Our research on talent management demonstrates the sophistication of European companies on a range of talent processes – from performance management to leadership development to succession planning.  In all of these areas, European companies have more mature processes than their U.S. counterparts. (See “2009 Talent Management Factbook” for more information.)

Europeans will likely agree that, of course, they are more sophisticated than Americans – they’ve known that for over 200 years.  But what’s behind it?

Let’s take performance management, for example. Just over half  of European companies have a consistent, enterprise-wide process. U.S. companies are more likely to have ad hoc or informal - and hence, not very effective - performance management processes. 

Competencies tell a similar story. Nearly two-thirds of European companies have defined competencies – far more than their U.S. counterparts. Competencies are important to a number of talent processes. In performance management, competencies are used to communicate “how” performance results are achieved and give managers a common “currency” for assessing performance and potential for promotion. Competencies are also used in talent acquisition, learning and development, leadership development, career management, and succession management. Indeed, competencies are a foundational element for every talent process.  How can a company be effective in any of these talent processes without defined competencies?

Another example is leadership development and succession planning. More European companies have mature leadership development initiatives aimed at long-term business sustainability. They also have more consistent, enterprise-wide succession planning processes to ensure strong leadership pipelines for the future. U.S. companies are more often in one of the less mature stages, in which leadership development and succession planning are inconsistent or aimed at developing individuals, rather than looking holistically at organizational needs.

Finally, if we look at overall talent management strategies, European companies again excel. More European companies have advanced their strategies, with mature, integrated processes in place.  Our study found that having a mature, integrated talent management strategy has a tremendous impact on business performance. (See “The Impact of Integrated Talent Management” for more information.)

Given these findings, it appears that European companies have talent in their corporate DNA.  They have a culture of continual development and are continually planning for the next generation of leaders and employees.

One U.S. manager, upon reading these results, remarked, “Of course they do. They HAVE to – it’s impossible for fire anybody over there!”

How much that plays into it, I don’t know. Maybe American companies are just too quick to churn through employees without trying to motivate and develop them to their highest potential. But that doesn’t explain the lack of long-term focus within U.S. companies. And I believe that goes beyond the current economic crisis, with many companies just trying to survive until the next quarter. Even before the recession, U.S. companies were more focused on the next quarter and beating Wall St. projections. Not many companies really think about the next five years.

I welcome any thoughts on this subject – especially from our friends across the pond.