The Cost of Not Having the Right Project Talent
PMI President and CEO Mark A. Langley speaks with CFO Magazine on why you should help your organization view project talent as an investment rather than a cost.
All too often, talent is viewed as a cost. I want to help you understand why you should help your organization view project talent in particular as an investment rather than a cost.
The simple truth is there are financial and opportunity costs related to inadequate investment in talent — especially project talent, those charged with driving business results and executing your organization’s strategy. In a recent Economist Intelligence Unit study for Project Management Institute (PMI), “Rally the Talent to Win,” research showed that talent management deficiencies are blamed for unsuccessful strategy implementation efforts 40% of the time.
Why is this your problem? Before you draft an email to HR, think about this: PMI researchers have found that organizations in which talent management is aligned with organizational strategy have an average project success rate of 72%; when the two are not effectively aligned, the average project success rate is 58%.
Overall, organizations with alignment wasting 33% fewer dollars on projects, according to our research. Wouldn’t you like to have one-third more money to invest in changing your business?
And what are you failing to achieve by not being able to fund more strategic initiatives? Whether your bottom line is suffering, you aren’t returning money to shareholders, or your competitors are surging ahead, it all comes back to making the appropriate investments in talent.
Yet the connection between talent management and strategic success isn’t sufficiently understood. In the EIU report, just 41% of respondents said their organization had a clear, accepted approach to strategic talent development. A mere fraction of those surveyed reported that their organizations provide enough in the way of financial resources, C-suite attention, or employee time to manage and develop the project management talent needed to implement strategy.
Looking at this from a different perspective, we also know that “high-performing” organizations (those in which 80% or more of projects are on time, on budget, and meet original goals) are more than twice as likely to align talent management to organizational strategy as their “low-performing” counterparts (those in which 60% or fewer projects are on time, on budget, and meet original goals). The same study also showed that a minority of C-suite executives are actively involved in setting talent management priorities or in mentoring future corporate leaders.
However, awareness of the need to align talent management and organizational strategy is growing. More than two-thirds of respondents in our study said that talent management will become increasingly important to strategy implementation in the next three years, and 75% believed improving talent management processes will be one of their biggest challenges for improving strategic effectiveness.
As a former CFO, I spend a lot of time educating executives about these issues. From a CEO’s vantage point I believe finance executives are well-positioned to take the leadership role in establishing the link between investing in project talent and achieving strategic results. Chances are good that project responsibility rests not with you but with someone who has functional responsibility, such as the CTO or the CIO. The fact that your role is not to fight for more resources for yourself or an individual initiative, but rather to support the success of the overall organization, gives you a mandate and a platform.
I’m not suggesting that you disintermediate the CIO, CTO, or anybody else who has project management responsibility, or try to usurp HR’s role. What you can and should do is learn more about the organization’s talent needs and challenges, and then use your influence and knowledge to educate others about investment vs. cost – and the cost of not investing in talent.
It’s also worth remembering and reminding others that talent isn’t just a numbers game; you don’t win simply by throwing more bodies into the mix. It’s about hiring people with the right capabilities, which may not be the obvious technical ones. Leadership skills and business strategy are now considered as important if not more so. And given that there is already a shortage of qualified project talent — a trend that is expected to worsen — investing in hiring and developing talent should be a strategic initiative itself.
Several years ago I had the chance to chat with management guru Tom Peters. I asked him why leaders need to be reminded about something as obvious as how important it is to find and nurture the right people.
He looked at me and said, “You know why, Mark? Because it’s hard.” And it’s true. But it’s also true that people and talent will always be central to organizational success and those organizations that understand this and don’t shy away from the hard tasks will see better results
CFOs who understand the link between talent strategy and organizational strategy and then educate and focus senior leadership accordingly will help deliver the message that doing anything else is the equivalent of failing to invest in the future of the organization.