Talent reviews are crucial for a successful organization. However, addressing its challenges early on is necessary to maximize the benefits. In this article, we explore the top four talent review challenges and how to overcome them, and actionable steps to build a talent review process.
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A critical part of running any business is planning. Planning helps businesses make decisions on how to allocate their resources effectively.
These resources include time, money, and attention. The goal is to create maximum value, and we measure it by the return on investment (ROI). Planning is essential for businesses to determine the best strategies for future success.
Planning is common in finance, marketing, and operations, but there are different challenges when it comes to people.
What is a talent review process?
Talent reviews help HR professionals assess and determine the most effective use of resources for talent management processes. This includes growth and development, deployment, and retention.
The goal of a talent evaluation, is to create the maximum value in the future. They allow you to identify, nurture, and retain top talent, ensuring your company’s continued growth and success.
Benefits of conducting HR talent reviews
There are loads of clear benefits to getting the process right. Talent assessments help you to:
- Understand critical roles to build a talent pipeline of strong leaders who are ready to move as positions become vacant.
- Retain and develop specialists with deep technical knowledge to maintain core competence.
- Ensure that individuals in high-impact roles are the best fit for the job.
- Seize new opportunities without needing to organize and develop your talent.
- Encourage every person to build their career by gaining experience and developing their skills. This also improves your ability to attract quality talent and keep the talent you already have.
- Address poor performance when it arises. Even though only a few people may not meet expectations, their impact on the business’ reputation can be significant.
Common challenges to talent reviews and how to fix them
Talent reviews are a critical component of an organisation’s talent strategy. However, conducting effective talent reviews can be challenging without the right approach.
1. Lack of good quality data
Good planning needs accurate data to focus resources on things that create the most value, such as time or money.
For example, to invest in stocks, one needs good data to study past performance, track market trends, and assess potential risks. This data helps them make informed decisions about when to buy, sell, or hold their investments. Without data, the investment is as good as a guess, and it’s unlikely to yield favourable returns.
The cornerstone of any successful talent review is high-quality data. This is the first and often most daunting challenge.
If you don’t have quality data, you will base your decisions on opinions that are changing, unreliable, and biased.
Collecting quality data on its own is also not enough. You must understand it to find talent needs and offer suitable training and development opportunities throughout your organization.
Prioritize data accuracy and quality by implementing robust data management and verification processes. This involves equipping employees with the knowledge and the right tools to collect quality data. Not sure where to start? View our People Analytics Solutions.
2. Facts vs. feelings in talent reviews
Usually, people base decisions in finance, marketing, and operations on facts. But opinions often cloud decision-making processes involving people. Personal biases and subjective viewpoints can heavily influence talent review outcomes.
Shift towards data-driven decision-making. Establish clear criteria and objective assessments in talent decison-making to minimize the impact of opinion. Encourage a culture of decisions relying on evidence rather than subjective judgments.
3. Confusing talent review models
The majority of performance appraisals use a three-by-three matrix with performance on one axis and potential on the other, similar to the image below.
It seems straightforward until you do it.
When talking about performance, are we talking about past or current performance? If past, how far back do we go?
Should we rely on performance ratings to judge job performance, or are they unreliable due to flaws in our evaluation process? When we talk about potential, are we talking about:
- Their readiness to move (promotability)
- The speed with which they are moving (potential) or
- How well we think they could do the next job (future capability)?
Simplify your talent review framework. Clearly state how to conduct an employee performance review and specify which talent assessment tools to use. If you choose to use a performance and potential matrix, ensure all stakeholders understand the purpose of the review and how to use the tool.
4. Cognitive bias and human psychology
Extensive research highlights the presence of cognitive biases in decision-making, especially in group settings. People tend to make suboptimal decisions (even more so in groups) based on their knowledge and beliefs where information is limited. During talent reviews, which often occur under time constraints, this problem intensifies.
Mitigate cognitive bias with structured reviews and ample time. Encourage in-depth discussions by spreading reviews across multiple sessions to alleviate time pressure. Addressing cognitive biases is crucial for achieving fair and data-driven decisions.
Why bother with talent reviews if it’s likely to fail?
A talent review process is a marathon, not a sprint. It takes planning and preparation. To address talent review challenges, develop an effective process to minimize or eliminate potential issues.
