Sunday, January 21, 2007

Making a market in talent


A 21st-century company should put as much effort into developing its talented employees as it puts into recruiting them.

Savvy companies understand the competitive value of talented people and spend considerable time identifying and recruiting high-caliber individuals wherever they can be found. The trouble is that too many companies pay too little attention to allocating their internal talent resources effectively. Few companies use talented people in a competitively advantageous way—by their visibility and mobility and creating work experiences that help them feed and develop their expertise. Many a frustrated manager has searched in vain for the , knowing that he or she works somewhere in the company. And many have had the experience of getting stuck in a dead-end corner of a company, never finding the right experiences and challenges to grow, and, finally, bailing out.

In a modern, networked, and , intangible assets (such as skills, reputations, and relationships) generate the highest value. Effective resource allocation means unleashing the value of talent by mobilizing talented people for the best opportunities—including, in particular, opportunities to become even more developed by finding work that creates distinctive new skills and knowledge.

As global markets become more dynamic and competitive, companies will need to deploy talent even more flexibly across broader swaths of the organization. Since management must develop and execute value-creating initiatives so quickly, talent is becoming more critical to corporate performance, specific needs for talent are more unpredictable, and companies must develop talent more rapidly than ever.

Research demonstrates that companies with enlightened talent-management policies have higher returns on sales, investments, assets, and equity. But most large companies aren't set up to allocate talent easily across the traditional organizational silos that stand as their most prominent structural feature. By offering and transacting job rotations and arranging development opportunities for talented workers, managers may foster talent management within particular corporate silos. But this approach fails when, as now happens more and more often, a company seeks to achieve talent synergies across the breadth of its operations.
Fortunately, some of the largest and most talent-driven companies are beginning to shatter the old orthodoxies. By developing internal talent market-places, these companies are giving managers the best opportunity to mobilize the talent they need for success while giving the most talented people better opportunities to utilize and develop that talent. Like knowledge markets, talent markets become strong by leveraging individual self-interest to drive enterprise-wide collaboration rather than by relying on top-down mandates to rotate jobs. The goal isn't simply to clear the market but to help a company get its work done more effectively and to increase the value and allegiance of talented workers by expanding their company-specific knowledge. Many of these companies also find that allocating talent effectively can make an enormous difference to important outcomes, such as .

Self-directed, talented people benefit considerably from such a market: the more talented they are, the greater the demand for their services and the better their opportunities will be.

Highly talented people are less likely to be blocked by less talented bosses taking credit for their work. Better opportunities also ensure that job experiences challenge these employees, who in the process develop more quickly. Broadening their exposure to the organization also helps them to develop a more extensive network of contacts to share reputations and information. Such self-directed and talented people are the very ones an enterprise is most at risk of losing, since they are the most likely to be actively testing external talent markets to find more attractive opportunities.

At the same time, senior people who are pursuing important opportunities will have a to draw upon, with a more diverse range of skills to tap. People who acquire reputations for developing talent will have a greater likelihood of attracting more and better job applicants, while "people eaters" will have trouble.

But the real beneficiary is the company, which wins by getting far better matches between its job opportunities and its most talented people and by gaining far greater transparency into shortages and excess supplies of talent.

Of course, talent marketplaces also present challenges. In companies with well-established organizational silos, the cultural changes will be enormous. Here, a talent marketplace may be only part of an effort to integrate more broadly. Some companies may need separate marketplaces for different skill sets (for instance, one for project managers and one for industrial engineers). Other companies, particularly those that already view talent as corporate rather than business unit property, will find the transition to talent marketplaces much more natural for all. Making sure that the right infrastructure of brokers, standardized performance reviews, and protocols exists is no small task. But for the right companies, the benefits can easily outweigh the costs.

Given an opportunity to develop and hone skills, top talent will be more likely to stay in the company. Talented people who have a broad base of experience specific to it can grow into its future leaders.

A talent marketplace can't be built easily on the foundations of traditional, siloed organizational structures. But for large, growing, and complex companies that know talented individuals may be their most powerful competitive asset, talent markets represent the .

**Ref:Lowell L. Bryan, Claudia I. Joyce, and Leigh M. Weiss; Mckinsey Quarterly,
2006 Number 2. Lowell Bryan is a director and Claudia Joyce is a principal in McKinsey's New York office, and Leigh Weiss is a consultant in the Washington, DC, office.

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