Unquestionably, the effective management of talent has to begin at the very top of the organization. The senior management team needs to spend a significant portion of its time focusing on talent management. Just how big a portion is hard to specify precisely, since it does need to vary depending upon the type of talent being managed, whether the organization has a buy or build strategy, and a host of other factors. However, a good rule of thumb is that senior managers, in particular, should spend 30–50 percent of their time focusing on talent management. In professional service firms (for example, law, accounting, consulting, and the entertainment industry), a higher percentage is likely to be appropriate. As one executive commented to me while I was writing this book, “Any organization that is more focused on managing its financial capital than its human capital is brain dead.”

Consider the example set by General Electric. Even before Jack Welch became CEO of GE, the company was known for senior management commitment to talent management. This commitment is a big part of what has made the company so successful, and it continues to be strong. As CEO Jeff Immelt notes in GE’s 2006 annual report, GE has a leadership development process that creates strengths and capabilities that drive competitive advantage.

GE is famous for its Session C meetings, in which senior managers from the company discuss the development of the firm’s talent. This same process is replicated at lower levels in the organization, so that during the course of a year, serious discussions take place about most of the human capital in the company. Leaders at all levels in GE believe that this type of concentration on human capital is necessary if the company is to truly establish its talent as a source of competitive advantage.

Bank of America provides another example. CEO Ken Lewis owns the talent management processes and consistently holds business unit heads personally responsible for meeting the objectives that they set in the talent development and management area. Every summer, he meets individually with the top twenty-four executives at the bank to review the organization and its talent pipeline.

Lewis’s in-depth sessions with these executives explore talent and people issues and how they will be handled for the business growth and development strategy that the bank has in place. The executives are expected to come to these sessions with metrics and databases that point to the key strengths and weaknesses in their unit’s talent pipeline. They are expected to make specific commitments regarding the development of talent and show their plans for talent movement. They are also asked to demonstrate explicitly how their talent moves will be aligned with the business strategy. For example, if they propose growth for their business, they are expected to show that they have the talent or can acquire the talent to support that growth.

Goldman Sachs provides another clear example of an organization obsessed with talent management. At this firm it is an honor for senior managers to be asked to be part of a selection process for new employees. And senior managers who do participate place great emphasis on the process, sending the message throughout the company that talent is a high priority from day one.
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Excerpted From: “Talent: Making People Your Competitive Advantage” (Jossey-Bass, April 2008)
Author: Professor Edward E. Lawler III, Distinguished Professor of Business and Director of the Center for Effective Organizations at the Marshall School of Business, University of Southern California