Global Talent Innovation

With employee trust falling by 57 percentage points and Generation Y to make up 75% of global ‎workforce by 2025, the time is now for global talent innovation.

Any company aspiring to compete on the global stage must implement a strategic approach to ‎talent management, built on a deeper understanding of the complexity and diversity of today’s ‎global talent pool and marketplace. This will enable them to unlock productivity in their workforces ‎and improve their organization’s ability to succeed, finds a new study by Booz & Company.‎

The economic downturn has accentuated the need for talent innovation. In addition to layoffs and ‎other cost reduction efforts, companies are questioning how they attract high-quality people. “A ‎recession offers companies the opportunity to build a more effective long-term strategy to attract ‎highly skilled potential employees, retain the best people, and address the complexities of ‎managing a workforce that is increasingly multigenerational, multicultural, and global,” explained ‎Joe Saddi, chairman at Booz & Company. ‎

Demographic, cultural, and economic changes are transforming the global labor market, but by ‎addressing the four fundamental building blocks of talent innovation: differentiated capabilities, ‎performance acceleration, leadership development and talent culture, the core components of ‎Booz & Company’s Global Talent Innovation™ platform, the CEO can build a distinct talent model ‎that delivers sustainable competitive advantage and breakthrough performance.‎


Global Workforce Trends

“These shifts, coupled with the economic downturn, are putting pressure on workforces around ‎the world. Innovation in global talent management therefore is an urgent priority,” said Bahjat El-‎Darwiche, a principal at Booz & Company.‎

Demographic and Generational Shifts ‎
White males now make up less than 20 percent of the global educated workforce and the majority ‎of educated workers are women and/or people of color. A trend is also emerging with the growing ‎impact of Chinese and Indian talent in the global marketplace—only 22 percent of graduates in ‎the global workforce come from North America and Western Europe. Women and people of color ‎however are still underrepresented in the management ranks.‎

Massive shifts in generational structure are transforming labor markets in countries around the ‎globe. In Germany, Japan, and the U.S., among others, more retirees, low birth rates, and caps ‎on immigration will fuel a reduction in the working-age population of between 20 and 40 percent ‎over the next few decades. “In transitional economies labor markets vary. India benefits from high ‎GDP growth and a young, highly skilled working-age population, whereas China and Russia both ‎have a shrinking number of young workers,” commented Saddi.‎

Business leaders need also to consider the generational composition of their workforce—which ‎includes three distinct generations; rendering the one-size-fits-all approach to talent management ‎ineffective. Generation Y, ages 15-30, is the next huge population swell and will make up 60 to 75 ‎percent of the global workforce by 2025. Generation Xers (ages 31-44)—the corporate bench ‎strength for leadership—are short in supply and positions they hoped to occupy are still occupied ‎by baby boomers—those aged 40-60 years. All three generations coexist in the workforce, but ‎have made clear their desire for greater flexibility in their career. ‎

Talent innovation implications: These generational and demographic shifts have created a vast ‎set of challenges for CEOs and talent managers, creating a need for tailored value propositions ‎for the complex needs and preferences of a diverse talent pool. “They also need to update incentive systems, benefits packages, succession planning, and career models to enable diverse talent ‎streams to perform at their best,” commented El-Darwiche.‎

Economic Downturn
The downturn has amplified the demographic changes in markets around the globe, causing ‎companies worldwide to downsize their workforce, which have had a massive impact on ‎employee morale and performance. According to the Center for Work-Life Policy (CWLP) data; ‎between June 2007 and December 2008, employee trust fell from 79 to 22 percent.‎

Effective responses to these challenges have been undermined by the economic crisis. Many ‎senior executives believe proactive talent strategies are currently unnecessary: with people so ‎grateful for a job they will deliver 100 percent. The evidence suggests otherwise: a recent study ‎found that in the wake of a layoff, voluntary attrition spikes by as much as 31 percent, and those ‎with the strongest track records and brightest employment prospects are the ones who leave. ‎

Talent Innovation Implications: Senior management focus on talent management strategies is a ‎necessity. “The challenge is threefold: leaders must stem talent leakage; they must sustain top ‎talent performance by re-inspiring employees and reinvigorating morale and they must take the ‎opportunity presented by this recession to realign talent management with the newly focused ‎business priorities of the company,” Saddi explained.‎


