Monthly Archives: May 2012

War for Talent? Why can’t we spot it?


In 1997 McKinsey published the report ‘War For Talent’. This paper suggested that businesses across the western world were suffering a shortage of talent/leadership across varying levels and this was potentially hampering growth and development.  The focus of this so called ‘war’ has shifted to Asia, because of western multinationals’ focus on this part of the world for growth. As the west faces the biggest economic downturn in generations, the stakes are seemingly higher. Have we really learnt anything from the original ‘war’? Indeed was there really a war going on? Are we better equipped to deal with challenges in demographic shifts and a culturally diverse region?

The original report has spawned an industry of self styled talent management consultants who claimed to have the magic bullet. The question has to asked; are really any closer to solving the problem? Have lessons been really learnt or did we just make the wrong assumptions all those years ago? Current research by the CEB  has suggested that the biggest challenge for western multinationals in APAC is the ability to find and/or grow suitable leaders. It seems HR cannot perform one of the key tasks it is asked to deliver. How do we attract, develop and retain suitable talent that will deliver results for the business and build a sustainable business platform?

The original McKinsey report was very light on defining what talent is. This has led to a misinterpretation of the central argument and has meant that companies have been caught up in a zero sum game of ‘Who Pays Wins’. This is no more obvious than in the Investment Banking Sector during the mid 2000s. This approach did not lead to a sustainable, long-term future for many organisations. In fact, it might be argued that this led to their downfall. And now this seems to be the prevailing narrative about the APAC Region. Speak to any executive (especially western) and the belief is the only way to solve the talent issue is to pay more because ‘this is the culture’. Perhaps this argument is a little myopic because this does not take into consideration the diversity of the region. The drivers and social forces in Japan,China, Singapore and Australia are multifarious. It is lazy to paint Asia as one homogenous region, but convenient for western executives.

In fact, the research (CEB – 2011 Drivers of Engagement) and some of our own Employee Engagement surveys point to a very different reality: many of the driving forces behind in engagement in the region do not differ greatly from the Europe andNorth America. In the CEB report the biggest driver of retention for employees across the APAC region lies in their ability to understand and see a clear career path and understand what they need to do to progress. This is at odds with a prevailing and very narrow view that the highest bidder wins. Imagine the paths of 2 graduates, 1 in London and 1 in Shanghai embarking on their new careers. In 2013 both have equivalent educations, live in capitalistic societies that drive self-improvement and achievement. The desire for social status is common. Arguably they have more in common than divides them in terms of the need to be inspired, engaged and motivated by the company they are working for. If both are middle class, basic needs have been met and we are assuming a sophisticated, intelligent individuals who have the ability to make complex choices. Are we really suggesting our graduate in China is more likely to move for an extra £1 per hour because that is his culture? This is patronizing and wrong headed.

This then leads to the central question about talent and whether we are ever have been in a war for talent or just don’t know what we are looking for. If McKinsey were ‘light’ on the definition of talent and companies were guilty of not thinking about what this really meant. During this time, in the west, our economies and companies grew at a substantial rate. Arguably, and this is where the leadership question is most relevant, not sustainably and at quite a high cost that we are paying for now. It seems that western business models have not learnt from mistakes of the past.

Any theories about improvement suggest that before we try to solve a problem we must first define it. The conclusions we are making in Asia are the same that we made in the west. Perhaps it is worth remembering that it was Japanese businesses who were the creators of Continuous Improvement Theories and this is maybe where we might look to understand and frame the problem more thoroughly, only then can we develop sustainable solutions to the problem.

If we can define the need at an early stage then perhaps some of our talent problems might not be as acute. Research suggests that 3 out of 4 hires in UK companies are in some way flawed – therefore are we wasting talent? Eg we recruit the wrong people for the wrong job because our methodologies do not take into account potential for the new role, instead we focus on what someone has done in the past.  This has immense costs both to the business and personal cost to the individuals recruited. We do have the tools to help us define potential so what is holding back organisations from using them? If we spend time defining what our business needs in terms of talent and leadership and then measuring how to spot and attract, we might have the cutting edge. This is true regardless of geography and presents an exciting opportunity for the future for a number of reasons outlined below. 

We know that if we are able to measure traits, behaviours, and  characterstics to a standard rather than a comparator, we are able to make better and quicker decisions (assuming we have defined what we want) and in turn this leads to more diverse outcomes regardless of where we are in the world. This turns the idea of ‘war for talent’ on its head because it is difficult to believe that with Indian and Chinese Universities producing more graduates than the west has ever known that we lack talent globally. Might it be better to ask what do we want talent to do? And are we really looking at the right attributes?

The mindset of current HR and business leaders holding us back from seizing an opportunity to make the best use of the talent available. We haven’t worked out a way to harness it. It seems puzzling that when Universities across Asia are producing more high quality graduates than the developed world has ever known, that the corporate world cannot harness this pool of skill, knowledge and potential. Psychologists have the tools to measure potential, attitude and emotional intelligence yet we still rely on on outdated methods of selecting that talent.

If we can really define and articulate what we are looking for, attract and measure the potential of these individuals, any business embracing this will truly have a competitive edge. This will help to reframe the question about the war for talent and perhaps learn to harness the talent that is already available. The question is whether the current generation of leaders is afraid that by walking this path, we will find that the new generation in APAC and maybe Europe will look, sound and act very differently to the generation that has gone before?

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