The War for Talent is Over. The War for Talent Strategy is Here.
Updated: Jun 25, 2020
In 1997 a seminal article published by McKinsey and Company coined the phrase, the “War for Talent.” The central theme was the impending decrease in the supply of knowledge-worker talent, exemplified by the aging of the Baby Boomer cohort, required a radical mindset shift in organizations as to how they would attract, develop and retain the highest caliber “talent” as a means to competitive advantage. The idea echoed previous theories such as the Resourced Based View of people as a differentiated asset (Barney, 1991) and the work of Gary Becker that delineated the impact of “Firm-Specific” from “General” Human Capital (1964).
Today we find ourselves fully embracing the term “talent.” Organizations have jumped on the “talent” bandwagon, creating positions: Chief Talent Officer; disciplines: Talent Management; and, processes: Talent Reviews, while paying far less attention to defining what they mean by “talent” and how to manage it in the context of a clear business strategy. In 2006 the Economist noted:
As we move toward the third decade of the new millennium, 20 years on from the War for Talent, organizations should now be far more focused on a new war. The War for Talent Strategy. That is adopting a discipline that identifies the key roles in the organization that differentiate it from its competition and creating specific practices and programs to ensure those roles are filled by the right people at the right time.
This is by no means a new idea. In a 2004 Harvard Business Review article, John Boudreau and Peter Ramstad discussed the need for organizations to segment talent and make differential investments in the critical few roles that drive the organization’s distinctive advantage. They note:
Further, Brian Becker, Mark Huselid and Richard Beatty’s, The Differentiated Workforce (2009) is a virtual cookbook on the subject of aligning Human Capital Strategy with business strategy. Their case for a well-crafted Talent Strategy is devastatingly clear. They write:
So why does it seem as if some organizations are not taking up the War for Talent Strategy and continue to hew to the outdated tenets of the War for Talent? Some seem reticent to differentiate roles (committing the intellectual error that they are differentiating people), fearing they may alienate workers who occupy roles that may not be pivotal. This leads them to adopt HR practices and programs that treat all employees as if they occupy the same position in the value chain; something that is practically impossible in virtually any enterprise. Some are not precise enough around their strategic intent, the singular lens though which competitive advantage is created, and operate with the mindset that “everyone knows our strategy and everything we do is aligned to it.” And some see the act of going through the process of establishing a clear strategic intent; segmenting roles for their contribution to strategy; engaging in internal/external scanning; and, developing differentiated selection, development, retention and compensations programs - more commonly known as Strategic Workforce Planning (SWP) - as too time consuming, bureaucratic or only the province of staff versus line leaders.
The War for Talent enabled us to shift our mindset to one that saw people as a strategic asset and for that we can be thankful. But the lessons learned from 20 years ago are anachronistic against the backdrop of rapid and discontinuous change, labor shortages and migration around the globe, and exponential disruptions to the way in which we work from breakneck technological innovation. The new front is the War for Talent Strategy. Organizations that will not only survive but thrive will be those that successfully integrate Human Capital and business strategy to drive competitive advantage through people.
If you would like to learn more about how Cognoscenti Associates has helped clients engage in Strategic Workforce Planning (SWP) processes that draw on the ideas cited in this blog please contact us through our website or email firstname.lastname@example.org