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My Take
What will be the HR executive's most pressing problem in the year 2008?
Much has been written about the casus belli -- or precursors to war -- that have precipitated the war for talent. Many of these arguments assume this war is being fought solely against external threats -- the impending retirement of the baby-boomer generation, the insufficient number of highly skilled younger workers and so forth. It's a classic conflict between external supply and market demand. But that's only part of the battle. The war for talent is also being fought within companies, against challenges and enemies entrenched just as deeply as those on the outside. This "civil" war is chiefly being waged on two fronts. The first is a fundamental battle that requires "national" (a.k.a. corporate) acknowledgement that the company must address its human capital needs and elevate talent management to its deserved position. In other words, the talent deficit isn't just an understaffing issue. It's an undervaluing issue, as McKinsey & Company's Lowell L. Bryan and Claudia Joyce argue in their book, Mobilizing Minds. Long accustomed to judging everything according to financial results such as return on invested capital, the authors say, companies have overlooked the fact that "the real engines of wealth creation today . . . [are the] intangibles created by talented people and represented by investments in such activities as R&D, marketing and training." Because such intangibles don't show up on conventional balance sheets, most companies don't consider them core business assets. Consequently, the practices that support those intangible assets -- including the practice of talent management -- have traditionally been regarded as secondary endeavors, not something that's integral to the company's strategic agenda. Just how much value in these "talent assets" are we talking about? Bryan and Joyce use an intriguing formula to arrive at a rough approximation of the value of intangibles: the market capitalization of a company minus its invested financial capital. Using that formula, the authors figure that the intangible capital of the world's 150 largest companies was $7.5 trillion dollars in 2005, compared to $800 billion in 1985. The second front in the civil war for talent arises from that age-old corporate struggle: turf wars. Managers have a natural tendency to fight to keep talented performers in their departments. But in the long run, this battle takes its toll on the company. Managers need to allow and encourage their employees to grow beyond their current roles through job rotation or other programs that allow them to maintain their current (or slightly diminished) duties while adopting new responsibilities and taking on new opportunities. Management benefits from a more knowledgeable staff and the employees benefit not only from the new skills or experiences, but also from a management environment that is selfless and free from the "choose sides" mentality that builds barriers. Clearly, the old platitude "our people are our assets" -- usually met with a good deal of eye-rolling -- is now a bottom-line fact, even if it's underappreciated. It's time talent management is elevated from a vague function of HR to a central business goal. Growing your business means growing your people. Companies that take this to heart will win the war for talent -- inside and out.
November 19, 2007 Copyright 2007© LRP Publications |
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