I never expected
to find myself here—sitting on stage in a packed room at the World
Economics Forum 2001 in Davos, Switzerland—kicking off a panel
on “Talent Strategies for the New Economy,” to be followed by the
top executives from many of the world’s leading corporations: Goran
Lindahl (ABB), Nobuyuki Idei (Sony), Leslie Vadasz (Intel), Edward
Tian (China Netcom), NR Murthy (Infosys). Thankfully for me, the
research I was presenting told an interesting story that challenged
some of the conventional wisdom.
Our study, which
I conducted with Susan Mohrman, my colleague at USC’s Center for
Effective Organizations, Gretchen Spreitzer (USC) and Jan Klein
(MIT), found a large discrepancy between what employees say they
want and the actual drivers of their behavior. This discrepancy
creates competitive challenges for companies struggling to retain
and motivate an increasingly diverse workforce. With the ever increasing
demands on firms and their employees, as many as 86% of employees
rate work/life balance as ‘very important’ or ‘extremely important’
in their careers. Yet, employers face the reality that greater employee
satisfaction with work/life balance has no impact on retention.
Our study identifies
the key drivers of retention and commitment across a broad spectrum
of employees from 10 leading technology-intensive companies operating
across a range of sectors in North America, Europe, Asia, and Israel.
The research includes analysis of a survey completed by more than
4,500 knowledge workers and managers; interviews and focus groups
with more than 500 business and technology leaders; and written
documentation of the knowledge management, human resource practices
and performance of these 10 companies.
results, presented in the report, “What
Do Employees Really Want? The Perception vs. The Reality,” published
International, show that what employees want depends very much
on the stage where each one is in their career, as well as generational
factors, gender, old versus new economy preferences, cultural dynamics
and managerial versus implementation roles. We contend that companies
need to personalize their retention efforts, cater to individual
needs and tailor the employment package. Despite the potential of
the Intranet to help with this individualization, our research shows
that most companies are failing to mine their employee data, and
falling into the trap of using the Intranet to standardize, rather
than customize, their human resource policies.
All the main groups
in the study say that their priorities are first work/life balance,
and then job security, followed by financial rewards. In analyzing
behavior patterns, however, these priorities provide a misleading
indication of how retention and commitment may be achieved. Instead,
common to retention in all employee subgroups is a focus
on strategic clarity—with employees identifying more closely with
the company if they believe it has a viable and well-communicated
strategy for success. In terms of financial reward, pay-for-organizational
performance has a positive impact on commitment for all groups
except Europeans. Rewards such as stock options or profit-sharing
do increase how much individuals identify with the company. In contrast,
pay-for-individual performance does not affect the commitment
of any employee group, except for men under 30. The only group for
whom job security drives retention is the late career group—those
For early career employees (30 and under) job security
does not have a positive effect on either retention or commitment,
whereas career advancement is very significant to the retention
of this group. Their ability to influence the organization and their
satisfaction with their professional work environment also help
build their commitment to the company. Being part of an innovative
organization is important both for retention and commitment.
For mid career employees (31 to 50) commitment to the company increases
if they are able to manage their own careers, and professional satisfaction
results in greater retention for this age group than for either
their younger or older colleagues.
For late career employees (over 50) professional satisfaction relates
to neither retention nor commitment. This is the only group for
whom job security drives retention.
Creating an Employment
With human capital
ever more essential to sustaining growth and creating shareholder
value, company leaders need to create an employment brand that attracts
the best talent, just as they create a consumer brand that builds
customer loyalty. This entails much more than offering competitive
pay packages of stock options. We find a discernable set of common
organizational features that impact the behavior of most segments
of the workforce, enhancing the organization’s effectiveness and
employee satisfaction and motivation:
A clear and compelling strategy;
An innovative environment low in bureaucracy;
Challenging work assignments that enable employees to grow their
Rewards based, in part, on how well the organization performs.
Approach To Building A Talent Strategy
As leaders seek to
build an employment brand, they can’t rely solely on fashionable
perks that make the company seem attractive to work for. With career
advancement high on the agenda, continuous learning is a crucial
part of any retention program. Our research shows that many leading
firms are pursuing innovative approaches to developing employee
A large new industry has been created in just the last three years
to provide firms with on-line learning. While a number of issues—lack
of broadband infrastructure, costs of creative course development—have
so far prevented elearning from delivering its full potential, the
vision it offers is to deliver just-in-time content when individuals
need it for their work, rather than the typical classroom training
that occurs several months before or after a person needs a certain
skill set. Qualcomm
has already begun to reach this vision, with most of its training,
particularly in technical skills and health and safety, developed
in-house and delivered either partly or completely over the Intranet.
