TALENT MATTERS!

A THEORY OF TALENT AND WHY IT MATTERS. Can you identify and develop top talent?

By Dermot Grazebrook, Blueprint Talent

What is Talent & Why Does it Matter?

X-Factor, Pop Idol, America’s Got Talent, The Apprentice and The Dragon’s Den. From aspiring entertainment artists to aspiring business professionals, the most successful reality TV-shows of the last 20 years are based on finding and celebrating undiscovered talent. The ongoing success of these TV-show formats demonstrates the innate appeal we all feel at discovering new talent, as well as for the drama of identifying new talent.

It’s not just celebrity game shows and their adoring audience of millions that value talent. So too does the business world. But don’t take my word for it. Here are some people who know something about the relationship between talent and business success:

• “People aren’t your greatest resources, the right people are your greatest resources.” Jim Collins.
• “A great employee isn’t just better than a good employee, they’re one hundred times better.” Mark Zuckerberg.
• “There’s a huge difference between our very best performers and everyone else. If you take a hard look at productivity, you’re seeing what easily amounts to a 300 percent difference. In fact, it’s probably a five-to-one gap.” George Anders.

Does Talent Really Matter?

Increasingly, business leaders now believe what HR practitioners have long known: that an organisation’s people (AKA: human capital) really do matter for a business’ performance and bottom-line!

Happily, this paradigm is no longer just a fuzzy notion. It’s now supported by hard data (and meaningful anecdotal evidence). In a 2013 survey analyzing top global companies performance, Ernest & Young found that:

• 84% of business executives said that their organization’s ability to develop and manage teams is essential for future competitiveness.
• The executives who rated their company as ‘excellent’ at building diverse teams were more likely to have achieved their target earnings, as well as business growth of greater than 10% in 2012.

This recognition of the value talent brings to a company is reflected in a 2011 survey by the Chartered Institute Of Professional Development (CIPD), a UK professional body, which found that:

• 77% of companies with more than 5,000 employees have talent management programs in place.
• SMEs with less than 250 employees use talent management initiatives more than corporates companies to attract new hires (41% of SMEs versus 20% of corporates) and to retain their key employees (50% of SMEs versus 35% of corporates).

Top talent is not a trait demonstrated by the majority of the population (otherwise, it wouldn’t be exceptional). By definition, top talent is scarce! If talented people can make a 100% to 500% difference on an organization’s productivity then it’s easy to see why McKinsey’s famous phrase of ‘the war for talent’ has become a globally accepted mantra. Very few other factors in business provide such clear and sustained differentiation with your competitors as your organization’s pool of talent.

In their book, The War for Talent, McKinsey consultants make the case that for over 20 years there’s been a global long-term strategic inflection point at play: “talent is now a critical driver of corporate performance and that a company’s ability to attract, develop, and retain talent will be a major competitive advantage far into the future.”

In their study, they focus on the war for managerial talent, which they acknowledge isn’t the only type of talent that matters to a company, but that “it is a critical one and it is at the epicentre of the war for talent.” I think we can all agree with this premise.

While TV-shows like Pop-Idol recognize the importance of an individual’s talent and McKinsey of managerial talent, Steve Jobs was emphatic about the value of talented teams of (talented) individuals in a company, which is best expressed by his philosophy of hiring only A-players at Apple. In doing so, it helped him transform Apple into one of the most valuable companies in history!

Here’s Steve Jobs in his own words on the importance of creating talented teams of A-players: “In our business, one person can’t do anything anymore. You create a team of people around you. [We have to] try instil in the organization the goal of only having ‘A’ players. In everything I’ve done, it really pays to go after the best people in the world.”

I think we can all agree it’s now a truism that most companies rely on their teams for success, rather than on any one individual.

While we can’t all hire Apple-level talent, it’s no less true that we all need to hire the best available talent in the local labour market. Certainly we need to hire (and retain) talent that is better than at our competitors.

In today’s complex business environment, it’s all about finding talented individuals who’re able to perform in productive teams. This is why soft skills, like communication and collaboration, are becoming a core competency for all employees; alongside the necessary technical expertise of their job. It’s EQ and IQ now.

If Talent Matters, Then Are We Getting It Right?

So, we all agree (including Zuckerberg and Jobs) that talent matters! But are we getting talent right at our organisations? Are we getting it right when we hire, develop, manage and retain talent? The evidence is that many of us have a way to go in order to do talent better.

