The Function of Talent Advisory in an organisation

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The Emerging Function of
Talent Advisory
in Organisations of Today
By Katharine McLennan
Strategy without execution is a daydream
Execution without strategy is a nightmare
Either without talent simply don’t exist
--a slightly adapted Japanese proverb
In the ever-changing environment of the 21st century, marked by increased complexity,
uncertainty and risk, talent resources have become more pivotal to organisations’ success
even as they are becoming more scarce. As a natural consequence, talent management has
evolved into a “decision science.” Just as the finance profession arose in the early 20th century
to guide decisions about how corporations compete for money and the marketing profession
arose in the 1950s to guide decisions about how to compete for customers, today talent
management is guiding decisions on how to define, attract, develop and retain people while
measuring the factors driving their performance and linking their capability to critical business
outcomes. Furthermore, in a global marketplace defined by innovation, the effective
management of talent has become both a major competitive differentiator for organisations as
well as the number one risk facing corporate leaders seeking to drive sustainable growth.
It has been 15 years since the publishing of McKinsey’s The War for Talent, and we have yet to
see it result in strategic and effective talent management practices in most of the corporates
we encounter. Perhaps the GFC gave us a bit of respite in terms of talent scarcity, but the
squeeze on talent is back on more than ever, with Australian’s economy experiencing 5.2%
unemployment in its latest figures, only 0.7% difference in the unemployment figures before
the GFC.
And now more than ever in an economy that is completely based on lightning-fast knowledge
transmission, having the right talent at the top who can nimbly strategise, execute and lead in
this ambiguous world is critical. This talent backed up by effective long-term succession
planning and development has become essential to shareholder confidence and thus billions of
value.
We see three forces influencing the rising importance of having access to sophisticated talent
advisory services: (i) a risk argument; (ii) a value-creation argument; and a (iii) regulatory
argument.

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(i) The Risk Argument for a sophisticated Talent Advisory function
Witness the value erosion of poorly executed or arguably non-existent talent risk management
plans at the very top:
 Lloyds temporary step down of its CEO, António Horta-Osório, on a two-month mental
health break that the company was in no way prepared for succession-wise, resulting
in a 6.6% decline in shares
 The quickly passing CEOs of Hewlett-Packard from Mark Hurd leaving in 2009, to Léo
Apotheker only staying for a year, and then to Meg Whitman in less than a year, who
just took the reins late last year. Through this flurry of CEO, $40 billion of shareholder
value was destroyed
 The 8% decline in value within a day of the announcement of the CEO appointment of
Thorsten Heins for Research in Motion (Blackberry maker), with the market not
believing that the selection of this very operational CEO would not be enough to stem
the $32 billion of shareholder value decline that had occurred over the last year
 The resignation of Perpetual’s Chris Ryan within only a year of his appointment as he
could not stem the continuous decline of the share price, having fallen from $32 a
share to $21 a share a year later
 The resignation of Leighton’s Chairman David Mortimer and CEO David Stewart, after
only 8 months in the role, to be replaced by Hamish Tyrwhitt. The announcement
alone cost 3% on the share market in one day
These are all cases where we believe the predominant answer to the following questions was
NO:
1. Business
Strategy
2. Capability
Required to
Deliver Strategy
4b. Talent
Mobility and
Succession Plans
for the Top 100
as a whole
3. Assessment of
current/ potential
capability &
career motivation
including talent
delivery &
retention risk
4a. Long-term
Development
and Career
Planning
for the individual
Do you -
Regularly update your
talent requirements
with your business
strategy to ensure
that you can execute
strategy in the long
term?
Can you clearly
define your
capabilities in a way
that is not HR-speak,
in a way that makes
sense to your people
yet is uniquely
differentiated from
your competitors?
Do you -
Have a standard methodology in which all of your
executives are evaluated to determine whether you
have the capability required to deliver the
strategy?
Know how to assess potential capability for the
future of these executives?
Have a good sense of how your talent stacks up
against your competitor’s talent?
Do you -
Know where your capability gaps are?
Know where your retention risks are?
Know where your vacancy risks are (positions that
don’t have clear successors)?
Know where your transition risk is for executives
starting in new roles?
Are you -
Blocking high potential talent because there is
nowhere for them to move?
Does everyone in the organisation
execute on their development plans
and have a ten-year individual career
plan that ensures that they have the
best chance at attaining their career
goals if they stay with the
organisation?
Do you know how to measure the
impact of development in order to
determine when capability gaps are
closed?
4c. Long-term
External
Sourcing Plans
for Capabilities
You Cannot
Develop Within
for the critical
and retention
risk positions
Do you -
Have sound succession planning and
regular talent mobility planning
sessions that cover the most unlikely
scenarios?
Do these scenarios take you out more
than 5 years so that you have an
inspirational talent opportunity
message for your young talent and for
potential talent in the market?
Do you -
track the best talent in the market and
keep in touch with them over the long
term?
Do you know what it would take to
attract this talent to your organisation?
Do you know what capabilities you
would need to compete against this
talent more effectively within your
organisation if you can’t acquire the
talent?
TALENT RISK ASSESSMENT TALENT PIPELINE SUSTAINABILITY
TALENT ADVISORY REFLECTION

