McKinsey declared the start of “the war for talent” in 1997. It has turned out to be a more or less permanent conflict.
Revisiting their earlier work in 2001, the management consultants stated: “The war for talent will persist for at least the next two decades. The forces that are causing it are deep and powerful. The war for talent is a business reality.”
The firm’s confidence has proved to be well founded. Just because companies have repeated the claim that “our people are our biggest asset” ad nauseam for years does not mean it is untrue. In fact, a slightly finessed version of that cliché gets nearer to the truth: “Some of our people are our biggest asset”.
Today, global businesses cast their recruitment net far and wide. As Thomas Enders, the chief executive officer of Airbus, the European aircraft manufacturer, said at the recent gathering of the World Economic Forum in Davos: “We look for the best and the brightest everywhere.”
Venerable corporate names such as IBM, General Electric, Procter & Gamble and Unilever, whose main focus has traditionally been on the US and Western Europe, woke up some time ago to both demographic and economic trends. They have invested heavily in building research and technology facilities in emerging markets, shifting their centre of gravity east.
This is partly about servicing new demand for products and services. But it is also, perhaps even primarily, about attracting and keeping new talent.
The heart sinks a little to hear human beings labelled as “human capital.” It is not clear that this represents an improvement on “human resources.” Similarly, there has been significant asset price inflation of the term “talent.” It has come to be almost synonymous with the word “people.” But, as we know, not all the talent is talented.
Distinguishing between top and average performers is a key management task, and not one that has proved easy to master. The dire practice of annual appraisals, and the continuing controversy over performance bonuses for unremarkable performance are proof of that.
But seeing potential, and becoming a true talent spotter, is a priority for business leaders. Your most able people create “disproportionate value,” Rob Goffee and Gareth Jones wrote in Clever, their 2009 book. So it is worth thinking hard about who these clever people are and how you can attract and retain them.
Clever people will achieve a lot for you, Mr. Goffee and Mr. Jones wrote, “but only if the organizational and leadership context enables them to realize their potential”. This may mean deploying only arms-length management, and shielding star performers from “organizational rain”.
It is not all about pay either. As one HR director told the authors, intelligent people will only stay “if you can offer them a great place in which to express their cleverness and other clever people to work with.” In this sense, the challenge of keeping hold of your best people forces the employer to ask how to make the organization more attractive and offer them a more valuable experience.
Once you have got hold of some genuine talent, the next task is to harness their abilities. Being flexible as a business will allow you to deploy people in the right teams at the right time. “The most effective clever organizations will be collections of value networks, or … temporary value chains,” the authors wrote. “These deliver a particular project or perform as a particular team and then, once they have completed their work, are reabsorbed in other places.”
According to Mr. Goffee and Mr. Jones, if bosses need a personal mission statement, they could try “creating attractive places for clever people to express themselves”.
But wait a minute. In all this talk of clever people and “high potentials,” what happens to everybody else – that is to say, the bulk of the work force? We cannot leave everything to a few star players. The work has to be carried out by everybody – and there is not a lot of fat left to cut in most work forces these days.
Some tact will be required in explaining to the organization how different employees are regarded. Having too many “second-class” (or even “third-class”) citizens in your business will not do a great deal for productivity, or the quality of the services you are trying to provide.
At Davos this year, a big theme was severe income disparity, the gap between some lavishly remunerated people at the top and the majority who have seen wages stagnate. This discussion of talent is sometimes used to justify the extreme bifurcation in pay witnessed over the past two decades. But not all the “stars” have delivered stellar performance.
In addition, rising unemployment, particularly among young people, is in part a result of a choice made by employers not to carry expensive staff any more, and instead hire fewer, better people. The talent debate is thus somewhat double-edged. The crowds seen in public squares around the world in the past few months – the groups of indignados in Madrid, or members of the Occupy movement in cities throughout the world– have often been graduates, well-qualified people who do not like the look of the deal on offer.
The views of these people have to be taken into account too. Their talent for disrupting business has been all too apparent.
Stefan Stern is visiting professor of management practice at Cass Business School, London
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