This case relates to a large UK-based general merchandising, non-food retail company (RetCo) with 800 stores and over 25,000 employees. The context for RetCo's interest in talent management included competitive sector conditions, economic downturn, competition for skilled labour, and growing internet sales. The company encouraged internal promotions rather than new hires. The long-term challenge was to identify the type of people and skills needed in the future, understand the 'shape' of the current talent pool, and develop people in key areas.

Annual appraisal reviews of all personnel led to a performance grade based on achievement of objectives. A mid-year review process, known as a Management Development Review (MDR), was conducted to assess future potential with all management grades and optionally for clerical colleagues by exception where they are seen to have future potential to progress. The aim of the MDR was to look forward and identify the level of future potential in the business. Line managers completed documentation ahead of the MDR meeting classifying their direct reports' potential and providing a rating of risk and value to the business.

Individual talent data was transferred to a 'Mapping Document' for each function which plotted employee potential by grade against six levels of potential ranging from high to low. Where Senior Managers were rated as High Potential, line managers completed an additional checklist to validate against detailed criteria outlining what high potential meant. The purpose of this was to provoke thinking and discussion on the ratings for the MDR meeting. Individuals were then rated against a nine-box grid based on an assessment of their performance and future potential. Mid-year discussions held as an output of the MDR meeting were intended to be open and honest and convey the opinions of line managers and others about an employee's potential to ensure that individuals were clear about how the organisation saw them. Data were input to a talent management system that would feed data upwards so that regional managers could review talent data reports for their region.

While this talent system was elitist as it was grading people relative to each other as a prelude to selecting high achievers, it was to some extent inclusive given the large number of employees it covered. Structured talent programmes were designed for early career employees, developing people in their current role, and developing to the next level. This was supported by career profile documents by function, highlighting competency frameworks and leadership behaviours. Leadership programmes were designed for selected employees to develop three characteristics of high potential managers, Judgement, Drive, and Influence. New staff were given an introduction to the company's history and culture and told about the talent processes used. The company's commitment to employee development was evaluated through an annual engagement survey that asked staff to give their views towards career progress and a range of related concepts.

Line managers submitted their predicted ratings of an individual's performance prior to the formal appraisal meeting. These were collated by \(\mathrm{HR}\), and any unusual or contentious ratings were discussed with managers. Ratings were expected to fit a standard normal distribution, and inflated ratings could be downgraded - with possible adverse effects on the employee concerned. Employees also prepared for appraisal by self-rating their performance using a range of toolkits and documents to help them. Final performance ratings were linked to a sliding scale of pay increments; the better the rating the higher the increment.

MDR and appraisal discussions were documented separately but fed into a talent review system, for example an employee could be graded as ready for his/her next role within two years. To assess potential, employees were classified against six ratings of potential, each with descriptors explaining the criteria for each rating. In addition, value ratings related to the employee's value to the overall business, rated as critical, high, or standard. Risk ratings related to the risk of the employee leaving the business went from high if it was anticipated that he/ she would leave within six months to low if it was anticipated he/she would not leave within eighteen months. A 'standard' rating, for example, meant that the employee had little impact on the business as a whole and that his/her skills could be replaced quite quickly. Documents were available to line managers describing the behaviours matching each rating. Although the risk and value classifications in particular were sensitive, it was suggested, though not mandatory, that line managers should share these ratings with employees.

When all data were entered into the review system, reports were prepared by HR for regional talent meetings attended by local managers, area managers, and regional managers. Review meetings aimed to calibrate talent decisions across the business. They were layered, in that different levels of management were considered at different meetings. Each employee was rated depending on his/her potential position and given an action plan depending upon his/her status: for example, to continue in his/her current role, to move across or upwards, or to deal with performance concerns. Line managers were asked to give feedback directly to employees on the MDR outcomes, though they were encouraged to avoid attaching 'labels' to their feedback for fear of 'pigeonholing' individuals.
To get consistency, HR staff trained line managers in how to conduct talent meetings, and they were given reference documents and advice on how to handle conversations with people, depending on their position on the grid. Examples of fictitious employees were used in an effort to get consistent interpretations of performance and potential. Question and answer routines, descriptors of the nine grid positions, and guidelines for appraisers were available, although there was less transparency in the information available to appraisees regarding the potential/MDR classifications.
Managing the annual talent meetings was a very busy time for HR staff. Because of the large scale of the talent process, HR business partners were collecting predicted grades, communicating review processes, training appraisers, preparing data and reports, and capturing the outcomes of talent meetings. Missing and suspicious data had to be checked before talent reports could be produced ahead of each review meeting. Alongside the review of most employees, data for the Executive MDR also had to be collated to review those having the potential to progress to Head of Function positions.
Employees nominated for progression to the next grade attended development centres to provide feedback on their performance and participated in structured leadership programmes, with development tailored around the skills and leadership behaviours required for the role. Additionally they were offered a range of development programmes including management skills, individual diagnostics, 360 -degree feedback, internal mentoring, assessment and development centres, leadership, leading change, acting-up and secondment opportunities.
Questions
1 Given that the same talent identification strategy was intended for use across the business, what management problems might occur across the different regions?
2 How might employees react when they find out that they are located outside the top boxes in the nine-box grid? How do 'conversations' need to adjust to take account of grid position?
3 What political factors could influence the ways in which employees and managers 'play' the talent management system described in the case?