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An integrated talent advisory service that goes beyond the provision of transactional search
and leadership development will not only save the wasting of millions of dollars on
transactional search bought reactively to vacancies and hundreds of talented executives
walking out the door because they were not developed in leadership, skills or career, but also
accelerate the right capability at the right time. As the Chief Internal Auditor works to test and
suggest mitigation against compliance, process and financial risk, a Chief Talent Officer works
to test and suggest mitigation against talent risk, as well as to catalyse the dramatic
appreciation of talent capital.
In our experience, however, the function of talent management in most organisations is a
series of talent reviews being conducted without any finesse, language, or long-term
contextual and strategic frameworks for looking at both the individual leader’s career
trajectory and where the organisation’s strategy needs the talent to grow. Talent intelligence,
retention strategy, tailored and strategic development planning and constant replenishment
becomes a 10-15-year capability play with a board that constantly changes in size and shape,
rules that emerge and change as the market changes, and pieces that come on, go off and
grow and decline over time.
An organisation’s executive talent are its most precious assets, and planning for the pipeline is
one of the most strategic activities an executive should undertake. Spending 5% annually on
a million-dollar piece of software for annual upgrading or 5% on a million-dollar property for
depreciation is business as usual. Spending 5% annually on a million-dollar leader in the
assessment, development and maintenance of their skills, behaviours, knowledge and long-
term career is NOT business as usual.

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(ii) The Value-Creation Argument for Sophisticated Talent Advisory Services
Executing firm talent management strategy is not just about risk management – it is also
about value creation. Since A Search for Excellence was published in 1982, there have been
numerous correlation studies about the impact on the bottom line of good management
practices, perhaps the most famous written by Jim Collins in Good to Great, published in 2001.
The most recent studies were conducted by the Hackett Group and Bersin & Associates in 2007
and 2008 who identified the critical elements of a sophisticated integrated talent management
system of large multi-national organisations and then correlated the sophistication of talent
management practices to bottom line outcomes. The correlation results are significant. The
top quartile-rated talent management implementers were significantly better business
performers across EBITDA (15% difference), net margin (22% difference), return on assets
(49% difference) and return on equity (27%).
0.0% 5.0% 10.0% 15.0% 20.0%
ROE
ROA
Net Profit Margin
EBITDA
Top Talent Performers
Fortune 500
Hackett Group Study 2007
Three-year average performance 2005-2007
15%
13%
11%
7%
8%
6%
5%
4%
$141,000
$163,000
$195,000
Increasing
talent
maturity
Increasing
talent
maturity
Increasing
talent
maturity
$US Revenue per Employee 2008
Voluntary Turnover 2008
Total Turnover 2008
Bersin & Associates Study 2008
This study examined 27 talent management capabilities of the Fortune 500
companies and compiled a weighted average score for each of them. The top-
quartile of companies were labelled “Top Talent Performers.”
An annual review of 725 US-based companies, weighted
by size of company and segmented into four quartiles of
maturity.
Firms with the Best Talent Management also create
value more effectively

