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Why Acquisition and Retention Strategies Don’t Work

It’s 2008: Do You Know Where Your Talent Is?
Why Acquisition and Retention Strategies Don’t Work
Part 1 of a Deloitte Research Series on Talent Management
By Robin Athey

Despite millions of unemployed workers, there is an acute shortage of talent: science educators to teach the next generation of chemists, health care professionals of all stripes, design engineers with deep technical and interpersonal skills, and seasoned marketers who understand the Chinese marketplace. Resumes abound, yet companies still feverishly search for the people who make the difference between 10 percent and 20 percent annual growth, or between profit and loss. Critical talent is scarce, and about to become much more scarce because of two looming trends: the retirement of the Baby Boom generation and a growing skills gap.

By “critical talent,” we refer to the groups and individuals that drive a disproportionate share of their company’s business performance and generate greater-than-average value for customers and shareholders. A company’s critical talent possesses highly developed skills and deep knowledge—not just of the work itself but also of “how to make things happen” in the organization. Without these people, organizations could not achieve their strategies.

We are not necessarily referring to the “A players” or senior executives who command the highest salaries. More often we’re talking about employees who don’t end up in the annual report. They include the scientists and clinicians who discover and develop the blockbuster drugs that fuel pharmaceutical companies’ growth. In the oil industry, they include the geologists and petroleum engineers who find and extract oil. In manufacturing, they include the machinists who perform precision manufacturing to Six Sigma standards. And in retailing, they may be the inventory managers who get the right goods in the right stores at the right time.

When the knowledge and skills of critical talent become scarce, recruiting wars erupt. Many leading companies fight these wars differently. They do not succumb to bidding wars, knowing that the “star” who chases high offers will be out the door as soon as the next higher one rolls in. Nor do they bribe talent to stay, knowing that monetary incentives do not foster long-term commitment; worse still, they can mask discontent that infects others. Rather than focus on acquiring and retaining talent, talent savvy organizations support their key people on the issues they care about most: doing work that engages them, learning how to do it even better, encountering fresh challenges, and interacting with people in positive ways.

Firms like Microsoft, Southwest Airlines, and SAS Institute are exemplary in the way they nurture and manage critical talent. They go to surprising lengths to help these employees tap into their core skills and passions. They expect continuous learning and growth and know that the most important lessons don’t take place in the classroom, but on the job. They also understand that positive relationships raise the performance of critical talent to new levels.

Crunch Time for Critical Talent
In just a few years, two emerging trends will force organizations to start paying unprecedented attention to their critical talent. The first is the retirement of Baby Boomers, the first crop of which will retire in 2008. Their impact will soon be felt. In automotive manufacturing, for example, up to 40 percent of managers will be eligible to retire within the next five years. In the public sector, countries such as Canada, Australia, and the United States could lose more than a third of their government employees by 2010. Retirees are also draining much of the working blood out of health care, with shortages of nurses and pharmacists particularly acute.

Meanwhile, many schools are having trouble meeting the demand for qualified candidates. They struggle with limited capacity, obsolete educational models, declining educational standards, and a general shift among students away from “hard skill” disciplines, such as science and engineering. In fact, the U.S. Department of Education estimates that 60 percent of all new jobs in the 21st century will require skills that are possessed by only 20 percent of the current workforce.5

Shortcomings of Current Approaches to Managing Talent
When labor gets tight, most organizations hunt for external candidates to fill their most critical jobs (“acquisition”) and try to convince current employees to stay (“retention”). These companies offer money, perks, and new challenges. But this is more of a knee-jerk response than a clear strategy. Sometimes it works. But more often it delays, or even fuels, the inevitable churn of good people.

In particular, companies place too much attention on “acquiring” talent, the front-end of the process. The typical U.S. company spends nearly 50 times more to recruit a $100,000 professional than it will invest in his annual training after he comes aboard.16 In part, this is understandable. It is far easier to phone an executive search firm or post openings on a Web site than it is to “grow” someone into a position or to deal with the internal politics of redeploying people from within.

But such shortcuts are costly. The average cost to replace an employee is one and a half times her average salary. New candidates can take a year or more to master their jobs. Moreover, a company that focuses on external talent can erode the commitment of internal candidates who perceive a bias against them.

