The War for Talent

Why is the silent battlefield important?

Only 60% of the corporate officers at the companies we studied said that they were able to pursue most of their growth opportunities. They have good ideas, they have money - they just don't have enough talented people to pursue those ideas. They are "talent-constrained." The leaders at Johnson & Johnson, a world-class operation, told us that they never used to go outside the company to recruit their top-level managers. Now they have to go outside as often as 25% of the time - because they are talent-constrained.

This is something of a zero-sum game. When companies go outside for talent, they're just taking people from other companies.

What does it take to raid another company's talent successfully?

We asked top people what they were looking for in deciding where to work. The answer: a great company and a great job. When they talk about a great company, they mean one that's well managed, that has terrific values, and that has a great culture.

They also know what they want in a job. One store manager at Home Depot told us, "This is my $50 million business." He was talking about his store. "I can double it, or I can run it into the ground. Where else could I get that kind of independence and that much of a challenge at age 33?" People want "elbow room" - a job that's pretty big, where they have responsibility for a number of functional levers, such as marketing and sales. They also want "headroom" - a job where they can make decisions on their own, without having to go through a bureaucracy. The best companies are beginning to appreciate these aspirations. Dick Vague, the chairman and CEO of First USA, part of Banc One, told us, "I aspire to create an enterprise where at least 80% of everybody's job consists of doing things that they love."

What role do startups and small companies play in the talent war?

The people at AlliedSignal were clear on this point. They told us, "We are competing with startups, not General Electric. There is a whole raft of talent that we simply do not get access to."

What do talented people get at startups? For one thing, the opportunity to make a lot of money. For another, they have a chance to be very connected to the top of the company. They can play a key role and make a difference to the whole institution - all at an earlier age. A highly talented 30-year-old is confident that even if he or she goes bust on a small-company venture, there will be another job out there.

What weapons can larger, more established companies use against startups and small companies?

The best large companies have learned how to mimic small companies. They create smaller, more autonomous units. They offer greater wealth-creation opportunities for their best people, regardless of age or seniority. And they compensate these people on the basis of performance. The best companies also find ways to keep 30-year-olds connected to the larger organization and to give them exposure to people at the top - which makes them feel that they are part of a smaller organization.

Big businesses can capitalize on their size. For instance, they've got more money, so they can afford to give a 35-year-old more responsibility and a bigger budget than small companies can. Big companies also have many more jobs to fill. More jobs means more bosses. So big companies can offer more mentoring opportunities.

What kinds of recruitment campaigns attract the most talented people?

There are four kinds of messages that the best people respond to. The first one is "Go with a Winner." It's for people who want a high-performing company, a company where they're going to get lots of advancement opportunities. A second message is "Big Risk, Big Reward." The people who respond to it want an environment where they're challenged either to do exceptionally well or to leave - where there's considerable risk but good compensation, and where they can advance their career rapidly. A third message is "Save the World." It attracts people who want a company with an inspiring mission and an exciting challenge - a pharmaceuticals or a high-tech company, for instance. The last group is drawn to a "Lifestyles" message. These people seek companies that offer them more flexibility and better lifestyle benefits - such as a good location.

How prepared are most companies to wage this war for talent?

Of the executives we surveyed, 75% said that their companies either don't have enough talent sometimes or are chronically short of talent. We then asked them, "Does your company make improving its talent pool one of its top three priorities?" In many companies, only 10% or 20% of corporate officers said yes.