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(iii) The Regulatory-Creation Argument for Sophisticated Talent Advisory Services
In a regulatory sense, we believe that more effective talent management is going to be
imposed on Australian listed corporations sooner than later. Witness the United States
Securities and Exchange Commission, who in October of 2009, removed the ordinary business
exclusion defence used by companies reluctant to disclose their CEO succession plans to
shareholders. This policy change has ushered in a new wave of corporate governance scrutiny,
as regulators and shareholders increasingly focus on CEO succession planning practices. With
$40 billion of value at stake at a company like HP, of course they should. In reversing its
former position of allowing the exclusion, the SEC cited that “poor CEO succession planning
constitutes a significant business risk and raises a policy issue on the governance of the
corporation that transcends the day-to-day business of managing the workforce.”
In fact, the following facts tell the story of perhaps why regulation is inevitable:
 In a 2010 international study of companies averaging 20,000 employees, Bersin &
Associates found that fewer than 12 % of the companies had truly integrated and
effective succession planning methodologies, characterised by succession planning
integrated with business strategy results, a complete understanding of capability
requirements for the future and the gaps currently at hand, and an associated
contingency plan of both internal talent and external Talent management
 Statistics such as 55% of organisations reporting having no formal succession planning
strategy are not uncommon, and these are companies with more than $500 million in
revenue
 Another study shows 40% of CEOs fail in their first 18 months
 Recent survey research from the US threw out even more alarming statistics:
o Forty-six per cent of CEO successions were unplanned
o Forty per cent of companies are not prepared for an emergency succession
o Forty-eight per cent of directors currently see CEO succession as the sole
responsibility of the CEO
o More than 60 per cent of companies report that the CEO recommends his/her
successor
o Fifty-seven per cent of directors say that they do not know when their CEO plans
to step down
o Only 16 per cent of directors believe their board is effective at CEO succession
planning
But we’ve known that all along. Whilst Australia has yet to enact such legislation in it
corporate governance regulation, bodies such as the Proxy Advisors Services and the
Australian Shareholders’ Association will surely be lobbying ASIC and the Federal Government
to at least get succession planning on the agenda of the Corporate Government Principles
governing any major ASX listing.

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What is the function of Talent Advisory in an organisation?
(refer to diagram on page 2 as you step along the StrategyTalent conversion table below)
Step along the
StrategyTalent
Conversion that
an organisation
must take (see
diagram, page 2)
Function of Talent Advisory Capability and experience
required in the function
TALENT RISK ASSESSMENT
(1) Developing the
business strategy
Whilst a talent advisory function in
an organisation is certainly not
there to provide the function that
strategy does, they are certainly in
a place where they can influence
heavily strategic directions by its
deep insights into the
differentiating nature of the
organisation’s capability.
This function is also skilled in
strategic facilitation, able to
provide in-house facilitation in for
the interactive workshops that
drive the most collaborative
approach to strategy formulation
possible. Talent advisory
facilitators know how to design
scenario testing, assumption
building, decision making and 5-
year vision exercises that
incorporate the “From” and the
“To” of business over the long
term. Whilst the team is working
on the content of strategy, the
facilitator is also strengthening the
team’s clarity in purpose,
accountability, decision making
processes and trust, as they are
experts on how leadership
psychology plays out in both the
individual and the team.
This facilitation allows the Talent
Advisory function to know the
executives intimately in the context
of the business strategy, which the
function to assess and coach
individuals from a much more
strategic vantage point.
The Talent Advisory function
must be comprised of people
who are experienced across
the triangle of corporate
strategy, business execution,
and leadership psychology.
They have trained extensively
in the art of team facilitation,
psychology of decision making
and team collaboration. They
integrate this psychological
insight with their commercially
grounded understanding of the
art of strategy design and
execution planning.
In the strategic workshops
they run for the executive
teams, the Talent Advisory
facilitators are usually
strategically complex thinkers,
very quick on their feet and
able to respond and adjust
agendas as they observe how
the team is processing over the
workshop. Time flies in their
workshops, and clear strategic
decisions are set
collaboratively. At the same
time, teams grow stronger in
the trust and the awareness of
both the strategic clarity of
their purpose but also in a
better understanding of each
other.
(2) Determining the
capability required
to deliver the
strategy
Knowing how to translate business
strategy into capability required is
not a skill most organisations have.
We have found organisations very
adept at creating the project
Having understood the
business strategy, the Talent
Advisory function must know
how to work with existing and
emerging organisation’s

