Three years ago, Fast Company reported on a breakthrough study by McKinsey & Co. that described the “war for talent” in business and the high stakes associated with how senior executives fought that war. Last summer, McKinsey released a new report on the same theme, called “War for Talent 2000.” The report, which takes another in-depth look at this critical issue, is a survey of 6,900 corporate officers, top executives, and midlevel gen-X managers in 56 companies. Here is an excerpt from the report on the seven “talent imperatives” that are essential for winning the war for talent.
1. Instill a talent mindset at all levels of the organization — beginning with senior management. A talent mindset is a deeply held belief that having high caliber people in the most value-creating jobs and having a strong bench are critical to achieving the aspirations of the company. The talent mindset must be reinforced with accountability for the strength of the talent pool at all levels…. A rigorous and candid review process is essential to identify high and low performers, outline individuals’ strengths and weaknesses … and identify specific actions to address issues around under-performers.
2. Create “extreme” employee value propositions (EVPs) that deliver on your people’s dreams — the EVP is the compelling reason why a talented person would want to work for your company. Crafted in the extreme, an EVP will enable a company to capture more than its fair share of talent. You will know that you’ve got the four elements of the EVP right when:
Great company: The company genuinely cares about its people and the people, in turn, truly care about the company. Trust and open communication are the fabric of each interaction. Each person is motivated by the company’s mission and aspirations. There is an enormous pride in being associated with the company’s success and each individual’s role in it.
Great leaders: Great leaders really do treat people with trust and respect, and honor the intelligence of all who contribute to the institution. They manage to find the balance between giving people independence to accomplish great things and providing the guidance, or even the guidelines, to help them do it. Great leaders build the capacity to achieve results, knowing that they do this by unleashing the talents and work ethic of their people…. They know their people and understand their dreams.
Great job: Quite simply, people have got to like what they do and the people they do it with. A great job is demanding and stretching and full of content that the individual finds interesting and important. Much of feeling good about a job is the result of being valued for one’s unique talents.
Attractive compensation: Today, money buys the house and the bacon, but it equally represents recognition and fairness. Talented people expect their contributions to be acknowledged and their compensation to reflect their impact.
3. Build a high-performance culture that combines a strong performance ethic with an open and trusting environment — company culture is a critical element of the EVP. One of the signal insights of this survey is that the combination of a strong performance ethic (the relentless desire to outcompete the competition) and an open and trusting environment achieves the greatest satisfaction with culture. The performance ethic, which some people misconstrue as a mean-spirited management approach, not only drives satisfaction with culture … it also drives financial performance.
4. Recruit great talent continuously — the most aggressive companies are always on the prowl for talent. They have a keen sense of who they are looking for, and they do their looking in new ways and in new places. They bring in talent at all levels of the organization, even senior levels.
5. Develop people to their full potential — every company leaves a tremendous amount of human potential untapped because its people are inadequately developed. Effectively conceived stretch jobs, coupled with informal feedback, coaching, and mentoring, are enormous developmental levers.
6. Make room for talent to grow — companies suffer an enormous cost by not acting on the negative influence of under-performers. Under-performers are unable to attract top talent, do not develop the people below them, block opportunities for those around them, undermine the morale of the group they lead, and ultimately cause better performers to leave the company. The biggest obstacle to action is human nature. Moving on under-performers, whether it’s to a new position or out of the company, is both a difficult task and an obligation of leaders.
7. Focus on retaining high performers — companies must truly deliver on their EVP promises if they hope to retain talented people. Beyond the EVP, companies must demonstrate that they value and appreciate their people. Simply helping high-potential people feel connected and vital to the future of the business can be a powerful retention tactic. Let them know they are wanted!