MANAGING TALENT
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MANAGING TALENT
Recruiting, retaining and getting the most from talented people
Marion Devine and Michel Syrett
The Economist in Association with Profile Books Ltd. and PublicAffairs
Copyright © The Economist Newspaper Ltd, 2008, 2013
Text copyright © Marion Devine and Michel Syrett, 2014.
First published in 2014 by Profile Books Ltd. in Great Britain.
Published in 2014 in the United States by PublicAffairs™, a Member of the Perseus Books Group
All rights reserved.
Printed in the United States of America.
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Where opinion is expressed it is that of the author and does not necessarily coincide with the editorial views of The Economist Newspaper.
While every effort has been made to contact copyright-holders of material produced or cited in this book, in the case of those it has not been possible to contact successfully, the author and publishers will be glad to make amendments in further editions.
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Library of Congress Control Number: 2013955892
ISBN 978–1-61039–383–6 (HC)
ISBN 978–1-61039–384–3 (EB)
First Edition
10 9 8 7 6 5 4 3 2 1
To our partners Stephen and Suzy
Contents
Preface
1 The war for talent
A phoney war?
Demand for more advanced skills
The quantity and quality of graduates
Demographic trends
Talent management to the rescue?
Well-established – but not well done
Can “talent” still be managed?
Conclusion: willing pawns?
2 Devising and implementing a talent strategy
Staying ahead or playing catch-up?
Devising a talent strategy
Measurement and evaluation, accountability and governance
Foundations of a talent strategy: buy, borrow, build
Gaining sponsorship from the business
Staying agile
Conclusion
3 Managing the talent process
Processes and pipelines
New complexities and challenges
A broader view of talent
Redefining talent
Leveraging talent across the business
Conclusion
4 The individual and the organisation
Generation Y: separating fact from fiction
What do 21st-century workers really want?
Implications: personalised career management
Conclusion
5 Taking a culture-led approach
Culture-led approaches in practice
Making culture-led approaches work
The need for transparency
Conclusion
6 Creating a talent ecosystem
Career planning and intrapreneurs
Business incubation
Linked-in internships
Alumni and associates
Conclusion
7 Playing the talent game
Making the company grade
Being opportunistic
Developing a support network
Job rotation and mobility
MBA considerations
Internships, secondments and sabbaticals
Aiming for the top
Conclusion
8 Planning for the future
Losers and winners in the battle
Good intentions, deficient processes
New priorities
The individual perspective
Not so strategically talented
A new model
Changing direction
New principles
Executive summary
Acknowledgements
Sources
Index
Preface
IN APPROACHING THE RESEARCH and development of this book, the authors were aware that there is already a large body of material on talent management on the market.
Yet in conducting the research to assess this material, a number of factors stood out. First, in the grand scheme of things, talent management is a relatively new concept. It has been around for only about a decade and as a study by Heidrick & Struggles, a global executive search firm, discovered, the creation of specifically focused talent development functions and managers is still in its early stage (see Chapter 1).
One consequence is that there is still no consensus about what talent management involves. As Angela Baron, formerly of the UK Chartered Institute of Personnel and Development, commented, it might or might not encompass a mixture of previously independent functions like graduate recruitment, performance management, career management and succession planning. Few of the new breed of talent managers are accountable directly to the chief executive or the senior executive team, and the level of integration between business and talent strategies is still patchy.
The other factor that stands out from interviewing people who are viewed as talented and/or have a track record of success in their chosen occupation is that there is a star
k discontinuity between the agendas of the individual and that of the organisation. It can no longer be taken for granted by organisations that the individuals they mark out for systematic promotion and development are going to be willing pawns in the talent game created for them – not least because that often involves a high degree of mobility and a long-term commitment to extended career plans.
Furthermore, narrowly defined demarcations about who is inside or outside the talent pool often exclude the very people organisations need to attract and retain at a time of volatility and uncertainty: aspiring entrepreneurs, mavericks, outsiders and specialists who do not seek or want a career ladder to a top corporate position, and who desire independence and autonomy.