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Step along the
StrategyTalent
Conversion that
an organisation
must take (see
diagram, page 2)
management plans and timelines
for executing against strategy, but
we have not seen the associated
clear articulation of capability
required to deliver against these
plans.
The Talent Advisory function works
with business executives to
assemble not only a picture of the
current set of capabilities required
for each of the positions under
review, but even more importantly
a view as to what you will need in
the future to differentiate the
organisation in the market in the
eyes of clients today and
tomorrow. In our experience, this
is seldom tied to existing
organisational charts and the
determination process needs a
much more laterally creative
definition of what talent needs to
look like for the future.
capabilities frameworks and
making them come to life in
people.
This function does not get
caught up in a “generic set of
leadership competencies” but
instead considers strategy,
culture and context to
determine the most relevant
capability set for each critical
position. And, as the business
grows and transforms, we find
that this set constantly
changes and varies across
Business Units, across time
horizons, and across markets.
This function does not rely
upon a static capability set and
does not get lost in static job
descriptions, knowing well that
jobs evolve rapidly as markets,
technology and knowledge
exponentially expand.
This function is also well-
versed in the artful lens of
ensuring diversity of thinking,
gender, career experience, and
ethnicity is applied to
determine the most effective
teams that complement each
other synergistically.
(3) Assessment of
current and
potential capability
and career
motivation and
therefore the talent
delivery and
retention risk
The Talent Advisory function takes
the business strategy and the
capability set and then works with
executives intensely to assess their
current and future potential against
what the organisation is trying to
build for the future both
strategically and culturally. The
function spends many hours with
each of your executives in a
dialogue that covers the spectrum
of assessment and development.
The function interviews their direct
reports, peers, clients and
managers to keep constant the
most comprehensive feedback
report on the leadership capability
that leaders can take action on
has strong experience of
assessing executives against
their current performance as
well as extrapolating a forecast
of the potential of a leader
based on multiple inputs of
past experiences, insights of
the leader, motivations,
perceptions, and strategic
mindsets.
The function has a
methodology that they use to
teach the organisation to have
much more robust talent
reviews and dialogue, much
more thorough and

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Step along the
StrategyTalent
Conversion that
an organisation
must take (see
diagram, page 2)
across education, exposure and
experience.
It is extremely important that the
Talent Advisory function is trained
extensively in using different lenses
for different types of people so that
we identify talent across all types
of diversity -- be it diversity in
career experience, type of thinker,
type of leader, gender, ethnicity,
country of origin, age, etc.
inspirational career
conversations, and much more
planned action around
education, experience and
exposure.
Over time, the Talent Advisory
function constructs a “Talent
Culture” across the
organisation that is part of the
everyday DNA of the
organisation.
The quality of the assessment
process is measured in the
results it brings in terms of
significantly shifted leadership
style, performance results, and
cultural engagement scores.
The trust we build over a long
period of time with the
candidates is also evident in
the number of times we are
asked to coach our clients and
work with them at their
significant transition times over
their career.
TALENT GROWTH
(4a) Long term
development and
career planning
After the assessment is complete,
the Talent Advisory function works
with the leader, their manager and
the Board and/or CEO team to
reflect on the short-term
development and long-term career
plans that each individual requires.
This is completely tailored to match
the individual’s own life situation
and ambition and align it the
organisational need for the
candidate’s skills and character
has deep experience in how to
advise on career possibilities
and years of experience in
coaching executives on what
steps to take to strengthen
their skill set, to meet their life
balance requirements and to
more than satisfy the
organisation’s perception of
them.