In a 2013 ManpowerGroup survey, with participants from 40,000 employers around the world, found the following global talent trends:

• 35% of all employers are struggling to fill their vacancies.
• 1 in 3 employers in the USA are experiencing a skills shortage when hiring for their vacancies.
• While this is 1 in 4 for skills shortages at European employers.
• 73% of employers gave as their main reason for being unable to fill their vacancies: a lack of people with the right mix and level of skills, experience, and knowledge for the role.
• The jobs that employers are finding hardest to fill with the right people are: leadership and senior management roles, engineers, technicians, accounting, finance, ICT, and sales.
• This is supported by the findings in a UK talent planning survey, by Hays & the CIPD of 462 HR professionals. It found that 52% of employers said that managerial and professional roles are hardest to fill, while 46% found it difficult to fill technical specialist roles.
• And…this trend in the problem of finding the right talent was getting worse not better…and still is! Most of the employers in the survey report their inability to fill their vacancies is at its highest since 2008.
• 54% of these employers believe that this skills and talent shortage will have a medium to high impact on their organisation’s competiveness in the marketplace. [This is up from 42% in 2012.]

A 2012 study by McKinsey into human capital practices, across thousands of companies around the world, found that:

• Only 32% had “high confidence” in their organisation’s talent strategy and activities.
• Many HR professionals feel nearly “paraylzed” by the nature and size of the challenges facing them, especially for the talent management function.
• Many feel they are unable to keep up the pace of change in the business environment and wider society.
• Emily Lawson, of McKinsey, says: “I can count on the fingers of two hands the robust talent strategies that I have actually seen — where the numbers have been done robustly and are modelled 3 to 5 years out, where it is clearly understood what it is going to take to compete in a particular market. I think it is very hard. Talent strategies take a long time to play out. There is still a misalignment between what goes on inside companies and what would strategically benefit them in terms of talent.”

These findings are supported by Boston Consulting Group’s 2010 global survey (of 5,561 business leaders across 109 countries) that found:

• 60% of organisations lacked a clear talent acquisition or talent management strategy.
• 33% have no strategy at all!
• Only 2% of companies claimed to have a clear, strong and comprehensive talent management strategy. Again, only 2%!
• On average, top executives and senior management only focussed on talent management activities for 9 or less days each year, while only 1% of respondents felt that their organisation’s talent management plans and activities were aligned to the company’s business-planning cycle. Again, only 1%!
• This data led Boston Consulting Group to conclude that many companies are “relying on serendipity to meet their current and future talent needs, incurring unnecessary business risk.”
• Yes, you read that correctly: most businesses are RELYING ON LUCK instead of good strategy when it comes to their talent acquisition and talent management!

Clearly, the results from the Boston Consulting Group, the McKinsey and the ManpowerGroup global surveys demonstrate a DISCONNECT between business operations and HR  — at least, when it comes to the talent acquisition and management function.

What is Talent? (The Bigger Picture…)

A basic challenge for talent management is actually defining what ‘talent’ means. And what it means in the context of any particular skill, job, organisation, or industry.

Trying to define ‘talent’ is a bit like St Augustine of Hippo’s reply when he was asked to define what ‘time’ is: “If no one asks me, I know; but if any person should require me to tell him, I cannot.”

Interestingly, in several business and psychology books on talent I’ve read, none provide a specific explanation of what talent actually is. (The only exception to this was Matthew Syed’s Bounce: The Myth Of Talent & The Power Of Practice.) Rather, they assume that we just know what talent is, whereas what is actually up for discussion in these publications is how we attract and assess and manage talent.

In business, clearly there’s a general link between ‘talent’ and smart, clever, hard-working, innovative individuals who demonstrate exceptional performance at work. But exactly what do ‘high potential’ and ‘exceptional performance’ mean? Well, for any one job or organisation what’s defined as ‘talent’ may vary a great deal according to context.

How one organisation (or industry) defines talent will not necessarily be exactly the same for any other organisation, as well as the fact that the appropriate frameworks for talent management and performance management will vary by job function, job level, organisation, sector (and geography, to some extent).

It will be helpful to try to define the concept of ‘talent’. Once I’ve done that, I’ll try take on the more controversial and complex challenge of teasing out the nature of ‘what talent is’ (or isn’t). But first, some definitions:

Dictionary.com, provides the following definition for ‘talent’:

• Special natural ability or aptitude: a talent for drawing.
• Capacity for achievement or success; ability: young men of talent.

Ask.com answers the question ‘What is talent?’ with: “Talent is defined as the ability you have in areas you compete in. A singer’s talent is their voice. A basketball player talent can be shooting the ball.”

According to these online dictionaries, talent is defined by competition. In other words, if you are better than the average person in a particular field or skill, then you can be said to have talent. The more talented you are at something, the more likely you are to win at it. (Can this be true for talent in non-competitive activities too, like meditation?) However, this definition seems circular – it certainly doesn’t help us understand how to identify and assess top talent when hiring new people, especially when recruiting people without prior experience.

In order to get a deeper understanding of ‘talent’, we need to reflect on the nature of talent. Again, we need to ask ourselves: what is talent?

