The strategist is an etymological warrior, deriving his or her title from the Greek word for general, and indeed you can often tell a would-be strategist by the copy of Clausewitz or Sun-Tzu in a cubicle drawer. A decade ago this year, the consulting firm McKinsey sounded a different call to arms, heralding a “war for talent” that was to dominate business competition for the next two decades. A glance at the clock tells us we should be right in the thick of it.
“Attract good people. Keep them.” This is the nub of the war for talent, the battle for what a McKinsey director told Fast Company ten years ago, would be a more important source of competitive advantage than “capital, strategy, or R&D”. That’s a bold claim. Capital was more accessible in 1998 than it is a decade on. Strategy, McKinsey thought gamely, could just be copied. And the half-life of technology was said to be getting shorter all the time. What did this leave? Human resources.
(Note that strategy evidently can’t be copied all that easily. Fortune magazine estimates that McKinsey pulled in over $1 billion in revenues last year. And, as this blog’s last post notes, many biotech applications are still long-lived.)
So is today’s competitive landscape pitted by the war for talent? Sure, companies are looking for top people. Recruiting has been professionalised: assessment centres, whatever you may think of them, are used twice as often now as they were twenty years ago. But even before McKinsey’s placet, CEOs had been proclaiming for years that “our people are our greatest resource”. Whats new under the sun?
The genuine insight in the war for talent – and, as far as this author can tell, it belongs not to McKinsey but to McKinsey’s main competitor – is that top-tier talent isn’t just slightly better than the next tier down. It’s several times better, although no one seems prepared to quantify just how much. A first-class manager has many times the productivity of a merely competent one. And the Street believes this, as you’ll discover if you ask why celebrity CEOs earn hundreds of times the salary of their peons.
Ten years on, McKinsey looks like a Menshevik, a white-hat revolutionary chasing an illusion. This is no longer the roaring economy of the late 1990s. An economic downturn signals a war, not for talent, but for jobs: where talent is concerned, it’s a buyer’s market. As we coast into recession, talent will be hanging on by its fingernails.