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Step along the
StrategyTalent
Conversion that
an organisation
must take (see
diagram, page 2)
strengths.
Many of the candidates we assess
then engage with the Talent
Function on a long-term basis in
ongoing coaching or particularly in
coaching for critical career
transition points, particularly in the
first year of new positions.
There are few organisations
that have robust career
planning for their top 100
executives. Seldom in our
experience do organisations
even know what the
possibilities are for the next
assignment so that they can
prepare well when the time
comes. We work with the
leader and their context to
ensure that there is a clear
pathway of career potential
and thus the associated
education, experience and
exposure required for attaining
the most optimum readiness
for candidates in their
transition of roles.
(4b) Talent mobility
and succession
plans
With our intimate knowledge of the
internal talent, their ambitions and
their retention risk combined with
our search partners’ knowledge of
the external market, we can now
help facilitate internal talent
reviews that plot the short and long
term talent pipelines of the
organisation in the format of
succession plans, long-term
position phases (in which we show
up to 10 years forward of people
scenarios for the organisation) and
long-term career plans (which are,
in contrast, sorted by the individual
person).
has deep experience in
facilitating C-suite teams and
Boards in their talent reviews.
They also know how to partner
strategically with the most
insightful search firm partners
who can help track competitor
talent and integrate this
market data with long-term
pipeline plans.
The Talent Advisory function in
partnership with an external
search firm is responsible for
an ever-growing knowledge of
competitors’ talent and the
ability of such talent to enter
the organisation as a
competitive capability and
cultural fit.
(4c) Long-term
external sourcing
plans for
capabilities the
organisation cannot
develop within
The Talent Advisory function must
partners with search firms who are
constantly in the market charting
both industry domains and
functional domains, watching who
is who and gathering detailed and
substantiated evidence about
must know how to strategically
and commercially work with
executive search firms who
know how to comprehensively
map talent in the market
against different purposes.

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Step along the
StrategyTalent
Conversion that
an organisation
must take (see
diagram, page 2)
where the great talent is through
the hundreds of reference
interviews they might conduct
weekly.
Having this competitive knowledge
allows the Talent Advisory function
to do many things: gives the
function a sense of “benchmarks”
for how to develop internal talent,
enables the function to influence
strategy based on a competitive
strength analysis, and allows the
function to make long-term
“attraction” tactical plans for
external talent to come into the
organisation.
When external talent is identified,
the Talent Advisory function works
with external search firms
assemble the most rigorous
selection process in order to
determine psychometric health,
cultural fit, and general leadership
potential. This assessment report
has proven to be instrumental in
ensuring the right selection is
made as well as representing the
first step of a comprehensive
onboarding process that the Talent
Advisory function can provide for
the new executive in their first
year.
The Talent Advisory function with
its data can also make the most
strategic recommendations on
whether to go “in” or “out” for
filling new positions.
These search firms must be
firms that know their candidate
stock over many years,
watching how their careers
develop and understanding
what steps they need to take
further and in what
organisations they would most
thrive.
Matching talent mapping
insights with the insights of
knowing the internal talent is a
skill and knowledge that The
Talent Advisory function is best
equipped to do and can
support leaders in their senior
recruitment decisions, being
able to provide an assessment
and selection process that is
fair, transparent, thorough and
exceptionally developmental in
nature.
Even the candidates who are
not selected in the process
gain immensely from the
process through a clear
understanding of where they
would need to develop next.

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How can a Talent Advisory Function provide a return on investment?
In traditional deal-based searches, organisations are currently seeing about 28% of the total value of the first year compensation go to executive
search companies as a standard fee. In our experience, large corporate organisations buy this search reactively, and the decision on which
search firm to go with is based on the decision of the hiring executive at the time, usually based on his or her previous search relationships.
Below is a table that indicates the scale of return you might expect if you were to work with us based on the typical expenditure patterns we see
in companies.
Category of
expenditure
Assumptions for a typical ASX 50
company, assuming we are
focusing on the top 300
executives
Amount spent if
organisation
followed the
traditional talent
strategies in the
Australian market
today
Immediate savings that could be possible if
a strategic Talent Advisory function is
executed that partners with a long-term strategic
search firm
Revised expenditure
Search amongst your
top 300 executives to
refresh with external
talent
15% turnover in a given year being
filled by external talent = 45
executives
Average search fee of $150,000
across these
15% x 300 x $150,000 =
$6,750,000 in search fees
$6,750,000 in
search fees
Getting turnover to 10% as we can increase
retention for employees whose careers and
leadership are being strengthened.
Offering a long-term strategic search partner an
average search fee of $127, 500 because with
volume we can reduce average fee by 15%
10% x 300 x $127,500 = $3,825,000 in search
fees
$3,825,000 in search
fees
(savings of $2.9
million)
Search to replace the
10% of the external
talent you placed this
year who will leave
within the first year of
hire
Because of poor assessment, poor
marketing of the company, poor
referencing the candidate and poor
onboarding, we see an average
10% turnover of external
placements within their first year
If you assume 10% on 45 new
placements and again, $150,000
search, you have $675,000
$675,000 in search
fees
Because of poor assessment, poor marketing of
the company, poor referencing the candidate and
poor onboarding, we see an average 10%
turnover of external placements within their first
year if transactional search practices.
Because of the strategic long-term sourcing
strategies and onboarding practices a Talent
Advisory function could provide, we could halve
this one-year turnover to 5%
If you assume 5% on 30 new placements and
again, $127,500 search, you have $191,250
$191,250 in search
fees
(savings of $483,750)

