Industry Insights
The escalating competition for gifted managers aka the War for Talent is no longer a fad or an excuse for executive self-indulgence. Today, it's the essence of competitive advantage. IIC Partners Board Member Paul Dinte looks at the issue and proposes a strategic response.
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The largest and most lasting damage caused by the Enron debacle is happening right now, says Paul Dinte, a director of IIC Partners, Executive Search Worldwide.
Enron's failure wiped out billions of dollars of investor equity in 2000, destroyed both itself and the venerable Arthur Andersen consulting company and most importantly heralded the end of the First War for Talent. Enron was the foremost exponent of the ''War for Talent'' (as first promoted by McKinsey & Co.) and the company's stunning collapse signalled, in many minds, the concomitant bankruptcy of the talent-war philosophy.
The simultaneous bursting of the dot-com bubble gave further credence to doubters of the talent war. In countless media reports the ''war'' was declared over, or a ''myth'' in the first place.
''The Second War for Talent the struggle for corporate survival is under way right now and we need to use what we learned in the first war to fight smarter the second time around,'' Dinte says. ''The war isn't over, it's only beginning and the McKinsey people got it right when they said there is no final victory. It's an ongoing struggle and anyone who imagines all that ended in 2000 is very likely seriously behind.''
This time the war is not a matter of executive narcissism and self-indulgence, as in the Enron case. This time it's being driven by the common demographics of the leading OECD countries.
The Second World War ended nearly 62 years ago and the first ranks of the ensuing massive boomer generation are now entering retirement. Senior positions, typically staffed by senior people, are being hit hardest and the executive suites of America and Europe are expected to turn over half their incumbents in the next five years.
The trailing cohorts of workers - generations X and Y - are far smaller than the boomer generation, thanks mainly to the commercialization of the birth control pill in 1960. As a result, several tens of millions of existing and newly-created positions are expected to run vacant in the decade ahead as economies in the US and Europe grow, while populations decline. Many of those will be executive talent positions made all the more difficult to fill because of the 1990s War on Middle Management (better known as downsizing), which further thinned the ranks of potential executive replacements. And this impact was exacerbated by the 1990's value shift that saw corporations actively discourage company loyalty as part of the downsizing effort.
''The message from most companies was, 'There's no such thing as a corporate family, so you'd better have your resume updated and your bags packed because we might not need you tomorrow,' '' Dinte recalls. (One Time magazine cover famously declared ''The End of the Job.'')
A decade later, the abrupt course reversal has given the world economy whiplash. Propelled by the emergence of a huge new middle class out of the educated proletariats of India and China, the global economy is demanding workers at all levels. In the industrialized nations of Europe and North America, the demographic sea change is just beginning and already companies are struggling to find the people they need. The number crunchers say in the years ahead the US economy could run tens of millions of workers short and a similar situation is likely for Europe.
''The first priority in the war for talent is to define what you mean by 'talent,' '' says Dinte, who is the founder and CEO of the executive search firm Dinte Resources, in Washington, D.C. ''We tell our clients that talent is not a commodity. It's a serious strategic mistake to talk about talent as the sum total of all the workers you need to run your company. We urge clients to fill rank-and-file positions with the best people available at the moment and move on. But avoid wasting time, money and productivity by leaving positions open any longer than truly necessary.
''Talent is rare and valuable,'' Dinte says. ''Save the talent search for the few positions with the power to shape the company, the leadership team and their direct reports and invest in finding the best possible people for those positions.
''Use a search firm, because the really good people are hard to find, harder to attract and tend not to take seriously offers that come from the company HR department. That kind of approach just isn't at their level.
''When we talk about talent, though, we also caution our clients to avoid a star system, like the one at Enron. Enron grabbed what they called talent, from all the best schools and by the dozens, paid those people lavishly and gave them free rein to do whatever interested them. Whole business units were created without executive authorization. Whatever that is, it isn't teamwork and it's completely outside the Oxford definition of a corporation ('forming one body of many individuals').
''The job of an executive search firm should be to find the person with the skills and experience you need, who has the personality, motivation and ethics to fit well into your leadership team and corporate culture.''
At the same time, Dinte says, there should be some very selective hiring of a few talented graduates or other junior people who have real potential to play big roles in the future. ''There's something fundamentally wrong with a company that doesn't grow a significant portion of its own talent just as there's something wrong with a company that can't reach outside for new blood when it's needed.
"Clearly, though, a big part of winning the war for talent is the defensive struggle to keep the people you have, especially the good ones," he says. "The repudiation of loyalty that companies preached during the 1990s is not helping and many are finding they need to retrace their steps on this front."
Some corporations are actively developing "recruitment brands” that are, or should be, logical outgrowths of corporate branding, focusing on those areas of reputation that are of most interest to prospective employees.
"Reputation means subtly different things to different groups," Dinte says. "Research shows that new grads will want to know about issues of work/life balance, corporate social responsibility and environmental performance. These will also be important to the best of the senior people, but they may place equal emphasis on areas of traditional operational and financial performance.
"Both groups are looking for opportunity to make an impact — and to be rewarded accordingly — so a large bureaucratic corporation may be at a disadvantage to some start-ups in the talent attraction/retention game. What some large companies are doing to be more competitive in this regard — and spur innovation at the same time — is creating smaller business units with special mandates and esprit de corps, rather like the famous Lockheed Martin Skunk Works.
"And, at all levels of hiring and retention, a reputation for good leadership is essential. Everyone wants to work for a good boss. But this is just a small subset of the strategy that says the best way to attract good people is to become known for hiring the best. Google took a creative approach to this concept by posting complex math problems on billboards. But the search for talent should never be allowed to degenerate into an IQ contest, as it did at Enron. IQ correlates rather poorly with long-term job performance and IQ measures don’t include any teamwork factor."
Dinte says IIC Partners colleagues in the UK are reporting that many companies there are placing new emphasis (funds) on training, as a way of both attracting and retaining the best people.
For the best people in the second tier, executive mentoring is another attraction and retention strategy. “The statement is true that, ‘It’s harder to quit if you’re having lunch every quarter with your mentor,’ ” Dinte observes.
"It’s cheaper to retain good people than to replace them," Dinte says. “But when you need new senior talent, those people are going to be increasingly hard to find in the decade ahead. In this environment, competitive advantage goes to those who can search farthest and fastest and who can consistently attract and retain the best people. Building a strategic relationship with an accomplished executive search firm should be the first step."
Paul Dinte is the founder of Washington, D.C-based Dinte Resources Inc. and a director of IIC Paterns, Executive Search Worldwide. IIC Partners is the eighth largest global search organization by revenues, with more than 50 offices in 38 countries. |
