Talent management is built upon talent intelligence—the understanding that businesses have of the skills, expertise and qualities of their people. It is the basis of every people decision that companies make and without it, they would be reduced to just randomly hiring and promoting people. It is the fundamental foundation of modern-day talent management. And yet, the trouble with most company’s talent intelligence is that it is just not that intelligent. In this article, based on their upcoming book Talent Intelligence, the authors explain why and show what organisations can do to rectify the situation.
Almost 15 years ago now, McKinsey declared that there was a “war for talent” coming, and it seems they got it right.1 Globalisation and shifting population demographics are causing competition for talent to steadily and persistently rise and making it harder than ever for businesses to find the talent they need.
In the West, only 18 per cent of firms say they have enough talent in place to meet future business needs2 and more than half report that their business is already being held back by a lack of leadership talent.3 Worryingly, 75 per cent of businesses report difficulty in filling vacancies, too.4 The situation is generally not as critical in emerging markets at present, but this will change. In China, for example, the predominantly manufacturing base of its economy has largely protected it from these concerns up to now. Yet as service industries and the use of knowledge workers grow and the impact of the country’s one-child policy is felt, China too will face these challenges. The war for talent is going global.
It is not actual war, of course, but there will be casualties and there will be winners. We know that those businesses that are better at talent management and more able to find and keep the best people tend to outperform their industry’s average return to shareholders by around 22 per cent.5 In fact, making good hiring and promotion decisions can have a bigger impact on market value than creating a customer-focused environment, improving benefits or having good union relationships.6 And amidst stronger competition for talent, these performance advantages for companies that are effective at identifying and managing talent will increase.