Such reflection inevitably leads us into the centuries old philosophical nature versus nurture debate, influenced by great thinkers from Plato to Hume to Pinker. The nature versus nurture debate centres on competing notions of the essence of Man’s mind: is Man born with innate skills and capacities already given to him (i.e. genetic traits) or is Man a ‘blank slate’ at birth and it’s his environment that determines his character and capacities?

Common sense indicates it’s a bit of both (nature and nurture), though for two thousand years philosophers have never let that stop them arguing for one over the other.

But common sense alone doesn’t help us identify and manage talent. Often, when we see talent in action, it seems almost miraculous – like some sixth sense inherent in the talented person. We marvel at their innate brilliance (and often assume that we could never do what they do).

But these everyday misconceptions about ‘talent’ and ‘innate ability’ are challenged by studies of performance excellence from across a range of professions and disciplines – whether sport, business or the military.

These performance excellence studies matter because they reveal some of the ways that we try identify talent in other people are just plain wrong. And these studies can help us develop a better capability for attracting and identifying the right top talent for our organizations.

So let’s get into how these performance excellence studies can help us understand ‘talent’ better…

First, what do we mean when we say someone is talented? Generally, it applies to a specific role or skill, which can be physical, perceptual or conceptual (or for most complex tasks, it’s all three). Also, context matters.

For example, a talented sports person demonstrates above average abilities in their motor skills, fitness, reading of the game and ability to anticipate the best play at any given moment. For a top sales person, it may be a combination of their people skills (EQ), perseverance, ability to think on their feet and knowledge of the product and the customer (IQ). So talent can only be ascribed to a person in the context of the performance of a specific set of skills while performing a particular task for an intended outcome. [It doesn’t make sense to say of someone -in a general sense- that they are really talented, without referring it to something specific.]

In short, talent is a performance related activity and, when we say of someone that they are talented, we are stating that their performance is one of excellence (or indicating the potential for excellence).

In the context of business this makes sense, as business is outcome orientated. And outcomes are a result of performance, whether by the company, its people or its teams. Businesses, like sports teams and stars, strive for performance excellence…or as close as they can get to it.

In order to better understand what talent is, then it helps to explore: what is performance excellence? We’ll do this with the assistance of three authors: George Anders (The Rare Find: How Great Talent Stands Out), Matthew Syed (Bounce: The Myth Of Talent & The Power Of Practice) and Gary Klein (Sources of Power: How People Make Decisions).

In the 1990’s, Gary Klein, a New York psychologist, was contracted by the US military to study how people make decisions under pressure in the real world. He studied many fields where professionals made decisions under stress, including firefighters and chess masters.

Prior to Klein’s studies, the general assumption about how these professionals reached decisions was that they would run through various alternatives in their minds before arriving at the optimal decision. This is known as ‘optimizing’. In fact, in his extensive research, Gary Klein found quite the opposite to be true.

For example, when assessing a burning building firefighter captains did not seem to make a decision at all. Instead, after brief contemplation of the situation, the captains just decided on a course of action without considering any alternatives. When asked about it, they often struggled to explain it. They’d just put it down to some form of ‘extrasensory perception’. Actually, what they were doing was ‘satisficing’: deciding upon the first option that works.

The firefighters weren’t just randomly picking any option. Instead, they were making accurate decisions that were the difference between life and death (both for themselves and the people they rescued). So what was going on? How could they seem to intuitively sum up a situation in order to make swift and correct decisions, while under immense stress?

After years of experience and learning on and off the job, the firefighter captains could “confront a burning building and almost instantly place it within the context of a rich, detailed, and elaborate conceptual scheme derived from years of experience. They can comprehend its complex dynamics, often without understanding how. Their experience has provided them with a firm set of patterns. They are accustomed to sizing up the situation by having it match one of these patterns.” (Klein.)

Klein’s study found that this ‘pattern-matching process’ is the same for pilots, military officers, detectives, and sports stars. What they have is deep knowledge and long experience in their chosen profession. Even in situations when they deliberated between alternative options, tests found that they still often chose to act on the first choice that came to their mind and that often their first choice was the optimal decision from all the variables options.

Further study showed that in real life situations of any complexity (which is most of them) the escalation of the number of possible variables result in a ‘combinatorial explosion’. This means that there is too much data to make a logical and deliberate assessment of all possible options and then choose the best. It takes too long and it still results in a risk of the wrong decision being made!

It seems there is no substitute for knowledge and experience (which is in line with common sense too, when you think about it).

The result of Klein’s research is that it means knowledge and experience really matter.

If deep domain knowledge and experience do matter, then this has implications for business and HR. Especially for management practices, succession planning and for the value of the retention of talented employees. It means that there is no short cut around developing ‘deep domain expertise’ (AKA: ‘talent’) in any given role, if performance excellence is important for success in that work. (Obviously, what ‘deep’ and ‘expertise’ mean in any given role varies according to context).

