Written by: Tim Saumier, CEO
As we begin 2017, I find myself having numerous conversations with clients regarding their talent problems. We did a five part series last year on this subject, here they are Part I, II, III, IV, & V.
Today, I want to focus on a pretty amazing company that understands talent and it has shown up in their financial results year over year for the past couple of decades – Danaher. For the average person, they won’t recognize the Danaher name. It is a publicly traded holding company with a number of different brands/products throughout its portfolio that grew from a small $700 million company in the 90’s to nearly $20 billion in recent years using their “secret sauce” – the DBS (Danaher Business System) which is modeled after the Toyota Production System (TPS) but with many enhancements in my opinion. Last year they split the company in to two companies (Danaher & Fortive) to help focus them in particular areas. Regardless of the split, they will continue forward with the DBS model and it will show up in their performance.
Many articles have been written about Danaher so my intent is not to replicate them but rather I want to focus on what I see as one of their key ingredients to the DBS success – how they handle talent. While this is not the end all be all, this is where I see they have a distinct edge over their peer group of companies as well as the many companies out there trying to emulate/duplicate their DBS model and ultimately their success. Here’s what I’ve seen:
They have a farm system (think baseball) where they consistently hire new college graduates (undergrads and their coveted new MBA graduate program where they recruit from the top 10 programs in the US). Regardless of what’s happening with their market / businesses they’re committed to hiring the brightest & the best and they tend to pay them to the right of the bell curve – meaning they pay well. For the high potential MBA’s, they put them in a rotation program where they garner experience in commercial roles, operational roles, and strategy roles ultimately letting the “cream of the crop” rise to the top and become their GM’s/Presidents.
The key here is they are not necessarily filling open requisitions that were created by someone who left the organization.
They in fact are over hiring to keep building their “bench strength.” Very few companies do this as consistently or well as Danaher. Most companies try to run lean and wait for someone to resign. This is a huge mistake in my opinion because whether you move a person internally or make an external hire there is so much opportunity cost being left on the table due to lost leadership and productivity. This is something that most presidents don’t truly grasp. They get it conceptually but do nothing to build their bench strength. I equate it to orders are flowing in from your customers and you are out of stock – lost opportunity. Something you never get back.
What’s amazing to me is this is all a math equation. Companies have an idea of their turnover % each year, they know the ages of their employees, and they have a projection of the headcount they will need to complete the goals for the year. They can also pretty easily figure out the trends for what types of roles are turning over and build bench around these specific roles. I can tell you the patterns of my clients and I don’t have all their data.
So why am I sharing this today?
To get you to think of talent as a real investment – not a short range transaction. Consider putting together a Sales Operation Planning process around talent and get serious and intentional about finally getting ahead of the game in your talent pipeline. If you have not figured it out, this is only going to get worse for everyone as company tenures are shrinking, loyalty to companies is all but gone, and people are getting recruited out for bigger jobs, bigger titles, and bigger money. If your average turnover was 5% last year, expect it to rise. If you choose to do nothing, expect tough times in the future as you won’t have the talent you need when you need it. It’s time for leaders to step up and do something about talent instead of blaming others. This is a leadership problem to solve.
I welcome your thoughts and feedback. This is one man’s opinion. You can find me on LinkedIn and at Twitter you can find me at @timsaumierTI. Also, you can learn more about TYGES at www.TYGES.com, on Twitter @TYGESInt, or here on our blog.
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