The Incomplete Art of Growing Talent

High Performance Culture is More Important

People are the highest form of technology. The human talent in organisations is unmistakably the only competitive factor not easily imitated by competitors.

Even when competitors poach employees from each other, they soon realize that the performance of otherwise top performers often vary when the organizational context is changed. A sustained excellence in managing and developing human talent represents a rich area for companies to develop a sustaining competitive advantage.

Many leaders know of the importance and value of human resource as an intangible asset. However, few behave in a manner showing that they truly appreciate their worth. The primary source of human talent is human intellect, human energy and human innovativeness. In the past, organisations could reasonably function well with a command-and-control bureaucratic structure. In this 21st century however, the successful organisations will be those who truly embrace the notion of human talent and apply a more focused and sophisticated approach to managing and developing human capital.

The term “talent” is used to differentiate from the mediocrity of mere competency sets and recognises the varying diversity of people talent in the organisation. In a classic 1998, McKinsey, the strategy consultancy company, published a study entitled ‘The War for Talent’. This became quickly the choice management fad even today. From interviews with hundreds of managers, McKinsey consultants concluded that building a better talent pool is not about building a better Human Resource department. They claimed that it was not about better training either. Nor was it about offering more stock options.

They argued that it is crucial for leaders and managers at all levels to embrace a “talent mindset”.

Leaders with a talent mindset make talent management a huge and crucial part of their job. They understand it can’t be delegated, so they commit a major part of their time and energy to strengthen their talent pool and helping others in the company to do the same. Finally, leaders with a talent mindset have the passion, courage, and determination to take the bold actions necessary to increase and strengthen their talent pools.

A “talent mindset” is the deep-seated belief that having better talent at all levels is how one can outperform the competitors. It is the belief that better talent is a critical source of competitive advantage. It recognises that it is better talent that pulls all the other performance levers. For McKinsey, a talent mindset is the catalyst that activates the other talent-building imperatives.

The belief in a “talent mindset” also explains the high premium placed on MBA degrees from top business schools, and why many compensation packages for top executives has become so lavish and out of sync with their own company profits. In the modern corporation, the system is considered only as strong as its “star” employees, the only talent that matters.

This talent-myth came crashing down about 20 year ago in a company where McKinsey had conducted twenty separate projects, billing nearly US$10m a year, and where a McKinsey director regularly attended board meetings, and whose CEO himself was a former McKinsey partner. The company was Enron.

The Enron scandal is now compulsory reading in all business schools. Enron was the ultimate “talent” company, whose culture was crafted single-handedly by McKinsey.

“The only thing that differentiates Enron from our competitors is our people, our talent,” Kenneth Lay, Enron’s former chairman and CEO, once told the McKinsey consultants when they came to the company’s Houston headquarters. Another senior Enron executive put it to Richard Foster, a McKinsey partner who celebrated Enron in his 2001 book, “Creative Destruction” that “we hire very smart people and we pay them more than they think they are worth”.

Enron management did exactly what McKinsey consultants advised that companies ought to do in order to succeed in the modern economy. It hired and rewarded the very best and the very brightest — and it is now in bankruptcy. The reasons for its collapse are complex and complicated.

One fact remains however undisputed: Enron failed not because of the lack of talent, but in spite of its talent mindset and many talented employees.

Indeed, what if smart people, measured by school grades and MBAs from top universities, are overrated?

The fundamental flaw in the “talent mindset” argument is the simplistic and naive notion that the overall performance of an organisation is just the sum of what its “best” individual “talents” can achieve.

Performance is not a stable fact but is impacted by human interaction. Team/social dynamics, communications, incentives and leadership are far more important. In many world-class companies, there is plenty of evidence that a great team can outperform a loosely connected group of more talented individuals. Creating impact performance is also made more difficult when senior executives fail to identify the best people for the best fit with the organisation..

The conventional wisdom is that organisational intelligence is simply a function of the intelligence of its employees. It is easily understandable to want to believe in “stars” because our lives are so obviously enriched by the inventions and discoveries of brilliant individuals. However, organisations operate and live by different sets of rules. They do not just create; they plan, execute, compete and coordinate the efforts of many different people, and the organizations that are most successful at that task are the ones where the “star” is its system of key people processes.

Like Enron, many companies have also fallen victim to the “talent mindset” myth. They often hire talented people for the wrong reasons. Even those that hire the right people often make little efforts to integrate and motivate them. Many young, new talents often became disappointed, realized that their jobs do not always require their level of expertise, ended up not fitting in, and finally leave.

The simple truth is that high-performance organizations are not products of high-performance individuals. They are products of high-performance cultures.

This is because individual employees, no matter how talented, are transient, but organizational cultures develop and pervade an organization, and endure after its people have left.

An individual’s innate ability matters less in determining organizational success than the attributes of the management system in which a person works. It is organisational systems, consisting of organizational processes and social dynamics that allow people to become and give of their best. Organisations preoccupied with determining best and worst performers often downplay attributes that are critical to building cultures and the management systems that bring out the best in everyone. The “talent mindset” myth assumes that people make organizations smart. More often than not, it is the other way around through organisational learning. Organisational learning develops tacit knowledge in employees. Tacit knowledge involves knowing how to manage yourself and others, and how to navigate complicated social situations.

Increasing globalization calls for dexterity and cultural mindfulness to fully realize the benefits of diversity and global reach. The heightened business uncertainties also calls for proactive and responsive minds rather than fixed processes. The main challenge facing management is to seek hitherto unconventional ways to manage and motivate their people with distinct styles of learning, focusing, producing, and communicating.

Psychologists have found that when people are commended for their efforts at focusing on goals, strategising and working hard, they will be encouraged to concentrate on learning goals and strategies for achievement. This also sustains their motivation, performance and self-esteem.

A developmental approach is therefore necessary to nurture the talents of all employees as a priority, without falling into the “talent mindset” trap of excessive individualism. Research evidence on learning organisations confirms that hiring and developing individual talent is just not enough for excellent performance. The oft-quoted critique is that you can have a team where each individual has an IQ of 180 but the collective IQ is only 80. It is of little value to develop people as individuals when the other features of the workplace are not conducive to high performance.

A holistic perspective has to be applied to obtain the effective nuture of human talent. Leaders will need to form a conscious and profound understanding of human capital that requires them to incorporate and integrate insights on management skills, emotional intelligence, performance appraisal and measurement, social networks, executive mentoring, coaching, and the balance between team and individual talent, leadership style, continual real-time learning, social and cognitive psychology, communication skills, and supporting technology infrastructures.

According to an Accenture-sponsored study, a high-performance workforce is an important competitive advantage because corporate culture cannot be copied as easily as its products and marketing strategies. It recommends six imperatives used by successful companies to create a sustainable high-performance workforce:

● Do not just hire skilled workers, hire “skillable” workers;

● match talent with the right opportunities;

● measure and develop talent in real time;

● use adaptive goal setting;

● link workforce actions to strategy and results;

● focus resources and new techniques on building skills and competencies.

Achieving competitive success through people involves a fundamental mindset change as to how we regard the work force and the employment relationship. It means achieving success by working with people, not by replacing them or limiting the scope of their creativity and activities. It ultimately entails seeing the human talent as a source of strategic advantage, not just as a cost to be minimised or avoided.

It is the acknowledgement of people as the true value creator of the organisation.