Common retention approaches are problematic, too. Often, they are driven by simple metrics such as employee turnover. But while churn at a company may fall from 10 percent to 5 percent from one year to another, it may hide the fact that critical employees are pouring out the door. Furthermore, the numbers say nothing about why people leave. In exit interviews, those leaving frequently resist giving the true reasons for their departures for fear of burning bridges. Finally, turnover does not measure people’s commitment to the company. When jobs are scarce, it is easy to retain a noncommitted workforce.

As a result, by focusing on the end points of managing talent (acquisition and retention) rather than on the middle ones (deployment and development), organizations ignore the things that matter most to employees. When this happens, companies set themselves up for inevitable churn, which becomes especially hazardous in a tight labor market.

Building Talent: A Shift in Mindset
A growing number of successful companies, such as Microsoft, Southwest Airlines, and SAS, are taking more than their fair share of the talent marketplace and cultivating high performers in key positions through a very different method. Rather than starting with recruiters, they first look inside to match employee experience and aspirations to the company’s evolving strategic needs. This doesn’t mean that they ignore external talent. They take recruiting seriously, in large part to achieve ambitious growth targets. But their historically low turnover rates let them spend much less time battling churn— and a lot more time outmaneuvering the competition.

As the competition for critical talent heats up, organizations must rethink the ways they manage these people. To begin, they must identify the segments of the workforce that drive their current and future growth. Then, rather than focus on metrics and outcomes (“acquisition” and “retention”), they must concentrate on the things that employees care about most: developing in ways that stretch their capabilities, deploying onto work that engages their heads and hearts, and connecting to the people who will help them achieve their objectives. By focusing on these three things, attraction and retention largely take care of themselves.

In the next three sections, we will describe how this model of develop, deploy, and connect really works, and why it helps companies generate superior performance.

Develop
The vanishing supply of talent will force many companies to take a hard look at how they develop key people. Gone are the days when companies were satisfied to find loyal, hardworking candidates. Instead, they need a mix of highly analytical people with technological savvy, creativity, global know-how, adaptability, and great communication skills to collaboratively solve complex and rapidly changing issues.

Developing such skills is rarely achieved by spending more on training. Formal training programs are important, especially when employees lack key skills or knowledge. But even online courses that provide access to coursework 24 hours a day, 7 days a week can fall short when it comes to resolving complicated, time-sensitive issues.

Rather than push more information onto employees through conventional training, it is more important that they “learn how to learn.” The sales executive who must know the customer’s business backwards and forwards, as well as his own, and those of his alliance partners can no longer be a deep specialist in a single product or service. It is more important that he knows where to go for information and whom to ask.

When people need to solve a problem, they tend to turn to others—not to their computers. Solving complex problems requires that critical talent focus on their relationships with others. Research suggests that people who cultivate broad and diverse networks are more successful than those who rely strictly on their inner circles.20

The best way to develop critical talent is through the collaborative resolution of real-life issues (“action learning”). A well-known study conducted over a decade by the highly respected Center for Creative Leadership finds that “stretch” assignments and daily interactions with others are far more important to the development of successful executives than the formal training they received.21 Not surprisingly, the hardships people endure provide the richest learning experiences of all. When asked to identify the key events that made a difference in how they manage today, only 3 percent of executives cited formal coursework. On the other hand, 12 percent pointed to business mistakes as their most potent learning experience. Another 12 percent cited a change in project scope as a key event in their development. Interactions with others also commanded high responses.22

People learn the most in situations that stretch them—the “trial by fire” experiences that put them slightly outside of their comfort zones. They learn not by pondering a hypothetical problem, but by directly tackling real issues. As a senior Microsoft human resources executive has noted: “We have very limited educational and training opportunities for our managers. But I think that we have absolutely developed leaders. You get people having to move from managing ten people to managing 200 overnight. That kind of stretch in the job will either create growth or death. Fortunately, we have such great people that most of them have just grown by leaps and bounds.”24

People also learn from those they trust: bosses, subordinates, peers, and mentors, both internal and external. At its heart, learning is social in nature. SAIC, a $6.7 billion employeeowned research and information systems development company, recognizes that people learn the most on-the-job and from each other. To ramp up learning before important initiatives, SAIC has formal processes that connect individuals and teams so that the inexperienced can learn from the experienced. These “peer assist programs” have become a natural way to approach complex assignments. Similarly, project managers at British Petroleum are required to request the help of peers before initiating large projects, such as drilling wells.25 Classrooms, books, and e-learning are helpful when people know little and have time to learn from scratch. But when experience is accessible and high costs and time are at stake, “peer assists” can be a much more effective way to expose people to the knowledge and experience they need— fast.

