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Thought: Winning the Battle

A battle is underway within the world of business, and it’s not (only) for customers.  As jobs and skills change, and commercial success increasingly depends on innovation and disruption over efficiency and operations, finding and recruiting the right people has become more important than ever.  In 1998, after a year-long study on the subject, McKinsey researchers declared that a “war for talent” was underway. In the years ahead, they said, organizations’ future success would depend on how well they could attract, develop, and retain talented employees.  Fast forward a decade, and in today’s economy competition is global, capital is abundant, ideas are developed quickly and cheaply, and people are willing to change jobs often.  In this environment, McKinsey director Ed Michaels who helped manage the original study confirms that “all that matters is talent. Talent wins.”

People are the Prize

The “War for Talent” rubric is apt, conveying the idea that people are a treasure and a commodity to be fought over.  But it’s not just human-centred sentiment; it is an economic fact. In another 15 years, there will be 15% fewer Americans in the 35- to 45-year-old range than there are now. At the same time, the U.S. economy is likely to grow at a rate of 3% to 4% per year. So over that period, the demand for talent will increase by approximately 25%, and the supply will go down by 15%. To compound the situation, in five years 75 million Baby-Boomers will be over 55. As they exit the workforce, there simply won’t be enough qualified Gen X workers to replace them.  That sets the stage for a talent war. Mark Lautman of Lautman Economic Architecture describes this as a Zero-Sum Conundrum, and the C-suites next wicked problem.  In a zero-sum game, employers who need to add qualified employees to survive or grow would have to steal them from their competition. This changes everything, shifting the power in the hiring relationship from employer to employee.   To add complexity, it’s not only other companies that need to compete for top talent, they are contending with the talent themselves – and the increasing lure of entrepreneurship and self-employment.  Younger workers especially tend to be disenchanted with traditional career paths and are seduced by the perceived flexibility and freedom of being one’s own boss. Despite the evidence that self-employed people tend to work longer hours only to earn less, and the estimates that only 30% of startups live longer than 10 years and fewer than 10% ever grow (and only 3% grow substantially), the ongoing appeal suggests that traditional jobs are under-delivering on what employees want to such a degree that many are willing to take pay cuts in order to get them.

Engagement Economics

Dissatisfaction and disengagement at work is epidemic and expensive.  According to Gallup’s recent State of the Global Workplace report, 18% of workers are actively disengaged in their work and workplace (unhappy, unproductive, and negative), while 67% are “not engaged.”  This represents an extraordinary 85% of employees who turn up to work and give their time, but not their best effort nor their best ideas. Gallup estimates that an actively disengaged employee costs their organization $3,400 for every $10,000 of salary, or 34 percent.  The economic consequences of this global “norm” are approximately $7 trillion in lost productivity. And when an employee does depart, research by Deloitte’s Global Human Capital Trends indicates that companies lose two to three times that employee’s annual salary in terms of lost intellectual capital, client relationships, productivity, and experience, plus the cost of recruiting a new hire. This flip side of this, Gallup revealed, is that companies who were actively engaging their staff (those work units in the top 25% of Gallup’s Q12 Client Database) saw 17% higher productivity, 20% higher sales and 21% higher profitability. At the regional level, Northern America has the highest proportion of engaged workers, at 29%, followed by Australia and New Zealand at 24%, whereas across 19 Western European countries, only 14% of employees are engaged, while a significantly higher 20% are actively disengaged. Regardless of region or industry, employee engagement makes a difference to the bottom line. Businesses seeking to adapt to rapidly changing global economic conditions must learn how to maintain high-productivity workplaces. Gallups Q12 survey is based on more than 30 years of in-depth behavioural economic research involving more than 25 million employees and consists of 12 actionable workplace elements which provide a clue into how to engage a workforce. Employers should review these questions (such as “in the last seven days, have you received recognition or praise for doing good work?” and “does your supervisor, or someone at work, seem to care about you as a person?”) and consider how their employees might answer them.   So, what can organizations actually do to improve the situation and build an engaging workplace? Across all the human capital research, literature and expert advice, three core themes emerge.