Transforming Your Talent Model

To attract, engage, develop, and retain the right talent companies must rethink their talent models—existing models no longer work. “Companies are also wasting resources by perpetuating HR ‎programs out of step with the way work is conducted and they cling to value propositions no ‎longer relevant, while leadership development is not arming organizations with the decisive, ‎experienced, globally minded visionaries they need. Chief executives need to declare global ‎talent innovation a priority, and lead the change,” commented El-Darwiche.‎

The Building Blocks of Global Talent Innovation
An effective global talent management model drives innovation, growth, and breakthrough ‎performance by balancing and integrating both business and individual needs. This shift in ‎perspective and careful alignment of employer and employee needs are what enable top ‎management to optimize talent expenditures, maximize productivity and performance and gain ‎competitive advantage. ‎

Building a Platform for a Sustainable Talent Advantage
Booz & Company’s Global Talent Innovation™ model’s building blocks must be addressed ‎holistically if an organization wants to release its full innovative and productive potential. They ‎serve as a platform upon which organizations can construct a relevant and robust talent model. ‎

1. Differentiated Capabilities ‎
Business success relies on a “right to win” through advantaged assets and capabilities. In a ‎service-based, technology-enabled economy, capabilities are supplanting assets as the main way ‎companies create and sustain value. “Differentiated capabilities are the skills, abilities, and ‎expertise that enable a company to out-execute the competition and capture share, and people ‎are the key to developing these,” commented Saddi. The requirement for creating and sustaining ‎world-class capabilities is a flexible and focused talent model that addresses the following:  ‎

  • Understand and prioritize the critical capabilities required for competitive advantage: A ‎strategic approach to talent begins with an understanding of the company’s business ‎strategy and capability requirements. The organization can then identify the high-priority ‎capability gaps and develop talent strategies to close them. ‎

  • Identify key talent segments: Senior management should classify their key talent groups ‎into either “pivotal,” “core” or “noncore” segments. Segmenting the workforce helps ‎organizations tailor talent strategies and allocate talent investments more effectively.‎

  • Develop tailored value propositions: Once pivotal and core segments are identified, ‎organizations can tailor value propositions to their unique needs and requirements. For a ‎company’s value proposition to resonate with desired talent, management must have a ‎clear understanding of key attraction and retention drivers. Updating value propositions ‎with the motivators and values relevant to desired employees optimizes a company’s ‎spending and increases the productivity, engagement, and retention of its workforce.‎

2. Performance Acceleration ‎
Performance acceleration is the processes and behaviors applied to managing performance, the ‎rigor with which these are designed and conceived, and the degree to which they drive ‎compensation, development, and promotion decisions. “The ability to engage and motivate ‎people so they make the right decisions and take the right actions in their work is the essence of ‎performance acceleration,” commented El-Darwiche. Companies whose performance ‎management system isn’t improving performance, building differentiating capabilities, or meeting ‎the needs and expectations of the most critical talent pools, might consider the following steps:  ‎

  • Ensure leadership engagement and ownership: The highest-performing organizations ‎engage HR and senior leadership in ensuring that processes, systems, and tools are ‎rigorous and consistent. Top-performing companies train leaders to improve the ‎capability and performance of their people, and hold them accountable for doing so. ‎

  • Reinforce meritocratic pay and promotion decisions: Companies that distinguish ‎themselves as talent innovators reinforce the relationship between pay and performance. ‎Individuals who excel are consistently developed, promoted, and paid. The performance ‎acceleration process must also be integrated with career planning and learning and ‎development, so employee capabilities and outcomes are continuously improved. ‎

  • Measure outcomes: High-performing organizations track performance and talent ‎outcomes through well-targeted metrics. These will provide insight into a company’s ‎talent dynamic, and are a powerful lever for innovation and continuous improvement. ‎

3. Leadership Development ‎
A leader today requires a strong sense of vision and the ability to inspire others along with ‎significant mental ability and the ability to work with all people effectively, in highly ambiguous and ‎rapidly changing contexts. “Organizations remain weak at deepening their leadership bench by ‎building differentiated capabilities, and they fail to take full advantage of the highly qualified ‎diverse talent available to them,” stated Saddi.‎

