Louis Scenti has worked as a leadership, organization development, and talent management practitioner for more than 30 years. He is currently the Founder and President of Cognoscenti Associates, LLC, a human capital consultancy focused on executive and leadership coaching and organizational consulting. Additionally, he is a Lecturer of Human Capital Management at the School of Professional Studies.
McKinsey and Company published a seminal article in 1967 and coined the phrase “War for Talent.” The article highlighted the impending scarcity in the supply of knowledge-worker talent. It signaled that organizations needed to adopt a radical shift in mindset to attract, develop and retain the highest-caliber people. An unintended consequence of this was the elevation of the word “talent” to corporate buzzword status.
Today, we find ourselves embracing the term “talent” for many uses; for example, we use the “Chief Talent Officer” for the head of Human Resource (HR) departments, “Talent Acquisition” for recruitment and “Talent Reviews” for annual performance processes. Despite the word’s ubiquity, organizations often fail to define exactly what they mean by talent.
In 2006, The Economist noted:
Indeed, companies do not even know how to define “talent,” let alone how to manage it. Some use it to mean people like Aldous Huxley's alphas in Brave New World — those at the top of the bell curve. Others employ it as a synonym for the entire workforce, a definition so broad as to be meaningless."
The Economist
If organizations fail to be intentional about what “talent” means, it is almost impossible to deploy human capital as a competitive advantage.
More than 20 years on from McKinsey's “war for talent,” a view that seemed to imply that all talent was created equal, the key to success for the next generation of human capital management lies in an organization’s ability to differentiate among segments of talent and to develop tailored programs and practices that address the unique needs of each segment. Practically, this means identifying key roles, skills and talent segments, their position in the value chain and their weighted impact on delivering the business strategy. It also means eschewing a “one size fits all” approach and adopting a very different mindset for the bedrock practices of hiring, developing, rewarding and retaining people.
As an example, Howard Schultz, CEO of Starbucks, envisioned the Barista role as pivotal, that is, the role most responsible for delivering the organization’s strategic intent.
As I visited small espresso bars throughout Milan and Verona, I was taken by the power that savoring a simple cup of coffee can have to connect people and create community among them."
Howard Schultz
Given the high turnover and variable commitment of retail store-level employees, Schultz knew that he needed a specific talent strategy for this key segment and introduced health benefits and 401K participation for these part-time employees, a radical notion in the fast-casual industry.
Differentiation strategies can also be applied to organizations facing talent or skill shortfalls. When adopted as a discipline, Strategic Workforce Planning (SWP) enables organizations to make informed forecasts about talent needs and employ innovative strategies to address gaps. A 2019 McKinsey article points out:
While talent shortfalls arise for many reasons, the supply-side remedies can be summarized in just three watchwords: Should we build on our existing skills? Should we acquire them? Or should we “rent” them?"
McKinsey and Company
Such approaches recognize that yesterday’s blunt instrument of simply staffing-up or laying-off large swaths of employees is not effective or sustainable in a fast-moving, rapidly changing and interconnected world.
Organizations that will not simply survive but thrive will be those that successfully align differentiated human capital practices with business strategy to drive competitive advantage through people. They must do so using twenty-first century approaches, such as agile methods and advanced data analytics. This will require a new generation of human capital practitioners. As McKinsey further notes:
Indeed, HR will need to sharpen its own skills, not only in traditional areas, like employee retention and performance management, but also in new ones, such as managing the risks associated with gig work. In this respect, HR leaders are no different from those in any other function — all of whom must be prepared to evolve if they are to be effective in helping the larger enterprise adapt to the changing nature of work."
McKinsey and Company
The War for Talent, therefore, lives on. However, this is a war that is won not through brute strength but rather through in-depth expertise and nuanced approaches — approaches that propel HCM teams forward as navigators of their organizations’ workforce.
The views expressed are those of the author and do not necessarily represent the views of any other person or entity.
