September 2007
The currency of business success today is talent—an organization's people, from its current and future leaders to its frontline employees. And in an age of talent, the war for this precious commodity is not only fierce but now truly global.
Most top executives have a keen intellectual grasp of the critical value of talent. But when it comes to the practical implications, they are less certain: Do we have the bench strength we need to devise and execute strategy today and tomorrow? Can our middle managers handle the squeeze that comes from constant streamlining and change? How is the work we do changing, and what critical skills will we need in the future? How does our organization and how do our people become more adaptable? And how will we best take advantage of new sources of talent?
These questions have become increasingly critical as the pressures of globalization, changes in workforce demographics and even the nature of work itself have made talent into an organization's most important competitive asset. Accenture research confirms that the issue of attracting, engaging and retaining the right talent has moved to the top of the corporate agenda.
Yet too many organizations have fragmented talent management systems, processes and practices, and have not focused on building those capabilities sufficiently. The HR function has long been a backwater of investment and attention, and is now facing significant challenges to reposition itself. HR outsourcing is becoming increasingly popular as a means of bringing about change in the core administrative and transactional activities of human resources. But much more needs to be done before talent is widely and effectively used to create sustainable competitive advantage and long-term value.
To truly compete on talent—to create what we call a talent-powered organization—companies must be prepared to do more than just fill in gaps by adding people. They have to be able to multiply their talent to generate superior levels of effort, imagination and creativity. And they need to do that by building and combining their capabilities in four areas—defining, discovering, developing and deploying talent. When these capabilities come together and are aligned with critical business needs, organizations are in a position to multiply their talent and thus to create sustainable long-term competitive advantage.
Extraordinary Value
Talent is traditionally thought of as an attribute of individuals with superior abilities in one field or another—sports, for example, or the arts. In business, the term may be applied to the brilliant engineer, the top salesperson, the financial wizard or the executive who leads the organization to new heights.
There's no denying that individuals can often contribute the kind of outstanding performance that helps their companies succeed. But the need for constant innovation demands new levels of creativity from employees working in teams, across locations and functions.
In the course of our research for The Talent Powered Organization: Strategies for Globalization, Talent Management and High Performance (to be published by Kogan Page in November in the United States and the United Kingdom), we found that companies that multiply talent by increasing the contributions of individuals, teams, workgroups and entire workforces are significantly more likely to achieve high performance. They invest in building capabilities in defining, discovering, developing and deploying talent that allow them to realize extraordinary value from all their people.
Yet finding and retaining the right talent is becoming harder. Demographic trends are working against companies in most of the developed world. Working populations are starting to shrink as the baby-boomer generation reaches retirement and birthrates decline. Generational attitudes toward work are changing as well; engagement and loyalty appear to be declining as employees expect more and are more willing to move on when they are not happy.
Knowledge workers now make up a significant part of the overall workforce, as reflected in part by the huge shift of corporate value from tangible to intangible assets in the past 10 to 15 years. Knowledge workers' contributions to company performance largely take the form of intellectual collaboration—something that organizations cannot simply command or program. Nurturing and leveraging the expertise and initiative of knowledge workers, and finding ways to engage them in knowledge creation and sharing, are critical to the multiplication of talent.
Against a backdrop of all these challenges, organizations are seeking out new talent pools in emerging economies. But the competition for the best people in countries like India and China is also intense, and few organizations have the scale and capability to discover and source talent globally.
Talent and High Performance
High-performance business rests on three basic building blocks; talent figures heavily in two of them. First, talent multiplication is one of the winning mindsets that make up a performance anatomy. But when talent-powered organizations embed the multiplier mindset and practices into their strategies, processes and operations, talent multiplication moves from a key competitive mindset to an important and distinctive source of competitive advantage—a critical element in a top performer's distinctive capability. (For more on the building blocks of high-performance business, see "Going the distance: How the world's best companies achieve high performance," Outlook, September 2006.)
