Common Denominator

23 02 2010

Managing the flows of talent through your business should be as rational as managing the flows of cash.

Financial management means that by looking at the numbers you can tell what kind of a quarter you are having, what kind of scenarios you might need to be preparing for and, should things not be going well, you can trace the numbers back to identify the problem. Saying that managing finance is rational is not to say there will never be surprises or challenges, just that by using a consistent denominator (money per time period) to manage your finances in an end-to-end manner you remove a lot of the potential mystery from the process.

Imagine trying to manage your finances if every part of your business was denominated differently – R&D by the IQ of the developers, marketing by the glossiness of the brochures, production by the timekeeping of the workforce, sales by variance from plan and finance by … well, money in the bank at the end of the month. If the money in the bank was wrong, how would you ever trace the problem – are the developers not smart enough or was it that the brochures were not glossy enough?

Sounds ridiculous. But how are you managing talent in your organisation? Using a consistent denominator, end to end (from shortlisting during recruitment, through every stage of engagement all the way to eventual departure)? More likely, you have a different set of tools and processes for every step of the journey.

A common denominator means that you can collect data about Sharon before you appoint her as the office junior, and use that same data to coach her when she joins the C-level suite a decade later. More fundamentally, it means that at any point in time you can look at any individual or team and say “this is why we hired them, this is why they have been able to deliver the performance they have to date, this is why they are currently assigned to this role on that project and here’s why we should be investing in them to prepare them for the next level of their responsibilities”. Or “we probably can’t offer them the next step they should be taking inside this business, let’s help them find their way to the next big thing and enjoy their goodwill even after they have left us.”

That is rational. And when surprises and challenges arise, we don’t have to improvise, we just look at the data and trace the problem. Just like when we manage that other valuable resource, cash.

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