My previous blogs have presented the necessary ingredients for successfully growing talent management firms, as well as the recipe for failure. 

Over the years, I have watched the industry thrive and survive the ups and downs of global economic vagaries. Simultaneously, I have witnessed an increased realization by the corporate world of the strategic value created by the human capital asset. Through these observations, several best practices—that may help you think through what needs to be put in place to ensure long-term success of a talent management firm—have come into focus. 

Continuous Innovation

It’s difficult to sustain long-term growth in the talent management industry—or any industry, for that matter—without continuous innovation and reinvention of the business to reflect evolving and maturing customer demands. For instance, the introduction of technology-enabled talent management solutions alone has significantly changed, and will continue to alter, the competitive landscape. Unfortunately, talent management is in a relatively immature state. In other words, the talent management industry has a long way to go before it can comfortably predict its future business success. 

Growth Planning

There is little substitute for strategic growth planning, particularly in an evolving industry. The challenge, of course, is how to stabilize a plan in such conditions. Suffice to say, five-year horizons are too far in the distance to think that today’s plan will matter much.  Instead, growth planning should focus on the short term, somewhere within a two- to three-year window. More importantly, any plan needs to be reviewed frequently for relevance, and changed as needed to meet ever-changing customer needs. As the saying goes, if you don’t take the time to plan for the future, the future will plan for you. 

Of course, the failure of most plans is not in their construction, but in their execution. Firms should not position growth planning as an exercise to appease leaders, partners, and customers who want to know where the business is headed. Rather, growth planning should lay out an executable plan to achieve a specific vision. More importantly, if leaders fail to share the plan with the entire organization or translate it into execution and accountability goals, it isn’t worth the paper on which it was written. 

External Oversight

I can’t stress enough how important it is to seek outside counsel from business leaders who have already learned lessons from the mistakes they have made. Be sure to obtain expertise from external resources in such areas as legal, finance, and IT, when not housed internally. In addition, pull together trusted advisors from both inside and outside the industry who can offer high-level strategic advice on a formal basis. 

Most public companies have boards to fulfill this need, but also legal obligations to do so. Privately held organizations, however, should also form advisory boards that meet periodically to offer advice, provide access to key connections, hold the senior team accountable for decisions, advocate game-changing ideas, and obtain commitment for taking productive action. 

Talent Management

It certainly shouldn’t shock anyone in the talent management industry how important it is to recruit, select, develop, and retain the right people. This is particularly critical for the talent management industry, which depends heavily on deep expertise and experience to serve its customers. After all, this is what we profess to our own clients. 

Unfortunately, the talent industry doesn’t always follow its own advice. Indeed, contrary to logical expectations, many talent management companies are not the best at managing their own human capital. Case in point: I recall being part of an assessment and selection company that took several years and multiple bad hires before it realized it wasn’t applying its own expertise to hiring its people. 

Visionary Leadership

It goes without saying that without strong and insightful leadership, few companies in any space will survive very long—at least not without great cost and pain. Two distinct sets of competencies are needed for leaders to be effective, especially in relatively small entrepreneurial environments. 

First, leaders must possess a long-term vision for the business—the ability to see the forest for the trees. Second, leaders must be operationally effective and understand the various business levers they will need to pull—the ability to achieve the vision. Unfortunately, these capabilities are hard to find in a single leader. In fact, they seem to be at opposite ends of the continuum. At the bare minimum, leaders’ deficiencies need to be buttressed by those around them. 

Too often, though, talent firm founders stay around too long. They refuse to relinquish their duties to others with much better qualifications and experience, particularly with financial and back-office operations, as well as customer-facing areas like business development and marketing. Strong leaders will surround themselves with people who are much better equipped to address the challenges of each business function. It’s more than just delegation and empowerment; it’s getting out of the way. 

As you examine your own business or well-known suppliers in the talent industry, you will want to assess whether these five critical success factors are well established. Are any factors missing? Finally, is there a pattern to what you have observed?