Developing your organization's brand as a talent developer.

This article introduces the concept of the branded talent developer, an organization that emphasizes the career and developmental opportunities it offers as a means of gaining competitive advantage in the war for talent. The authors describe the financial and operating advantages earned by these organizations in attracting and retaining talented employees. We also characterize the nine qualities that differentiate branded talent developers from other organizations, and the difficulties inherent in building and preserving a reputation as a branded developer. Finally, we discuss the several important roles played by HR professionals in establishing a talent development brand.

In exchange for what prospective and current employees give to an organization--time, skills, performance, commitment--there is a corresponding "get" for the employee. Organizations market this "get" in various ways. For example, investment banks promise to pay high performers unusually well. A recent New York Times article (The New York Times, 2006) described the "Goldman Sachs premium" this way: "Goldman's compensation per employee ... is about $623,418 ... Lehman spent the equivalent of about $314,000 for every employee, and Bear Stearns spent about $320,000."

Some companies emphasize career and developmental opportunity. The best are able to turn their commitment to development into a source of advantage in recruiting, engaging, and retaining employees. We call these companies branded talent developers. For example, Exxon Mobil is highly regarded within the energy industry for its investment in employees, and this investment is a company guiding principle: "The exceptional quality of our workforce is a valuable competitive edge. To build on this advantage we will strive to hire and retain the most qualified people available and maximize their opportunities for success through training and development."

P&G is another company known for hiring employees right out of school, and developing them through progressive work assignments and training. It would be unusual for P&G to bring in external talent at other than junior levels, except in the rare case of an acquisition like Gillette, and almost unheard of to bring outsiders into senior executive positions.

Ketchum, the global public relations firm, also competes for talent by marketing its commitment to development. As the Ketchum website points out: "Ketchum prides itself on its reputation for providing the best learning opportunities in the industry." The 2004 Holmes Agency Report Card described the firm as a leader in employee training and cites its developmental opportunities as a prime reason why employees of competitor firms find Ketchum attractive (Holmes Agency, 2004).

Many companies espouse superior development opportunity, yet few sustain this commitment over the long term. The following sections describe the benefits of being a branded talent developer, how companies go from rhetoric to action in sustaining branded development, and outline the important ways that HR contributes to brand building.

The Benefits of Being a Branded Talent Developer

Companies that establish standing as a branded talent developer appear to benefit in several ways. First, they are more likely to attract, hire, and retain individuals who have the skills and attributes they require or wish to develop. This recruitment and retention advantage should not be surprising. A large literature review, including a recent study by Towers Perrin (Towers Perrin, 2005), identified career development as a prime factor in attracting and retaining employees. Fortune's "Best Companies to Work For" survey suggests that developmentally oriented organizations are more likely to be seen as attractive employers (Fortune, 2006). Charlotte and Laura Shelton's research (Shelton & Shelton, 2006) also demonstrates the particular relevance of development for the emerging professional workforce: "The top three things (they) want in a job are positive relationships with colleagues, interesting work, and continuous opportunities for learning."

Branded talent developers also appear to meet their talent needs, accomplishing this at a lower overall cost. By focusing primarily on junior employees, they avoid the costly practice of experienced hires. Building deeper relationships with talent pools provides a "first-pick" advantage, consistently enabling them to attract stronger individuals. Their attention to rigorous process and clear competency criteria results in fewer hiring "failures" and greater rates of employee retention. For example, Gallup's Q12 research provides at least indirect support for the relationship between a focus on talent and talent development and employee retention (Welch, 2004).

Third, branded talent developers are better positioned to pursue an organic growth agenda successfully. As a number of thoughtful observers have noted (Gubman, 1998; Frank & Taylor, 2004; Michaels, et al., 2001), staffing and skill gaps are typically described as a significant impediment to successful growth and expansion. Branded talent developers solve this problem by strongly connecting developmental activities to business plans, more rigorously assessing their human capital, and building skills for the future as well as the present. For example, GE's chairman Jeff Immelt recently mentioned:

As Immelt's comments suggest, the focus of GE's developmental activities is geared specifically on the competencies that are crucial to the company's future business needs for performance, rather than focused in broad, generic areas.

The best branded talent developers appear to earn a valuation premium for the quality of their leaders and leadership system. As we argue elsewhere (Ulrich & Smallwood, in press), these organizations are more able to generate greater investor confidence in their ability to execute a growth strategy successfully.

What Differentiates True Branded Talent Developers?

Over the past several years we have become interested in how organizations build "leadership brand," a reputation among investors, customers, and other stakeholders that the organization does a superior job of developing leaders and leadership (Ulrich & Smallwood, in press). In the course of this research, we have observed a number of organizations that justifiably earn a strong reputation for development generally, rather than solely in the area of leadership. This research has led to a broader interest in what enables some organizations to earn a stature as a branded talent developer.

Through a combination of literally dozens of interviews with HR and business leaders in a range of industries and companies, extensive discussions with consulting and academic colleagues, and a review of the available published research, we find that nine factors are consistently present when an organization earns and preserves status as a branded talent developer. Although our research is still in its formative stages, and more qualitative than quantitative so far, we have found enough interest and support for our observations to believe that it is of interest and value to a broader professional readership.

1. Branded talent developers see employee development as a key element of strategy. Several years ago, McKinsey completed the study it called the War for Talent (Michaels, et al., 2001). It noted that the victors of this "war" instill what they call a "talent mindset" at all levels of the organization, particularly senior management. This is a hallmark of the branded talent developer. Branded talent developers walk their talk, strongly linking strategic plans to employee development. They involve executives deeply and regularly in the development planning of top performers, what companies like Citigroup and Rohm and Haas call "corporate property." As the Hewitt Study of "Top Companies for Leaders" points out, "The Top 20 companies ... boast CEOs and boards who are actively engaged in leadership development programs and personally involved in the selection, review, and development of their best talent."

2. They emphasize "'growth from within." Growth from within used to be prevalent in many companies but today is somewhat more rare. As companies have downsized, flattened, and redefined the employee contract, it has become less common to see an emphasis on internal development. P&G continues to adhere to this strategy rather than hire experienced talent. It and other branded talent developers recognize the cost advantage of developing rather than poaching established talent. Moreover, they believe their way of training and developing employees provides a long-term performance advantage that is closely tied to culture and effective work process. They also see their development orientation and emphasis as a strong retention aide; employees who have grown up together within the company are more likely to work together over time on a variety of projects, and build trusting relationships which enable greater cooperation in achieving business goals. As one former P&G HR executive with significant international experience put it, "When you've been in the trenches together over a number of years, it simplifies collaboration. There is a trust that you approach problems in a similar way, share a common language, and that your values are generally congruent." (Younger, interview with Dave Hanna)

Branded talent developers, including P&G, need not be "grow from within" purists. Most find it necessary to bring in outside talent to address key gaps; however, they are highly selective about whom they hire, when experienced hires are made, and what roles they are prepared to fill externally. Rarely, if ever, do they hire directly into executive levels, believing a depth of company experience is essential. Past experience has taught them that the short-term performance gain of hiring experience in other than specialized areas is not worth the organizational morale and attrition cost (see, e.g., Pfeffer, 2001). They typically find that the "rejection" rate of externally hired executives is quite high, despite their skills, because they represent a poor cultural fit.

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