Auditing Talent to Unearth Potential – Talent Management and Its Alignment to Objectives

South Africa’s unemployment rate recently clambered back over the 25% level, the highest reading since 2005, and the 12^th highest unemployment rate globally. 5.7 million people are unemployed in South Africa, not counting those who aren’t economically active. Under the expanded definition of unemployment, including those discouraged job seekers who have given up on looking for work, this figure soars to 36% of the population. In view of this state of the labour market, an effective talent attraction and retention strategy becomes vital to the continued success of the organization. Talent needs to be viewed as a scarce commodity, and the only sustainable competitive advantage an organisation has.

The ongoing success of a business is largely driven by the performance of its employees and enough has been written about human capital to provide undisputed evidence of this phenomenon. It can even be argued that people are your biggest asset, and if you are going to maximize the benefit they provide to the business, you need to have a thorough insight, awareness and appreciation for what they can do, and how they do it. Specific competencies need to be identified (whether analytical, technical, learning based, or practical), measured, aligned with the company’s strategic vision and cultivated for sustained development of both the organization, as well as the individual. Ask yourself the question, do the goals of the individual line up with the corporate strategy and the overall requirements of the business? If not, can the individual’s efforts be focused on other corporate objectives that offer a more optimal orientation? After all, placing the right person in the wrong position ends up negating a significant proportion of the efficacy of the role, and the person performing it, and poses a considerable strategic and operational risk to the organisation. These threats extends to the leadership pipeline of the business and a lack of depth of internal candidates to fulfil critical roles which can cascade into increasing pressure on employees with critical skills, a resultant increase in their salary expectations and difficulties in retaining them, thus putting a serious dent in the development of essential skills required by the business in the future.

John Hopkins University’s human resources department defines talent management as “a set of integrated organizational HR processes designed to attract, develop, motivate and retain productive, engaged employees, the goal of which is to create a high-performance, sustainable organization that meets its strategic and operational goals and objectives”. When one compares this to the IIA (Institute of Internal Audit) definition of Internal Auditing, the crossover in terms of the accomplishment of objectives, and the adding of value through a systematic, disciplined approach points to a vital need to have an intimate knowledge of the talent resources within the organization, and the way in which these resources are utilized.

I’m sure many of you would agree that the logical first step in this process (and arguably the most important) is to ensure that the level of relevant talent and business acumen within the internal audit team is of a sufficient standard to empower auditors to have a multi-faceted understanding of the business and the industry sectors it operates in. After all, what better way to audit and understand talent, than deploying the talent at your disposal in the most efficient and effective way possible. In smaller teams this requires a very broad scope of knowledge, whereas in larger teams specialists can be identified with distinctive aptitude in a particular audit area. An alignment of these proficiencies with the organization’s objectives, and the significant risks faced enables the internal audit function to add substantial value to the achievement of these objectives and ensures that the execution of the audit plan runs parallel with the strategic direction of the business.
The 2016 State of the Internal Audit Profession study conducted by PwC highlights this need for effective talent management within the profession, and goes on to mention that “a flexible talent model that emanates from a business-aligned strategic plan and delivers the right resources when needed enables effective leaders to deliver more value”. For more on this study, click on the following link – https://pwc.com/us/en/risk-assurance/sotp/2016-State-of-the-Internal-Audit-Profession-Report.pdf.

A successful talent audit starts with a proper grasp of the thresholds of what is required for each critical role, not just currently, but in the future as well considering the alignment with organisational objectives. After all, one of the most important outcomes of the process should be to evaluate the organization’s ability to achieve these objectives. Using data captured by the HR department such as cognitive ability tests, personality questionnaires, key performance indicators (KPIs), interviews, feedback sessions, etc., auditors can gain valuable insight into employee’s strengths and development requirements in line with linked objectives. To this end, a detailed SWOT analysis is a valuable exercise when determining the talent/objective fit, and simplifies the process of identifying gaps so that the necessary action can be taken. Effective oversight mechanisms need to be in place and the various roles and responsibilities should be well established and communicated throughout the enterprise.

There are several important characteristics that exemplify a productive talent management process, and it is important that a talent management audit focuses on these critical areas, and whether they have been performed satisfactorily, in line with company policies and procedures:

• Clear talent management standards and priorities need to be in place, aligned with the strategic direction, measurable through performance metrics and targets, and achieved throughout the business. Cognisance should be taken of both internal and external factors that impact this performance.
• Detailed workforce planning needs to have been conducted to determine resourcing requirements
• Succession planning must be performed taking into account the critical skills required to perform the role
• Talent management activities should be constantly refined based on the input of the relevant role-players and their managers
• If gaps are identified, they need to be addressed, and if necessary, the HR policies, procedures and process goals should be revised and adjusted to be brought into line with the strategic goals of the organization.

In our increasingly complex, knowledge-based world the talent present in our societies, communities, businesses and families provides us with a powerful competitive advantage, and has become a major contributing factor to organizational performance and success. By linking this competitive advantage to our business strategies, and aligning the achievement of objectives to the optimal utilisation of the talent at our disposal, organizations can take a massive leap forward towards ensuring their talent does not go to waste, or worse, is lost for good.

Author – Paul van der Struys
May 2016