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Category of
expenditure
executives
Amount spent if
organisation
followed the
traditional talent
strategies in the
Australian market
today
search firm
Revised expenditure
Loss of productivity
from this 10% that
either walk out or need
to be asked to leave
within their first year
This includes costs such
as:
HR management time;
Managerial time;
Managerial time to
interview new
candidates;
Loss of productivity due
to low morale and lack of
leadership caused by
vacuum;
Training and relocations
costs lost
There will always be some loss of
productivity with any new
executive. Without proper
onboarding and assimilation that
begins as soon as the external
candidate is given the job offer,
serious time lags, cultural mis-
matches, and strategic mis-fires can
occur within the first year of hire on
top of the risk of actually losing the
executive
A survey by Right Management
conducted across 444 multinational
organisations showed that at least
42% of those organisations
calculated the cost of the loss of
productivity and opportunities lost
at least twice the employee’s annual
salary. 26% of the survey
respondents said three times their
salary, and 11% said up to 5 times
their salary. The calculation of
these costs can. Let’s use an
assumption of a $450,000 executive
who earns a bonus of 50%, totalling
$675,000 in package. Even at twice
this package, the lost productivity
and other costs associated with the
bad hire would be 2 x $675,000 =
$1.35 million per bad hire.
Let’s assume that of the 10% of
executives who leave within the first
year, 50% of these were actually
due to the wrong hiring decision on
$4,000,000 in lost
productivity across
the organisation
With an effective Talent Advisory function, we
would propose that there would only be 1 mis-
hire at the most, usually arising from emotional
disturbances that occur after the hire, never
before seen in the person’s life. Because we are
constantly watching the market with the strategic
search firm, this one mis-hire would easily be
replaced without as much of the productivity lost
in transactional search. We would argue that at
most you would lose would be the annual cost of
your executive. Let’s make that 1 x $675,000 x
1 mis-hire.
$675,000 in lost
productivity across the
organisation to any
mis-hires and
additional time to
replace
(savings of $3.325
million)

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Category of
expenditure
executives
Amount spent if
organisation
followed the
traditional talent
strategies in the
Australian market
today
search firm
Revised expenditure
your part. That is 10% x 50% x 45
executives = about 3 executives
needing to be fired. At $1.35
million a piece, this is $4 million
dollars
Cost of Talent
Advisory function
services that relate to
the “4a” and “4b” of the
StrategyTalent
Conversion diagram on
page 2
For a typical Top ASX 50 organisation, the Talent
Advisory function would focus intensely in
leadership advisory and succession planning on
top 70, conducting regular assessment and
development work with these executives,
staying close to the executive teams through our
strategy facilitation and developing these
executives through our coaching practices
We would also focus on the top 5-10% of the
emerging young talent (e.g. 28-35-year-old)
with the ten-year horizon.
In this way, we would be closing your capability
development gap and working with you to create
the best long-term talent mobility plan
Estimated $2,000,000
in Talented Advisory
staffing costs (7 staff
EVENTUALLY), which
might cover covering
top team facilitation,
top 60 assessment,
and development of
critical talent,
eventually over the
years covering your
total top 300
population as well as
instilling
TOTAL COSTS $11.4 million
dollars
$6.7 million,
representing a 41%
cost reduction or
$4.7 million
TOTAL VALUE CREATION you might expect by employing
world class talent practices
Correlations studies indicate a 15% increase in EBITDA, a 22% in
net margin, a 49% increase in return on assets and a 27% increase
in return on equity

