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In the book Leading Organizations, McKinsey senior partners Scott Keller and Mary Meaney address the ten most basic issues facing leaders: attracting and retaining talent, developing the talent you have, managing performance, creating leadership teams, making decisions, reorganizing to capture value quickly, reducing overhead costs for the long term, making culture a competitive advantage, leading transformational change, and transitioning to new leadership roles. This article, drawn from the book’s opening chapter, speaks to the first of these topics: attracting and retaining talent.
Why is talent important? Superior talent is up to eight times more productive.
Suppose your business strategy involves cross-functional initiatives that would take three years to complete. If you took 20 percent of the average talent working on the project and replaced it with great talent, how soon would you achieve the desired impact? If these people were 400 percent more productive, it would take less than two years; if they were 800 percent more productive, it would take less than one. If a competitor used 20 percent more great talent in similar efforts, it would beat you to market even if it started a year or two later.
Great talent is scarce: Almost one-third of senior leaders cite finding talent as their most significant management challenge.
A McKinsey Global Institute study8 suggests that employers in Europe and North America will require 16 million to 18 million more college-educated workers in 2020 than are going to be available. Companies may not be able to fill one in ten roles they need, much less fill them with top talent.
Most companies don’t get it right: A whopping 82 percent of companies don’t believe they recruit highly talented people.
Talent matters, because its high value and scarcity—and the difficulty of replacing it—create huge opportunities when companies get things right. Let’s now turn to how they can do that.
What are the big ideas?
Focus on the 5 percent who deliver 95 percent of the value. In a world of constrained resources, companies should focus their efforts on the few critical areas where the best people have the biggest impact. Start with roles, not processes (which create generic solutions that don’t meaningfully improve results) or specific people (who might help you in particular situations but don’t build institutional muscle).
Make your offer magnetic—and deliver
Leaders know the term “employee value proposition,” or EVP: what employees get for what they give. “Gives” come in many flavors—time, effort, experience, ideas. “Gets” include tangible rewards, the experience of working in a company, the way its leadership helps employees, and the substance of the work. If your EVP is truly stronger than the competition’s, you will attract and retain the best talent.
When the National Bureau of Economic Research looked into this, it pitted humans against computers for more than 300,000 hires in high-turnover jobs at 15 companies. Human experience, instinct, and judgment were soundly defeated: people picked by computers stayed far longer and performed just as well or better. Although people analytics is a field still in its infancy, it’s gaining speed. In 2016, only 8 percent of companies reported that they were fully capable of using predictive modeling, but that was up from 4 percent in 2015.22 Leaders who don’t implement concrete plans to leverage technology in the war for talent will quickly fall behind.
How do I make it happen?
1. Aspire
The team first determined the talent requirements for the organization’s five-year plan. Two roles were especially important: general managers and data-analytics specialists. The team then coupled this demand view of talent with a supply view and identified the gaps. Senior leaders gave the team a mandate for bold action.
2. Assess
With the priorities established, the team took a deep dive into the current mess. What did recruits in each target segment care about? How did the institution compare with their other options? Why were people in key roles departing? Which current approaches were and weren’t working? Using interview techniques to get behind superficial answers, the team gathered qualitative data. Quantitative data were generated by predictive analytics algorithms that determine patterns and an analysis of how general managers spent their time.
The organization’s value proposition for generalists—the promise of interesting work, on-the-job development, and an attractive, flexible career path—turned out to be on target. However, the reality didn’t live up to it. The team found that specialist candidates wanted a different value proposition: deeper technical development, opportunities for special projects, a more relaxed and informal environment, and freedom from administrative tasks.
3. Architect
The working team recommended two discrete career paths, for generalists and specialists. The role of general managers would be adjusted to let them play more of a coaching (rather than a coordination) role. For data analysts, the team proposed more relaxed, informal recruitment events on school campuses and a stronger referral program.
4. Act
The leader and top team led from the front—for example, by personally attending the newly overhauled top-talent development programs—to communicate the importance of making the target EVP real and vibrant. She quickly became known for asking two questions in every performance dialogue: “what are your top five to seven priorities?” and “who are your top five to seven most talented leaders?” People learned that there should be a match between the answers.
5. Advance
The results appeared quickly: employee engagement shot up and attrition declined, especially among the most recent hires. Acceptance rates started improving, and employees became a powerful recruiting source.
Eighteen months later, after rising nearly 40 spots in the public sector’s Best Place to Work ranking, the organization found it easier to access talent, especially data scientists. Attrition dropped to historic lows, particularly in critical general-management and specialist roles. As a final sign of success, instead of trumpeting the organization’s downward spiral, headlines announced the bold new agenda and leadership.
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On Friday, Facebook publicly released its internal policy on harassment.
In a post authored by COO Sheryl Sandberg and VP of people Lori Goler, the two execs wrote that they were publicizing their policies and processes, "not because we think we have all the answers, but because we believe that the more companies are open about their policies, the more we can all learn from one another."
On its website, Facebook lists tips for making the most of anti-harassment training, information about how the company conducts internal investigations, and examples of workplace harassment like "derogatory or insensitive jokes, pranks, or comments," "slurs or epithets," and "unwelcome sexual advances or invitations."
The policy states, "'I was joking' or 'I didn't mean it that way' are not defenses to allegations of harassment. Nor is being under the influence of alcohol or other substances."
Employees can report incidents via HR, the company's employment law team, or a whistleblower hotline, while managers must report violations and suspected violations "and will be subject to discipline for failing to timely report."
Once a complaint has been filed, investigators from the company's people team reach out to employees via email to schedule meetings. Two members of the team meet with employees called upon over the course of the investigation — one investigator takes notes, and one asks questions. The results of the investigations include termination, education, counseling, warnings, and no action.
In their statement, Sandberg and Goler added that it's crucial for companies to be transparent about their policies going forward: "We don't have everything worked out at Facebook on these issues, but we will never stop striving to make sure we have a safe and respectful working environment for all our people."
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