Accenture research suggests that a critical starting point for creating this mindset is strong, visible leadership with a deep conviction about the power of collective talent. For example, the High Performance Workforce Study 2006—a survey of more than 250 senior executives in the United States, Europe and Australia—revealed that companies deemed "human performance leaders" are much more likely than "laggard" companies to have functional leaders deeply engaged in talent management issues and initiatives. These leaders understand and can articulate their organization's critical talent needs, both today and for the future. As a result, they are able to cultivate a talent multiplier mindset throughout the organization; it is this mindset that fuels the talent multiplication engine.
We have found that talent management practices can be as varied as companies' strategies. But our research strongly suggests that talent-powered organizations regard talent multiplication as a critical organizational capability that is built on a solid foundation of integrated HR systems, consistent processes and strong governance with comprehensive measurement. They maximize the use of technology to support talent multiplication, and innovate continuously in all their talent management practices and processes.
Keys Areas of Focus
Talent-powered organizations pursue four activities in concert.
1. They define their talent needs based on a clear understanding of mission-critical jobs and key workforce skills and competencies, and in light of current and future strategic goals.
It's not enough for executives to have an intuitive understanding of the way talent helps an organization meet its strategic goals and achieve business successes. Leaders of talent-powered organizations clearly articulate how talent creates value for the organization.
Two elements are crucial to successfully charting the pathway from workforce skills and capabilities to business outcomes: a clear understanding of how the business creates value for customers, and deep insight into the parts of the organization's workforce that have the greatest strategic impact.
It is imperative for talent-powered organizations to define their talent needs in terms of their strategic contribution to the business. However, these organizations must also understand their talent needs at the level of workforce skills and competencies in order to define the specific nature of the talent that needs to be developed or recruited. Best-practice talent management processes are connected through a competency model that provides a common language to drive all talent processes, from recruitment to deployment, learning and performance management.
2. They discover new sources of talent by seeking out diverse talent pools, considering novel options for accessing the talent they need, and offering comprehensive value propositions to current and prospective employees.
Contributing to the extraordinary complexity of today's global talent market has been the emergence of talent pools of unprecedented diversity. Talent-powered organizations draw on a wide range of capabilities new to the world of people management, such as supply chain management for sourcing talent, and marketing and branding to appeal to diverse talent.
As the global economy continues to grow, geographic diversity will play a major role in the way companies discover new sources of talent. The ability to strategically and systematically discover diverse talent sources ensures that talent-powered organizations are not locked into particular locations or smaller, more limited talent pools.
Companies are beginning to develop "talent supply chains" to rapidly adapt sourcing channels and targeted talent pools to new strategic objectives and changing business conditions.
For example, Texas-based oil-refining giant Valero Energy Corporation won Workforce Management's award for innovation in 2006 for developing one of the first talent supply chains. Beginning in 2002, Valero used the chain to reduce the time required to fill an open position from 120 days to 40 days, and to reduce the cost per hire from $12,000 to $2,300. This improvement came while the company was growing phenomenally, from 2,000 employees in 2000 to about 22,000 by 2006, with annual revenues of $75 billion.
The most significant results, however, were strategic. The talent supply chain enables Valero to forecast demand for talent three years out, at the division and job-title level. These projections allow the company to make strategic decisions about whether to hire new employees, enlist contractors or outsource the work. Dan Hilbert, the Valero executive in charge of the project, notes that "for the first time, talent pipelines can now be developed years in advance to meet specific future talent needs. It's pretty revolutionary stuff."
This capability has become essential in a multi-polar world, as organizations everywhere need to understand global talent markets, how to access new talent and where they should consider alternative talent-sourcing strategies. To maintain a future flow of talent and the adaptability necessary to respond to changing market conditions, this understanding must become second nature.
3. They develop talent's potential by building individual skills, knowledge and competencies in ways that expand the organization's collective capabilities.