Among the benefits they have seen are: much lower cost and greater
consistency of quality in course provision, greater flexibility
for the user in when they take training, and greater retention of
learning because of the interactive nature of the coursework.
Pratt & Whitney has
created a computer simulation of the core business decisions involved
in developing new aircraft engines. The simulation not only provides
hands-on instruction in some new business tools, but more importantly
enables individuals from all the different functions involved in
this complex process to appreciate the wider business context, to
see the issues from many different perspectives (including the customer’s)
and to better understand where their role fits into this system.
Motor Company is attempting to reinvent its entire operations
into an e-business. As part of this strategic initiative, it has
designed a unique leadership program for its high potential middle
managers from around the globe. They deliver all the traditional
course material on-line, devoting most of each person’s effort to
a project in which they use new electronic tools to fundamentally
reinvent the way they work. The most innovative aspect of the program
is that projects are intended not only to enhance business results,
but also to enable individuals to better meet the needs of the stakeholders
at home and in the community, as well as finding more time for themselves.
Universities: In order to emphasize their commitment to learning,
hundreds of firms have now created corporate
universities. Often formed in partnership with higher education
institutions, the best of these corporate universities offer the
chance to customize content to the needs of the business, while
enabling individuals to receive course credits for the more general
knowledge they acquire. Many corporate universities are now investing
heavily in moving their content on-line and increasing the experiential
learning component of their face-to-face courses.
over the Net: Just as the leading business-to-consumer and business-to-business
companies are continuously mining the data they collect from the
Internet and building personalized portals to allow them to build
much closer relationships with individual customers, companies can
also harness their own Intranet’s capacity to develop a much more
sophisticated understanding of their business-to-employee relationships.
The current problems with achieving this are:
Many human resource departments
view the Intranet as a way to reduce costs and automate the delivery
of employee transactions, rather than a chance to build richer relationships
with individual employees;
Most human resources departments
lack the data mining skills needed to analyze the data effectively;
Too often, the focus is on standardizing human resource policies,
rather than creating options that allow for customizing to individual
Defining a Talent Strategy
Building a Talent
The conclusions of
our research and the practices from some of the companies that have
built some of the world’s leading employment brands suggest a ten-step
approach that firms can take to create a successful talent strategy:
Create a clear and compelling strategy and vision
for the firm.
Identify the core capabilities required to excel
at this strategy and to continuously improve performance. With that,
distinguish skills available externally from those that must be
Seek out the best sources of these skills wherever
they are available globally, and offer these individuals opportunities
to advance and contribute, regardless of nationality.
Understand what factors are most important to attracting
and retaining the individuals with these key capabilities and gaining
their commitment to the enterprise.
Recognize that different individuals want different
things from work and that their priorities are likely to shift as
they progress through different stages of their life and career.
Create multiple career pathways (e.g., technical
ladders, rotational assignments, opportunities to join new ventures)
to replace the declining number of managerial promotion slots in
today’s flatter organizations.
Craft individual development plans and opportunities
to enable employees to build the capabilities that create maximum
value for themselves and the firm.
Hold individuals and managers accountable for meeting
development objectives and sharing the knowledge they gain with
Tie rewards and recognition to organization and team
performance and enhancement of skills, rather than placing too strong
an emphasis on pay for individual performance.
Seek opportunities to rapidly enhance the firm’s
talent through strategic acquisitions, recognizing that these need
to be managed differently than traditional mergers.
Finegold is an Associate Research Professor at the Center for Effective Organizations.
He is the author or editor of many articles and books on topics
ranging from the changing employment relationship and international
comparisons of skill development to corporate governance and high-skill
ecosystems. These include: The
German Skills Machine: Sustaining Comparative Advantage in a Global
Economy (2000), Are Skills the Answer? (1999), and forthcoming
books called, Net-Enabled: Designing Organizations for the Internet
Economy and Corporate Boards: Adding Value at the Top, from Jossey
Bass in 2001. Contact him directly at email@example.com.
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