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1. Business
Strategy
2. Capability
Required to
Deliver Strategy
4b. Talent
Mobility and
Succession Plans
for the Top 100
as a whole
3. Assessment of
current/ potential
capability &
career motivation
including talent
delivery &
retention risk
4a. Long-term
Development
and Career
Planning
for the individual
Talent Advisory can work with
executive teams in interactive
workshops that drive the most
collaborative approach to
strategy formulation possible.
Our facilitators know how to
design scenario testing,
assumption building, decision
making and 5-year vision
exercises that incorporate the
“From” and the “To” of
business over the long term.
Whilst the team is working on
strategy, the facilitator is also
strengthening the team’s
clarity in purpose,
accountability, decision making
processes and trust through
their deep experience of high
performance team building.
The Talent Advisory facilitators
are also getting to know
executives intimately in the
context of the business
strategy, which allows them to
assess and coach individuals
from a much more strategic
vantage point (“in situ”)
After the assessment is complete, the Talent Advisory function
works with the executive, their manager and the Board and/or
CEO team to produce and then execute on the short-term
development and long-term career plans that each individual
requires. This is completely tailored to match the individual’s
own life situation and ambition and align it the organisational
need for the candidate’s skills and character strengths.
Many of the leaders we assess then engage with the Talent
Advisory function on a long-term basis in ongoing coaching or
particularly in coaching for critical career transition points. This
allows us to revise the assessment reports on a regular basis.
The Talent Advisory function is particularly adept at the first
year coaching for executives in new positions.
4c. Long-term
External
Sourcing Plans
for Capabilities
You Cannot
Develop Within
for the critical
and retention
risk positions
With our intimate knowledge of internal talent, their ambitions
and their retention risk combined with our search knowledge
of the external market, we can now help executives to facilitate
internal talent reviews that plot the short and long term talent
pipelines of the organisation in the format of succession plans,
long-term position phases (in which we show up to 10 years
forward of people scenarios for the organisation) and long-
term career plans (which are, in contrast, sorted by the
individual person).
The Talent Advisory function is then in a position where it can
strategically partner with search firms to keep our eye out
looking for external talent for three purposes – so that we
know how our internal talent stacks up against the market and
can be developed against this benchmark, so that we know
what competitive advantage our competitors have through
talent, and so that we know which talent in the market could
likely come over that would be worth the investment, whether
to fill a vacancy or to simply come in proactively.
When talent is identified, the Talent Advisory function and
search partners work together to assemble the most rigorous
selection process in order to determine psychometric health,
cultural fit, and general leadership potential. This assessment
report has proven to be instrumental in ensuring the right
selection is made as well as representing the first step of a
comprehensive onboarding process that the Talent Advisory
function can provide for your new executive in their first year.
TALENT RISK ASSESSMENT TALENT PIPELINE GROWTH
Knowing how to translate
business strategy into capability
required is not a skill most
organisations have. We have
found organisations very adept
at creating the project
management plans and
timelines for executing against
strategy, but we have not seen
the associated clear articulation
of capability required to deliver
against these plans.
works with your business
executives to assemble not only
a picture of the current set of
capabilities required for each of
the positions under review, but
even more importantly a view
as to what you will need in the
future to differentiate yourself
in the market in the eyes of
your clients today and
tomorrow. In our experience,
this is seldom tied to existing
organisational charts and needs
a much more laterally creative
definition of what talent needs
to look like for the future
takes the business strategy and
the capability set and then
works with executives
intensely to assess their
current and future potential
against what the organisation
is trying to build for the future
both strategically and
culturally.
We spend many hours with
each executive in a dialogue
that covers the spectrum of
assessment and development.
We then also interview their
direct reports, peers, clients
and managers to deliver the
most comprehensive feedback
report on the leadership
capability that leaders will ever
receive.
THE VARIOUS ROLES OF A TALENT ADVISORY FUNCTION

