"But while many organisations develop their idea of employee value, it's sometimes not shared through the company or properly monitored and evaluated. So we think it's essential that talent management is part of a CEO's balanced scorecard, for example."
And flowing out of the central talent question is a host of related issues. Talent has pushed diversity up the agenda, for example. By designing jobs that allow for more flexibility – partly to attract women in and then to bring them back after, for example, maternity leave – companies can tap into a much wider talent pool. Coaching and mentoring, too, become much more than nice-to-have options.