Talent Risk is Strategic Risk of Modern Businesses.
1. Lack of holistic talent strategy
It may include lack of succession planning; lack of return on leadership investment and fail to attract, develop and retain the talent. For many organizations, it lacks close links to connect short-term recruitment strategies with long-term workforce planning. To effectively manage talent, companies must have both a short and long-term approach via holistic talent strategy.
· Talent Analytics: Information is the lifeblood of digital business, data-based analytics is the scientific approach to help HR see the big picture from a systematic view, addressing questions like Where does organization have talent gaps, how might they change based on predicted changes in customer demand or geographic regions? What're the alternative talent pipelines at digital era? etc. How to make a tough choice such as build vs. buy vs. borrow talent to close these gaps? It is strategic imperative in designing a holistic talent management system that addresses wider concerns such as employee engagement, escalating costs, performance management, connecting employees to the enterprise and diversity.
· Key Driver for managing global talent strategically:
(1) Shortage of global leaders, or personnel with necessary skills
(2) Lack of organizational focus on managing talent
(3) Lack of development in talent management processes
(4) Increased global competition for talent
2. Lack of capability and capacity in managing human capital
Instead of treating employees as human resources, human capital is the better term to perceive human potential as a strategic business investment. Human capital assets include such as recruitment, retention, leadership training or other skills development. More specifically, talent management risks include:
-Capability Risks is associated with building the collective skills a high performing organization needs to compete now and in the future—the breadth and depth of sets of skills and competitive capabilities present within a workforce
-Capacity Risk is upon how an organization is able to create and maintain the size, scale and shape of the digital workforce needed to execute its business strategy seamlessly. It is always important to monitor the talent pipeline and discover the new digital channels to recruit, and develop talent.
-Cost Risk is also critical for managing talent with efficiency. What will it cost an organization to recruit and retain the talent it needs, the industry surveys consistently finds that many businesses do not even track the real cost of the workforce as a key metric
3. Reputation & Regulatory risk
Organizations today are facing many digital new normal, as social media will spread the word quickly. Reputation is part of the business brand, and the business brand usually also reflects the enterprise culture. Some say reputation risk is not a risk but a consequence of the public and media reacting to all the other risks. When someone talks about managing reputation risk, they are most likely talking about the post-risk processes of damage control and remedial steps involving corporate communication and public relations programs. And generic risk management includes how organizations manage economic, legal, political, social and human risks, how to build up its resilience muscle.
- Reputation risk affects talent management effectiveness: Current and former employees freely exchange opinions about their workplaces, which can affect the ability of the organization to retain existing talent or recruit top talent. On the other side, it’s important for organizations to building an employment brand; building talent communities/pools and leveraging social media accordingly
- Regulatory risk: is relating to employee behavior, regulations, and laws; or the negative impacts of law or regulation on organization’s ability to attract talent. This category covers both the need to ensure talent processes comply with local regulations, as well as whether talent management is seen as a key business capability or just an administrative process simply to ‘be complied with'.
To look forward, today’s talent managers must isolate and address a much broader array of talent risks, taking into account a critical need to craft a solid talent strategy that supports business objectives and capital investments, to identify the talent bench strength and weakness; forecast the talent management capability & capacity, manage costs, build the resilience muscle for potential reputation or regulatory risks, and manage talent KPIs to well reflect its business values.