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Key Governance recommendations
Based on our observations and experiences with how talent is governed in other
organisations, we would recommend that:
1. The Talent Advisory function be considered as an independent and objective
function, treated very similarly to an Internal Audit function. This would mean a
dual reporting relationship:
a. To executive management for their insights from assessing and developing
talent in order to execute against short and long-term strategy
b. To the Board (via the Head of People/Nominations Committee) for
ensuring that the organisation is constantly assessing against leadership
risk and executing successfully against mitigation plans through talent
development, succession plans, talent mobility and external sourcing
2. The head of this function be considered a senior executive perhaps without the
bureaucratic designation of a “level” so that they can easily coach personalities
that would otherwise be designated as more senior to them by where they sit on
the organisation chart. Often just calling this position a Chief Talent Officer
without reference to an organisational level suffices.
3. The head of the Talent Advisory function have regular access to the CEO and their
team so that the discussions of talent are regular, sophisticated, and fully
informed. This also allows Talent Advisory to observe the CEO team executives
“in situ,” which would further strengthen the function’s ability to assess, coach
and provide long-term succession planning data to the team and to the Board
4. This head of Talent Advisory function be entrusted to meet with the Chairman
and the Head of the People/Nominations Committee independently so that the
organisation’s long-term horizons on capability be reviewed, a horizon that often
extends well past the current executive team’s horizon
5. This function have regular access to their counterpart in global best practice
organisations – their strategic thinking, their talent processes, and their ideas
about executive development
6. This function be established first by a Chief Talent Officer who is supported by a
senior manager who is skilled in assessing and developing talent. These two
people will then work through the needs of the organisation over the first year,
most likely growing a Talent Advisory function that consists of the original two
people plus one Talent Advisor for each business unit, who works hand in hand
with the Head of the Business Unit’s Human Resources
7. This function partner with the research arm of a university/business school who
could quietly trace the learnings from the emergency of a globally leading Talent
Advisory function and the impact on the success of the business and its
individuals

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Background of Author
Katharine McLennan
Katharine’s passion in leadership can be summarised
in three words, the first two of which “Sawu Bona,” a
Zulu greeting which means “I see you and all of your
potential.” The third word is “Sikhona,” which is the
response, which means “Because you see me and all
of my potential, I now exist in this world and have
meaning.”
Katharine is a partner in Johnson’s Leadership Advisory practice, which emerged from the
breaking away of five of the critical leadership and CEO/Board search partners from Heidrick
& Struggles in Australia. At Johnson, Katharine shares her wealth of experience with clients
from the ASX Top 50, focussing on succession planning, C-suite Teamstrategy facilitation,
Top 100 conference facilitation and executive assessment & development. Katharine assists
clients in the management of their internal talent pipeline whilst at the same time
coordinating the identification of the external talent pipeline, which is undertaken by her
search colleagues at Johnson.
Before joining Johnson, Katharine spent two years as Executive General Manager Talent and
Business Unit Human Resources for the Commonwealth Bank, where her portfolio included
Talent Acquisition & Retention Strategies, Succession Planning, Talent Development,
Operational HR for the nine business units of CBA and Workforce Planning.
Before joining CBA, Katharine spent 10 years in leadership consulting, most recently with
Heidrick & Struggles where she developed CEO succession plans and C-suite coaching for
CBA, Gilbert + Tobin, Brisbane Airport, Bankwest, GPT, Ergon, Fujitsu, and CSR. Prior to
this she headed up the leadership practices of the Mettle Group and PricewaterhouseCoopers.
Prior to her leadership consulting decade, Katharine spent four years as t he key architect and
implementer of the Sydney Organising Committee for the Olympic Games operational
strategy. In this role she led the operational planning process for the venue operations and
was the main facilitator on all operational planning and contingency exercises within the
Sydney organisation. She still consults regularly for the IOC and other cities’ Olympic
Committees.
Katharine began her career with Booz Allen & Hamilton in Australia and New Zealand, driving
corporate growth strategies, business reconstruction and process re-engineering across
industries such as health care, banking, steel manufacturing, telecommunications and
logistics.
Katharine holds a Bachelor of Science with Honours (biology & history) from Duke University,
Masters of Arts (political science) fromthe University of New South Wales and Masters of
Business Administration (MBA) from Stanford University, having graduated with top class
honours in all three degrees. Katharine is also a qualified psychotherapist.
Katharine is a member of the Advisory Board of the University of Technology Sydney
Business School under Roy Green, as she is passionate about determining how businesses
and universities can collaborate more effectively together as well as how business education
can be better formulated for a more integrated leader.
She has two children, Kate (14) and Geoffrey (11). She is also a member of the Practical
Wisdom group of business leaders who study Buddhism under Sogyal Rinpoche, as well as an
avid practitioner of Ashtanga Yoga. Having studied the biology of anxiety as her university
honors thesis and then completed her psychotherapy diploma, she is a passionate keynote
speaker on how neuroscience insights can be applied in the world of leadership, particularly
in the areas of executive depression and anxiety.

The Function of Talent Advisory in an organisation

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