- Eliminating Excel-based processes with an interactive online talent review assessment
- Simplifying the classification of high-potential employees
- Implementing change management communications
- Automating talent review reminders
How to build (or enhance) your talent reviews
We like the concept of building sustainable and healthy People Ecosystems. You can read more about the benefits of viewing organizations as complex ecosystems here. We need to see HR as People Ecosystem architects. Like any architect, it helps to have a design brief BEFORE you start the design process.
The design brief has to come from the business. The following questions help guide what information you need from the business to help you design talent review guidelines. If you already have a talent review process in place, make sure your current process answers them all.
Before designing a talent review, you need to answer these questions.
- What talent development decisions do we need to make?
- Who should make the decisions?
- What information do you need to make the decisions?
- How can the data we have guide them to make the best decisions?
- What are the consequences of the decisions we make?
- Who will allocate the resources required?
- Who will be accountable for executing the decisions?
- What HR processes need to be “activated” as a result of the decisions made?
We unpack each of these questions in more detail below.
What talent development decisions do we need to make?
There are two decisions you need to make about talent development.
- Do you develop someone for their current job or for the job they will have in the future?
- What resources do we need to allocate to do that?
Who should make the decisions?
The direct line manager is the best person to answer the first question. They see the person’s work performance most often and can provide an answer.
To figure out who should make the decision, we must assess how well the person is handling their current job.
There are 3 possible answers to this question:
- They are not coping or they are struggling to deliver.
- They are delivering but cannot take on more.
- They are delivering and can do more.
If the answer is 1 or 2, then we must develop them further in the role they are in. If the answer is 3, then we must develop them for a future role.
Let’s revisit the initial question, which was: who is the best person to make the decisions?
If the person can do more, then the HR Business Partner (HRBP) or line manager’s manager is the best person to make the decision. These individuals understand the current or future needs of the business and the necessary skills and experience. If the person is not ready for promotion, the line manager must determine what development they need.
What information do you need to make the decisions?
To decide how well the person is coping in their current role, the direct line manager must observe:
- How well is the person doing their job (quality of output)?
- How quickly do they complete tasks (speed of delivery)?
- How happy are the recipients of their work (customer satisfaction)?
- How independently can they work (autonomy)?
- Do they find ways to improve how they work (initiative)?
- Do they consistently meet deadlines (reliability)?
These behavioral observations are all indicators that the person is competent, confident and capable of doing their current job. Past performance review outcomes are irrelevant because it depends on what they were facing at the time. They may have had particularly tough or challenging business conditions at the time of their previous review. Despite not meeting performance targets, they may be a good performer.
If the person excels in all the performance questions above, they may be ready for a promotion. To decide on promotion, the HRBP or line manager’s manager should consider the following:
- Is this person a high professional or a high potential?
A talent review uses potential as one of the axes in a matrix. The options are usually “High” “Medium” or “Low” potential; or “High” “Some” and “At” potential. You might consider low- or at- potential as career-limiting.
This is where the psychology of the decision process has the greatest negative impact. Nobody wants to be in the low- or at-potential box. So how do you overcome the stigma associated with the placement?
Overcoming the stigma of a low-potential rating
Before we jump into the psychology of a low-potential employee, let’s first clarify what a high potential is. A high potential is someone who takes on more complex levels of work faster than most other people.
The most obvious indicator of a high potential is that they are younger than their peers (they got there faster). That’s great, but it has a downside.
The faster you go, the less you can see. You simply cannot gain 7 years of experience in 3 years. You could deliberately design some experiences to accelerate the process, but experience trumps development in this instance.
If a high potential employee is promoted often but has less time to deepen their expertise in their role, then the opposite is not a low or at-potential employee, but rather a high professional.
A high potential is then not a low or at potential just because they move slower. They have more time to experience different situations, deepen their technical skills and learn from the consequences of their actions. High potentials don’t have to deal with the consequences of their actions because they are usually long gone by the time these issues arise.
The point is, both high potentials and high professionals have value. The performance evaluation process is not about putting someone in the right box. If you make this clear to employees placed in a low potential box, you remove the stigma.
How can the data we have help guide them to make the best decisions?
Let’s get back to what information is needed to answer the question: If the person is ready for more, are they a high professional or high potential?
The data we need is time in the workforce vs. complexity of work. When we map these two data points onto a grid we can see the person’s career trajectory, i.e. how fast they got to where they are.
High Potential (Accelerated Career Trajectory)
Example placement of a high potential.
High Professional (Normal Career Trajectory)
Example placement of a high professional.
To be clear, this has nothing to do with their performance or promotability (readiness to move to the next level). Potential is only the speed with which they are moving.
What are the consequences of the decisions we make?