Mentoring and coaching are also important to learning— especially when expectations are made clear and tied to explicit goals. Deutsche Bank’s Global Partnership Network for Women (GPNW) employs “mentoring circles” to promote the productivity and networking of its growing population of female talent. Each circle comprises one to two mentors and four to five “mentees.”26 The approach gives employees greater diversity and exposure to the business than traditional one-on-one coaching. At Campbell Soup Co., CEO Douglas Conant measures managers on how well they coach and develop their staffs.”27 In this way, Conant acknowledges the crucial role that the quality of interactions has on the financial performance of the company.

Deploy
If people learn the most in jobs that stretch them, they perform best when they can actively discover and define the role that will tap their deepest passions and skills and the conditions required to succeed. For some, the key to feeling more committed is flexible work arrangements. Others love most aspects of their job but detest the 30 percent of it that causes them to look elsewhere. Still others are simply mismatched. That is, their performance is compromised because they haven’t either the motivation or ability they need to succeed. Organizations cannot make everyone happy; in some situations, turnover is the price to be paid. However, voluntary turnover within critical segments of the workforce can put a company’s strategies at risk.

At United Parcel Service (UPS), the people who drive the trucks and deliver packages are a critical talent segment. UPS pays great attention to selecting drivers, taking great pains to match their skills and interests to the job. Despite careful recruiting, though, UPS once suffered high turnover among drivers. The company found the reason was the tedious and exhausting task of loading trucks before delivering packages. When UPS shifted the task of loading to another group of workers, driver turnover dropped dramatically. Turnover in the loading jobs is 400 percent per year, but these positions have far less impact on the delivery process. They also require skills that are easy to fill with part-time students and temporary workers.28

Deployment is about matching the correct candidate to a critical job or project. But it doesn’t stop when people are assigned. Companies must continuously focus on their critical talent to ensure that their skills, interests, and capabilities evolve in line with strategic objectives. At times, this may mean re-evaluating the design of the job, as UPS did with its delivery staff. At others, it may mean redefining the conditions of the job through virtual arrangements and flexible schedules.

Deploying talent also means helping those who are mismatched in their jobs. By mismatched, we don’t just mean lack of capability, although this is often the case. People are also mismatched when they have the skills, but not the burning interest. An example is the “quant jock”34 at a large bank who excelled at crunching numbers, but whose heart was really in strategy. Such people unfortunately become typecast in their positions far too frequently, and it becomes difficult for them to break out of their roles without leaving the company. Similarly, people can be mismatched when they’ve accomplished their goals and wish to master something new.

It isn’t surprising that most organizations hold people to the confines of their resumes. It is risky to hire or reassign people based on their potential, rather than their experience. But inviting talented people to explore their options is not as risky or costly as paying them when they’re disengaged, or losing them altogether to the competition.

By and large, people are capable of doing many things. With the proper experiences, support, and connections, they are apt to gravitate to roles that unleash their passions. Indeed, some of the most successful business people were never educated or trained for the roles they mastered. The founder of the Lotus Development software company, Mitchell Kapor, had been a disk jockey and transcendental meditation teacher in his past careers. Ray Kroc sold milkshake machines to restaurants before he started to build the McDonald’s empire in 1954 at age 52.35 His modest sales roots wouldn’t have predicted his later success as one of America’s greatest entrepreneurs and CEOs. Advertising legend David Ogilvy was a chef in Paris, a farmer in Pennsylvania, and a member of the British Intelligence agency before making a mint in advertising. At age 38, he jumped into advertising with no credentials and $6,000 in the bank. Prior to running America Online, Steve Case was in charge of coming up with new pizza toppings for Pizza Hut.36

It is not unusual for people to try on different roles before they find the one (or two, or three) for which they are best suited. For every airline pilot or doctor who knows his or her passion at nine years old, there are likely more who are still trying to figure it out at 30. Indeed, interests and goals may shift over time. But by and large, people don’t find the right fit until they “taste, touch, and feel” it.

