One of the most common myths I encounter revolves around the “people part” of business. The misconception is that the risks associated with the biggest investment many companies make every day (headcount) is somehow less measurable than other types of business risk.
One reason is that the business community has not had clear language and a framework to talk about talent risk. Prior attempts at human capital analytics have fallen short and even been seen as a waste of time. In response to this, I’ve put together a list of the types of talent risk that we can identify today. Note that each of the risks highlighted below can be quantified and mitigated.
What Talent Risks Should You Be Measuring and Assessing?
Talent risk management is about assessing your company’s capacity to execute your strategy 3 to 36 months from now. All companies are looking to set up a sustainable business model, and this must include ensuring you’re going to have the right technical/professional talent in place.
That being said, most companies struggle to create a plan to mitigate talent risk. This is mostly because they don’t know how to quantify and measure the cost and benefits associated with talent risk management.
Below, I’ve put together a list of the types of talent risks we see every day, in order to help you understand how they can be quantified and mitigated. Once you read through them, ask yourself: how many of these risks are keeping you up at night?
Losing an Employee with Unique Knowledge
Although big corporations can have thousands of employees, there are individuals who seem to be the “only one who knows.” Losing an employee with unique knowledge can slow production, hinder customer experience, dissolve competitive advantages, extend troubleshooting time, and even create safety hazards.
Lack of Role Clarity
Having the right employee in the right position is one thing, but if they don’t have a clear idea of their role, they can ending up running the wrong way. Infighting, inconsistency, and rework are just some of the symptoms that can stem from a lack of role clarity.
Having Too Many “Experts” Working at Cross-Purposes
Your experienced team members, or experts, may be great at what they do, but you should keep a close eye on which tasks are assigned to them. Having too many experts working at cross-purposes can lead to monumental stress levels and poor productivity, especially if there is no standard-bearer for “the right way” to perform necessary tasks.
Too Few Backup Employees
It seems that every executive is trying to reduce costs and run a leaner, more efficient operation. That leaves little room for excess capacity. Having a backup to key front-line employees seems a luxury that budgets don’t allow. Instead of thinking about the added costs associated with having backups, consider the risk of not having them. And, consider looking for “partial” backups within the existing team.
The Absence for a Clear Development Path
This is a major talent risk that causes companies to lose next-generation employees. Beginner team members are often relegated to years of “paying their dues” or “shadowing experts” without any clear path to success or knowledge transfer systems in place to help them out. If your workforce can’t see a future of personal growth with your company, they will feel the need to leave you for a competitor in order to grow professionally.
Excess of Specialists
Specialization may be beneficial in certain scenarios, but having too many specialists can result in reduced performance and create “pacers” who slow down the whole organization. In these cases, having utility players that can be easily deployed into a broader variety of tasks can be more beneficial to a business.
Routine Turnover of Outsourced Resources
Constantly changing outsource providers can mean a heavy burden for your own employees as they manage onboarding and re-training new resources while sticking to existing schedules and budgets.
Onboarding Takes too Long
Adding headcount actually does more harm than good for a little while and if that “little while” is months or years when it could be half that long, the cost to the team (as well as to the new hire) can be overwhelming.
Lack of Skilled Talent
The war for skilled talent in some sectors is only going to get worse. Not having enough talent on board can result in lower capacity, which in turn can mean losing out on valuable opportunities. Increasingly, the response needs to be hiring talented individuals who are not already skilled and then growing them into their new roles.
Letting the Wrong Expert Train their Peers
Simply appointing a trainer because they are good at talking does not mean they will produce a capable workforce. Knowledge transfer is about finding an employee who does work “the right way” and who delivers quality results consistently, and then replicating that.
Losing Valuable Talent Shortly After a Merger or Acquisition
Similarly to developing your team, this talent risk revolves around paving a clear path to success for your newly acquired employees. If they don’t see a chance to grow with the acquiring company they will most likely seek that opportunity elsewhere.
Overspending On “One-Size-Fits-All” Training
If your new-system rollout includes mandatory training make sure you know exactly how to measure whether it was effective. The risk comes in assuming that because your people were “trained” that they are, in fact, ready to go to work.
Losing the Capacity of Maintaining Important Legacy Systems
Pulling out your experts and plunging them into new system rollouts without prior knowledge transfer can hinder critical legacy systems. Likewise, laying off experts before these new rollouts are up and running can cause turmoil and confusion among the rest of your workforce.
Outsourcing the Ownership of an Organization’s Critical Knowledge
Outsourcing certain aspects can benefit a company, but delegating critical knowledge to external sources can have adverse effects. This is especially true if you lose track of it over time. Keeping crucial knowledge in-house can help mitigate this talent risk and prevent unpleasant surprises in the future.
Across-the-board Budget Cuts
Arbitrarily cutting heads to reduce costs without considering long-term effects is a huge talent risk that can be avoided easily. Setting up more effective mechanisms can help leaders make tough decisions that will reduce long-term effects on an organization’s operations.
Blindly Moving Subject Matter Experts
Pulling experts from one team and placing them in another without regard for the impact to the original team introduces a host of risks. To manage this talent risk properly, you need to analyze the impact of moving subject matter experts in both productivity and role clarity. In addition, having a solid knowledge transfer system in place can help fill any gaps left after the move is complete.
Failure to Clarify the “New Big Picture” Scheme
Every time you reorganize or make a major change within your organization, you must go over the big picture for each team to avoid poor prioritization and decision-making.
Trying to Change the Culture Without a Clear Action Plan
Trying to shift an organization’s entire culture can be a shock to your workforce and it often fails. If you don’t articulate the future state in plain language and then point to the behaviors of people who already embody the new culture, how will anyone know what you really want?
Did you find any talent risks that your team is facing in the above list? Fear not, all of these can be solved in a measurable and methodical way.
With talent risks posing a threat to your workforce on a daily basis, having a mitigation system in place is more important than ever before. Our talent risk management and knowledge transfer solutions provide the tools and resources needed to assess, measure, and solve talent risks with the same diligence that is commonly applied to other business risks. This will ensure that your workforce remains ready to face any and all challenges the future may hold.
To learn more, get a free “sneak peek” edition of my new book on Talent Risk Management, Do You Have WHO It Takes?
Topics: Workforce Risk Management, Talent Risk Management, managing talent risk, talent risk mangement definition, definition of talent risk management, talent risk management process, Risk Management