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Wasting Talent Reduces Profit

October 21 2011 - "The World changes and we change with it" is the latest trend. A few examples of this introduction that catch the eye are: the proportional rise in the ageing population; a tight labour market; booming social media development together with all sorts of linked technical means; the inflow of generation "y"; the current financial crisis in connection with the lack of trust in organizations inside and outside; a more scrupulous and articulate consumer. There are many factors that have an influence on organizations, but do organizations really 'want' to change or do they do so for the sake of appearances?

When organizations actively want to participate in the changing environment a question arises: why is available talent not being fully utilized? Of course employees who are classified as a "young and high potential" are important to these organizations but beyond these individuals a complete scenario is obscured: the individual talents of every single employee.

Insufficient vision on talent

Richard van der Lee, Manager Retail Clients at Rabobank Bollenstreek in the Netherlands, wrote a dissertation on this issue to wind up his MBA study. "My observation, which among other things is based on researching talent within organizations, daily working practices and everything that I see and hear, is that managers do not deal seriously with the subject of talent. The main cause of this is that organizations have a failing vision of personal talent, especially when there should be a relationship between individual development of talent and organizational aspects such as strategy, leadership and culture. Separate from this there are the aspects which are directly important as seen from the customer's perspective. In these times customers do expect that organizations go along with market changes, are innovative and show entrepreneurship i.e. think along with the customer and not stick with an internal focus as many organizations do."

Open door

Enough of excuses such as 'it takes time,' 'it is unprofitable,' 'it is the responsibility of HR,' 'we already pay enough staff expenses.' "By utilizing talents that are relevant at that moment for market developments, organizations can align with the market more dynamically. It is kicking at an open door when you conclude that utilizing talent, on the basis of the previously formulated definition, results in both customer satisfaction and an increase of satisfaction amongst employees, allowing organizations to take a lead over the competition with consequent improvement in (financial) results," Van der Lee states.

Individual talents

"Look at your own organization and ask yourself the question: in what way is the vision of our organization in this field related to the individual development of talent?" Van der Lee continues. "Is it well regulated or is it done for the sake of appearances? Right now it is important that the individual (hidden) talents of employees are being developed and aligned to developments in the market so that. the right person is in the right place."

Strategy, Culture and Talent

Mathematicians and other rational people will ask if this produces any extra profit. Van der Lee: "Willliam A. Schiemann (2009) has established a number of hard number observations based on very wide research. These findings are described in his book Reinventing Talent Management, How to Maximize performance in the new marketplace. Schiemann demonstrates among other things that in organizations in which Strategy, Culture and Talent are aligned to each other (so called Highly Aligned Organizations) profit can double with respect to the competition.

As an example, on the basis of figures from the year 2006 it appears that businesses in the Netherlands, with a number of employees between 10 and 100, made in total a profit before tax of €22.178 million. Let us say that three percent of these businesses actively occupy themselves with development of talent. Their 'normal' profit would be €665,34 million. When these organizations develop themselves to highly aligned organizatons (aligning talent, culture and strategy) they can double their profits to a maximum of €1330,68 million. So when organizations spend more time and energy aligning and developing talent, culture and strategy they can take a bigger part of the total profits in the market and so beat their competitors.

Time for a vision on talent

Van der Lee concludes: "Organizations which are not actively engaged in developing the talents of individual employees are ignoring "market" and "money" consequences. Therefore he advocates getting busy in the development and implementation of a "vision on talent". The time for creating and exploiting talent has dawned.

Richard van der Lee is working as a Manager Retail Clients at Rabobank in the Netherlands. In his spare time he has published several articles (the articles have been published on several HRM-sites and a website for managers and directors in the Netherlands). He is also asked to give presentation about his vision on HRM-issues in seminars. As part of an Executive MBA he researched the development of individual talent in organizations. This resulted in a specific ideology for organizations, and a corresponding model on how to build a ‘vision on talent’. The main component of the model is the strong relationship between relevant market perspectives and organizational perspectives. Email Richard for questions or suggestions to, or find him on twitter under the name visieoptalent.

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