Hewlett-Packard
captures people early through summer internships and part-time jobs
for high school students. One US-based accounting firm hired a third
of one year's graduates from a top Indiana college. The Home Depot
hires its competitors' best employees. Enron recruits retired military
officers because "people from the army are used to traveling
a lot, and this work is like what they have been doing." Ten
years ago, McKinsey's new hires were almost all MBAs; now over 40
percent are lawyers, doctors, economists, scientists, military officers,
or former government officials.
Talent-winners
also recruit continuously, rather than simply to fill openings. Thirty-one
percent of HR directors at top-quintile companies strongly agree that
they are always looking for great talent and bring it in whenever
they find it, compared to only 9 percent at mid-quintile companies.
Arrow Electronics is "constantly looking at our competitors,
suppliers and customers to spot great people." At Baan, "Everyone
must be a talent scout." Companies whose approach to hiring is
to fill any open slot within three months should expect to lose the
talent game.
Even when the dominant strategy is to spot talent early and train
it within, companies should consider regularly hiring senior executives
from outside. Rather than seeing this as a failure of the internal
development pipeline, they should view it as a way to accommodate
rapid growth, refresh the gene pool and calibrate the internal talent
standard.
Bill George recruited many new hires to facilitate Medtronic's moves
into new products and geographies. Amgen has hired in close to a quarter
of its top 500 people to feed 50 percent annual growth. Despite the
success of its internal development efforts, General Electric routinely
fills up to a quarter of its senior openings from the outside to calibrate
its talent and raise the bar. Nor should companies hesitate to go
outside their own industry. Sears hired Gulf War general Gus Pagonis
to run its logistics; Bank One hired Taco Bell head Ken Stevens to
lead retail banking.
Developing talent aggressively
Elevating talent as a priority throughout the company, developing
a sound employee value proposition and ensuring your sourcing strategy
is a powerful one will do much of what is needed to make your position
in the market for talent compelling. Our research suggests that there
are also a number of specific steps to do with development that companies
should take to complete their talent program.
Put people in jobs before they're ready
Academics and HR professionals have long known what our research confirms:
the key to development is "a big job before I expected it."
Yet only 10 percent of "top 200" executives strongly agree
that their company uses job assignments as a very effective development
lever. Forty-two percent have never made crossfunctional moves, 40
percent have never worked in an unfamiliar business unit, 34 percent
have never held a position with P&L responsibility and 66 percent
say they have never had a leadership role in starting a new business.
All sorts of reasons explain this sorry state of affairs: there's
often precious little clarity about who should be developed, let alone
how; senior people worry that moving people around is not worth the
disruption; divisions hoard their best staff; and HR executives, who
should know better, are often preoccupied with training and other
"auditable" initiatives. But like it or not, people learn
by being put in situations that require skills they don't have - a
truth poorly served when "Who can do this job best right now?"
dominates staffing decisions.
All companies could do better. At a structural level, they should
consider what they can do to form smaller, more autonomous units,
create the maximum number of P&L jobs each business will bear
and use special project teams to provide new challenges and ways of
working together. Overall, the characteristics that make a job good
for development are similar to those that make it attractive in the
first place, with one notable exception: executives always prefer
to have full control over everything they are responsible for, but
jobs that require them to achieve results by influencing rather than
controlling others contribute powerfully to their development.
Put a good feedback system in place
Everyone knows how important feedback and coaching are, yet most companies
don't do them very well. Seventy-three percent of executives view
informal feedback and coaching as essential or very important to development,
but only 30 percent rate their company as excellent or very good at
providing them. Sixty percent strongly value being mentored but only
25 percent are content with their mentoring.
Good feedback and coaching raise everyone's game, not just that of
the high flyers. Fortunately, companies can nudge leaders to offer
more feedback through "360-degree feedback" programs (where
contributions come from those above, below and around an individual)
and other formal mechanisms. Arrow Electronics uses its 360-degree
feedback system, monitored by CEO Steve Kaufman himself, to determine
whether managers are actually providing the feedback and coaching
that they should.
Understand the scope of your retention problem
Most companies recognize they could improve recruitment and development;
few realize they have a retention problem. They focus only on the
top 200 executives, where average attrition is below 4 percent a year.
But it is the early and middle ranks of managers three to eight years
out of college, their basic training already paid for, that represent
a company's investment in its future. Senior executives seldom notice
them, and they may not feel connected to the organization; they are
also more mobile and demanding. All in all, this is a volatile mix.
The situation will come to a head as the number of 25- to 34-year-olds
continues to decline over the next decade, and as their perception
of future opportunities dims with the preponderance of older executives
occupying the top positions in most companies.
Paradoxically, it is the companies that have done the best job of
recruitment and development that may be most at risk from poaching.
But every company needs to understand why its high performers are
leaving. Attrition must be tracked by performance level. The common
practice of tracking voluntary as against involuntary attrition is
not good enough: it's probably your high performers who are choosing
to leave.
Creating and delivering a great employee value proposition is clearly
the best way to retain people, yet only 16 percent of those surveyed
sat they are effective at giving high performers more exciting jobs
to retain them. What can you do? Start by giving them a sense of belonging;
as John Quayle of Arrow Electronics points out, "It's harder
to quit if you are having lunch every quarter with your mentor."
Send them a clear message that they are valued: two very well-run
companies recently discovered that several high performers had no
idea that they were highly regarded and were being groomed. And wherever
possible, give them a great boss.
Just as account managers nurture and develop their key accounts, someone
in every company should be responsible for nurturing and developing
each key employee. Top-potential people should never fall off the
screen.
Move on the poor performers now
It's hard to give all your high performers a great boss if too few
of your bosses are high performers themselves. Most companies have
a number of weak players in their organization. They aren't exactly
failing, but neither are they leading the way.
The cost of carrying such people is enormous. Don't fool yourself
that weeding them out will destroy morale; it's probably lower than
you think already.
from The McKinsey
Quarterly, 1998
Elizabeth G, Chambers
Mark Foulon
Helen Handfield-Jones
Steven M. Hankin
Edward G. Michaels III
Reprinted from The McKinsey Quarterly, 1998
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