A world with deep people analytics capabilities allow us to experiment with radical ideas like the “Talent to Value” method
People analytics will open up a world where companies can be creative with how they link people directly to the value they create
The “talent to value” method, developed and deployed by Sandy Ogg and his firm CEOWorks struck me as fascinating because it is based on two provocative claims: “between 30 and 50 roles that make up somewhere between 70 percent and 80 percent of the value agenda” [i] and “about 60 percent of these roles are two layers below the CEO, and 30 percent are three layers or more below the CEO”[ii]. Sandy’s ‘Talent to Value’ tool and a method links data about roles, and people’s performance to a company’s performance – using people anlaytics in close combination with human intuition and logic.
While I think the claims made are unlikely (and perhaps morally worrying – imagine 2970 people in a 3000-person organisation being told they add just 20% of the value!) – this is a fascinating example of the ambitious, and deep changes that may be possible within an organisation that has developed a strong people analytics capability.
Sandy’s method (and the software ‘solution’ McKinsey has co-developed with him) follows three steps: define the agenda, identify and clarify critical roles and match talent to roles:
- Define the value agenda
This step is the grounding for the following two steps.
Executives identify which business units are likely to grow the most, where, and how, e.g., Small BU ‘A’ will grow out of proportion to its size taking advantage of global opportunities and delivering SaaS – making its value at stake greater than larger ones. A very judgement focussed exercise informed by data.
This detailed analysis sets up the discussion for what roles will drive that value, and what skills talent that fills those roles will need to have, e.g., future leaders will need a global mindset, and fluency with cultures while being comfortable with technology. These characteristics must be cross checked against a database of the skills within the organisation – a core part of People Analytics.
- Identify and clarify critical roles
The next step is about using forecast data and judgement to identify roles – where did the value in this unit come from? how will this change? What roles have, and will, be critical?
Roles can be deep in the organisation (they are rarely the most senior roles) and cover value crating roles (P&L roles) as well as value enablers (support functions). The focus here is on roles (never people). Each role is made numerical – mapping 5 year projected margin that directly can be attributed to that role/ is enabled by the role. These measures are used to identify the most important roles; and leads to a counterintuitive outcome. Apparently research across the 50 or 60 cases have suggested (as quoted above) that 30-50 roles make up 70-80% percent of the value agenda. These roles are fleshed out in ‘role cards’ with detailed KPIs, jobs to be done and role requirements (e.g., experience in sales, history of P&L ownership). People analytics collected about the current incumbent, and perhaps past incumbents informs the creation of the role card.
- Matching talent to roles
This is where clear data aout internal talent pays high dividends. Matching data to detailed ‘role cards’ takes out subjective ‘hunches’ and becomes an evaluation of evidence. The perspective of value also makes evaluating incumbents easier – apparently this “typically leads a company to realize that 20 to 30 percent of those in critical roles are not well matched.”[iii] This can create a lot of new value as new incumbents who have the skills required to create value begin to deliver.
Managing this after these 3 steps above is requires deep and constant people analytics: measuring KPIs of critical roles, and matching these to the value created, identifying what interventions can improve performance, and tracking development in these roles should happen in “real time”.
[i] https://www.mckinsey.com/business-functions/organization/our-insights/value-of-talent-management
[ii] https://www.mckinsey.com/business-functions/organization/our-insights/linking-talent-to-value
[iii] https://www.ceoworks.com/the-latest-books-and-resources-from-ceo-works