Leadership development practices would help broaden the mix of people in senior positions, but ‎such practices remain static and homogeneous. Moreover, few companies have committed to ‎rethinking leadership models or reshaping development processes. Companies need to broaden ‎their perspective on leadership development and commit to building a leadership bench more ‎reflective of a diverse global talent pool and more prepared to tackle the complexity of today’s ‎business environment.  ‎

  • Evolve the leadership model: Most leadership development models focus on building a ‎narrow set of functional competencies and a generic set of aptitudes for executive ‎behavior. Talent innovators will combine leadership competencies with differentiated ‎capabilities. “Leadership development is an essential enabler of the business strategy ‎and reflects the diversity of the company’s customer and employee base. Such a ‎leadership model becomes a sustainable organizational capability,” explained El-‎Darwiche.‎

  • Highlight talent management competencies: The ability to inspire, motivate, and develop ‎the next generation of leadership talent is crucial to any leader’s success. If the best ‎leaders are those who can foster teams that deliver, innovate, and create value in ways ‎above and beyond the average, then leadership development and advancement models ‎need to recognize and cultivate talent management competencies.‎

  • Build the leadership bench: Best-in-class leadership programs are characterized by ‎significant executive accountability. Senior management must help conceptualize, craft, ‎and deliver leadership programs, integrated with the business strategy and grounded in a ‎business case for why an enhanced leadership capability is required. The development ‎program should encompass all of the highest tiers of leadership at the business unit and ‎functional level, and include a variety of developmental experiences. ‎

4. Talent Culture ‎
“A talent culture is made up of the values, beliefs, behaviors and environment required to attract, ‎engage and retain committed and competent employees,” Saddi said. Companies that embrace a ‎talent culture outperform those that do not. It must be led from the top and can be achieved and ‎sustained only if it is hardwired into a company’s processes. Great cultures are the result of ‎specific and deliberate practices and strategies: ‎

  • Build engagement: Engaged employees are far more productive, committed, and aligned ‎with company goals. The bad news is that only one in four employees, on average, is ‎‎“engaged.” Improving low levels of engagement and helping people feel more respected, ‎important, and confident is an investment in building a culture of authenticity, ‎accountability, meritocracy, learning, and agility where employees can progress and ‎achieve their own and the company’s full potential.

  • Rethink your organizational and career designs: Most organizational designs, career ‎paths, and job descriptions typically favor male executives at the top, a layer of mid-‎career managers in the middle, and a group of younger, entry-level employees at the ‎bottom. “Career paths are largely vertical, with advancements in pay and responsibility ‎defined incrementally. Talent innovators will rethink the jobs they offer to incorporate ‎greater flexibility, shorter tenures, more efficient training, and more flexible career ‎advancement models,” El-Darwiche said.‎

  • Enhance your talent brand: Attracting and retaining pivotal talent is vital to a company’s ‎ability to build (and protect) a differentiated employer brand to present to prospective ‎stakeholders. It should reflect and embrace the values of the company, emphasize its ‎focus on talent, and differentiate it from its competitors. It should appeal to pivotal and ‎core talent segments and reinforce the particular capabilities that drive competitive ‎advantage. ‎

Booz & Company is helping organisations around the world with their talent culture, following an ‎exclusive alliance with Sylvia Ann Hewlett Associates LLC (the consulting arm of the CWLP), to ‎provide tailored and sustainable solutions to global companies rethinking talent-management ‎strategies. The alliance is helping companies enhance their global talent pool—especially ‎pertinent during the brutal downturn. “Engaging and energizing star performers—across the ‎divides of gender and culture—is key to corporate renewal and growth. This alliance offers clients ‎deep functional and industry knowledge, cutting-edge expertise on how to leverage multilocal, ‎multicultural and multigenerational talent, and access to best-in-class benchmarks and practices,” ‎explained Saddi. ‎


The Road Ahead

An effective approach to talent management is challenging and complex. The global talent ‎innovation model moves companies beyond best practices and standard tool kits and provides a ‎road map for leaders to tackle their talent challenges. Each building block works in concert within ‎the context of an organization’s business strategy. Following this approach, companies can ‎conduct a talent diagnosis, identify gaps in their talent strategy, and shape a tailored approach to ‎maximize the potential of their talent pipeline. In doing so, they can move beyond best practices ‎to best-in-class innovation and performance.‎