"The War for Talent," a management buzzword first circulated in the late '80s, is an unhelpful myth in the modern marketplace. The real struggle for small and mid-size companies is growing and sustaining great leaders.
Companies that have recognized the obsolescence of the "War for Talent" concept are focusing primarily on developing great leaders from their internal team, and worrying less about reward programs and recruiting. HR professionals who still consider themselves embroiled in the talent war continue to waste time with an array of traditional and relatively unproductive HR pastimes, such as redesigning employee perk programs and setting up free lunches and parking spaces for the Employee of the Month. These individuals are busy repeating the mistakes of the last decade. But company executives who focus on identifying and developing their internal leaders are positioning their companies to survive and thrive.
The War Myth
It's a hard truth, and it bears repeating. "The War for Talent"—the catalyst for a number of expensive, unproductive and occasionally bizarre HR practices—doesn't exist, at least not in the way traditional HR practitioners like to envision it. In the late '80s, McKinsey & Co. said talent would become increasingly scarce. This talent (smart, sophisticated businesspeople who are technologically literate, globally astute, and operationally agile) would become the competitive differentiator of the future.
Suddenly, HR was "hot" and important to the company's success. This created a hiring and perk-design frenzy among HR professionals that has not yet abated. When looking at the marketplace, however, the predicted dearth of talented professionals seems hard to find.
The Talent Reality
The real employment market of 2006 has proven more adaptive. Three signs of the "War for Talent"—wage growth, job growth, and engineer shortages—never came to pass. Wage growth in most industries remains flat. The overall U.S. employment market also remains flat, with private sector growth of only 2.02 million between 2001 and 2005. Job growth was far higher in the '60s, '70s, and '80s, long before anyone was talking about a "War for Talent." In addition, the U.S. continues to produce the world's most valuable engineers in larger numbers than other countries. The rising number of foreign engineering graduates (especially in China and India) means a lot of basic engineering work is being shifted to these growing labor pools. The plain fact is, the world is full of talented people looking for great work, and hoping for leadership they can trust and believe in.
The Talent Crisis
The true talent shortage is great leaders.
Leadership talent, the kind that provides a competitive advantage for a company, cannot be gathered; it must be cultivated. Perhaps because of the outward, hiring-oriented bias created by the "War for Talent," HR executives aren't spending nearly enough time and energy working on basic issues surrounding retention and motivation. Instead, they remain focused on recruitment. According to the recent Spherion Emerging Workforce Study, only 34 percent of HR managers mention retention/turnover as a key HR concern, but nearly 40 percent of employees intend to find a new job in the next year.
The solution to the leadership shortage isn't a traditional "HR" solution. Real talent is available to almost every company, but talented people won't come (and they won't stay) unless they are compensated competitively, fulfilled, and happy with their work. The real solution to finding and keeping great employees is a culture of effective leadership, with teams of leaders trained and empowered to grow the business and motivate employees.
This is a task for executive leadership, and it requires relentless focus on developing the mid-level and senior leaders. Helping the mid-level leaders build a company's culture is a direct and highly effective way of building a talent-rich environment with a seasoned, experienced management pool. As a corollary, it also prevents the need for constant and obsessive recruiting and "perk-building" efforts.
Of course, this process takes time and hard work. Mid-level leaders often need training in what it takes to be successful in their roles. Too often, we see strong technical, financial, or administrative specialists who performed well as junior employees, but fail when they are promoted because they have not been given the skills and structure needed to lead successfully. The damage that can be done by an untrained or ineffective leader can cripple a project, or a business. On the other hand, if leaders are equipped with the right skills and, in turn, create an environment where other people can be successful, the result is a company that holds on to top talent and creates an employment brand that draws in other talented people.
Creating a culture where leaders and followers have an effective relationship can affect a company's workforce far more than getting caught up in employee perks and recruiting minutiae. And this process isn't solely the province of large companies with a full complement of HR professionals. In a small company, all it takes to boost retention and productivity is the right training and mentoring for the key leaders. Those are the people who will establish the direction and speed of the organization.
Sadly, many companies continue to focus on finding the right people and less on developing the emerging leaders they already have. The right focus is on creating and empowering the leaders already within the organization to achieve critical company goals. When this happens, employees will be running to get to work in the morning, and stay with a company long enough to grow beyond their boundaries. And when that happens, the so-called "Talent War" will become about as relevant to your company as a war movie on late-night television.
Jack Midgley is vice president of human capital consulting services for TriNet,a San Francisco-Bay Area, based company providing HR outsourcing services to small and medium-sized companies throughout the United States and Canada.