In 1997, a ground breaking McKinsey study exposed the "war for talent" as a strategic business challenge and a critical driver of corporate performance. Then, when the dot-com bubble burst and the economy cooled, many assumed the war for talent was over. It's not.
Subsequently in 2001, the authors of the original study revealed that, because of enduring economic and social forces, the war for talent will persist for the next two decades. McKinsey & Company consultants Ed Michaels, Helen Handfield-Jones, and Beth Axelrod argued that winning the war for leadership talent is all about much more than frenzied recruiting tactics.
It's about the timeless principles of attracting, developing, and retaining highly talented managers - applied in bold new ways. And it's about recognising the strategic importance of human capital because of the enormous value that better talent creates .
The outcome of the study is applicable to Singapore companies as it was fortified by five years of in-depth research on how companies manage leadership talent - including surveys of 13,000 executives at more than 120 companies and case studies of 27 leading companies - the authors proposed a fundamentally new approach to talent management.
They describe how to: create a winning EVP (employee value proposition) that will make your company uniquely attractive to talent; move beyond recruiting hype to build a long-term recruiting strategy; use job experiences, coaching, and mentoring to cultivate the potential in managers; and, strengthen your talent pool by investing in A players, developing B players, and acting decisively on C players.
Central to this approach is a pervasive talent mindset - a deep conviction shared by leaders throughout the company that competitive advantage comes from having better talent at all levels.
Using practical examples from companies such as GE, The Home Depot, PerkinElmer, Amgen, and Enron, the authors outline five imperatives that every leader - from CEO to unit manager - must act on to build a stronger talent pool. Written by recognised authorities on the topic, this is the definitive strategic guide on how to win the war for talent.
The Singapore Context
In today’s tight labor market in Singapore and many other Asian economies, companies are facing intense competition for talent – and are giving increased attention to ways to retain talent rather than rely on costly replacement and retraining.
Retention of talent with critical skill sets is vital for achievement of business growth and to build organisational competencies, which represent a sustainable competitive advantage for Singapore companies.
The loss of needed talent is costly because of the resultant bidding up of market salaries for experienced hires to replace them, the costs of recruiting and assimilating new talent, the lost investment in talent development, and the hidden costs of lost productivity, lost sales opportunities, and strained customer relationships.
Can Singapore companies win the “war for talent”? Will we be able to define and implement a retention strategy that will give us the stable, committed, capable workforce required to achieve a competitive business advantage?
Consulting firm and research organisation reports, published books and articles, and internal company retention studies suggest that everyone is following the same overall plan. How will this approach give a company an edge?
Few, if any, organisations today in Singapore have an adequate supply of talent. Gaps exist at the top of the organisation, in the first- to midlevel leadership ranks, and at the front lines.
Talent is an increasingly scarce resource, so it must be managed to the fullest effect. During the current economic downturn we may experience a short ceasefire in the war for talent, but we’re all seeing new pressures put on the talent running our organisations.
Are today’s leaders able to do more with less? The A-players can, and there should be a strategic emphasis on keeping those leaders—and developing their successors. Many organisations are reducing their workforces, but let’s be careful not to cut so deep that talent is scarce when the economy rebounds.
The supply of leadership talent is critical to any organisation’s prosperity and is, therefore, a central element of talent management. The increasing trend of growing leaders from within is based on a dawning realisation that a popular alternative for acquiring talent—poaching key people from competitors—ultimately leads to frustration.
Outstanding leaders who can ‘ramp up’ quickly are hard to find, increasingly expensive, and even when successfully recruited, tend to move from company to company. So the best approach, usually, is to develop systems and processes to identify available leadership talent.
Many studies have shown that an important factor for commitment and retention is the effectiveness of immediate management. Employees say it is an important element of the work environment; research shows it highly correlated with commitment and retention scores, and employees cite poor management as a key reason for leaving a company.
Accordingly, there have been many books focused on manager effectiveness. One big seller was "First, Break all the Rules", reporting on the Gallup Organization’s findings and recommendations for better management of people.
Integrated Talent Management
So, what do we mean by talent management? In the broadest possible terms, it is the strategic and tactical management of the flow of talent through an organisation. Its purpose is to assure that the supply of talent is available to align the right people with the right jobs at the right time based on strategic business objectives.
The term “talent management” is often used to denote e-recruitment and automated applicant tracking systems. This emphasis on staffing and recruiting is more appropriately called the talent acquisition phase of the talent management cycle (see Figure 1), an important but preliminary step in the overall process.
Figure 1: CEE Talent Management Cycle
The Talent Management Cycle includes the proactive analysis and planning to assure long-term strategic development and deployment of critical leadership and other resources through systematic identification, assessment, planning, and developmental action.
Talent Management Cycle is composed of several essential elements:
1. Talent Acquisition: Proactively recruiting world-class, diverse leadership talent and providing on-boarding support for them to accelerate their assimilation into their roles.
2. Talent Development: Developing and executing learning and development programs, processes & assessment tools to grow current and future leaders
3. Performance Management: The process of creating a work environment in which people can perform to the best of their abilities.
4. Succession Planning: This is critical towards developing a leadership pipeline or assuring near-term leadership continuity by thoughtful consideration of the availability, readiness, and development of internal talent (including High Potentials) to assume critical “priority” leadership roles.
5. Organisational Results: This is obviously the ultimate outcomes of any integrated talent management system. However it is a lagging indicator and leaders will have to focus on the organisational climate which will have an impact on the other elements of Talent Management Cycle as explained earlier.
The flow of effective communication and the systems of recognition and rewards are integral part of the climate which influences the talent’s performance effecting productivity, creativity and in driving results with the right impact. The climate is impacted by a values-driven leadership team.
Your organisation can create a new product and it is easily copied. Lower your prices and competitors will follow. Go after a lucrative market and someone is there right after you, careful to avoid making your initial mistakes.
But replicating a high-quality, highly engaged workforce is nearly impossible. The ability to effectively hire, retain, deploy, and engage talent—at all levels—is really the only true competitive advantage an organisation possesses.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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Prof Sattar Bawany is the CEO & Master Executive Coach of Centre for Executive Education (CEE Global).