Battle for talent, the 'fourth world war'

K. Basrie, The Jakarta Post, Jakarta

Helen Handfield-Jones, coauthor of The War for Talent, made a stop in Jakarta on her tour of five major cities in Southeast Asia to promote the 200-page book, published by Harvard Business School Press last year.

The book is based on research with 200 senior managers from 77 companies in 1997 and 56 companies in 2000, all of which were based in North America. The study was conducted by Canada-based McKinsey & Company, where Handfield-Jones and the other two writers, Ed Michaels and Beth Axelrod, work.

Even though the characteristics of the companies and the people surveyed for the study might have significant differences from those in Indonesia, the book will help broaden our perspectives about what the battle for competency and success is all about: Preventing the most talented workers from bailing out.

With the help of PT McKinsey Indonesia, we sat down with Handfield-Jones to discuss what it takes to be a talent in today's workplace.

What do your really mean by talents in the book?

It's really very old and inclusive about someone's capability to do their job, it includes their inherent abilities, like intelligence and personality. But also their skills, knowledge, their values, all of those things.

We're talking about a highly talented person. She could be a highly talented baseball player, and a terrible soccer player (laughing). Or it could be terrific business leader and a terrible journalist. So, when we're speaking about highly talented persons, it means they've got a total set of skills, abilities, values and mind-set. For a pharmaceutical company, that means a great scientist, for a soccer company, it means a great planner, for most other businesses it means the most senior leadership.

Then, how do you precisely describe the war for talents, particularly in the global arena nowadays?

Talents have become more important and more difficult for companies, with four forces driving that. The first force is the increase for knowledge workers generally -- computer programmers, medical technicians, business people, journalists, and all of the people who work with their mind -- instead of with their hands.

As the world shifts to an information-based economy from a manufacturing based one, a large percentage of the jobs are now knowledge-worker jobs. In 1900 in the U.S., for example, 17 percent of all the jobs were considered to be knowledge jobs. But now, it's over 60 percent and it's increasing. Overall, there's an ongoing demand for educated people.

(Christian Van Schoote from McKinsey Indonesia said that his office had not yet carried out a study on the same issue in Indonesia. But he firmly believed that big cities all across the globe were obviously facing the same problem.)

The second force is that the jobs of senior managers all over the world are more challenging than they were 10 or 15 years ago. Many forces are requiring companies to be more innovative, higher performing and faster to respond to change in the global economy.

And I think in the Asian context or any developing nations where you have companies facing tighter competition than ever before, privatization, deregulation, and the wonderful advances of science and technology, many companies in Asia are also thirsty for more and better business management talent.

The third is that talented businesspeople are more mobile, more able to change companies. This is very true in the United States. So if I don't like the company I am working for now, I could change to another company. Plus, there's mobility across countries. People could leave Indonesia and go to the U.S. or, more usually, to Singapore. And European, American and Japanese companies are looking for talents. They come in to find talents in places like Indonesia.

And, finally, the fourth force, there's a difference here in that some countries have demographic problems -- which you don't have here but we do in North America -- in the form of an aging population, where people under 45 are actually decreasing in number. The pool for the next generation leaders is smaller and smaller.

You don't have that problem here but your challenge here is that in term of supply of business management talent you don't have a very deep pool of managerial talents who have been exposed to competition and best practices.

Do the Asian cultures, values and so on play a certain role in the war?

Certainly they do. Cultural differences influence what approaches are appropriate. Most of the principles in this book are globally implacable but apply differently because of different cultures. Let's take several examples. In Asian cultures and also European cultures too there's a reluctance to be frank and honest about performance, right?

What about family-owned businesses that are so common here?

That poses a challenge because again it becomes more difficult to be honest about people. We certainly see family-owned businesses that have overcome the problem after being objective about performance and recruiting the most qualified people. But in some family-owned businesses, that's difficult to do. So, what's your suggestion to such companies we have here?

I would say to adopt the mind-set that we need capable people to run the company and that some of them can be family members and others not. But let's assess and promote people based on their overall performance.

How much we can trust them certainly is a factor but also how capable they are and how effective they are at leading the organization. It's more about capability rather than relationships. Do you think that headhunters, for instance, would help solve the problem?

They are playing important roles in North America. Many big companies are looking for them. It's a good thing for the talent market to become more transparent, where buyers and sellers can match up to select the right people. The increase in headhunter- and Internet-recruiting also fuels the mobility of people moving from one company to another. It makes the best use of talent and the mechanism helps talented people to find ways for the best opportunities. It's a little bit like a free market. In such a war, what are the best weapons for companies here in Indonesia to avoid the nightmare of losing their gifted employees?

I don't agree with the word nightmare, I don't (laughing). Those kind of people moving is a trend that won't stop. What a company should do to respond is, first, be very good in retaining your best people so know who your very best people are and make sure you are giving them proper promotion and compensation.

Give your people as much as you can. And in general, it's good for companies to compete for talent. Companies should have two things, one is that they have to realize that it's going to happen.

(According to Van Schoote, companies willing to achieve their goals should do all their best to retain their best employees. But many firms don't do that and let the best go and keep the poorer performers, who are less likely to move on.) Any tips for employees planning to make a change?

We should look at our proper value preposition: what are the other organizations offering you, can you really change it, what do your talent competitors have that you don't? That's a very strategic approach.

Is that what you call EVP (employee value preposition) in the book?

Yes. That's the place at which we start.

What about the tactics for employers?

They should know who their best people are and find out the reasons why the best leave. Why have we failed to retain them? So it needs a kind of very personal and individual tactic to keep hold of these people.

(McKinsey's research in the U.S. shows that the opportunities available in their current offices lead talented individuals to stay, added Van Schoote.) Here in Indonesia the "pull" factors for people leaving their current companies are varied, such as the weakening of the local currency, the lack of career opportunities, a poor relationship with the boss and the poor working environment. Your comments?

(Van Schoote, who was given the chance to reply first to the question, insisted that although McKinsey had not done any research here, they believed that a rupiah-based salary was not the most determining factor. In the end, he went on, people moving abroad will also face the same relative living cost. What McKinsey thinks most about the critical factors are the culture and opportunities, not the compensation.)

You cannot make a great value preposition with compensation alone. Also you cannot attract people with money alone. But, like a car, if you can buy one at half the price or far less than the price it's a different story. So compensation matters but if the difference how does this sentence end?

In many industries a decade or two ago, the difference between the most profitable company and a not very profitable company was structural. It could have been physical assets and plant, structural barriers or hard, tangible assets. Now in the information era, it's the intangible things that differentiate between companies, such as brains, innovation and relationships. The other thing is the supply-demand imbalance. Companies have been looking for talent but the global supply is not enough. It wasn't the case a decade or two ago. But, why have you stayed with McKinsey for 11 years while you, of course, had great chances to change?

I love working with clients, I like doing research, I helped build the talent management practice at McKinsey, and McKinsey gave me the opportunities to build it.

The War for Talent is available at major bookstores, including QB World Books (Rp 358,000).