INSEAD Professor Herminia Ibarra explains that finding one’s career niche involves a process of experimentation. In her years of research, she has discovered that people often need to try several roles before they find their best fit. Selfintrospection is crucial, she argues, but cannot offer the insights provided to us by hands-on experience.37

Firms such as SAS and Microsoft go to great lengths to help their talent find the right niche—redeploying people each year, if necessary. Organizations that help valued employees redeploy typically win their commitment. If a mutually satisfactory solution can be struck, then they win it immediately. If an arrangement can’t be struck, then they may win it in the future—even if a valued employee chooses to leave. Successful talent management includes strategies to stay engaged with alumni. Individuals granted latitude by their employers to explore new territory often make their way back with renewed vigor and insights.

Connect
Few jobs are accomplished in isolation. Most require the backing, decision-making help, and knowledge of key individuals, both inside and outside an organization. As problems become more complex and collaboration more common, who you know is increasingly becoming more important than what you know. As a retail director at multinational ING Bank once remarked, “Our account managers have remarkable product expertise. But our clients’ needs have changed. How do we cultivate generalists rather than specialists, and encourage our account managers to rely on access to experts, rather than be experts.”38 To increase performance in today’s complex organizations, leaders must help key individuals build rich, diverse networks.

People have always relied on informal networks to get their work done. Decades of research led by the University of Chicago and Stanford University validate the link between the strength and diversity of social networks and one’s influence, or social capital.45 Social capital determines one’s ability to gain access to information, solve problems collaboratively, and achieve goals.

It is often suggested that we learn 70 percent of what we know about our jobs through our informal networks. A wellknown study at Xerox found that the field technicians who fix copy machines learned the most when they gathered for coffee each morning – not when they consulted the manuals that had taken years to compile, but were largely ignored.46 Research at MIT further confirms the importance of our social networks.47 It found that engineers and researchers were five times more likely to turn to another person for information rather than to search an impersonal source such as a file or database. People with rich networks tend to solve problems faster, and with better results.

By rich networks, we don’t mean that everyone needs to be connected with everyone else. People are likely to rebel against requests to attend more meetings or answer more e-mails. Instead, a targeted approach is required to connect people with the right people and knowledge. Rather than leave such connections to chance, organizations can do a lot to help individuals increase the quality of their interactions and knowledge flows. Encouraging “communities of practice,” the self-organized groups that form around a common mission or interest, is one such means. Peer assist programs are another, as SAIC has found.

The quality of a person’s informal networks also has a substantial impact on his performance. Rob Cross (University of Virginia) and Wayne Baker (University of Michigan) are making great strides to understand the characteristics of networks that lead to individual and organizational performance. In one study, they found that the “energy” we send to each other in our interactions is four times a greater predictor of performance as the information that we bring to the table.48 We create positive energy when we listen carefully, respect others’ needs and perspectives, and promptly answer questions. One only has to reflect on personal experience to know the impact of toxic interactions on our ability to perform.

This focus on networks and connections is one with which few organizations have deep experience. But emerging software is changing that picture. Social Network Analysis (SNA) tools are one of the hottest areas of investment for venture capitalists. We refer not to the software that drives dating Web sites, but to the technology that identifies the connections between people and their knowledge. By mapping such connections, leaders can gain important insights on how work really gets done in critical parts of the organization: who knows whom, who knows what, who trusts whom, who energizes others, and who creates bottlenecks. The tool is not meant to point fingers, but to create healthy flows of knowledge and relationships.

When properly used, Social Network Analysis can help leaders increase the success of an important merger, locate expertise for a crucial project, or strengthen executive team performance. It can reveal gaps in knowledge and highlight the differences in the personal networks of high and low performers. As such, it can be a powerful tool in the development and deployment of key individuals.

So What?
The Develop-Deploy-Connect model is interconnected and virtuous. An improvement in one area naturally leads to an improvement in another. For example, people develop better skills when they are deployed in stretch assignments and connected with others from whom they can learn and grow. Likewise, effective deployment occurs when people have the knowledge, skills, networks, and relationships they need to succeed. Finally, effective connection happens when people are deployed in work that engages their curiosity. In these circumstances, they are more likely to learn from and teach (i.e., develop) others.

Important benefits result from this virtuous circle. One is capability. When highly capable individuals work together, they build organizational capability. The second is the alignment that occurs when the right people are in the right jobs. A third result is commitment. People are more likely to master work that engages them, fosters their growth, and encourages productive relationships. When people feel the organization takes a keen interest in their interests, skills, and connections, they are far less tempted to look for challenges outside.