1.Adopt a People-Centred Approach

The solution to the talent problem is finding the right people for the right job.  It’s as simple as that according to Tomas Chamorro-Premuzic, Professor of Business Psychology at University College, London, and the CEO of Hogan Assessments in a recent Forbes article: “If organizations are serious about fixing their talent problems, let alone be future-ready in the war for talent, they will need to become expert talent agents, and this will require a proper understanding of people, including what makes each individual tick, and how to get the most out of each person’s potential.” The imperative to better recruit, develop and engage workers is nothing new however Chamorro-Premuzic recommends 3 unique approaches for today’s workforce:

  • (1) Focus on potential rather than performance: if most of tomorrow’s jobs will be different from today’s jobs, past performance will be a poor predictor of future performance. It is only by estimating a candidate’s probability of contributing to the organization in the future that you will be able to make smart hiring and promotion decisions. The challenge, then, is to infer how good people are at things they have never done before, which means decoding potential.
  • (2) Bet on soft rather than hard skills: One of the best ways to decode people’s potential is to focus on their soft skills. The World Economic Forum’s Future of Jobs report concludes that “human” skills like originality, initiative and critical thinking are likely to increase in value as technology and automation advances.  A 2019 report by LinkedIn Learning agrees, ranking creativity, persuasion, collaboration, adaptability and time management (in that order) as the top 5 soft skills companies need most in 2019.
  • (3) Learn to distrust your instincts: The rise of AI and ubiquity of data may be restructuring the entire working landscape, however, it also has the potential to help solve the talent crisis by allowing data-driven or evidence-based recruitment decisions.  In his book, The Talent Delusion: Why Data, Not intuition, Is the Key to Unlocking Human Potential, Chamorro-Premuzic champions data, via AI and machine learning, as the great equalizer eradicating conscious and unconscious biases from hiring decisions and leading to better placements based on capabilities and innate skills.   The paradox here is that it takes data and systems to adequately manage people, and Chamorro-Premuzic believes we can win the war for talent “by recruiting better, developing better, engaging better, collecting better data, and making more data-driven decisions on potential and performance”.

2.Create a Purpose-Centred Company

Top talent aspires to align their passions and skills with an organization’s mission.  According to numerous worker engagement studies, what we value most highly in a job is not money, it’s meaning, and purpose over a paycheck. Whereas previous generations tend to place a slightly higher value on security and tradition, millennials are more motivated by personal happiness, achieving life aspirations, and recognition.  They demand higher degrees of autonomy and flexibility, more versatile career paths, a stronger emphasis on work-life balance, and a more defined sense of purpose.  According to the 2018 Global Talent Trends study by Mercer, thriving employees are three times more likely to work for a company with a strong sense of purpose. A recent Brookings Institute report states that “Almost two-thirds (64 percent) of millennials said they would rather make $40,000 a year at a job they love than $100,000 a year at a job they think is boring.”   Yet purpose is not only pursued by millennials.  

The 2016 Workforce PurPose Index (by LinkedIn and Imperative) is the largest global study on the role of purpose in the workforce.  It revealed that Baby Boomers are the most purpose-driven generation today (48% compared with millennials at 30%).  According to Erik Erikson, a German psychoanalyst, in his eight-stage theory of development and identity, young adults (millennials) are focused on building relationships. When they reach middle age, there’s a shift to associate one’s identity with what one is contributing to society.  As a global average, 37% of LinkedIn members are purpose-oriented, which means that they optimize their job to align with work that matters to them. And, another 38% considered purpose to be equally weighted with either money or status. In The Business Case for Purpose (Harvard Business Review), Global Lead for EY Beacon Institute Valerie Keller believes purpose taps a universal need, serving as a motivator and uniting everyone to contribute to something bigger.  In their 2015 study, the institute found that although 90 percent of executives recognised that a strong sense of collective purpose drives employee satisfaction and loyalty, less than half of the executives surveyed said their company had actually articulated a strong sense of purpose and used it as a way to make decisions and strengthen motivation.  This suggests that purpose is a powerful, allbeit underutilized tool in the war for talent. A company can embody purpose in a number of ways.

