The Battle for Talent

The positive thinker sees the invisible, feels the intangible, and achieves the impossible - Anonymous

Market forces have put traditional sources of competitive advantage based upon a superior offering under pressure. There is often global competition, customers are willing the settle for something that meets minimum requirements, and innovative products can be imitated more quickly. Therefore past experience is not as reliable a basis upon which to form assumptions that will guide future actions. This makes it imperative for business executives to stay close to customers and be prepared to quickly adjust.

One the other hand, there are aspects of the customer interaction that include the communication of the value proposition, sales support, follow-up service and customization of offerings that have often not been fully exploited and have enormous potential for significant competitive differentiation.

But tapping into this rich vein requires a shift of focus from tangible assets to the intangible: skills, knowledge, information and problem resolution. That shift therefore will place added import on the ability to effectively manage those intangibles.  In fact, research has shown that business leaders consider finding talented people likely to be the single most important managerial preoccupation over the next several years.

Nearly half of those surveyed expect the intensifying competition for talent -- and the increasingly global nature of that competition --  to have major effect on their companies. No other global trend was considered nearly as significant. [1]

Expensive efforts to address this problem have failed. But the growing challenges including the importance of the knowledge worker mean that organizations must take management of intangible assets more seriously. Knowledge workers are the fastest growing talent pool in most organizations, and have their own demands and peculiarities. One of the key reasons they are so valuable is that they create more profit than other employees do -- up to three times more. The top 20 percent or so of managers - raise productivity, profit, and sales revenue much more than the average.

A higher performer in sales generates 67% more revenue than the average. [2]

However, the fact that performance of companies within the same industry varies significantly suggests that some struggle to extract value from this type of resource.

The threats leaders face however don't come solely from outside; shortcomings of the traditional management approach create obstacles on the path to maximizing the potential of talent and other intangibles:

  • Traditional outcome measures cannot adequately capture and manage intangible value -- and therefore knowledge
  • Often intangible capabilities are considered tactical issues and are not part of the strategic process.
  • Therefore companies are reactive -- and respond only after a significant demand arises diminishing the ability to execute.
  • Silos exist -- intangible resources are not aligned with strategic objectives
  • Investment in intangibles is expensed rather than capitalized; managers try to boost earnings by cutting discretionary related expenditures.
  • Leaders and organizations do not have a precise idea about what a job requires - now or in the future.
These can block corporate growth creating additional performance pressures. An improvement to the traditional approach that can capture the energy that exists within talent and intangible resources can bring substantial benefits -- among them, greater numbers of loyal customers.
  1. McKinsey & Company
  2. ibid
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