Global managing partner of McKinsey & Company Dominic Barton joined the firm in 1986 and has advised clients in industries including banking, consumer goods, high tech and industrial, so he has a lot of insight into what’s driving talent in today’s business landscape.
Barton teamed up with Ram Charan and Korn Ferry vice chairman Dennis Carrey to co-author the new book “TALENT WINS: The New Playbook for Putting People First” from Harvard Business Review Press, which provides business leaders with a blueprint for transforming how companies acquire, manage and deploy talent in today’s business landscape. The book synthesizes insights from interviews with hundreds of CEOs, CHROs, chief transformation officers, and CFOs to present a plan to win the war for top talent.
Chief Executive talked with Barton about why CEOs should have a deeper understanding of their employees, new ways to deploy teams within organizations, shifting the thinking of board members on talent strategies and the evolving role of human resources moving forward.
Q: Why do you think it’s critical for CEOs to have a deeper understanding of who’s actually within their organizations and how can they make the most of that information?
A: For CEOs, it’s about identifying a relatively small percentage of people who could drive a massive amount of value in the company. And they’re not all at the top of the organization, for sure. They could be all over the place. The key is figuring out what are those roles and then what do you think about the people, and you have got to get to know them. And I think there’s a way of doing it by just actually looking at the economics of the business. What drives the performance or what’s going to really be driving the companies, we think, over the next two to three years, above and beyond what they normally do?
We’re saying that 2% of people are driving a lot of value. You’ve got to find those people, you’ve got to know who those people are and just make it a mission. And I think one way you can come out of this through the financial side, but it’s also through pushing on your management team about, “Tell me about some of the rising stars” or “Tell me some of the top talent.” I think it should be part of all the performance dialogs you have with business units, talking about talent. “Tell me about some of the up-and-comers, the rising stars or people who seem to be doing extraordinary things,” but always pushing that. Not just looking at the operating performance, but always coming at it with a bit of a talent question. So, by doing that, it becomes part of the lexicon, if you will, and the names surface up.
“We’re saying that 2% of people are driving a lot of value. You’ve got to find those people.”
Q: Tell us about the value of implementing cross-functional teams that can come together, take care of business, disband and re-establish themselves when they’re called upon.
A: It’s based on a notion that companies have to increase their clock speed. Decisions have to be made faster, you have to move resources, people and capital around faster. You have to be more flexible in terms of where the opportunities are and where you need to take resources away from, because of the speed of the market’s gone up. And it just continues to go up.
And so, it’s very difficult to do that in a very hierarchical organization. If you’ve got nine layers, just the time it takes to be able to get from a signal to an action, you’ve missed it. More agile organizations tend to be flatter. We’ve just seen significant delayering that’s going on.
If you think about whatever institution you’re in, you’ve got to be doing some digital work. It could be digitizing your operating processes. It could be digitizing how you interact with your consumers. All companies are going to have to get much better at how they manage and leverage the data that they have on their customers and on their customers’ customers, and that’s where you can build a cross-functional team right away.
So when you’re building something new or you’re revamping something, you can put in this cross-functional, flatter organization to be able to drive it. You’re bringing many different skills together, working together on a topic and then it gets disbanded and they may work on other topics. And how hard you want to go depends on what the culture is like in the organization.
Q: One of the topics covered in the book deals with shifting the definition of TSR from total shareholder return, to focusing more on talent, strategy and risk. For CEOs who are trying to work with boards is it a challenge to convince board members to completely shift their thinking in that regard?
A: I think the good news is there are more boards that are shifting this way. But it’s hard, because a lot of what boards have to do is defined by regulatory and fiduciary requirements. There’s a lot of time you have to spend just on compliance issues and making sure that what you say you do, you are doing, and who is testing that, and the risk and so forth. What we found is people just don’t have a lot of time to be able to focus on these three things that you’ve mentioned
If you look at where people spend their time on a private equity board versus a publicly listed company board, it’s actually quite different and more towards these three topics than the others. I actually think the board would like to do this, too. But the biggest barrier being that there’s a rote system, if you will, based on the regulatory, fiduciary risk side, which is important. We can’t dump that overboard. But it has to be broadened, and that’s where we think more time needs to be spent.
Q: What are some of biggest areas of evolution in the HR space in terms of bringing on talent into organizations?
A: HR has to be a strategic partner, because we think hard about how we allocate capital and spend capital, but we should be spending equal, if not more time, with the talent aspect. We should be reallocating talent, focusing on how to improve talent. And the HR person is an expert in that.
There’s much more data analytics now in helping manage and lead talent better than we’ve had even five years ago. With the data analytics that we have now, we can be much more precise about the types of people we should recruiting, knowing when people are going to leave. There’s predictive analytics that can tell you when people are likely to leave or who’s most at risk. This is sort of a performance assessment tool. How you measure organizational culture? Is this an aligned organization? What do we stand for? It’s not some amorphous thing. There’s actually more digital tools than there ever has been, and it’s growing. I think that enables the HR function to be more analytic than it ever has been.