October 21 , 2017

Managers Are Hoarding Talent: A Hidden Problem That’s Likely Hurting Your Firm

Expediting the transfer of employees among diverse business units allows a firm to develop and retain employees, while simultaneously increasing the cross-pollenization of ideas and the transfer of best practices. Unfortunately, I find that executives at every large organization I have visited consistently complain that this beneficial movement simply doesn’t happen often enough.

I have also found that most executives across the globe are surprised to learn that one of the primary contributors to this restricted movement is a phenomenon known as “talent hoarding.” If you are not familiar with the term, talent hoarding is where individual managers take purposeful actions to ensure that their top talent remains on their team longer than what is good for the company and the employee.

The costs of talent hoarding can’t be ignored

There are numerous negative people management and business impacts that result from talent hoarding. One obvious impact is increased turnover as a result of employee frustration from not being quickly recognized as top performers and from keeping them longer than their desired time on their current team. In addition, a lack of cross-fertilization among business units will dramatically slow innovation.

Another cost may result from overly relying on expensive and time-consuming external recruiting, even though you actually have exceptional bench strength. But your bench will make a much smaller contribution because a significant portion of it will be hidden from managers that need that talent.

The biggest cost overall may reach tens of millions of dollars each year for a major corporation. And those costs result from significantly restricting overall corporate growth because sufficient levels of internal talent aren’t immediately available when needed for promotions, for leadership openings and transfers to other rapidly growing business units.

This problem has remained largely hidden because no manager will admit to doing it. But also because within the poorly managed corporate internal movement process, there is never an internal movement metric that measure when top employees have been on a team too long.

Talent hoarding is so damaging because if a firm’s top employees are restricted from developing and moving. They won’t wait, but instead, they will quickly accept a better external opportunity!

Why managers hoard top talent

Ideally, individual managers should automatically put the needs of the corporation first. And when they do that, rather than hoarding talent, they instead act as a “talent launching pad” by encouraging the top talent that they have developed to leave to other teams as soon as they are ready. Unfortunately, there is a diminished incentive to release top talent because there is no direct corporate measure or reward for developing and sharing talent.

Obviously, keeping top talent beyond their “time to move on date” can help a selfish manager by allowing them to continue to meet their KPI goals and to earn their related bonuses. Incidentally, individual team members and senior managers may also directly or indirectly encourage teammates to stay longer than their optimal time, because the loss of talent will also affect their own performance bonuses.

By restricting talent movement, managers can avoid the chore of having to hire new talent that will likely not immediately meet the performance level of the departing employee. Some managers also hoard because they fear that they will not be able to hire a replacement at all because of budget or hiring freezes.

And finally, the employee themselves may not resist having their movement restricted because they mistakenly over-trust their manager when she/he says that they are “not yet ready.” And without a manager’s encouragement, there may be higher levels of fear that will prevent many employees from pursuing even an obvious new opportunity on their own.

The 8 most common talent hoarding tricks and how to discover them

As part of any effort to limit talent hoarding, you must be able to spot and then minimize the many actions or tricks that managers use in order to keep their top talent as long as possible. The top 8 actions to look out for are listed below, with the most common practices listed first. For each, I’ve included the approaches HR can use for uncovering the bad practice.

1. “Not quite ready yet” coaching by the manager

This is a subtle but quite common approach utilizing a manager’s regular one-on-one employee coaching and feedback sessions. During these meetings a manager coaches and tries to convince a top employee that they are “close, but not quite yet ready” for the next position. The same negative coaching advice may be provided when a top employee approaches their manager about advice on whether they should apply for an internal opening.  “Stay longer” coaching may also include overemphasizing the importance of team loyalty and how essential the individual is to the team’s success.

What HR can do: HR can overcome many coaching holdback arguments by allowing employees to refer top colleagues for open internal jobs. This approach is effective because co-workers almost always know which fellow employees have high potential. HR may also be able to identify any under-coaching by interviewing a sample of above average performers to see if they are actively being encouraged to move up. Alternatively, 360° survey results may also reveal when an individual manager is discouraging development or rapid internal movement within their team.

2. “Under-rating” top employees

Managers that routinely provide the “you’re not quite ready advice” cited above, frequently supplement that advice by purposely providing “just below the threshold” performance ratings. This is done because under most employee performance appraisal or forced ranking systems HR sets a minimal numerical score or threshold for qualifying for transfers, promotions or raises.

I have personally witnessed managers who know that threshold purposely scoring a top employee just below that minimum. This artificial lower rating allows the manager to provide positive feedback, while at the same time effectively restricting internal movement. Incidentally, when another internal manager is interested in one of a manager’s top employees and calls for a reference check, their current manager may purposely undersell them or focus on the employee’s flaws.

What HR can do: Identify a manager’s pattern of purposely underrating by using statistics. Over time check to see if the percentage of employees rated “just below the promotion threshold” on a team is higher than normal. HR can also utilize statistics to “calculate” which employees in a team will soon become “overdue” for internal movement.

3. Managers limit high visibility work assignments outside this team

Managers are well aware that when top performers become visible to other managers, it’s only natural for them to be targeted for internal movement. So hoarding managers, in order to reduce the internal visibility of their top team members, may purposely restrict them from serving on task forces and outside-of-function committees. Unfortunately, such a practice negatively affects the performance of ad hoc teams because they are populated with many average employees that a manager doesn’t mind losing.

