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Five Factors For Managing In An Uncertain World: PART IV – Talent

January 9, 2008

It seems that everyone is writing about talent management. Surveys from consultants and academia regulary highlight the dramatic shortages, the threat to business operations, the impacts on innovation. For example, a recent report by McKinsey showed that executives see the battle for talent as the #1 trend in the global economy.

Perhaps they are right. Certainly, I do like the work that McKinsey has done on ‘tacit knowledge’,  in which they distinguish those who contribute to ‘efficiency’ (and can largely be automated or outsourced) and those who contribute to ‘effectiveness’ (knowledge workers and integrators who bring added value). This analysis says that tacit workers are growing in volume – and it is the shortage of people with these advanced analytical, communication and coordination skills that lies at the heart of the talent crunch.

These broad, cross-industry findings are reflected in the results of IACCM’s surveys of the commitment management community (contracts, procurement and legal staff). Managers and senior professionals bemoan the shortage of new recruits and the inability to plan for the future.

I agree that there is a talent issue – but I do not think it is a shortage of talented people, I think it is a failure in their deployment.

I observe more and more people wasting more and more time on low-value and highly repetitive activities. Decision making is in tatters. People are running ever faster and often going nowhere. And this issue goes right to the heart of this series of articles. It is symbolic of so many revolutions.  Old systems and methods are breaking down. They have not been replaced by any coherent alternative. Some elements of the new world are present, but they are running amok, with no real control (e.g. e-mail, networking, global supply chains etc.). Management is out there following every new approach, yet because it is new, no one really knows what they are doing. Chaos is the result – and it doesn’t really matter how much talent you have, it cannot flourish in such an environment. Indeed, having too much talent in a chaotic environment is probably a bad thing; at least untalented people just sit there and wait; those with talent try to fix things.

There are many examples I can cite to support my conclusions. For example:

  • lengthening lead times to get deals negotiated and closed, due to increased reviews and approvals and fear of making commitments. 
  • inability to compile effective requirements or to define desired outcomes.
  • reluctance to automate or outsource traditional work, because of uncertainty over its replacement.
  • growing organizational conflict over roles and responsibilities.
  • reluctance by professionals to share information and knowledge, to enable the performance of others.

I had a typical conversation on this today, with a very senior manager from one of the major outsourcing providers. He was the latest in a long line who complain that deals frequently fail to meet expectations because those expectations are so unclear. He highlighted how most customers seem unable to define requirements and revert instead to imposing onerous contract terms, as if penalties somehow substitute for meaningful defintions of performance. I pointed out to him that this is not likely to be because customers are in some way holding out on him; it is because they don’t actually know what they want. They can’t reach agreement because the systems and procedures are not there to involve the right people; they are restructuring the enterprise with no plan; and they have no real sense of the characteristics needed for future competitiveness in a global economy.

And that is typical in a revolutionary environment, where uncertainty is the main reality.

But maybe it’s true that the people left in the corporate world aren’t very smart. Perhaps everyone with talent has become an entreprenuer, or retired, or moved to India. Well, we see no evidence of that. In fact, I have been amazed by the commitment shown by IACCM members to raise their knowledge and gain further qualifications. Five years ago, less than 17% of our members had an MBA. Today, that proportion is approaching 40%. Clearly, people in the developed economies are personally commited to raising skills and knowledge – but many feel their organization has no appreciation of this. They seem to be doing it as a defensive measure to remain employable, rather than because their company then makes real use of their enhanced capabilities.

So that leaves many talented employees extremely disillusioned and yes, many do think about moving into less stressful or more persoanlly rewarding roles, perhaps self-employed or in a different business sector.

In the end, there is little question that businesses are operating inefficiently and it must be very frustrating to be a top executive right now. That same McKinsey survey mentioned in the opening paragraph revealed that, while CEOs know that change is needed, well over 50% have no idea who in their organization is responsible for making changes happen! And 72% feel that they must hire from outside to get the right people as their key management team.

None of this is a strong indicator of a talent crisis. But it is a very powerful illustration of a world that is changing so fast that we have the wrong people in the wrong places, we have procedures and policies that inhibit change, we have a control culture in the West (reinforced by an unimaginative regulatory environment) that constrains the very change on which our future prosperity depends. And there are certainly education shortfalls in the developing world that means a potential shortage of talented people with know-how (and therefore a potential crisis for the labor arbitrage model of outsourcing).

So although I have entitled this article ‘Talent’, what I really think we face as a challenge is an issue of leadership – people who will step forward, establish credibility and accept accountability for taking their organizations through these turbulent market conditions. And those leaders will of course establish for themselves and their teams a high-profile, strategic position in their organization. Those leaders will be the ones who make sense of today’s technologies (the source or our revolution) and really understand how to deploy networked capabilities that enahnce both efficiency and effectiveness. Our crisis is one of productivity more than availability of good people.

One final piece of evidence to back up this assertion. When IACCM undertakes benchmarks and talent surveys, we see consistent feedback that individual professionals have a good sense of what they need to do to enhance their skills. We see graduates emerging with talents far beyond those of previous years. And we see a distinct lack of confidence in functional heads; their people simply do not believe that their top management has the vision necessary to navigate them through these fast-changing times. Management does not – in general – understand technology and therefore it tries to do new things in old ways. And that simply does not work.

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