HRP 2: Inventory Your Talent Base

Human Resource Planning (HRP) is about optimizing workforce talent to increase the value of the firm. My inaugural post on this momentous topic offers a step by step road map consisting of Seven Tenets to Talent Building. Taken in sequence each Tenet is a chapter in our Talent Management Blog Series. The complete collection serve as operating instructions on how to realize true workforce transformation that can take your company from good to great. We are now at step two.

Candid assessment and complete inventory of your company’s talent base are the nuts and bolts at the center of formal Human Resource Planning.  In this post I explain how to do it with speed and simplicity. I have championed the same basic system with my clients and employers  for over a decade– and it works great. Let’s go to it…

Simple as 1-3-1

In the preceding post, I implored that Talent Building is NOT Recruiting – this is HRP Tenet #1.  I am convinced and so suggested that tweaking traditional hiring techniques has no discernible impact on the quality of  human resources. Instead, happenstance looms largest in  hiring outcomes. That’s right–the primary driver behind landing a great hire is luck!  A familiar 1-3-1 performance distribution emerges in any case: One in five hires is very good; three in five are okay; and one in five you would not rehire. Yes, admittedly the basic math does seem too approximate and stunningly simple. Hiring people is complicated business, after all.  And judging worker  job performance is even more complex!

Not really.  But, if you insist, we’ll flesh things out a tad. With a Human Resource Planning Matrix as our guide we can subdivide the workforce a bit more  and take candid account of current employee performance. The game plan is to force rank every worker by each person’s overall  job performance, then adjust the list slightly by slotting  each one into simple employee-categories.  Piece of cake!

Human Resource Planning Matrix

Category	Description	Optimal Distribution
High Potential	These are your best and brightest ready to take on more now. Challenge, develop and pay well. Give stretch projects with rewards. Concentrate here!	10%
Growth Potential	These people are keepers. They are reliable and very good at current job with promotion potential. Develop for effectiveness, keep busy and train.	10%
Strategic Retain	Technically skilled, unique know-how you can’t afford to lose. May have well homed experience in niche, but marginal upward potential. Important to keep in current role and push to share knowledge.	10%
Meets	Doing what paid to do with normal support. May be ok for lateral. Focus on basics, reward for effort and keep efficient. Rank and scrutinize bottom 20%.	50%
Too New	Less than three months in current assignment. Provide daily feedback, test abilities and subject to intense scrutiny during highly-structured on boarding.	20%
Over or Out	Mismatch in current role. You would likely not rehire based on what you now know. Verify assessment and set stage to change role or dismiss.

This Human Resource Planning Matrix is the simple but powerful tool that drives the entire process.  Employee categories  are purposely few,  basic and self explanatory. The “Optimal Distribution” column is a benchmark–it is just guideline. And, if you are like most business leaders who have yet never experienced HRP, you probably still don’t buy it. You insist, at first glance,  that many more than 20% of your good people are top notch or have long term growth potential. Perhaps that is true.  Good for you.  Moreover,  you refuse to mark  rotten  20%  of  your committed workers or newbies in training  who happen  to sort to the  bottom  of  the list.  No, that’s too radical. All of your  employees are very solid worker bees, after all– you have no need to get rid of any of them. Been there too. This thinking is very consistent among leaders who are naturally loyal to staff and proud of  team accomplishments.  Hold that thought.  We’ll go there in our next post about decisive leadership.

For now the goal is to performance-rank and characterize your workforce, each person assigned to the most appropriate category on the HRP Matrix.  No, you can’t create new categories. And, no you can’t assign one person to two categories.  That’s cheating.  This is a proximity game and you need to plug people in to the category that most closely fits, even it ain’t perfect.  As you decide who goes where, pay no mind to the Optimal Performance Distribution for now since you don’t believe it anyway.  The goal is to reflect the actual talent distribution of your team as best you know.  In fact, your first attempt at taking talent inventory will bear little resemblance to the Optimal Distribution.  It doesn’t matter.  This is about accurately depicting your talent base in it’s present state.

Performance Category vs. Hierarchy

The HRP Matrix offers a brief Description for each employee category and suggests different employment programs that  may apply.  This is important.  The traditional HR instinct is to offer the same goodies to all in the name of equal employment opportunity.  Yet in the same breath, different perks, varying reward amounts and wide-ranging training and development  opportunities are subject to aristocratic class system.  The ticket to  qualify  is based on hierarchy– job level, salary grade, title, that kind of thing.  The top brass get professional development seminars.  The front line manager is allowed supervisory skill training.  Staff development is regulated by performance appraisals.  Poor staff! Meanwhile, job performance, achievement potential  and individual contribution are not differentiators.  This simply will not do.

