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In addition to having the right organizational design and accountability and authority frameworks in place, modern organizations need a system for ensuring the right people are in the right positions. While avoiding the “Peter Principle” is an important objective, there are other factors to take into account. Although it is generally the job of Human Resources to run an effective talent management system, it’s the CEO’s job to establish it in the first place. The right system helps managers be more effective in determining if incumbents have the right blend of Problem Solving Capability, Skills and Knowledge and Application. An effective talent management system can appropriately assess the levels of these 3 criterion.

Problem Solving Capability

Problem solving capability has to do with how people process information. Processing needs to take place at a level of complexity that is appropriate for the position assigned. As an attribute that matures over time, not everyone has the same level of problem solving capability or maturation rate. For instance, an individual may be fully capable of being a front line manager and solving problems at that level. In a few years, that same individual may mature to problem solving capability at a director’s level. A few more years and they may be ready to transition to a VP position. Someone else, however, may have the capability suitable for front line management and be fully engaged and motivated working in a front line management position for the duration of his or her career.

The CEO must understand that these scientific principles exist in the same way gravity exists. We can apply them to inform our judgment to make better decisions as to who can solve problems, process work, and implement solutions in a way that is most appropriate for the position they’ve been appointed to. We cannot train someone to the next higher level of problem solving capability; it is a maturation process.

Skills and Knowledge

Assessing knowledge and skills is an important, albeit uphill battle for many CEOs. In most organizations, there are systems and frameworks in place for measuring competencies as they relate to job value, and as a result many of them are tied into the structure of the organization. Unfortunately, most are not as precise as they need to be to effectively assess the knowledge and skills needed for success.

Knowledge is acquired over a lifetime. And while experience is an indicator of knowledge, it, in itself, is not a sufficient indicator of knowledge. The talent management system needs to make certain the processes in place can assess knowledge to fully understand what an individual can bring to the table and if it matches the knowledge needed to do the job.

Technical Skill is the demonstrated ability to apply knowledge in a way that results in good work. Equally important, the talent management system needs to ensure that experience and education are not the only factors considered, but also, the ability to clearly demonstrate the technical ability to use that knowledge.

Finally, there needs to be a Social Processing Skills component to the system. The way in which an individual needs to interface with:

  • Others on the team,
  • Direct reports (if it is a management position),
  • Peers in other parts of the organization, or
  • Stakeholders in the community

All need to be assessed and matched to position requirements.


The third component of an effective talent management system involves application, or recognizing when an individual values the work so that they will use their full capability, and fully apply their knowledge and skills. The largest failing for organizations in this respect is hiring individuals who have capability, and the knowledge and skills, but lack application. For example, if a manager does not value the core responsibilities of managing – coaching, training, performance management – critical tasks will not get done because they will focus on other types of work that they value more. It’s essential that the hiring manager thinks through and identifies the key elements of the job and what must be valued for success.

In most organizations, the talent management system is developed and monitored by the Head of Human Resources, and that’s fine. The CEO, however, is ultimately responsible for ensuring that the system in place focuses on the right things, and that it works well.