Talent Management in a Knowledge Economy

HR Strategy Talent Mgmt

A recent issue of the Economist highlighted talent management in Big 4 accounting firms.  This is especially interesting because while the rest of the economy is heading towards greater levels of knowledge work, the Big 4 are arguably at the leading edge.  In truth, their work is almost 100% knowledge work and the trends they see will impact everyone else eventually as we also progress along the continuum towards more collaboration and innovation.

It is not just that they collectively employ some 500,000 people around the world. Many companies are as big as they are. Unlike most, however, the Big Four really mean it when they say that people are their biggest assets. Their product is their employees’ knowledge and their distribution channels are the relationships between their staff and clients. More than most they must worry about how to attract and retain the brightest workers.

Time is regularly set aside at the highest levels to chew over how best to do this. Detailed goals are set: Deloitte’s 2010 business plan includes targets for staff turnover, the scores it seeks in its annual staff survey and the proportion of female partners it would like to have. Partners are increasingly measured and rewarded as managers of people, not just for the amount of money they bring in. People-related items account for one-third of the scorecard used to evaluate partners at PwC. KPMG’s British firm has introduced time codes so that employees can account for how long they spend dealing with staff matters. The idea is that those who devote lots of time to people-related matters are not disadvantaged as a result in pay rises and promotion.  ((The Economist.  July 19, 2007.  “Accounting for good people.”  Retrieved from http://www.economist.com on November 13, 2007.))

It is especially interesting that one-third of the scorecard used to evaluate partners is now centered around people items.  Where I’d guess that a decade ago the scorecard was almost entirely devoted to sales and profitability items, the major presence of people items is indicative of where the rest of our organizations need to go.  I find repeatedly that HR complains about managers who are not held accountable to HR processes.

For example, employee timesheets that are submitted late, pay raises that are not allocated for months, or performance reviews that are only given token attention.  Today, we lose good employees for not having overtime pay on the payroll, or getting someone’s raise a month late.  Worse yet, employees know when their performance review is not real and their upward opportunity is minimized by management.  But when we lose these employees, there may not be people to backfill them.  It seems to me that the Big 4 might have the right model.  Can you “ding” a manager for the percentage of late merit increases they have not processed by the due date?  Or perhaps promoting managers who promote their own?

As the Economist states, “The scale of resources pumped into talent management by the Big Four may be beyond most employers, but many of their ideas could still be copied.”  ((Ibid))

The most intractable problem is that there are never enough skilled or promising people to go around. Just as competition for the best of the bunch is growing, the pool of available talent is changing. In America baby-boomers are flooding into retirement; in Europe the market is greying; and in India and China the large number of graduates masks low numbers of truly high-quality candidates.  ((Ibid))

I’ve also written about this.  While we keep looking towards Asia for talent, it’s really very likely that Asia (mostly China, but to a small degree India) is not ready to supply the high quality senior talent we need.  China is nowhere ready, and India is still fairly early in the knowledge curve to develop high quality talent although in my opinion they are getting pretty close.  However, simply turning out mass numbers of highly educated talent does not mean that they have been socialized for the type of knowledge work and innovation that perhaps exists in the U.S. and European talent markets.  Or possibly the high quality talent market in India is simply composed of younger candidates and those people have not reached the peak of their growth curve (like how the Gen Y in the U.S. is nowhere close to it)