High Potential employees need to be challenged.  They should be offered cross functional opportunities, special projects and get more exposure to higher ups.  Your top best workers should be rewarded–not by salary grade–but in proportion to their contribution, which is exponentially greater than average-performing peers. Most of the company’s investment resources in people should be targeted for the super stars, regardless of job level in the company hierarchy.

In contrast, Strategic Retains usually have little in common with your high potential best. No, no. Instead, this  is a special subgroup of those wide-spread among the Meets requirements category. Her daily performance may be average; but her role is critical.  If she leaves the company now you are screwed. Her value derives not from stellar achievements, tireless  effort, super smarts or decisive leadership. Not at all. Instead, job security is achieved by stranglehold  due to one-of-a-kind  expertise, niche specialization or because she’s the only person in the shop who knows every nook and cranny.  Obtaining this wisdom for company keeps should be the goal; not being held hostage to it.  She  should be assigned as mentor and allow trainees to shadow her every move.  Her development opportunities are to train others, not be trained.  Obviously, that’s a different program.

In future posts I will expand on  the appropriate employment programs assigned to each Category in the HRP Matrix.  The point is that HRP is not just about a worker bee score card.  It serves as the compass for your entire human resource management program–custom and different depending on where each employee stands on job performance and achievement potential, not artificial salary grade and concocted job title.

Time to Take Inventory

Now about process.  Yes, ALL workers should eventually be subject to the exercise from entry level clerk I to the CEO’s direct reports.  It is critical, however, to start at the top.  The talent building initiative must have the President–not the HR VP–as the leading champion.  Otherwise it won’t work.  Assuming you are good to go there, the next step is educating the top team on how it all works.  For the initial assessment, I prefer to do it one-on-one with each department executive.  Here is how I explain it:

To complete this exercise, you need two simple things:

1. The Human Resource Planning Matrix
2. A spreadsheet list of employees names by department, title and hire date

The scope is important too.  Starting at the top of Corporate ladder, the CEO’s direct report lieutenants should assess each of their direct reports.  Depending on the company size, it is probably manageable to drill down at least one more level so you now have the  VP / Department head looking at a list of her direct reports (let’s call them managers) and those who work for the manager (let’s call them staff).  Let’s say that’s 22 people in all–5 managers and 17 staffers.  Got it, good.

Now, regardless of job level or staff specialty, try to force rank each worker from best overall job performer to the least.  Don’t worry about the HRP Matrix or Categories yet.  Just plug through the list and take your best shot at prioritizing it.  This effort takes a little thought, but it is not nearly as hard as some would make it out to be.

A few words about Forced Ranking:  This idea was made famous  in the glorious 1980s by Jack Welch, former Chairman of GE. Big guns including Yahoo, Ford Motor, Capital One and 3M have since adopted versions of this somewhat controversial performance management practice.  The gist is to identify a company’s best and worst performing employees, using person-to-person comparisons, rather than comparing individuals to themselves year after year via a fixed score card. I am a firm advocate that, when properly administered, this practice can improve the quality of the workforce. I know it works without a doubt. I’ve seen it. It is a great way to avoid notoriously inflated feel-good performance ratings too, which are nothing more than institutionalized lies that infest personnel files  everywhere.

There is a lot written on the topic and it has been much studied. I endorse it because I know from experience that it is better to do it this way, especially in the first years of a good-to-great change strategy.  If you want to know a little more about forced ranking, this Harvard Business School study makes the case succinctly.  It includes a caveat that I also embrace– Forced Ranking works best in the first years of implementation but loses its impact or need after about four years of positive change.

Okay, now you forced ranked everyone that works in your department, 22 in all.  That should give you a good basis to pick and plug a little bit now to complete the next step–which is to ensure each worker is properly assigned a Category on the HRP Matrix.  Simply add a “HRP” column to your spread sheet and assign each employee to a Category–write it in– High, Growth, Retain,  Meets, New or Out.  Within the the Category, keep them sorted by performance rank from top best to bottom worst.

Wow, I’m tired.  You must be too.  You have worked hard and this post is much too long already.  In our next post we will study your HRP spreadsheet and use it to demonstrate the critical requirements embodied in Talent Building Tenet # 3– Leadership in a high performance work culture and executive intolerance for mediocrity.  Get some rest.  You are going to need it.  It takes a lot of energy and courage to move a company from good to great.  That’s what leadership is all about.

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