Career development efforts in large corporations are too often limited to programs that target "high potentials" and future leaders. This approach is shortsighted. In the knowledge economy, the skills demanded of employees at all levels are constantly being redefined. To deal successfully with that reality, talent-powered organizations invest in developing the capabilities of all employees, with a particular focus on accelerating the development of skills and workforces that are most clearly linked to business strategy. And they are using technology extensively to accelerate learning and connect people to better share knowledge and experience.
An important element of the business strategy of Avaya, a communications systems, applications and services company, is accelerated new-product introduction. The company is thus keen to ensure that employee training is linked to this strategic goal. To that end, it has employed a methodology called "business interlock" that, among other things, links training to the new-product development process, ensuring that investments in training are aligned with strategic objectives and deliver measurable results.
To improve performance while accelerating talent development, talent-powered organizations also use technology to better enable collaboration and distribute work globally. The field of radiology boasts a number of innovators in this area. Donald Resnick, M.D., a professor of radiology at the University of California, San Diego, explains how the global distribution of radiology work creates opportunities for accelerated learning by providing doctors with more varied cases. "At one site you might have only chronic diseases, but at another place you might get only sports medicine," he says. "So all of a sudden these fellows are getting experience in [chronic diseases and] sports medicine. To me, the educational value is spectacular."
Talent-powered organizations accelerate the development of key skills and critical workforces by embedding learning into job assignments in a structured way. And they make this learning available at the point of need, based on a clear understanding of the competencies and experience required to be effective in different jobs and roles.
4. They deploy the right talent in the right place at the right time to align employees' strengths and aspirations with the organization's goals.
Engaging employees by deploying talent in ways that create the best possible match between their talents and aspirations and the strategic goals of the business is an essential capability for talent-powered organizations.
Instilling a strong sense of engagement among employees is both more important and more difficult than ever. Engaged employees do better work and are more committed to the organization's goals; engaged workforces are also more cohesive. But changes in the nature of work and in attitudes toward the work–life balance can make engagement an elusive goal.
Talent-powered organizations deploy talent in ways that enable people to draw on their personal and professional aspirations to create value for the organization.
For example, Yahoo! Inc. engages its people by offering meaningful career opportunities in the form of challenges that can have strategic impact. The company aligns individual aspirations with organizational goals by combining the promise of a valuable career experience with pride in a professional contribution ("How big can you think?"). The company seeks to connect employees to something bigger than themselves: "Working here, your day-to-day efforts will not only impact your future, but the web's too."
Aligning work demands and performance expectations with employees' personal work preferences is another route to engagement and high performance.
For the 4,000 people working at its corporate headquarters, Best Buy Co. has established the Results-Only Work Environment, in which employees create their own schedules and decide where they will work and how they will get their jobs done. As long as the work gets done and employees meet productivity goals, no one cares how, when or where employees work. The results have been impressive. Employee engagement scores have gone up, productivity has increased by 35 percent and retention has improved.
Systemic Commitment
Creating a talent-powered organization demands a profound and systemic commitment to a holistic system of talent multiplication based on these four capabilities. Strong leadership is absolutely necessary as well: Leaders must provide vision and passion for talent multiplication and communicate its strategic importance to the organization and its future.
But leaders cannot create talent power; they can only lay the foundation for talent multiplication. The responsibility for multiplying talent must be cascaded through the organization.
Because everyone needs to be actively involved in multiplying talent, the organization must invest in developing leadership and management skills throughout the ranks. In particular, middle managers must have the people management skills that will enable them to effectively define, discover, develop and deploy talent. The importance of line managers and supervisors in engaging and multiplying talent cannot be overestimated.
Just as executives and employees had to become tech-savvy when information technologies became strategic, and just as they had to learn to think globally when the world's markets changed, they now need to become talent multipliers. This task is crucial for those who want to create, and be a part of, the talent-powered organization.
