Why companies are preparing to do battle in a new war for talent

It is nearly 15 years since the management consultancy McKinsey & Co coined the phrase “the war for talent” and unleashed a whole new concept in business. Until 1997, it is not too far-fetched to say, “talent” was something confined to the stage or the screen or perhaps the sports field. Now, talk of talent is so widespread that it is arguable that the term has been devalued to the point of being meaningless.

ORIGINS OF WAR

McKinsey realised early on the significance of what it had created. Returning to the subject for a survey published in the spring of 2001, its consultants described how the phrase had “reverberated throughout the business world”. Indeed, the original description obviously struck a chord with managers battling to hang on to good staff as the advance of the internet led to the excitement of the business opportunities created by the dot.com boom. But the researchers found that even in the slowdown that followed that boom there was huge demand for star performers. They went so far as to predict that the war for talent would persist for “at least two decades” – because the forces behind it – essentially the move from the Industrial Age to the Information Age – were deep and powerful.

And so here we are in an economic crisis widely seen as the most severe for western industrialised nations since the 1930s – with highly-qualified graduates seemingly unable to buy a job – and still business leaders are talking of the problems of finding and developing talent. What is going on?

Institute of Leadership and Management

Well, several things, apparently. First, despite McKinsey’s entreaties for all these years, many organisations are still relatively unsophisticated in their approach to talent management. The November/December 2011 issue of “Edge”, the magazine of the Institute of Leadership and Management, features a lengthy article setting out how businesses need to move away from thinking about a single “talent pool” and segment their different talent types in much the same way that marketers segment customers. Drawing on a book, “What Talent Wants: The journey to talent segmentation” by talent management experts Jackson Samuel, it describes six groups – brand enthusiasts, career ladderists, connectors, the nurtured, opportunity seekers and planners – who all have different expectations and attitudes and so have to be managed differently.

THE NEW BATTLE LINES

This marks an interesting departure from the usual distinctions between generations, which usually have younger Generation X and Y employees cast in a bad light compared with their older colleagues. But, of course, it is only the beginning of the process; it is not enough simply to recognise that different people behave in different ways and have different motives (something all those consultants who advocated employee engagement never seemed to realise). Turning this recognition into something worthwhile involves effective communication – most often between the employee concerned and a line manager who is already probably busy enough trying to meet targets in an increasingly competitive environment. However, there is evidence that the extra effort is worthwhile. The “Edge” article quotes the international news and financial information company Thomson Reuters as one that has adopted the approach comparatively easily. It has identified five critical talent segments – global talent, executives, future leaders, technologists and domain experts – and introduced appropriate initiatives to help develop each.

Second, the rapidly changing world means that many organisations need different sorts of people to those that were central to their efforts even a few years ago. In some cases, they can encourage existing employees to adapt. But in others they need fundamentally different skills and attitudes.

Women make up 30-50% of BRIC workforces

Related to this is a third factor. The rise of emerging economies is creating fresh opportunities for international companies. But whereas in the past such companies typically managed their overseas operations with expatriate managers, they are increasingly looking to local talent. In many cases, the companies concerned claim that the talent pool is shallow. But Sylvia Ann Hewlett and Ripa Rashid argue in the recent book “Winning The War For Talent in Emerging Markets” that they are overlooking a solution that “is hiding in plain sight” – large numbers of university-educated women pouring into the higher levels of the job market in BRIC (Brazil, Russia, India, China) countries and elsewhere every year. With women making up 30 to 50 per cent of the workforces in such countries, the authors predict: “As we enter the second decade of the new millennium, the face of top talent in emerging economies is most likely to be that of a woman.” With many industrialised economies still struggling to get significant numbers of women into the upper reaches of the corporate arena, this is perhaps another example of the emerging world leapfrogging its historically more developed counterpart.

VICTIMS OF WAR

Antonio Horta-Osorio of Lloyds TSB

A sort of coda comes in the shape of a report just out from the executive search business MBS Group. Noting that several high-level executives – including most notably Antonio Horta-Osorio of Lloyds Bank – have stepped down for reasons of stress, exhaustion or a desire to have more balanced lives, the firm’s managing partner, Moira Benigson, believes that corporations perhaps need to start thinking “broadly and creatively about adapting the top jobs to the right people”. She adds: “It’s just not feasible any longer for FTSE companies to expect that high salaries alone can attract the interest of talented leaders”.

This might be right. But what MBS has spotted in the report “Who Wants To Be  a CEO in 2012?” might also be indicative of something more complicated. First, it could be that executives are at last starting to react against the “star” system that imagined that single individuals somehow acted as the embodiment of large and complex organisations. Second, it could be that these stressed executives are victims of a system that has pushed them through the ranks so quickly that they perhaps arrive in the top jobs as well prepared as they might be. (In days gone by, the route to the top was more relaxed with plenty of opportunities to find out about all aspects of the organisation as well as spend some time doing jobs that were well within their capabilities.) Third, having reached the top relatively early, such executives might feel there are insufficient challenges left and so – possibly with the benefit of having made a substantial sum of money – they head off in different directions. Interestingly, the few women who make it to the top jobs are often older – suggesting that they might have spend longer in the trenches and so are more prepared to stick it out once they reach the top.

Kevin Wheeler

Then again, it could be that we are at last starting to see the arrival of a new type of leadership at the top of large organisations. Kevin Wheeler, founder of the Future of Talent Institute, recently identified “five trends that will shape our future”. Predicting that the world would become more village-like, he pointed to the importance of Social Businesses, Transparency, Analytics and Privacy and Working Smarter. But alongside these he saw the arrival of a new concept of employee in a world that did not require sole use of an individual’s talents as was the case in the Industrial Age and a recognition that the idea of the sole leader is outdated. “The idea of ‘the buck stops here’ and other such notions will become less common and there will be more sharing of responsibility and decision making because of the complexity of problems and the impossibility of one person understanding all the variables,” he says. “The CEO should be one of many leaders,” he adds, citing the concept of the “leaderful organisation” developed by Joe Raelin at Northeastern University. Under this model, leadership is “concurrent, collaborative, compassionate, and collective.”

This might have an effect on the vexed issue of executive remuneration. (Another possible reason for executives seeking lower-profile roles might be the desire to escape the public interest in their pay.) As London Business School professor Lynda Gratton has pointed out, if organisations are going to shift towards a more collaborative, team-based approach at the top it might not be as necessary to pay them so much.

Whichever approach prevails, it looks like McKinsey was right. Talent will be vital. “We have progressed from the Industrial age to the Information age. The value of hard assets has declined relative to the value of a company’s intangible assets – assets such as proprietary intellectual capital, winning brands, and innovative ideas. Underpinning all of these intangibles is talent. And better talent is what will separate the winning companies from the rest. We have found repeatedly that having strong talent in key positions creates huge improvements in performance. For instance, in a manufacturing company, we found that the best plant managers grew profits 130% while the lowest performing managers achieved no improvement,” it says in its 2001 follow-up to the original “War For Talent” study.

Comments

  1. Ross says:

    Hi there! Well written post and fantastic website! Got a great deal of useful info. Cheers!

  2. alfred beilin says:

    hi all the best have a gud new year
    alfie

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