Traditionally, leaders have been encouraged to dynamically reallocate capital to the most pressing and attractive opportunities. This focus remains today, but many companies face a challenge: human capital is now the scarcer of the two main capitals.
Companies that manage talent with the same rigor they do financial capital, treating it like the precious resource it is, typically see better results. They reallocate talent to high-value areas and push talent management to the top of their growth agenda.
Now more than ever, leaders will need to put talent at the core of their decision making. Winning organizations articulate a clear link between the value the organization creates and the talent required to create it. There are three steps to truly unlocking the power of talent:
- Get clear on the most critical roles. Start by defining the value agenda: How will the company make money in the future? Which roles are critical to creating that value? We find that organizations typically have 25–50 roles that create a disproportionate amount of value. Identifying those roles and their requirements and then taking stock of the knowledge, skills, attributes, and experiences of existing talent can help leaders answer the questions of whether they already have the right roles for their business strategy—and then whether they are filled by the right people. In one example, a consumer packaged goods company that already had a chief information officer was embarking on a digital transformation. After conducting a critical roles analysis, it was clear that a chief digital officer would bring the knowledge, skills, and experience needed to unlock value from the transformation.
- Define the critical skill pools required, planning for multiple versions of the future. Companies need to ask: Do we have the critical capabilities that we need at scale to achieve our future aspirations? Where are we long or short on talent? By understanding supply (the skills you have) and demand (the skills you need) organizations can define the optimal approach to bridging the gap, which could be reskilling, upskilling, hiring, or redeploying. An Asian bank that aspired to be “engineering-enabled” needed to rapidly acquire next-generation technology and automation capabilities that it didn’t have in-house. The bank forecasted the necessary skill pools, including data science and full-stack programming, and identified where they were long and short. They could then address the shortages with reskilling. Alongside that effort, the bank developed a targeted location strategy, opening technology hubs in areas where quality tech talent was concentrated. In another example, a multinational retailer identified capability gaps and “acqui-hired” companies that would bring the necessary skills in-house.
- Embrace changing talent models and ecosystems. Traditional talent models matched full-time or part-time employees to a static schedule and location; a hiring manager would design a role in a given location, post the job, and then fill it. Today’s talent models are vastly different. Competitive dynamics and the gig economy are pushing companies to source and attract talent differently and transaction costs are falling as workers organize and lend out their skills in new ways. Now, talent is the driver for where work takes place and how roles are constructed, and new ecosystems are emerging. Companies may find that tapping into these ecosystems through app-based, on-demand labor, and tech-enabled marketplaces help them curate top talent while aligning with the expectations of today’s workforce.
Companies that successfully organize for the future will master these three steps and create meaningful experiences for their scarcest resource—talent—in order to achieve a competitive advantage.
Career Exchange is a COVID-19 response initiative offered at no cost to companies hiring, furloughing, or laying off individuals. It is a digital talent marketplace that aims to address the mismatch of labor supply and demand, helping organizations and individuals. McKinsey & Company supports the platform as part of our commitment to safeguarding livelihoods. Learn more or visit the Career Exchange website to sign up.
This blog post is part of a series on Future of work, which explores a set of new principles such as anti-fragility and experimentation that are becoming increasingly critical for today’s organizations as they build more creative, adaptable, and human systems.