When a manager restricts work assignments outside of the team, it restricts top performers from building relationships and seeing that “the grass might be greener” on the other side.

What HR can do: HR can identify this practice over time by calculating the percentage of above average performing team members that are assigned to outside of team activities and then compare that percentage to the average.

4. Purposely not listing high potentials and those ready for movement

Many firms have lists that are distributed to all managers that cover employees judged as having high potential, leadership potential or being ready for promotion. So managers that hoard purposely avoid placing their top talent on these HiPo and promotion lists to keep them “hidden” from other managers that are actively seeking top talent. Hiding this talent will also severely damage the corporate succession plan because the employees that should be on it remain essentially unknown.

What HR can do: HR can identify this hoarding practice by looking at the percentage of a manager’s employees that are placed on these lists. HR can help to avoid this problem by having an independent process for selecting the individuals to be placed on important lists.

5. Restricting employee development/training opportunities

In addition to limiting visible work assignments, managers that hoard may subtly restrict or discourage their top talent from taking advanced training classes or development opportunities. A manager might restrict formal development activities to limit the visibility of their team’s talent. But also because merely participating in these development/training opportunities may signal to HR that the employee is ready for movement.

What HR can do: HR can identify this restricted development practice over time by monitoring the percentage of above average employees under a manager that are provided with corporate training and development opportunities.

6. Punishing employees because a manager perceives them to be disloyal

This insidious practice is, unfortunately, not that unusual. It occurs when a manager proactively and often subtly punishes an employee they perceive to be disloyal. A manager may decide that a top employee is disloyal if they apply for external jobs, internal openings, transfers, promotions or leadership development opportunities

The form of punishment varies by manager, but it may include removing key responsibilities, dramatically lowering their performance ratings, refusing to allow them to interview internally or blocking them (we can’t afford to lose you) from taking internal jobs that they are offered.

What HR can do: HR can identify this practice over time by interviewing members of the manager’s team that have applied for internal openings after a 6-month delay in order to see if there was any punitive action against them by their manager. Because a high-performing team generally contains several top performers, HR can also measure the overall promotion and transfer rates of all high-performing teams to see if their transfer-out rates are lower than the norm.

7. Hoarding may be unintentional

Some managers may, inadvertently, end up not promoting top talent simply because of their inability to assess an employee’s potential. Not knowing which employees have potential may also cause managers to direct their development efforts to the wrong team members. It’s also true that some managers routinely rate all employees low across the board. And with lower ratings compared to other teams, this will restrict movement out of the team. 

What HR can do: HR can help managers better identify top talent by providing company-wide talent assessment processes that are applied to all employees that perform above the average. HR should also make individual managers aware when their employee ratings are significantly below that of other managers. HR can also help to speed up internal movement by lowering or eliminating the restrictions on how long an employee must stay in a particular job before you are allowed to move on.

8. Limiting employee access to information revealing internal opportunities

While some managers proactively make their employees aware of internal opportunities, others try to restrict this type of information. Managers can discourage their employees from going to internal job fairs, and they can make information about current openings outside the team hard to find.

What HR can do: HR can limit this problem by automatically “pushing” job openings to all relevant employees and by holding career events during nonworking hours.

Some additional solutions for reducing talent hoarding  

Firms like Google have tried to minimize talent hoarding by allowing individuals to self-nominate for a promotion. Firms like Cisco and Booz Allen have used their own recruiters to source and place the best internal talent. Many other firms have established clear and predictable career paths, so there is little uncertainty about the upward steps and how long, on average, they should take.

It’s also important for talent leaders to realize that business firms are not alone in having to minimize talent hoarding. One of the most prominent examples of this problem occurs in baseball’s minor-league farm teams. In the lower leagues, it is only natural for managers to want to withhold talent for as long as possible from the next higher level team because that will allow them to continue winning. Baseball teams minimize their hoarding problem by heavily rewarding managers that successfully develop and move top talent up the line. Orchestras and performing groups also face the possibility of talent hoarding, so they use open tryouts to help minimize the problem.

Final thoughts

As an expert with decades of experience in improving internal movement, I have found that this important role is almost universally under managed. It is under managed because frequently it is not a standalone function with its own full-time leader and budget. And the performance metrics of internal movement can only be described as atrocious. As a result of these and other shortcomings, managers can and frequently do get away with intentionally restricting the internal movement of talent. However, I have found that once corporate executives understand the tremendous costs resulting from this unnecessary restriction, they expect immediate action.

The first action should be to put together a team of HR and line managers and charge them with identifying the extent of the talent hoarding problem at your firm and the most effective ways to reduce it.

Author’s Note: If you found that this article stimulated your thinking and that it was actionable, please take a minute to follow or connect with Dr. Sullivan on LinkedIn.

As seen on TLNT, Septemeber 25, 2017.

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About Dr John Sullivan

Dr John Sullivan is an internationally known HR thought-leader from the Silicon Valley who specializes in providing bold and high business impact; strategic Talent Management solutions to large corporations.