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 / Autumn 2009 / Issue 56(originally published by Booz & Company)


The Talent Innovation Imperative

Toward a New Talent Model

The economic crisis has created a complex challenge for corporate leaders with respect to talent. They must stem the leakage of the highest-quality people even as they reduce overhead. They must reinspire employees and reinvigorate morale. Most urgently, they must realign the company’s talent practices with its strategic priorities — which, in many cases, the recession will have forced them to refocus. And they must revamp their talent model to reflect changing demographic trends; as companies begin to recruit and train people again, they will find a very different talent pool than they have had in the past.

Demographers have long foreseen dramatic shifts that would affect the makeup, location, preparedness, and expectations of every company’s workforce. Now those trends are here, and many companies are unprepared. Combined with the economic downturn, these shifts have created a perfect storm of workforce pressures on companies around the world.

One shift involves the growing numbers of Chinese and Indian people in the global talent marketplace; another is the expanding achievement gap between women and men. In many countries, more women than men graduate from colleges and universities, and women, barely present on corporate payrolls 30 years ago, now make up more than half of the global educated workforce. White men now make up less than 20 percent of the “tertiary” educated population (defined as those with a college or university degree), from which most corporate employees are drawn, and potential managers from North America and western Europe are outnumbered more than three-to-one by their counterparts from the rest of the world. (See Exhibit 1.) As a result, leading companies are already finding that they cannot simply passively bring women and people of color into the workplace; they must prepare them for greater positions of responsibility.

One company directly addressing this challenge is Johnson & Johnson (J&J), which has identified high-performing women of color as a pivotal group and successfully piloted an initiative aimed at accelerating their career development. Called Crossing the Finish Line, this program for director-level women of color and their direct supervisors consists of a four-day session: two and a half days for the high-potential women, and one and a half days for their (mostly male) supervisors. The two groups overlap for half a day in the middle, during which the women share what they have learned, their supervisors respond, and together they create action plans for career acceleration — which are rolled out upon completion of the program. Company data shows that women who participate in the program are more likely to get promoted than those who do not. It has since been expanded to include men of color.

“This program helps us capitalize on talent that is reflective of the global environment and different from the traditional mold,” says JoAnn Heffernan Heisen, chief diversity officer of J&J. Companies are similarly adapting to generational shifts, which vary by region. In the mature economies of Europe, Japan, and North America, the “demographic bulge” of the baby boom generation (born between 1946 and 1964, currently ages 45 to 63) is beginning to move out of the workforce. The swelling ranks of retirees, low birth rates (particularly among the college educated), and caps on immigration are all factors that will fuel a reduction of between 20 and 40 percent in the working-age population over the next few decades. Meanwhile, in transitional economies such as China, India, Brazil, and Russia, talent markets vary widely. India benefits from both high GDP growth and a young, highly skilled workforce, whereas China and Russia both confront a shrinking pipeline of young workers. All these countries need better-educated entry-level talent to sustain strong growth. (See Exhibit 2.)

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  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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