Why Talent Strategy in South Africa Should Be Keeping Every CEO Awake at Night
Talent strategy in South Africa and globally is broken for most organisations. According to a recent IBM study, almost 60% of organisations do not have the requisite people skills and resources to execute their business strategy. The root cause is clear. Executive leaders cannot articulate the capability and skills their organisations need to be fit for the future.
The People Balance Sheet addresses this directly. It is the diagnostic tool that gives executives an immediate bird’s-eye view of their people’s capabilities. It shows both the current state and the required future state. In doing so, it provides the blueprint of where executives need to take their people to execute strategy successfully.
Just as a financial balance sheet indicates an organisation’s financial health, the People Balance Sheet indicates people health. It provides a strategic overview of competency, capability and talent from the perspective of delivering on strategic business objectives.
Once strategy is written, the leadership team must stop and ask one hard question: “Do we have the right people skills and strengths to execute on this strategy?” Most do not ask it rigorously enough. Fewer still can answer it with confidence.
The Disconnect Between Strategy and Capability
One of our clients had enjoyed market domination for over 40 years with a product leadership approach. Their mantra was simple: build it and they will come. It worked well until the competition changed focus. Competitors shifted to a more personalised, client-centric model. They listened to the market and built customised, intimate solutions that met individual customers’ unique needs.
Our client continued to sell products en masse. They lost market share rapidly. It forced them to consider a change of strategic direction. But changing strategy overnight from a product leadership model to a customer-centric one is not possible. And they did not manage it. They discovered that executing a customer-centric strategy required customer-centric capabilities across the workforce: empathy, collaboration, relationship-building and active listening. Their entire solution needed reverse-engineering from the customer backwards. In other words, their People Balance Sheet, when overlaid on their new organisational strategy, was weak.
Adjusting the People Balance Sheet to Strength and Health
The People Balance Sheet has four iterative dimensions. None can be ignored.
1st Dimension : Document the current as-is state of capabilities within the organisation.
2nd Dimension : Articulate the future capabilities required to deliver on the organisation’s strategic objectives.
3rd Dimension : Define the gap between the as-is and the to-be states clearly. This gap becomes the tactical roadmap for strategy execution.
4th Dimension : Ensure the to-be state aligns not only with organisational strategy and the operating model but also with each person’s career aspirations within the organisation.
Dimension 4 is fundamental. Organisations cannot force people into roles that do not resonate with their personal career aspirations and natural strengths. People need to feel that they can learn, grow and perform. They need to feel they belong, not only in their job role but also within the organisation’s future plans for them.
If an organisation cannot deliver that, it loses people. The war for talent has become a silent one. People vote with their feet. They walk into competitors’ organisations and take their capabilities, and the organisation’s investment in them, with them.
Speed of Execution and Agility Underpin Talent Strategy Success
Speed of execution is a prerequisite for operationalising the People Balance Sheet. One of our clients tasked their HR team with formulating the People Balance Sheet for the entire organisation manually. The team took nearly 20 months to complete the task for 30 job roles. By the time they presented it to the executive heads, the future state capabilities they had identified as critical were already out of date.
The People Balance Sheet must use digital tools and global competency databases. This ensures data capture is fast and updates are easy. With the correct methodology, systematised diagnostic tools and disciplined design, organisations can execute a People Balance Sheet far more effectively and at significantly higher speed.
Business agility is also a key capability and mindset required to succeed with the People Balance Sheet.
Agility gives organisations the ability to adjust plans quickly in the flow of execution, responding to feedback from the market or internal stakeholders. An agile mindset ensures the organisation continually assesses itself, the market and its internal capabilities through the lens of a changing world. It makes minor or major tweaks whenever needed.
Non-agile organisations that wait for quarterly or annual strategy sessions to make changes risk being left behind. The proliferation of technology alone means that emerging capabilities always evolve. Both strategic thinking and capability planning require agility to keep pace.
While HR can assist in the process, executive heads own and drive it. They are ultimately accountable for successful strategy execution. The sole purpose of the People Balance Sheet is to ensure the organisation has the right people in the right jobs with the right capabilities to execute. That is not the domain of HR alone.
How the Wrong Capabilities Directly Impact Business Performance in South Africa
PWC’s 22nd Annual Global CEO Survey highlights the direct impact that a lack of correct capabilities has on an organisation’s performance. When CEOs were asked what impact the availability of key skills is having on their organisation’s growth prospects, the results were stark.
Radical Shift: If You Cannot Source the Talent, Create It
In an ideal world, organisations would task HR with finding the right people in the recruitment marketplace. But with 64% of heads of recruiting having difficulty acquiring talent to support a change in strategy, organisations must look inward. They must create the workforce they need through upskilling and reskilling.
By 2030, the global talent shortage could exceed 85 million people. The issue is not a shortage of workers. It is a shortage of workers with the right skills.
Creating the capabilities needed to execute strategy calls for a genuine shift in thinking. IBM articulates this clearly: “Inside the organisation, build agile teams with heterogeneous skill sets to enable experiential, peer-to-peer innovation, and create a culture where learning becomes viral. Create opportunities for job sharing and internal mobility that focus on skills development. Work across HR organisational boundaries to connect the dots, making skills the anchor point. Identify the key skills needed for success and align your future skilling strategy throughout the entire employee lifecycle — from recruiting, to team formation, learning, career coaching, compensation, and retention. Share skilled talent across organisational boundaries.”