All this poses considerable challenges to the senior managers who seek to recruit, retain and benefit from the skills and insights of talented people. This book seeks to highlight the dilemmas they face and, through reference to organisations with a proven track record of success, define and outline some of the emerging solutions. It also includes a chapter aimed at “talented” people themselves and how they can best approach the talent game at a time when the rules are significantly in flux.
Marion Devine and Michel Syrett
January 2014
1 The war for talent
All of us know that the calibre of talent distinguishes great from good, winners from losers and adaptation from extinction. Having the right team playing on the field is the fundamental difference between victory and defeat.
Indra Nooyi, chairman and chief executive, PepsiCo
SOME 15 YEARS AGO, McKinsey & Company, a global management consulting firm, produced a now famous report called The War for Talent. It made the case that international companies needed to pay as much attention to how they managed their brightest employees as they did any other corporate resource. McKinsey declared that “better talent is worth fighting for” and predicted a world where the supply of talent would decrease while demand would rise. Companies would be locked in a constant and costly battle for the best people for the foreseeable future.
McKinsey’s definition of talent went far beyond managerial or leadership skills:
[Talent is] the sum of a person’s abilities … his or her intrinsic gifts, skills, knowledge, experience, intelligence, judgment, attitude, character and drive. It also includes his or her ability to learn.
In response to economic boom times between 1998 and 2001, many firms expanded rapidly and the battle to recruit and keep the best people well and truly began. The talent management function, as well as a burgeoning talent management industry, sprang up to identify, retain and develop high-flying individuals into a small, exclusive top tier of managers and leaders.
Despite several cycles of economic boom and bust, as well as the world’s most severe economic crisis, the battle for talent continues. The competition for the best staff has broadened beyond senior leadership talent. Employers are struggling to recruit sufficient numbers of highly skilled people for a wide variety of managerial and specialist positions.
At the international level, talent shortages are more severe. During the past decade, an internationally mobile group of employees, who can pick and choose where they work, has emerged. As firms in emerging markets also begin competing in the global economy, these people are in ever-greater demand.
Singapore, for example, has embarked on an intensive recruitment programme for skilled foreign workers, with more liberal criteria for eligibility to work in the country. Some 90,000 now work in the city-state, the majority from the United States, the UK, France, Australia, Japan and South Korea.
The World Economic Forum predicts good times ahead for this internationally mobile group. In its 2012 report, Stimulating Economies Through Fostering Talent Mobility, which analyses the demand and supply of skilled workers in 22 countries and 12 industries, it comments:
The coming decades will present golden opportunities for well-educated people with critical expertise. So deep and widespread will be the talent gap that individuals willing to migrate will have unprecedented options.
Annual surveys of employers worldwide between 2009 and 2013 by ManpowerGroup, a multinational human resources consulting firm, have shown steady rises in the number experiencing difficulties in recruiting skilled workers. The 2013 survey revealed that more than a third (35%) of nearly 40,000 employers worldwide are experiencing difficulties in filling vacancies. One in three employers in the United States is experiencing skills shortages; European employers are reporting similar shortages. Despite continued high unemployment in many European countries, especially those in the euro zone, more than one in four employers (26%) struggle to fill jobs because of talent shortages. Around three-quarters (73%) of responding firms say the main obstacle is a lack of people with the right level of experience, skills or knowledge to fill these positions.
Firms in the survey report the highest shortages since 2008, and over half (54%) believe that this will have a “high or medium impact” on their competitiveness. This is an increase from 42% in 2012. The jobs that are most difficult to fill include engineers, sales representatives, technicians, accounting and finance staff, managers and executives and information technology staff.
Jeffrey A. Joerres, ManpowerGroup’s chairman and CEO comments:
There is a collective awakening among the surveyed firms about the impact of talent shortages on their businesses. Globally, employers are reporting the highest talent shortages in five years. Although many companies recognise the impact these shortages will have on their bottom line, more than one in five is struggling to address the issue.