About the Authors
Peter Cheese leads Accenture's global Human Performance service line and is responsible for developing the company's offerings, capabilities, alliances and assets in this area. With more than 20 years' experience in consulting, Mr. Cheese has led a wide range of client projects that have focused on transforming performance, especially involving human resource management and employee learning. Mr. Cheese speaks at a wide range of human performance conferences and events. He is based in London.
Robert J. Thomas is the executive director of the Accenture Institute for High Performance Business in Boston. Dr. Thomas is a leading authority on leadership and transformational change. He is a frequent contributor to Outlook, and his ideas on human capital development have also appeared in Harvard Business Review, Sloan Management Review and The Wall Street Journal. His book Geeks and Geezers, which he co-wrote with Warren Bennis, was one of the best-selling business books of 2002. Dr. Thomas's new book, Crucibles of Leadership, will be published by Harvard Business School Press this fall.
Elizabeth Craig is a research fellow at the Accenture Institute for High Performance Business. Her research focuses on talent management, employee engagement, individual attachments to organizations and career development. Dr. Craig, who is based in Boston, has published work in Harvard Business Review, the Financial Times and the European Business Forum.
Sidebar
How talent powers Google
Google's holistic approach to talent is an important contributor to the company's high performance. Like other talent-powered companies, its systems for engaging people's talents ensure competitive success and increase the organization's collective capabilities. Google defines its talent needs in terms of the most strategically pivotal segments of the workforce and mission-critical skills and competencies.
For instance, Google sees winning the talent war in China as critical to achieving its strategic objective of becoming the country's leading search engine (China's own Baidu.com is the current market leader). To that end, the company lured away a former Microsoft Corp. executive, Kai-Fu Lee, to become president of Google Greater China. A charismatic visionary with great appeal among young Chinese, Lee's mandate is to build a research and development center that will serve as a "talent magnet" to fuel Google's growth in China.
Google continuously seeks out new options and channels for discovering talent. In 2006, the company accessed a relatively untapped talent pool by opening a new office in Ann Arbor, Michigan, where it will hire local talent to fill 1,000 account management and customer support positions over the next five years. The company saw an opportunity in the region's supply of highly skilled college graduates and low cost of living (relative to high-tech hubs such as Silicon Valley, Boston and Seattle).
Acquiring small startups is another way in which the company secures key talent. It encourages budding tech entrepreneurs to pitch to Google before they seek funding from venture capitalists, a practice that is only ostensibly about acquiring new technologies—Google wants the people who are building the products.
Developing talent is another well-established capability for Google. According to Shannon Maher, Google's UK engineering site director, "We have customized the whole business for innovation. For example, engineers are allowed to spend 20 percent of their time on whatever they want to do, and this allows us to cross-pollinate a lot of new ideas." In addition to building learning and development opportunities into work roles, Google requires its people to contribute to their colleagues' development by hosting "TechTalks," in which employees teach other employees. (Outsiders are also invited to TechTalks, both as presenters and participants, and the sessions are videotaped and posted on the Internet.)
Google has also developed a capability in deploying talent in ways that align individuals' talents and aspirations with the organization's strategic objectives. The fun work environment and all of the perks "Googlers" enjoy are nice, but it is the promise of opportunities to work on "the toughest problems in computer science" and help develop "innovative products that make a positive difference in tens of millions of lives every day" that truly engage Google's employees. According to BusinessWeek, Google's "position on the crest of innovation" enables it to engage more engineers and tech talent than any other computer or Internet company.
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As the company builds new capabilities and creates new market opportunities, its strategies evolve, talent needs are redefined, new talent sources are discovered and that new talent is developed and deployed. Google has set in motion the virtuous cycle of talent multiplication to become a talent-powered organization.
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In 2005, Google's sales per employee were $1.5 million—more than twice that of its competitors. In talent-powered organizations, systems for combining employees' skills and knowledge help everyone contribute more while also increasing the organization's collective capabilities. Thus the talent-powered organization achieves high performance while it strengthens its competitive position and positions itself for future growth.
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