A Scientific Approach to Leadership
and Management Development

"Leadership Matters"
— A Management Newsletter —

Finding Talent — Management's Toughest Challenge?

As managers, we have two primary jobs in the companies we serve: getting business results and helping people grow. The first is easy enough to explain (though difficult to do), but the second job is often underestimated and misunderstood by managers — and by the companies that employ them.

But why is it so important to help people grow and develop? It seems as if the supply of skilled and talented people has never been greater — around 200,000 MBAs are awarded every year. Add the expanding global labor pool, and it would appear that talented people are quite plentiful. Yet a recent Fortune magazine article1 unequivocally suggests that the demand for top talent is greater than ever, creating an auction-like environment for acquiring this talent.

"…the demand for top talent is greater than ever."

In today's business environments, it is talented people who make companies rich. Therefore, talented, experienced people are becoming much more valuable to their firms — and much more expensive. And the inability to hold on to those people is becoming a greater threat to company success. As the demand for talent increases, the talent in the highest demand of all is that of the skilled, effective manager.

The reason for the heightened need for managers is simple: the pace and scale of business today makes it impossible for managers to command and control detailed aspects of the work. Manufacturing and call center supervisors controlling the work has been replaced by systems and processes that push authority down the line. In short, more than ever before, managers must get things done through others.

Intellectually, many managers understand this, but many managers do not know how to replace reflexive habits that are counterproductive. MBA programs simply do not "teach" managers the skills they need to help people grow — and valuable experience is idiosyncratic and time-intensive.

The primary conclusion reported by Colvin in the Fortune article: While 77% of companies say they don't have enough managerial bench strength, more of them are "getting serious about growing their own leaders."

Unless a company's executives want to bid for "star talent" — an increasingly expensive proposition — or fight through litigation to mitigate headhunting, they must grow leadership from within. If a management pipeline is not developed, then the firm is always threatened by predators willing to overpay for talent.

Executives must make a decision: should they seek to find and hire more talented people, or should they seek to develop that talent among the people they already employ?

Talent is too often perceived as something people are born with. Perhaps that's true, but firms that just pursue talent will never really have the top talent — unless their pockets are very deep. Every company simply can't have the top 10% of the talent. Primarily, companies are full of ordinary people.

Fortunately, "ordinary" people can achieve extraordinary results. Great companies help these people gain the talent to achieve at great levels. Southwest Airlines (who routinely avoids hiring MBAs) is just one example. Many companies regularly get great business results through "ordinary" people — without going to the market to hire the top "talent."

Native talent is not nearly as valuable as learned skill. And more companies are learning that the job of developing management and leadership skill is not the job of HR, but of managers. Buying managerial talent off the street is the easy way, but it's very expensive — and it's often counterproductive overall, due to issues with morale and conflicting culture. The alternative is to make it part of every manager's job to grow the ordinary people you already have.

Colvin reports that there is a "war for talent." There is only one way to avoid this costly war: by building talent from within. This is management's job. It requires that managers pay attention to growing their people. It requires that managers make bigger jobs for their direct reports, and that they work more through others.

In fact, growing talent from within may be the only way managers can succeed in the other part of their job: getting superior results with limited resources.

1Colvin, Geoffrey (2006, Feb.). “Catch a rising star.” Fortune. Click to read online at: http://money.cnn.com/2006/01/23/magazines/fortune/starintroduction_fortune_060206/index.htm?cnn=yes

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