The Chartered Institute of Professional Development (CIPD)/Hays 2013 Resourcing and Talent Planning survey in the UK shows a threefold increase in the number of employers reporting difficulties in recruiting well-qualified people, from 20% in 2009 to 62% in 2013 (based on the responses of 462 UK-based HR workers). Managerial and professional vacancies are the hardest to fill (52% of responding employers said this) followed by technical specialists (46%), particularly in the manufacturing and production sector.
However, the CIPD/Hays survey revealed that some of the difficulty in recruiting is because skilled workers are reluctant to move jobs during a time of economic uncertainty. It shows that the rate of labour turnover has declined steadily since the start of the financial crisis in 2008. One in six organisations reported that a shortage of skilled job applicants has contributed to recruitment difficulties.
A phoney war?
Employers certainly think they are experiencing talent shortages, but is this really the case? Is the current difficulty in recruiting skilled workers more to do with their reluctance to move jobs than any real decrease in their numbers?
There is an argument that genuine talent shortages would lead to rising wages and lower rates of unemployment for skilled workers such as university graduates. Yet few developed countries are seeing any rise in wages and unemployment rates have risen in many of them.
Mark Price, a labour economist at the US-based Keystone Research Center, points to the number of manufacturers complaining about the shortage of skilled workers in the United States. In 2011, there were reportedly 60,000 vacancies in qualified skilled posts within the US manufacturing sector. “If there’s a skill shortage, there have to be rises in wages,” Price says. “It’s basic economics.” Yet the evidence from organisations such as the US Bureau of Labour Statistics is that wages have either stalled or are even falling in the manufacturing sector.
Business leaders, policymakers and economists in the United States have had a vigorous debate about the possibility of a phoney war for talent. A notable figurehead for those who doubt the claims of serious skills shortages is Peter Cappelli, professor of management at the Wharton School, University of Pennsylvania. In his 2012 book Why Good People Cannot Get Jobs, he argues that there is no real shortage of skilled workers. He believes that the problem is a result of poor recruitment practices and “picky” employers who make unreali
stic demands on workers and offer too low pay. He asserts:
The skills gap story is their [employers’] diagnosis. It’s basically saying there’s nobody out there, when in fact, it turns out it’s typically the case that employers’ requirements are crazy, they’re not paying enough or their applicant screening is so rigid that nobody gets through.
Searching forever for somebody – that purple squirrel, as they say in IT, that somebody who is so unique and so unusual, so perfect that you never [find] them – that’s not a good idea.
Cappelli points to other practices that help suggest skills shortages. American employers, he argues, are placing too great an emphasis on work experience and are turning away qualified and trained candidates. They are unwilling to provide these candidates with the training or skills that would help alleviate apparent talent shortages. Unrealistic “wish lists” are configured into applicant tracking software, again leading to the rejection of qualified candidates.
He also argues that employers are often leaving positions vacant, parcelling out the work to other employees. This is because most internal accounting systems do not help organisations calculate the true cost of unfilled positions, and there is an impression that there is an economic benefit from not filling jobs.
Research by Randstad, a multinational human resources consulting firm based in the Netherlands, confirms that external recruitment processes are taking longer and that employers are choosier. In the UK, for example, successful candidates for senior roles undergo an average of 3.4 interviews, compared with 2.6 in 2008, and for junior roles an average of 2.4 interviews, compared with 1.6.
Psychometric testing is one major reason for lengthening appointments processes. Randstad’s survey finds 29% of UK roles now involve some form of psychometric, technical or aptitude testing, compared with 14% in 2008. Vetting candidates, such as checking references and qualifications, delays the hiring process by 15.2 days on average.
Mark Bull, Randstad’s UK chief executive, says that employers have become increasingly selective when it comes to interviewing:
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