Last week’s post to this blog introduced the topic of managing talent risk and busted three common misconceptions around that. Let’s take on another.
As business leaders, you manage many risks systematically and with great rigor. You manage risk of litigation with contracts and insurance, risk to operations with multiple suppliers and maintenance protocols, risk to health and safety by having protective gear and environmental sensors, risk to finance by maintaining cash reserves and lines of credit, etc. Yet with all that you do in risk management elsewhere in your business, you likely do not have a rigorous way to assess and methodically mitigate talent risk in your workforce.
I started my knowledge transfer consulting firm nearly two decades ago and have watched companies struggle with this challenge for years. Organizations stab at this problem with competency models, demographic profiles, and headcount battles—or hope that a succession plan and a little luck will carry them—but in the end few can say with any degree of certainty that they will have the workforce they need to execute their business strategy 1 – 3 years from now. With that backdrop there is some irony when we say, “People are our most important asset.”
5 Common Talent Risk Factors You Cannot Afford to Ignore
There are very real and urgent reasons to manage your people-related risk with rigor. Consider the presence of specific talent risk factors in your workforce and the cost of ignoring them. Here are five of the most common risk factors:
- Shortage of essential talent—The risk of failing to acquire new expertise in growing areas poses a threat to your company’s ability to meet strategic objectives and stay competitive.
- High percentage of new hires—Failing to onboard new hires in a timely manner will lessen their productivity. Without a good knowledge transfer plan, your overtaxed Subject Matter Experts will be stretched further by the influx of questions from new hires.
- Dissatisfied employees—Unplanned turnover of employees, even when they don’t join a competitor, costs your company money in terms of training, development, and replacement costs.
- Shortage of talent in the leadership pipeline—Do you know which senior leaders are likely to retire in the next 1 – 3 years? Do you have a succession plan in place? If your top executives retire, are there successors with the right skills and knowledge ready to step in? If not, you risk serious disruption to strategy and operations and costly lost knowledge.
- Loss of critical skilled employees—Is your company able to function when key skilled employees depart? Do you know where your skilled teams lack bench strength in critical technical skills? A younger workforce does not equal low risk, as employees can leave unexpectedly for any reason. Are you mitigating the risk when critical knowledge leaves your workforce? If you do not you know which individuals (regardless of their age) hold your company’s unique, business-critical knowledge and do not have a method to quickly transfer that knowledge to their peers, the direct and indirect costs to your business will be high.
We Need More Rigourous Assessment and Measurement of Talent Risks
Risk management has become an increasingly popular concept in corporate boardrooms but leaders seldom think in terms of risk to workforce talent and skills—especially below the C-suite. This is true even though the effects of failing to manage talent-related risks can range from costly to catastrophic. To complicate matters, many of the methods used to analyze talent and other business risks today have proven to be ineffective and even counterproductive. Given the difficulty of quantifying talent management problems, investments, and results, the challenge is to use risk management methods so they produce better outcomes, not just make managers feel better.
When it comes to talent management, a vague sense that things are “good” or “not good” is not enough. A clear methodology for understanding and prioritizing the strategic, tactical, and operational risks that affect your hiring, development, and retention of key employees is essential. Also essential is measurable, dated outcomes from your risks reduction investments so that senior leaders know with certainty when a risk has been or will be reduced. Experts in business management, communication, and worker training have grappled with these needs over the past two decades—with massive implications on the growing field of knowledge transfer.
As a knowledge transfer thought leader, I am constantly debunking the myth that people-related risks can’t be reduced with the same degree of rigor as other risks. At my firm, our 3-step Knowledge Transfer Solution tackles this risk assessment and measurement challenge head on: our process methodically assesses your workforce talent risks in quick and scalable way, and then increases team readiness and bench strength by moving the right skills to the right people at the right time, so your organization is measurably ready to execute its strategy.
With current knowledge transfer tools, a business unit’s talent risk profile can be charted in a matter of days—not weeks or months—and then compared, at a glance, to unit’s reduced risk profile after three, six, or twelve months of structured knowledge transfer. In future blog posts, I’ll discuss how the combination of a clear, simple risk assessment framework such as the Knowledge Silo Matrix (KSM) and a trackable Skill Development Plan (SDP) makes managing talent risk as quantifiable as managing any other risk your organization faces.
SUMMARY: People CAN be an organization’s greatest asset when the talent pool is well managed. Today, it’s much easier than you think to begin methodically managing your talent risks with the same degree of rigor as you apply to managing other business risks. A good knowledge transfer process that starts with a talent risk assessment, identifies and replicates unique critical knowledge in the heads and hands of coworkers, and has clear and measurable outcomes will ensure a ready workforce—even in the face of transitions and emerging risks factors in years to come.