In The Why of Work: How Great Leaders Build Abundant Organizations That Win, David Ulrich, professor of business at the University of Michigan, and author of more than 30 books on human resources and leadership, believes the “why” of work is the common driving force behind every successful organization.  Once you learn how to harness this force, you can make meaning in the workplace—to bring out the best in everyone, create value for your employees, your customers, your company, and yourself, and ultimately build hope for the future by building “the abundant organization.”   For some practical tips, we have compiled a list of the most pertinent advice for employers to provide purpose to employees:

  • Create a company vision, reference it frequently, and ensure alignment with it in all aspects of the business;
  • Allow individuals to have autonomy and influence;
  • Display respect and consideration;
  • Provide the necessary resources and an environment within which to thrive;
  • Recognise and applaud positive performance and contribution;
  • Share customer success stories and the bigger vision of the company;
  • Source people that connect intrinsically with the purpose of the company;
  • As founders and managers, live out authenticity and consistency, and be inspiring!

So, even if you as a business owner are not particularly purpose-oriented, remember that purpose creates profit.  Employees that are more satisfied and fulfilled are higher performers, more productive, and likely to stay longer.  And as research from the E.Y. Beacon Institute and Harvard Business School shows, companies that lead with purpose are more likely to be profitable with 85% of purpose-led companies demonstrating positive growth.

3. Offer an Experience-Centred Workplace

In our February THOUGHT article The Future Workplace, we revealed that in a competitive jobs market, employee experience (EX) is the new trump card for companies.  Keeping their workers happy translates to increased productivity and in turn greater profitability and commercial success.  Employee experience has gone beyond simple employee perks like free beer and pizza, to a sophisticated play for their hearts and minds and, in turn, their loyalty and ‘best effort’ in the workplace.

According to the Globoforce Employee Experience Study, the more satisfied and appreciated a company’s employees are, the more likely they are to work harder, ultimately resulting in greater performances. In his book, The Employee Experience Advantage: How to Win the War for Talent by Giving Employees the Workspaces they Want, the Tools they Need, and a Culture They Can Celebrate” (Wiley, March 2017), author and futurist Jacob Morgan identifies three key factors that must be addressed to achieve what he coins the “Employee Experience Advantage”: culture, technology, and physical space.  From his research of over 250 global organizations, he determines that this creates an organization where people genuinely want to show up to work. 

According to future strategy firm The Future Laboratory, in their 2018 The Future of The Workplace foresight report, these three elements will merge to create a working experience for employees that may have once been reserved for a luxury traveller.  “Tomorrow’s Hospitality Workspace will be a one-stop urban flagship destination for the 5G workforce, a place where work, play and rest are combined under one roof, forming convenient destinations and innovative communities that will attract the globalised, footloose workforce of the late 2020s. Importantly, the key offering here is not gimmickry but choice.  According to Gallup’s recent State of the American Workplace report, more than half (54 percent) of office workers would leave their current job for one that offers more flexibility.  The latest Workplace Survey by Gensler reveals that the most innovative companies actually have twice as much choice not just when work occurs, but also where they work (38 percent versus 17 percent).  

A successful and inclusive remote working culture can be an excellent way to broaden an organization’s labour pool across geographies. Interestingly, when given the choice, a vast majority of workers still prefer to spend a significant amount of their time in the office for a variety of reasons: proximity to teammates, access to resources, and the overall community.  For Gensler, choice means having the right tools and spaces for the job at hand. “Proximity, layout, adjustability, noise management, and technology are key factors in a successful rollout of this type of environment”.  Implementing a choice environment is a perfect opportunity for Human Resources and Real Estate departments to partner and align aspects of job function, policy, and the physical environment to ensure the workplace is a cultural asset.


At the center of every growing business’ growth plans is the need to attract, engage, recruit, and retain employees of the highest qualityThe business of winning and keeping top talent has meant that companies are looking at employers with the same value – if not more – as customers.  This has brought about a whole new strategy around employee experience such as workplaces that delight, on-the-job learning and professional development. The war for talent is being won today by those companies prepared to invest in their people, to outwork their purpose, and to create workplaces that inspire and engage.

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