October 19 , 2017

How the Talent Management Function Can Thrive In a VUCA World

This is part 1 of a series on talent management in a VUCA world.

By Dr. John Sullivan

As a leader in talent management, you have undoubtedly already noticed over the last decade that there has been continuous volatility and change in the business, political, social, technological, and even the physical environment. Well, this world of turmoil actually has a name, which is VUCA—an acronym for Volatility, Uncertainty, Complexity and Ambiguity.  This turbulent environment was first identified and used by the U.S. military but it is now also becoming a standard business term that cannot be ignored.

In 2012, the prestigious consulting firm BCG conducted a research study that demonstrated using hard numbers that this turbulence in the business and economic environment now occurs more often, the turbulence lasts longer, and it occurs with greater intensity. And as a result of this turbulence, the study demonstrated that there is also a correspondingly high level of volatility in most corporate results, including revenue, profit, market cap growth, and in the frequency that firms change their industry position.

If your firm is to thrive in this VUCA environment, every aspect of your business will need to transform so it has the capability of learning fast and adapting. The talent function will be expected to assume a leadership role in transforming your employees and your people management processes, so they can function effectively amid the turbulence.

Every area of talent management will have to become agile and adaptive, but it appears that there are four areas that will require the most change: leadership development, talent acquisition, innovation, and analytics.

Leadership development must change to meet the requirements of a VUCA world

Those who manage the leadership development function are beginning to realize that their firms will now need a completely different kind of leader, and a transformed development approach with the capacity to produce a high volume of leaders with “adaptive” skill sets in a short period of time.

Through discussions with HR managers at adaptive firms like Google and Facebook, I have been able to identify many of the expectations that these VUCA firms have for their “next generation” of leadership development programs. Because rapid, uneven growth often requires a decentralized management approach that also relies on teams, the development function will need to develop many more team and sub-team leaders for roles at many different—and often lower—levels of the organization than under the current model. Because it is extremely difficult for an adaptive leader to be effective without an adaptive team, in most cases the entire team will also need to be developed at the same time.

The entire leadership development process itself will have to be super-accelerated (the target may be six months) so that, when necessary, the needed leaders can be developed “just in time.” The assessment of high potentials will also need to be faster but assessment will be more difficult because potential will have to be identified among many employees with low levels of experience. VUCA-ready leaders will also need to be developed so that not only are they fast decision-makers, innovators, and able to learn quickly, but they also will be able to maximize those same skills among their team members.

The high workload levels dictated by the VUCA environment will allow no reduction in their current workload during development. This pressure will drive increased use of virtual learning options, including social media and wikis. Development will also increasingly occur while solving actual corporate problems, so that leader development also contributes directly to business results.

Talent acquisition must also adapt to a VUCA world

Those in the recruiting function will have to learn how to identify and successfully land new hires that are highly adaptive and that can learn quickly to match the speed of change in the environment. Recruiting also will need to be prioritized, so that hiring innovators and game changers into key positions will become a primary focus.

Because new technologies can help firms to adapt, new hires will have to be much more technology-savvy. And because these types of required candidates are rare and must be fought for, better trained recruiters, highly effective referral programs, and new sourcing and selling strategies will also be required. And finally, because new business opportunities will appear quickly, hiring and promotion processes will have to become significantly faster to fill these sudden needs.

With the intense competition, increasing innovation is critical

Because of the success of firms like Apple and Google that are laser-focused on innovation, the traditional talent management goal of increasing productivity is already being supplanted by the goal to be first and innovative. And because the entire organization must move in unison, innovation, experimentation, and risk-taking will have to occur everywhere and not just in the traditional product development areas.

Because collaboration and networking are required for innovation, talent management will have to influence workplace design in order to dramatically increase cross-team interaction. Learning, which is also essential for innovation, will have to adapt its approach. This is because formal learning itself is much more difficult in areas where innovation is occurring. In addition, talent management leadership will have to learn how to accurately measure, recognize, and reward collaboration, risk-taking, and successful innovation.

The rise of the analytics-driven organization

Because in a fast-moving environment, you must get development right “the first time,” the entire leadership development function will be forced to shift to a data-based, more-scientific, and metric-driven approach. This will make leader assessment against the new requirements related to adaptability especially critical.  These would include those conducted using full assessment centers, as well those conducted using accurate online tools.

More importantly, in a VUCA world predictive analytics are key in speeding up decision making and reducing the planning stage.  Predictive analytics may be new to you because they are in fact relatively rare within talent management.

The most common example is weather prediction. Predictive analytics allow businesses and farms impacted by weather to prepare for upcoming weather events. Hurricane predictions, for example, have become amazingly accurate as a result of the use of “big data” and statistical approaches that predict upcoming storms. Predictive policing is becoming more common where analytics help police departments know in advance where and when crimes are most likely to occur in their city.

Predictive analytics have recently become extremely popular in the area of consumer behavior, where they have been used to predict future shopping behavior and changing patterns. The insurance industry gets the nod for the longest history of use with predictive analytics, as insurance companies have long used them to identify patterns of illnesses and accidents.

Within talent management, Google has excelled by producing predictive analytics in hiring, leadership, and retention. In the retention area, Google learned to use a combination of seven different factors to predict which employees were most likely to leave (in some cases, before the employee actually realized it themselves). In other cases, Sprint used analytics to predict which new hires were likely to quit and Cisco once used predictive metrics to identify which struggling new hires were likely to succeed over the long-term.

Concluding thoughts

Rather than viewing this turbulent VUCA world as scary and frustrating, some firms and their talent management functions have instead already accepted it as an opportunity to become an organizational role model, a change champion, and to provide a new corporate competitive advantage.

And as a result of their talent initiatives, the revenue per employee, the rate of innovation and the market cap value at firms adaptive like Apple, Google, and Facebook have attained previously unreachable levels, despite the VUCA environment. Firms like Samsung have even adapted corporate slogans like “perpetual crisis” to make it clear to all of their employees that they see the VUCA world as a permanent condition.

If you agree with this outlook that VUCA is the “new normal,” the time to develop a sense of urgency and to begin transforming talent management is today.

Want to hear more?
Join DDI’s Dr. Scott Erker and me for a webinar on this topic on November 20, 2013. Managing Talent at the Speed of Change: How You Can Win will cover how you can prepare your organization to compete—and thrive—in a VUCA world

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.