NACD BoardVision - Talent: Strategy and Risk (Part 2)
This week's edition of NACD BoardVision focuses on developing talent. Join Chris Clark, publisher of NACD Directorship, and Phyllis Deiso, McGladrey's national SEC practice leader, as they discuss how boards can create effective talent development strategies.
Announcer: Welcome to NACD BoardVision where leading boardroom advisors, governance professionals, and seasoned directors discuss critical issues related to your responsibilities in the boardroom.
Christopher York Clark: Hi, I'm Christopher York Clark, publisher of NACD Directorship Magazine . Welcome, this is BoardVision and our guest today is Phyllis Deiso of McGladrey, a preeminent accounting firm for the middle market. Our subject today is also going to talk on our Blue Ribbon report on talent development, but it's going to go far beyond that. Phyllis, good to have you in here today.
Phyllis Deiso: Thank you, Chris. It's always great to be here.
Christopher York Clark: As always, as is my style, I'm going to jump right in and pull out as much insight as I possibly can in a short period of time. And one of the imperatives of that talent report -- our Blue Ribbon Commission, touched on that everything -- the company's hiring philosophy, the employee incentive programs, and the corporate culture should all be aligned with the talent pipeline in that particular strategy. Based on your current client list, how do they best measure their talent and their talent development?
Phyllis Deiso: It's a great question. I think that there's also some insights in the Blue Ribbon Commission report, but I would say -- I'm an accountant and I deal with financial statements, and financial statements are often viewed as the language of global business. But financial statements are historic. They are a lagging indicator.
Christopher York Clark: Review mirror.
Phyllis Deiso: Yes. And so, I think today, companies who are looking at talent management rely a lot on lagging indicators and why? Well, lagging indicators are historic, they are sometimes easier to measure, and less subjective so we look at things like employee surveys. Employee engagement -- we measure the employee engagement through the employee survey. We look at turnover, especially turnover among the highest performers. We certainly should not ignore those. I think there is valuable information to be included. However, we should also have a combination of predictive indicators. So, for example, I'm looking at leadership in a company. How many leaders have successors who are currently ready, internally, to step into that role, or ready in the near future? Some of those predictive indicators should form part of the blue ribbon company's talent management process. One of the things that boards seem to struggle with is candidly assessing the non-CEO strategic leaders. And while we have the once a year -- most companies have some once a year strategic initiative around a team and capital, and there's an assessment of upper-level strategic leaders, rarely is that assessment as candid as it needs to be for the board to really have a feel for what that talent pipeline is. And partially, I like to think that's because were nice people. But it's very difficult when you get a manager in a room -- even an upper-level manager in a company, is required to talk about their people, and somehow that individual believes that any type of feedback that is less than glowingly positive is a bad reflection on them and so it's hard to really get to the meat of that. What I would recommend we do -- and certainly European boards or international board struggle with is just as we do in the United States, and that is to be sure that the board calendar includes once a quarter some component of talent management, whether it be the pipeline, whether it be talent development. Now, what I will say our non-U.S. companies sometimes do better is they seem to have talent development embedded in their culture, a little bit more so perhaps the we do in the United States, and that may be a little unfair. Certain companies in the U.S. are exemplary and world-class and talent development.
Christopher York Clark: Not everybody can be American Express.
Phyllis Deiso: That's exactly right, so -- and that's a great example. But I do think that they perhaps are more invested internally then we sometimes are.
Christopher York Clark: Let's get your forte, which is the middle market. Do they have the requisite time to do this type of deep-dish analysis, to be the architect? Because as you say, doing it annually doesn't work for anybody.
Phyllis Deiso: Yeah. I again, I don't believe in -- every company is different, and it starts with reports from management to the board but the board saying this is key to our future, it is a key part of our strategy. These other risks and how do we address those risks? If the resources internally are not sufficient, it's not necessarily the answer to go out and expand HR department, but use a laser approach, address those risks by hiring appropriate resources that specifically address the risk profile you've identified.
Christopher York Clark: All right, I'm going to surprise you here. I want to put aside for a moment NACD's report on talent and I want you to give, kind of, a bottom-line closing on all this discussion on talent, and talent development, and its being part of every component. How would you connect the dots with the talent issue with a company's risk profile?
Phyllis Deiso: Well, I think again, it's up to the board. The board has an oversight responsibility, and so I think boards today are very sensitive to overstepping that -- nor should they, and so it's a fine line between attempting to manage the non-COE C-suite and really understanding what the talent pipeline is. But it is important that this and be identified, it be assigned, it be measured using the appropriate metrics, and it's up to the board to ensure that it is there. It is a signed responsibility and it is measured and talked about. I've mentioned before that, you know, we have our strategic initiatives if it is an emerging market. I will guarantee to you that at almost every meeting, that emerging market is discussed in one form or another because it's just so key to our future, but yet we're not discussing the people. We're not connecting the people to the execution of the strategy, yet the success or failure of that strategy foundation only depends on the talent that is connected to the strategy, and so it really begins with the board and with the directors.
Christopher York Clark: Phyllis, thank you for truly connecting the dots.
Phyllis Deiso: Thank you, it's been a pleasure to be here.
Christopher York Clark: On the half of NACD and McGladrey, thank you for viewing today. I'm Chris Clark and this is BoardVision .
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