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Published: August 27, 2009

 
 

The Talent Innovation Imperative

Any company that competes on the global stage must, in light of today’s changing workforce, rethink the way it manages people.

Too many companies are wasting their resources— their people and their financial leverage — by perpetuating outdated approaches to talent management. They structure jobs rigidly, forcing many people to work a 9 a.m. to 5 p.m., Monday through Friday, workweek. They focus their training on functional skills, not on aligning employees’ capabilities with the strategic objectives of the business. For leadership development and career advancement, they rely on long-standing training courses that don’t reflect the contributions that people can make in today’s flat, flexible, and entrepreneurial organizations. And their compensation systems do not adequately link to performance or hold managers accountable for developing the talent of their staff and their direct reports. In short, the talent management in these companies is not arming them with the decisive, experienced, globally minded visionaries that they need at every level.

It’s not that talent is unimportant to corporate leaders. Many of them see that people are the only asset that innovates, and that innovation is the only path to sustained breakthrough performance. As these leaders read about companies such as Google and Patagonia that are known for their creative and attractive work environments, they would like to provide the same. And they know, from these examples and others, that the investment needed to improve is relatively small, and the paybacks are relatively high.

But they are held back by an old model of talent management. This model, which is so pervasive it is almost unseen, is grounded in 20th-century assumptions about people and the workplace. It hasn’t adapted to demographic changes, to shifting attitudes among employees (knowledge workers in particular), or to the new priorities of global corporations. It needs to be changed, and the needed reform will come about only through deliberate changes in policies and practices.

To be sure, many executives are prone to postponing talent management innovation in the wake of the global economic crisis. Employees are so grateful to have their jobs, the thinking goes, that they can be relied on to deliver 100 percent. But the crisis has added urgency to the talent problem; the commitment of employees is most needed in a crunch, and that commitment is all too easy to lose. Surveys conducted by the Center for Work–Life Policy (CWLP) show that between June 2007 and December 2008, the number of employees expressing loyalty to employers plunged from 95 percent to 39 percent. The number trusting their employers fell just as dramatically, from 79 percent to 22 percent over the same time period. Surveys in mid-2009 continued to report similar disenchantment and mistrust. Another recent study, published in the Academy of Management Journal, found that after a round of layoffs, voluntary attrition spikes by as much as 31 percent, and precisely the wrong people — those who have the strongest track records and brightest employment prospects even in a recession — are most likely to leave. Companies that react to the crisis with across-the-board talent cuts are not just missing an opportunity to compete; they’re making themselves weaker.

By contrast, some companies have been steadily innovating their talent models, and the results are showing up in breakthrough performance, superior competitive advantage, and significantly enhanced global reach. No single company has all the answers, but it is possible to chart — using the experiences of many companies before and after the recession began, as well as research conducted by Booz & Company and the CWLP — the parameters of an effective approach to global talent innovation. As we’ll see, this approach has four main priorities: differentiated capabilities, performance acceleration, leadership development, and the fostering of a talent culture.

 
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Resources

  1. Tony Avirgan, “Economies of Major Developed Countries Will Shrink in 2009,” Economic Policy Institute, February 18, 2009: Links demographic shifts to loss of economic potential.
  2. Shumeet Banerji, Paul Leinwand, and Cesare R. Mainardi, Cut Costs, Grow Stronger (Harvard Business School Press, 2009): Introduces a capability-based approach to shrinking expense while building a right to win in key markets. 
  3. Sylvia Ann Hewlett, Top Talent: Keeping Performance Up When Business Is Down (Harvard Business Press, 2009): Spells out critical changes needed in attracting, holding, and building new structures for high-performing and high-potential employees.
  4. Sylvia Ann Hewlett, Laura Sherbin, and Karen Sumberg, “How Gen Y and Boomers Will Reshape Your Agenda,” Harvard Business Review, July 2009: Guide to the “remarkably similar” intentions and demands of these two cohorts, and the implications for talent management.
  5. Per-Ola Karlsson and Gary L. Neilson, “CEO Succession 2008: Stability in the Storm,” s+b, Summer 2009: Booz & Company annual CEO succession study suggests that corporate leaders need to do much more to foster the next generation of highest-level executives.
  6. Edward E. Lawler III, “The Talent Lie,” s+b, Summer 2008; Talent: Making People Your Competitive Advantage (Jossey-Bass, 2008): Two resources describing how “few organizations seem to walk their executives’ talk when it comes to the management of talent.”
  7. Cesare Mainardi, Paul Leinwand, and Steffen Lauster, “How to Win by Changing the Game,” s+b, Winter 2008: How to invest in a capabilities-driven strategy, with some discussion of talent approaches.
  8. Richard Rawlinson, Walter McFarland, and Laird Post, “A Talent for Talent,” s+b, Autumn 2008; Theodore Kinni, Ilona Steffen, and Brenda Worthen, editors, Capturing the People Advantage: Thought Leaders on Human Capital (s+b Books, 2008): Interviews with leaders in the human resources function and others who have developed many aspects of talent innovation in their companies.
  9. Center for Work–Life Policy Web site: Access point to the center’s work on “on-ramps and off-ramps”; reversing the brain drain for women in science, engineering, and technology; and other talent- and diversity-related issues.
  10. For more business thought leadership, sign up for s+b’s RSS feed.
     
 
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