War for talent – time to move from high potentials to all employees

Seventeen years ago the term “The war for talent” was coined in a Harvard Business Review article1 and changed how companies manage their top performers worldwide.

Since then, HR approaches have focused on those often referred to as “high potentials”. However, things have changed and companies need take a fresh look at their tactics to gain more competitive ground, says Robert Bolton, partner and co-leader of KPMG’s Global HR Centre of Excellence.

As economic recovery continues, organisations are competing for talent on an unprecedented scale. KPMG’s recent survey of HR professionals revealed that more than 80% of respondents say that addressing skills shortages is a higher priority now than it was two years ago – and will become critical in the next two years. Skills shortages are set to increase as globalisation and competitive pressures take hold across all sectors and industries and improving economic conditions spur employees to seek new jobs. The majority agreed that there is a new war for talent, and this war is different than in the past.

The survey found that the most-often named root cause of talent and skills shortages is generational. But despite the increasing concern for talent issues, many organisations continue to take a narrow approach to talent management – one that may actually be weakening their organisation’s competitiveness.

Talent managers who are overly focused on securing and retaining high-performing individuals can lose sight of the benefits of a more holistic talent-management system, one that addresses wider concerns such as escalating costs, diversity, truly effective performance management and connecting employees to the enterprise.

Respondents agree that it is time to turn to new, more relevant and holistic strategies for managing talent. Two-thirds of survey respondents say it is most important to address the talent needs of all employees – in the context of the business and its strategy. Just over half agree or strongly agree that pursuing high potential talent at the broader team’s expense puts the business at risk through lowered morale and reduced employee engagement.

Harnessing analytics to guide thinking and gauge success

“War on talent” thinking has prevailed for so long, but there has been a lack of any evidence to show whether or not it actually works. Non-financial benefits of the sort offered by effective HR functions are difficult to quantify. But new technologies are enabling robust data and analytic capabilities, allowing HR functions to evaluate and make evidence-based decisions that positively impact the business.

A good example of this is when a leading UK retail bank wanted to make better-informed decisions about its recruitment, training and workforce. It was looking to improve branch performance and better position itself as a market leader in banking. By analysing the practice of people management, the data showed that, for the first time, highest performing and better-engaged branches had a more flexible workforce (it had a higher proportion of part-time workers). The study also showed that the highest-performing branches had retained their most experienced employees, and showed a higher average age and tenure of staff. As expected, the best performing branches also showed lower absenteeism and higher employee satisfaction.

To help enable an effective talent management strategy, companies need to have a global view of their talent and take a more finely tuned and comprehensively planned approach that measures the impact of their effort. Rather than following industry trends and adopting off-the-shelf solutions, companies should develop distinct talent strategies tailored to their products, markets and business goals. Then they can put powerful new data and analytic capabilities to work to gauge their success and fine-tune their people practices.

Opportunity awaits those who are willing

A genuine opportunity exists to create a differentiated and fresh approach for the HR function, one that is a demonstrable value driver for business, but it will require significant effort. Changing ways of working, the power of evidence-based people management and the increasing accessibility of technology means that the status quo for HR is increasingly unsustainable. Organisations that are ahead of the curve and who take this more holistic view stand to benefit, while those who take a narrow approach with pre-conceived notions risk losing far more than simply the war for talent.

References

1. Ed Michaels, Helen Handfield-Jones and Beth Axelrod (1997). “The war for talent”. Harvard Business School Press.

Robert Bolton

About Robert Bolton

Robert Bolton is partner and co-leader of KPMG’s Global HR Centre of Excellence.

2 Responses to War for talent – time to move from high potentials to all employees

  1. dickt 9 Jul 2014 at 4:08 pm #

    “When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
    This article confuses two issues. Real hi-pos will receive particular attention and extraordinary resources from the Company. That will not change. All CEOs want the very best to be brought through the corporation and tested, challenged and given real chances to show their worth, and many will fail along the way. Those resources are too expensive to dedicate to every employee. The idea of “development for everyone” is right, but let’s not kid ourselves that the same level of resources will be applied to all employees.

    The article then goes on to describe a retail bank figuring out what people practices help branches to generate more profit. I would argue that is a different thing entirely. I would further argue that it is extremely likely that the local manager’s skill set, motivation and behaviours, and the climate that s/he creates has much more impact on branch profit than the few people practices the article describes.

    • PHintermann 27 Jul 2014 at 7:00 pm #

      Not sure whether it’s Mr. Bolton who confuses two issues, dickt. I happily agree that companies should and will have an interest in spotting and developing highly talented employees and will (have to) continue investing in development and retention of high potentials.
      Having stated that, I do not understand from Mr. Bolten’s text, that he were to suggest one should quite doing so altogether. Rather, he argues that whilst (the surveyed) HR professionals notice a trend in skills shortage, they (and/or their companies) keep on taking a narrow approach focussing on the high potentials, only. He then goes on to provide evidence for his point, that it turns out high performing branche offices differ from those performing less by factors such as: retaining (most) experienced employees; (resulting in both) a higher average age and tenure of staff; lower absenteeism and higher employee satisfaction.
      Considering, the likely influence of a branch manager, it seems evident that this factor to be included, leaving me to speculate whether their influence is less significant than one would commonly assume.
      I am curious, though, to learn more about the methodology employed. Iit seems that data were gathered and compared cross-sectionally, making it difficult to establish cause-and-effect relationships