Sure, by now most of us have heard about the importance of strategically managing talent and human capital, but how many of us are convinced that companies truly buy into those lofty concepts in droves? Some of us will even have read McKinsey’s now classic study from the late 1990 that coined the term “the war for talent.”
In other words, now in the new millennium, we find ourselves in the talent age. The article’s authors claimed that in an environment where competition has become global and capital is abundant (well, at least it was 10 years ago, well before the recent collapse of banking investment giants, and the US and German government interventions), “…all that matters is talent. Talent wins.”
Conversely, during the agricultural and brick-and-mortar age of the 19th century, the economy was based on land, and on truly physical and very tangible assets, whereas people were regarded as a mere labor expense. The industrial age of the 1930 followed with a manufacturing-driven economy and a need for specialized workers. Then came the automation age of the 1960 that introduced the concept of human resources (HR) management. Still, higher business performance was derived through the most effective use of factories and distribution networks, i.e. physical assets, much more than via staff.
The knowledge age of the 1980s moved the basis of economic value to information and knowledge assets through integrated communications and computer technology. That era introduced the concept of “knowledge workers” and people being regarded as “assets” (rather than a necessary evil and expense). Now, post Y2K, the competitive battlefront is for the best people because they are the true creators of value. Nowadays, we are in the age of talent management and human capital management (HCM). Right?
Well, during these days of Wall Street crumbling and “main street” companies struggling to compete globally, it is easy to be cynical about concepts like HCM, while watching on cable TV how ten thousands of former employees are carrying boxes and vacating once coveted premises. Moreover, many of us have also in the past worked for (and with) jerks and felt unimportant and unappreciated by our employers.
How believable are then these platitudes about “people (or their skills, at least) being the most valuable corporate asset?” Yeah right!
True Mavericks Do Succeed
But, like mediocre individuals, mediocre and average companies resort to the usual “hire-and-fire” practices (not to use the currently politically loaded “more of the same” mantra). One such all-too-common practice is to layoff a number of folks in a knee-jerk fashion (many of whom might be potential talent gems) during the tough times, based on outmoded thinking that equivalent replacements will be readily available in the job market when times improve.
Little do these companies know (or think about) whether they have ever properly aligned their strategic business objectives with the current talent pool and employees’ performances. Do they know who the best performers are (and why, based on which metrics?), and who can smoothly replace whom in case of a departure (as a way of life)? Moreover, workforce planning at such organizations is based on past staff profiles, without the ability to project the needed skills’ requirements and shifts in the future. This makes forecasting workforce supply and demand almost impossible (if even intended).
On the other hand, analyst research has time and again proven that organizations using talent management strategies and solutions exhibit higher performance than their direct competitors and the market in general. For instance, Taleo’s own research shows that from Fortune 100 global enterprise recruiting and performance management to small and medium business, leading companies invest in talent management to select the best person for each job because they know success is powered by the total talent quality of their workforce.
According to Taleo Research and the Human Capital Institute (HCI), over the past two decades, the enterprise value vs. book value of publicly traded companies has increased fivefold. This value “delta” can be justified by the value of their brands, but also by the value of their assembled workforce. At the same time, the tangible vs. intangible assets ratios changed from 62/38 percent in 1982 to 15/85 percent in 2002.
Many of us have heard stories about the hipster companies like Google or Apple nurturing and pampering their talented employees in order to get the best innovativeness out of them. More examples of such environments can be found in William C. Taylor and Polly LaBarre’s acclaimed book entitled “Mavericks at Work”. Perhaps the maverick concept could also work in politics too, but let’s first discern who the real maverick is? But I digress…
Anyway, for ordinary mortals, the chance to work at such a privileged company seems equal to their chance of dating a movie star. Therefore, it is easy to go back to being cynical and dismissing HCM and talent management as just the latest fads.
The Need for Talent Management Seems Real
But, at the recent Taleo World 2008 conference, I was able to witness first-hand that the talent management is a vibrant enterprise software market, and a battleground for both software providers and user companies (employers). In fact, the extraordinary (maverick) companies do not look for ordinary mortals but rather for a talent that is hard to find.
According to sources like The Gallup Management Journal, the United States (US) Bureau of Labor Statistics (BLS), the United Kingdom (UK) Chartered Institute of Personnel and Development (CIPD), Hewitt Associates, and Taleo, there are many challenging workforce issues confront HR departments, including:
Part 2 of this blog post will continue with the challenge of dealing with the so-called Generation Y’s talent, and will then try to define the scopes of talent management and HCM, while Part 3 will explain my buying into these concepts via some major league sport teams’ examples.
In the meantime, please feel free send me your comments, opinions, etc. I would certainly be interested in your personal work experiences as an employee or employers, as well as with leveraging these emerging software categories per se.
A view is that one of the major reasons for high employee turnover is the managerial pressure to deliver, and with that pressure is the manager’s forgetfullness to say “Thank you for a job well done.” The employee does not feel appreciated, and even though there may be salary increases, that missing “pat on the back” that missing “thank you” is what has caused employees to be disinterested cogs in the wheel and to switch jobs.
I do have a second thought too, and that is remuneration of CXXs (CEO, CFO, etc). Twenty years ago, the average CXX salary was 60 times the average employee salary. A recent review shows that the amount has climbed to 600 times the average salary. There is that large increase that employees hear about what it says is “Benefits for hard work do not trickle down, so why work hard”.
[…] Part 1 of this blog post introduced some mixed feelings and doubts that we might still have about the noble concepts of talent management and human capital management (HCM). This skepticism lingers in spite of the? many indicators of the usefulness of these concepts in mitigating some imminent global workforce challenges, which were outlined in Part 1. […]
[…] Part 1 of this blog? series introduced and analyzed some mixed feelings and doubts that we might still have about the noble concepts of talent management and human capital management (HCM), while Part 2 provided some definitions of these two software categories’ respective scopes. […]
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