Editor’s note: Owen Davis is Managing Director of U.S. Operations of TrainingFolks, which specializes in performance consulting, leadership development and designing and executing employee-based development systems.

CHARLOTTE, N.C. – The top executive of a major manufacturing company was considering early retirement, and the company was facing a dilemma. To continue the company’s growth, it needed a bench of new leaders with the right kind of talent – i.e. the skills, drive and charisma – like the CEO and other senior leaders who would also be leaving for retirement.

Unfortunately, the CEO and his senior leaders had only followed the adage to surround themselves with people who had good skills – especially in those areas where they were deficient. The company had hired qualified employees, but not the kind of people with the skills and abilities to lead the company into the future.

That’s the challenge so many organizations are facing today: their leadership is aging or departing for other opportunities, and there’s no bench of seasoned rookies trained and ready to move up to the major leagues. As Baby Boomers reach retirement age over the next two decades, 40 percent of the workforce will be turning over, creating a huge issue for business.

On all levels, talent management has moved to the top of the priority list for
human resources executives. According to a recent survey of senior HR officers by ORC Worldwide, talent management is the top strategic HR issue that companies expect to face in 2007 and the one that is taking the most time for HR executives.

A simple solution to the problem of retiring leaders would be to simply find, identify and train younger employees to develop and move into those top leadership roles. But the people business is not simple, and talent management involves more than just matching up resumes with job descriptions. Leaders need to demonstrate relevant experience in the industry and be able show a track record of tangible results – with projects, profits and people. A leader must also be a cultural fit with the organization in order to motivate and inspire others to greatness.

So how does an organization manage the talent management crisis? The organization itself needs to create and foster a talent management mindset and culture.

Become known as an employer of choice. Those who are highly skilled and demanded in fields such as engineering and finance will likely be drawn to, hired by and stay with companies who have branded themselves as great places to work for employees at all levels – not just eager entry-level new graduates. Fortune’s 100 Best Companies to Work For list boasts employer benefits such as free meals, family-friendly shifts and onsite child care, incentive bonuses, and time to work on independent projects. While most candidates aren’t expecting a swimming spa like Google, gourmet dining like SAS, free gas cards, or pet insurance, a supportive corporate culture and great benefits foster a reputation that attracts and retains top quality talent.

Create a “grow your own talent” culture. Good companies like W.L Gore & Associates of Newark, DE, look first to their own employees when a vacancy occurs. The CEO of this manufacturer of products including Gore-Tex fabric and Glide dental floss began as a process engineer and rose through the ranks. Not only are employees already accustomed to the corporate culture and knowledge about the company’s products and services, but they’re also a known entity, having proved themselves.
Businesses that immediately go looking outside the company are sending the message that their own employees aren’t “good enough” to be considered. Companies need to shift their focus from recruiting to redeploying internal employees with interest, skills and potential when possible. By doing so, a talent hierarchy evolves, and when a senior level vacancy occurs, the succession process becomes simplified.

Create a culture of continuous learning, development and reward. Talent management doesn’t stop after the job is filled. Great companies invest in their employees, such as Kansas City-based American Century Investments, who spends $2,700 per year on training for each employee.

Organizations must link training, knowledge and performance together, and work to develop skills for individuals who are lacking in any of these areas. They must blend formal and informal learning by providing the kind of assignments that stretch and develop future leaders, and offer situations for employees to “try out” their leadership skills. Boston Consulting Group even offers career mentors to support employees who are averaging 60-hour work weeks. At Cary, NC engineering consultant Kimley-Horn & Associates, any employee can award an on-the-spot bonus to a colleague for a job well done.

Finally, organizations must recognize talent management is a system-wide responsibility, not just an HR function. And HR professionals need to see how their efforts are closely aligned with corporate strategies to recruit, develop or outsource talent. For true talent management to take place, a paradigm shift must occur. Roles, responsibilities, business processes and feedback mechanisms must reviewed, modified (or even implemented), and employees across all levels of the organization must understand the value of these changes to themselves and the company.

Leaders are not born, but made, and their talents are not developed overnight. You may not be able to instantly replace company leaders with younger clones, but by identifying and developing individuals with drive, direction and management and relationship skills, you’ll be able to find a CEO successor, when the time comes, whose talent profile projects continued success.

Owen Davis is Managing Director of U.S. Operations of TrainingFolks, which specializes in performance consulting, leadership development and designing and executing employee-based development systems. He can be reached at 704-998-5530.