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strategy and business
 / Summer 2006 / Issue 43(originally published by Booz & Company)


Rethinking the Value of Talent

Classifying employees by their role in the success of your business rather than by their function can improve the effectiveness of recruiting, staff development, and deployment.

If companies managed financial assets as carelessly as they do human assets, then shareholders, auditors, and regulators would come down hard on them for inefficient use of funds. Yet although it is commonly accepted that individuals are crucial to an organization’s success, many companies cannot measure or manage their employees’ contributions to corporate value.

Two significant barriers stand in the way of a more productive or strategic approach to recruiting, developing, and deploying employees. First, many managers are reluctant to categorize people, for fear of appearing elitist. Second, human resources departments typically classify individuals according to the functions or the business units — the vertical silos — in which they work, not how essential their roles are, or what experience or other personal qualities are required to perform the role. No attempt is made to classify people horizontally across functions or business units, according to how “business critical” they are. And even when a company does consider an individual’s contribution to the success of the organization, it is all too often limited to a discussion about performance rather than organizational measurements of success.

We believe that businesses need a far better understanding of the strategic value of employees; it is critical to success in the global marketplace. A company’s future growth and competitiveness depend more than ever on attracting qualified workers — an increasingly scarce resource — and helping them work efficiently together within the organization. Business organizations are like theater troupes: Their success depends on timing and on every person executing his or her role, whatever it may be.

Consequently, a strategic approach to managing the value of employees first requires a definition of the roles that must be performed on the corporate “stage.” This means creating a taxonomy of jobs within the corporation that is consistent across business units, countries, and functions and is divorced from the individuals working at these jobs. As far as the organization is concerned, an employee is first and foremost expected to fulfill a function, with a number of tasks for which a number of skills are required. Some of these tasks are technical and some are related to the employee’s relationships with coworkers and outside agencies.

A bank teller, for example, must be able to handle simple transactions and be courteous; a chef should be a good cook, act as a team leader, and have a reliable reputation; an airline pilot is expected to fly a plane well and facilitate the aircraft’s rapid turnaround; and a production worker must perform a set of technical tasks and meet ISO quality standards in doing so.

Once the different roles have been defined, management is in a position to determine how important each is to the company’s ability to create value for customers and shareholders. In theater language, it’s the determination of which roles should have top billing and which can be played by character actors.

Certain jobs have a greater value impact on an organization; there is a substantial risk to financial performance or reputation if these tasks are not performed well. In some cases, but not all, these jobs merit higher compensation. Other roles carry a significant cost impact, because they require a good bit of training, development, and skill complexity to be performed adequately. These roles almost always command the highest salaries in the organization. (See Exhibit 1.)

On this basis, we can classify an organization’s roles into four broad segments, each of which requires a significantly different talent-management approach.

  • Creators devise and implement an organization’s distinguishing value proposition or business model. They include senior executives and the chief designer in a fashion house. These are scarce resources with skills that take a long time to acquire and are costly to develop and maintain.
  • Ambassadors represent the organization’s public face and are responsible for customer experience. Among other positions, they are bank tellers, supermarket cashiers, nurses, and field installation technicians. In most cases, these workers are easily replaceable and their skills do not have to be particularly sophisticated, but if they don’t do their job well, the business can suffer significantly.
  • Craft Masters ensure the quality, timeliness, and cost-effectiveness of an organization — the essential ingredients for the faultless execution of a business strategy. These are the design engineers in a high-tech business, the “nose” of a perfume brand, the whiskey blender in a distillery, and the auditor in an accounting firm.
  • Drivers keep the business running. They are assembly-line operators, back-office agents, and administrative assistants. Although they are neither crucial to the success of a venture nor hard to hire, in most companies they represent the largest category of human capital, and bad management of this group can lead to operational disruption or quality problems.
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