In my career, I have never referred to people as employees. I always speak about teams and team members. I wasn’t trying to be cute or to make people feel good by having them think, “Hey, I’m on the CEO’s team.” I meant it as much for myself as for them. It was one of the ways in which I acted as my best self. When I referred to the 52,000 people at Baxter as team members, I constantly reminded myself that we were all in it together as a best team, as a best partner with our customers and suppliers, and as a best investment, both financially and in how we developed talent. As I saw at Baxter and as I learn today from executives of large and small companies in many industries, when it comes to creating shareholder value, talent matters most.
For some people, though, it will seem counterintuitive that the more time, effort, and resources spent on talent development, the better the chance of becoming a best investment. The confusion is understandable, given all the pressure on people these days. In my classes at Northwestern University’s Kellogg School of Management and in talks with executives, I often hear complaints such as: I don’t have enough time. I have to deliver on my projects. I can’t be distracted by these people issues.
These comments are often made by very bright people who can read a financial statement backward and forward, and quote accounting standards from memory. The vast majority, if not all, of these managers and leaders want to do the right thing for their teams and their organizations. The problem is they feel so overwhelmed by all that needs to be accomplished that focusing on talent management becomes one more thing on an agenda that’s already overly ambitious.
Then there is the pressure of the numbers, themselves. Even when senior leaders know that talent issues are important, with quarterly financial targets to make in order to satisfy shareholders and Wall Street, there is a strong temptation to let the short term eclipse the long term. Laying off several hundred or thousands of people may appear to be the only way to hit the numbers or provide proof that a reorganization is underway. Although companies do need the right size in response to the marketplace and economic conditions, organizations don’t usually grow by cutting costs. And what happens to the long-term performance when the remaining team members feel overwhelmed to the point that productivity decreases? How will a company attract the best talent when morale suffers and engagement declines? At the risk of repeating what should be obvious at this point, talent management matters the most.
When I was in senior leadership positions at Baxter, I sometimes was asked how much of my time I devoted to talent management. Taking into account the development of my team, communicating with people, and understanding who knew what across my network, it probably represented 95 percent of my time. People were sometimes shocked by my answer, and wanted to know how I managed to get everything done, if only 5 percent remained to do my work. They failed to grasp that the people part was my work! If I had the right people in place who knew what needed to be done, and who were highly motivated and engaged, then we would be on our way to success. By ensuring that my team was developing broader capabilities and getting the experiences they needed to take on new challenges and expanded responsibilities, I was furthering the growth of each individual and of the organization as a whole.
It can be difficult for some people to forge a connection between what they perceive as philosophical concepts and the need to make decisions and judgment calls. They tend to see binary choices between, say, talent development and performance targets. They do not see the synergies among developing talent, satisfying customers, and generating a return for shareholders. To them, if one switch is on, then the others must be off.
Obviously, if an organization wants to be sustainable, it must increase sales, leverage costs, improve margins, and generate cash flow. These goals and objectives, however, are not mutually exclusive of talent development. Leaders must understand how everything in an organization ties together. Here, self-reflection can bring the leader back to what really matters for the long-term health of the organization: creating an optimal environment for the team, in order to generate more value for all stakeholders as a best investment.
In every organization—small or large, public or private, for profit or not-for-profit, there is a direct link between talent and financial performance. Having great results is dependent upon having exceptional talent. This is the ultimate win-win all constituents and stakeholders enjoy when their organization becomes a best investment.
Excerpted with permission of the publisher, Wiley, from “Becoming the Best: Build a World-Class Organization Through Values-Based Leadership” by Harry M. Kraemer Jr. Copyright (c) 2015 by Harry Kraemer Jr. All rights reserved. This book is available at all bookstores and online booksellers.
Harry M. Jansen Kraemer Jr. is the author of Becoming the Best: Build a World-Class Organization through Values-Based Leadership (Jossey-Bass, 2015), and the best-selling From Values to Action: The Four Principles of Values-Based Leadership. He is the former chairman and CEO of Baxter International Inc., and is now a professor at Northwestern University’s Kellogg School of Management and an executive partner with Madison Dearborn Partners. (See www.HarryKraemer.org).