So why does all this matter for business? (After all, most jobs don’t require people to fight fearsome fires or make flashy slam-dunks…except in the metaphorical sense.)

It matters a great deal because Klein’s theory of performance excellence is contrary to many current business trends and practices, like: the assumption that talented but inexperienced managers and consultants can be parachuted into any role or sector and still deliver excellence by virtue of what they learnt previously – say, in a generalist MBA or from applying their raw IQ, etc.

It matters a great deal because if we hire for character and train for competence, then we need to understand how to develop deep domain expertise in a cost and time effective way.

As a result of similar studies in 2001, Jeff Immelt enforced the requirement of deep domain expertise as a criteria for getting ahead at GE. A noticeable change in GE’s approach and culture from the Jack Welch era! [Jeff Immelt was Welch’s successor as CEO of GE.]

So, again, what is talent? From Klein’s research we can say that ‘talent’ is ‘performance excellence’ made up of ‘deep domain expertise’ in the form of excellence in a ‘pattern-matching process’ accompanied by relevant skilled behaviours (conceptual, perceptual and/or motor).

In other words, talent is learnt behaviour and knowledge that is applied in the performance of a task to the standard of an expert.

This is very good news, as it means that ‘talent’ can be made and developed. We can create more ‘naturals’, so to speak! If we can learn to create more talented professionals more consistently, then we may have a good chance of addressing the global and local skills shortages.

In 1991, during a study comparing the best professional violinists to professional violinists who were merely good or average, Anders Ericson found that what distinguished the best from the good violinists was a simple rule: by the age of 20 years, the best violinists had practised an average of ten thousand hours. This compared to a good violinist’s practice of eight thousand hours (while the average violinists’ had practiced four thousand hours). This is known as the ‘ten thousand hour’ rule (made famous by Malcolm Gladwell in his book, Blink).

Ericson concluded: “The differences between expert performers and normal adults reflects a life-long persistence of deliberate effort to improve.” Again, it shows that talent can be learnt and developed, if one is dedicated and motivated enough.

The requirement for a great deal of practice if one is to achieve expert-performance means that a great deal of ‘internalized motivation’ is needed; and without which the required level of purposeful practice just won’t happen (or it won’t happen in a way that delivers a good return for the time invested). Naturally, internalized motivation is more than mere discipline. It includes that the person actually enjoys it for its own sake.

For a high performance organization seeking to employ hire performance and talented people, this is why employee engagement really matters! It also shows that attracting and recruiting the right person matters, in regard to if they’ll be engaged by the work they’re applying for.

For anyone in the labour market or applying for a job, this is why choosing work that aligns to your passions or interests matters. As a consequence, this is why career awareness and career-mapping matters. And it’s why talent management is important for how an organization manages people. [There’s a case to be made that better career awareness and mapping available to all from school to retirement could have a significant impact on a nation’s productivity and GDP!]

These studies by Klein and Anders are good news for business. In a world that is in a ‘war for talent’, it demonstrates that talent can be created and nurtured.

Peter F Drucker (known as the father of modern management) pointed out that there are too few ‘naturals’ in the world (as he called top talent) to be able to meet the demand for it. Therefore organizations need to learn to deliver excellence while making do with ‘ordinary folk’.

If we can develop ordinary folk into experts capable of performance excellence then there is a new hope for business in ‘the war for talent’. Also, there is hope for increasing productivity, at an individual and organizational level as well as for a nation’s GDP.

So…Expertise Matters!

So to sum up, what is talent? Talent is the result of an individual’s internally motivated life-long development (in the form of deliberate effort to improve in the pursuit of performance excellence), in a chosen specialized activity or profession, which results in consistent above average performance by that individual. [Obviously, external factors, like education, mentoring, coaching, opportunities, etc, all play a significant role too. But if all other things are equal then Klein’s and Ericson’s studies show us where the difference can be made.]

Talent is expressed through deep domain expertise. In short, applied knowledge and experience is KING!

Studies show that a minimum of ten thousand hours of practice for performance excellence in any given field.

Is ten thousand hours really that much? Well, yes and no. On average, if you work full time, then you average two thousand one hundred and sixty hours at work per year. So it should take approximately five years to become an expert and capable of performance excellence, assuming you’re applying yourself to continual improvement throughout. (That doesn’t seem so much in the course of a career, does it? But it does mean that employee retention is even more important than ever!)

So again, why does talent matter? Well, if we agree with Zuckerberg, Jobs, and Anders that a great employee is one to five hundred times better than a good one, then perhaps Ram Charan and Bill Conaty are right when they say:

“Talent is the leading indicator of whether a business is headed up or down. If businesses managed their money as carelessly as they manage their people, most would be bankrupt.”. (The Talent Masters: Why Smart Leaders Put People Before Numbers.)

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