This shift is already underway. 46% of CEOs say that significant retraining and upskilling is their most important strategy for closing the skills gap.
Building a Workforce Fit for the Future: The Talent Strategy South Africa Needs
When organisations face disruption, the temptation is to overcomplicate. The better response is to return to the fundamentals of sound strategy execution. Two decades ago, Kaplan and Norton introduced Competency Design and Strategy Maps as a way of executing organisational strategy. These business basics fell out of favour for a time. They are now making a strong comeback, boosted by technology enablers such as IBM Watson and EMSI databases. The People Balance Sheet is not a new concept. It is Strategy Execution 101, updated for the present with technology.
Once executives understand the health of their People Balance Sheet, they can align strategic objectives with the capabilities needed across the organisation. The gap between the capabilities they have and the capabilities they need becomes the blueprint of where they need to take their people.
Organisations can go a step further. Executive leaders, in partnership with HR, can predict emerging, evolving and expiring capabilities using predictive modelling. This is the level of flexibility and agility that genuine future fitness requires.
The skills crisis is not going away.
Advances in IoT, AI and cloud are only as strong as the human ability to extract and interpret data meaningfully.
According to the WEF’s Future of Jobs Report: “Workers will need to have the appropriate skills enabling them to thrive in the workplace of the future, and the ability to continue to retrain throughout their lives. Crafting a sound in-company lifelong learning system, investing in human capital and collaborating with other stakeholders on workforce strategy should thus be key business imperatives, critical to companies’ medium to long-term growth.”
This is an exciting time for business. Organisations have the power to create the workforce they need. Get in touch to find out how the People Balance Sheet can strengthen your bottom line and make your organisation truly fit for the future.
How LRMG Helps South African Organisations Build Their People Balance Sheet
At LRMG, we own proprietary tools, technology and digital platforms that help organisations define and action their People Balance Sheet. We partner with clients to deliver on their organisational strategy by bridging the gap between their as-is and to-be capability requirements. In practice, this means defining the roadmap for future fitness through talent development, talent technology and talent advisory solutions built for the South African and African context. To find out more, contact the LRMG team.
Frequently Asked Questions: People Balance Sheet and Talent Strategy in South Africa
What is a People Balance Sheet and how does it work?
A People Balance Sheet is a diagnostic tool that gives organisations a strategic overview of their people health from a competency, capability and talent perspective. It works by documenting the current state of capabilities across the organisation, articulating the future capabilities required to deliver on strategic objectives, defining the gap between the two states and aligning the to-be state with both the organisation’s strategy and each person’s individual career aspirations. The gap between as-is and to-be becomes the tactical roadmap for talent development and strategy execution.
Why do South African organisations struggle to execute strategy?
Research from IBM shows that almost 60% of organisations globally do not have the people skills and resources to execute their business strategy. In South Africa, this challenge is amplified by a significant skills gap, particularly in digital, data, customer-centric and leadership capabilities. The core problem is that many executive leaders cannot clearly articulate the capability and skills their organisations need to be future-fit. Without this clarity, talent investment is unfocused and strategy execution remains aspirational rather than operational.
How quickly can a People Balance Sheet be created?
Speed depends entirely on the tools and methodology used. One LRMG client took nearly 20 months to complete a manual People Balance Sheet for 30 job roles, at which point the results were already out of date. Using LRMG’s digital tools and global competency databases, the same exercise can be completed in a fraction of the time. The data remains live and updatable, which is essential in an environment where required capabilities evolve continuously.
What is the difference between upskilling and reskilling in a People Balance Sheet context?
Upskilling means developing additional skills in an employee’s current area of work, deepening their existing capability to meet new demands. Reskilling means training employees in entirely new areas to prepare them for different roles or responsibilities. Both are critical components of a People Balance Sheet strategy. As the global talent shortage approaches 85 million people by 2030, organisations that invest in upskilling and reskilling their existing workforces will close capability gaps faster, at lower cost and with less disruption than those relying entirely on external recruitment.
How does LRMG help South African organisations build and action their People Balance Sheet?
LRMG supports South African organisations through the full People Balance Sheet process using proprietary tools, technology and global competency databases. In practice, this means facilitating the as-is capability assessment, defining the to-be state aligned to organisational strategy, mapping the capability gap and building the talent development roadmap to close it. LRMG then delivers the talent development, talent technology and talent advisory solutions that execute the roadmap. To find out how LRMG can help your organisation build a stronger People Balance Sheet, contact the team.
References:
- IBM Report The Enterprise Guide To Closing the Skills Gap, sourced from Unpublished data from the 19th IBM Global C-suite Study (IBM Institute for Business Value 2018)
- PWCs 22nd CEO Survey
- Gartner for HR: Analytics-Driven Talent Strategy
- IBM Institute for Business Value The Enterprise Guide to Closing The Skills Gap
- World Economic Forum: Future of Jobs Report 2018