If you decide to develop an individual in their current role, then you must create opportunities to:
- Increase experience from exposure to people or processes
- Deepen technical skills needed in the role
- Develop specific attributes or behaviours that are important for success in the role.
If you choose to develop someone for their next role, check if that role is crucial for succession planning or more general leadership development.
If the person is a high professional, and the next role is not significantly different to their current role, create development opportunities (as above) that focus on the next job.
If the person is a high professional, and the next role is significantly different to their current role, create development opportunities that will help with their transition.
A note on learning agility
The ability to transition to a new role is called learning agility. There are four types of learning agility:
- Mental agility: Complexity of thinking, develop new ways of making connections
- People agility: Complexity of relationships, develop new ways of interacting with others
- Change agility: Complexity of change, develop new ways of adapting to situations
- Results agility: Complexity of achieving goals, developing new ways of getting things done.
If the person has high potential, then they should already have the necessary learning agility. Focus on exposing them to experiences, acquiring skills and developing attributes needed for the next role.
It’s also worth adding three additional questions at this point.
- Level of engagement: How engaged is this person? Do they like being here, do they enjoy what they do?
- Impact of loss: How bad would it be if we lost them and why? Do they have scarce skills, valuable relationships or specific institutional knowledge?
- Flight risk: How much of a “pull” is the market exerting on this person?
These questions are important because they help to determine the need to retain this person. If someone has scare skills, low engagement and high flight risk, it means you are probably going to lose them in the near future.
Who will allocate the resources required?
Talent reviews should be conducted from the bottom up. This is because each decision and the resulting actions will take up time, money and attention.
Resource allocation decisions may occur at various organizational levels based on authority delegation. Design the process so that those making the decisions at the top get a comprehensive list of decisions made below. Their role should not be to question the actions, they should only determine the level of funding.
From our experience, carefully thought through decisions are often disregarded by opinions higher up. With a well-designed process, those farther away will trust the outcome.
Who will be accountable for executing the decisions?
The direct line manager should be accountable for the development of an individual in their current role.
HRBP’s and the line manager’s manager should be accountable for executing decisions for future roles.
What HR processes need to be “activated” as a result of the decisions made?
The decisions made during the talent review process will impact the following HR processes:
- Talent acquisition: To add talent to fill vacancies and do talent intelligence for contingency planning
- Learning and development: To coordinate the delivery of training
- Assignment management: To ensure exposure to the necessary experiences
- Leadership development: To manage the delivery of interventions that develop leadership behaviors
- Succession management: To update succession plans and determine risk
- Organizational design: To identify and review critical roles
- Retention: To manage and limit retention risk
- Employee engagement: To manage engagement levels
- Deployment: To coordinate the movement of people to new positions
- Compensation and benefits: To forecast future changes in costs as a result of anticipated movements
- Workforce planning: To match talent supply and anticipate demand.
Talent review 9-box placement guide
We have unpacked why asking the right questions and having the right data to support decisions can help participants in a talent review process.
To illustrate this, we’ve developed a 9 box placement guide that explains how using the right questions and data can help more accurately place talent in the correct box and provide the best prescriptive recommendations that help build talent investment action plans.
Evaluate your people operating system
Finally, to create a great talent review process, you need to ensure that your people operating system is up to the task. A people operating system is made up of four enablers:
- Data: Without data, everything is based on changing, unreliable and biased opinions.
- Process efficiency: Resources such as time, money and attention will be wasted without an efficient process that focuses on the most important decisions.
- Culture: Without a company culture that values people and their potential, anxiety, resentment and fear drive the conversations.
- Technology and tools: Without the right technology and tools, data quality is compromised, processes are inefficient, and culture can’t be embedded.
Developing succession plans post-talent review
Succession management is theological next step to a talent review process in the world of talent evaluation. It’s the point where talent teams shift their attention from simply assessing current skills and potential to building a strong bench and talent pipeline for the future. This phase, much like any other data-driven talent initiative, requires a structured process to collect talent data, analyze individual skills and competency gaps, and ultimately derive actionable insights. Learn more about our Succession Management Solution to mitigate your succession risk.
People usually make up about 60% of the operating costs of a business. A well-designed talent review process can dramatically increase their value.
To design a talent review process that is effective, you need to address the unique challenges of making people decisions. If you don’t deal with the challenges, it will undermine the value of the process.
By continuously evaluating and evolving your people operating system, you can stay ahead of the curve and drive success in today’s rapidly changing business landscape.
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