The shifting sands: What companies need to know in the war for talent
How the disruption is affecting organisations in their quest for talent
Power has shifted significantly towards skilled talent in a hyper-connected economy starved of resources that can orchestrate change. Organizations that don’t evolve effort and incentives for the new world of work will find it difficult to sustain their advantages
Gradual but fundamental changes affecting the talent market had already been taking root in the past decade. This was made possible by the spread of affordable high speed internet to most nooks and corners of the world. For example, though virtual work wasn’t really accepted as reliable enough, “work from home” had become a term; “online learning” was a forward thing to do but not really the go to medium for serious goals; and even though almost everyone knew of a “freelancer”, most were not keen to be one themselves.
It took this Covid shock for most to come aware into the true potential of these changes for both seekers and providers of talent. The convergence and hyper-dependence on these in the past 20 months or so has changed the landscape of talent forever.
Perhaps the most lasting change we are going to see is the power shift from employers towards skilled talent. This is due to an evolving demand-supply dynamic.
In an economic trajectory arm-twisted into a new direction by Covid, firms need a higher proportion of skilled talent faster than they have ever done before. I say higher proportion because usually only about a quarter of the people — let’s call these folks impact talent — in any firm produce about three quarters of the value it generates (see reference 1). The rest help in delivering incremental value and ensure business continuity while new change/value generation can be orchestrated.
Skill here means any particular specialised set of actions that are proven to generate business value. Impact talent can be seen as a subset of skilled talent which is also highly adept at evolving itself, and therefore the business, with external change. This usually comes with strong foundational abilities, focused interests, and attitudes that enable positive outcomes.
Finding, recognising, and developing impact talent is difficult and perhaps one of the most important things a growing business needs to do.
In times of rapid unanticipated change the proportion of impact talent needed rises across industries creating temporary scarcity. To cope, the premium firms are willing to pay for this talent goes through the roof as they scramble to adapt at a breakneck speed. This therefore pushes up demand for such talent.
Now skilled talent is not just a scarce resource but increasingly mobile, thanks to remote, and also increasingly connected. This not just makes them more aware of their own worth in the market but also desperate to realise and enhance it.
This drastically reduces the power organisations have over their talent based in information and location arbitrage. Simply put, this means people who just a few years ago would have stuck with a firm due to lack of information about the market value of their talent, location constraints, or motivation, will now be doing that less and less. Motivations by themselves have undergone a radical change with people realizing that life is perhaps not as long and predictable as it seems. Perhaps a topic for another time.
In a way the skilled talent marketplace is going towards being more efficient due to lowering of entry and exit barriers for aspirants.
(The other side of this story is about talent that is unskilled, semi-skilled or has skills that have less and less incremental value as technology progresses. The paradigm shift will perhaps not reward this category, or firms that rely on these, as much. While a positive tide in the economy may lift their boats along with others in the short-medium term, the long term looks fuzzy)
Skilling or education in general is an arduous and time taking process; a major challenge for economies by itself. Because the supply of skilled talent in short term cannot increase suddenly, higher mobility of talent leads to supply constraints.
Higher demand and volatility in supply means firms have to be smarter and work harder than ever before for talent.
Organisations will need to offer not just better but more evolved and diverse value propositions to retain different types of talent based on their skills and preferences.
The tying of a variety of individual incentives, feedback, and rewards more closely and immediately to the realised skillset and business impact will increase across levels for skilled talent.
This has been in the making for a few years now (2). It’s just like offering different products for different market segments in an efficient and competitive market — one size doesn’t fit all anymore when there are many more available.
Firms that have figured this out are creating bouquets of attractive value propositions: flexibility, autonomy, deep development investments, well-being investments, flat hierarchies, and powerful incentives to grab the best talent on offer while the time is ripe for disruption and growth. This alongside pivoting their talent teams to strategic, agile, and high performing ones.
These discerning businesses are planning for persistent change rather than just the next phase of stability.
References:
- “The Best & the Rest: Revisiting the Norm of Normality of Individual Performance”, Ernest O’Boyle Jr., Herman Aguinis, Publisher: Personnel Psychology, 2012, 65, 79–119
- “Ahead of the curve: The future of performance management”, Mckinsey Quarterly: May 2016
