Human capital, not financial capital, is today’s scarcest resource. We can measure human capital productivity in terms of time, or the hours employees put into their jobs; talent, or the skills, capabilities, and ingenuity employees bring to their work; and energy, or the level of engagement, passion, and focus they apply to their work. By examining these factors in combination—Time + Talent + Energy and the interactions between them—we can gauge how effectively human capital translates into productivity and economic value.
In 2015, we set out with the help of the Economist Intelligence Unit to measure how effectively companies make use of their human capital. The best companies—the top quartile in our sample—got a 29 percent boost in productivity from their talent. Interestingly, they didn’t have significantly more difference-making talent than the rest, rating approximately 16 percent of their talent as top-tier as opposed to 14 percent in the bottom three quartiles. The biggest driver here was how effectively a company deployed and teamed its top talent to take on business-critical roles and mission-critical enterprise-level initiatives. Well-teamed talent led by an inspirational leader who knows how to get the best collective effort from his or her team is a productivity force multiplier.
If you have invested heavily to recruit potential difference-makers into your company, you will naturally want to build processes that accelerate their development. This entails revisiting many of your HR practices and procedures—training, job assignments, compensation, and so on—with that goal in mind. Full details are beyond our scope here, but by way of illustration, we’ll highlight one of these topics, talent rotation, as an example of how practices can and should change to accelerate development of difference-making talent and to engage and inspire a Millennial-heavy, modern workforce.
Accelerating talent development through smarter rotations. Nearly every large company tries to manage assignments and rotations as part of its career development process. But rotation can be tough to get right. For example, the conventional assignment is usually no more than two years in length, and results may take longer than that to materialize. So individuals can be unfairly penalized or rewarded for results that stem largely from their predecessor’s actions. This not only makes performance assessment challenging, it also has deleterious effects on an individual’s professional development. He or she doesn’t get the benefit of feedback to see what works, what doesn’t, and what corrective action might be necessary to return the company to the right course. We asked executives in our survey how often they thought their companies got talent rotations right. These managers believed they got the assignment duration appropriate just a little over 50 percent of the time.
In our experience, the optimal assignment length runs closer to three years than two years.
But rather than set a fixed period, you may want to tell people that they have a multi-year mission with well-defined milestones and measurable accomplishments. The job description can explicitly describe this multi-year objective, one of which must always be to identify a pool of successors. In ordinary circumstances, employees placed in business-critical roles under these conditions shouldn’t be considered for new assignments until they have successfully completed their multi-year missions.
LinkedIn has an innovative approach to job assignments and rotation. The company—acquired by Microsoft in June 2016 for $26 billion—is a fast-growing organization with big talent requirements that just happens to be in the business of talent. LinkedIn’s concept of a mutually beneficially employment agreement based on a “tour of duty” is one of the most powerful tools we have seen for talent development, retention, and engagement. Here’s how Hoffman and his coauthors define the concept in their book, “The Alliance”:
“When Reid first founded LinkedIn, for example, he offered an explicit deal to talented employees. If they signed up for a tour of duty of between two to four years and made an important contribution to some part of the business, Reid and the company would help advance their careers, preferably in the form of another tour of duty at LinkedIn. This approach worked: The company got an engaged employee who worked to achieve tangible results for LinkedIn and who could be an advocate and resource for the company if he chose to leave after one or more tours of duty.
The employee transformed his career by enhancing his portfolio of skills and experiences. By recasting careers at your company as a series of successive tours of duty, you can better attract and retain entrepreneurial employees. When recruiting top talent, offering a clear tour of duty with specific benefits and success outcomes beats vague promises such as ‘you’ll get valuable experience.’ Defining an attractive tour of duty lets you point to concrete ways that it will enhance the employee’s personal brand—while he’s at the company and if and when he works elsewhere—by integrating a specific mission, picking up real skills, building new relationships, and so on.”
Chances are your most talented employees already spend considerable time thinking about next steps to pursue their passions and develop their careers. Creating time-bounded missions focused on a defined set of outcomes is a powerful way not only to align interests but also to create a natural structure for re-recruiting talented people for their next mission—as opposed to simply reacting when another opportunity drops in their lap.
While LinkedIn aspires to retain top talent and engage these individuals in transformational missions, the company’s leaders realize that lifetime employment is no longer a realistic ambition. In this sense, the organization follows the same advice it gives to corporate clients, treating its alumni network as a key asset. That reinforces LinkedIn’s business model, employee value proposition, purpose, and culture. What’s more, it all seems to work. A study of talent flows in the tech industry by recruitment Website Top Prospect found that LinkedIn is able to hire 7.5 people for every employee it loses to competitors—a number that compares favorably with Google (1.2) and is in the same ballpark as talent magnet Facebook (8.1).
Excerpt adapted from “TIME | TALENT | ENERGY: Overcome Organizational Drag and Unleash Your Team’s Productive Power” by Michael Mankins and Eric Garton (Harvard Business Review Press; March 7, 2017).
Michael Mankins is a partner in Bain & Company’s San Francisco office and the former head of the firm’s Organization practice in the Americas. He is the author of two books and numerous articles in the Harvard Business Review and other leading publications.
Eric Garton, a partner in Bain & Company’s Chicago office, has written and spoken widely on organizational issues. He leads the firm’s Global Organization practice and is a senior member of its Consumer Products and Industrial Goods & Services practices.