Going Forward: Taking the First Steps in Building Talent
So how can companies build this kind of cycle for generating top talent? The first step is defining exactly which jobs are critical. This is a central exercise, but it is not as straightforward as it might appear. It requires a clear vision of the range of current and future strategies that will drive organizational success. This doesn’t mean banking on a single outlook, but may instead require alternative scenarios that acknowledge the uncertainty of business. It then requires a firm understanding of the talent supply and demand patterns outside and inside the organization. Energy suppliers such as ChevronTexaco and Shell are taking a hard look at their talent pipeline—especially in areas such as engineering, where the demand for qualified candidates will soon skyrocket due to retirement and a limited pool of graduates.

Within core business units, identifying critical workforce segments requires determining which jobs make or break organizational performance. Disney found its park street sweepers were critical people because they were in touch with millions of customers every year.49 The FedEx delivery person is another example.

Companies must also identify the skills that will drive future growth. SAS closely monitors turnover to precisely understand what skills are leaving. When combined with projections of skills needed for future projects, these data help the company plan the deployment and development of key individuals.

Once leaders identify their company’s critical talent and skills, they must next match people, skills, and knowledge to company needs. Decisions to redeploy, develop, and stimulate connections evolve from this analysis. It is important that this not be a top-down process. People are likely to underperform if they are deployed against their will. The same is true of the professional who is forced into a mentoring relationship as part of his development. The role of the organization is to communicate needs and create the support mechanisms (e.g., electronic job boards, coaching, and strategic networking events) that people need to grow in line with organizational goals. SAS, for example, creates development plans in individual departments—not in HR or at the top of the company. The strategy is communicated, but decisions are made on an individual basis. It’s the responsibility of the line leader to be sure that individual and organizational goals are aligned.

As the competition for critical talent heats up, organizations must better understand the supply and demand of critical workforce segments. Energy companies that are highly dependent on geological and petroleum engineers must anticipate and model shortages into their talent forecasts. A pharmaceutical giant such as Pfizer must monitor (and try to influence) the availability of researchers and clinicians as part of its talent strategy. SAS taps its Human Capital Management (HCM) system to gain insights on employee factors like turnover or age within its critical workforce segments. Such analyses help organizations understand the supply and demand of talent at the professional, or job level.

A next layer of analysis involves determining the skills required to achieve important strategies. A complex software project, for example, may require a business unit to ramp up the quantity and quality of its programming skills. Many organizations are beginning to develop skills databases that provide an inventory of currently available skills. When properly designed, skills databases can be modeled to analyze the gap between what is currently available and what will be needed to execute shifts in strategy. Product managers at SAS, for example, employ skills databases to plan future projects. This helps them to plan the development and deployment of people—rather than wait to the last minute to arm people with the skills they will need to succeed. Such information can help fuel the growth of both individuals and business units. When used with internal demographic information, such as projected turnover and retirement, it can also help executives develop talent strategies at the enterprise level. As expected from a market leader, SAS is already on the way.

When a company manages critical talent in this manner, it must guard against unwittingly creating a culture of “haves” and “have-nots.” A focus on critical talent and the people who support them doesn’t mean other employees should be blocked out of the development process or kept in unsatisfying jobs. Managers must keep their eyes out for employees in less critical roles who possess the talent to succeed in critical roles. There are countless stories like the one of Southwest’s chief operating officer, Colleen Barrett, who rose from being a legal secretary to a top position.

In the coming years, most companies will have no choice but to seriously rethink their approaches to talent strategies. But shifting demographics should not be the only reason. Improving the performance of critical employees directly improves organizational performance. Furthermore, focusing on critical talent is relatively new territory for most companies and, thus, offers a new way to compete. Compared to more popular investments in customer, technological, and financial strategies (which have been refined over decades), a welldesigned talent strategy could truly differentiate an organization.

When a company’s talent management process evolves in the manner described in this article, companies will be reluctant to go back to the stop-gap measures of recruiting and retention. Managers may be amazed by how often the talent they need resides right under their noses—or the noses of colleagues a continent away.

Rather than fight a futile “war for talent,” leaders should look within for the critical skills and knowledge required to execute the company’s most important jobs. By developing, deploying, and connecting these people the right way, leaders can raise their performance—and the performance of the entire organization—to a whole new level.

Endnotes
1 Conversation with Pfizer, September 2004.

2 John W. Boudreau and Peter M. Ramstad. “Talentship and the Evolution of Human Resource Management: From Professional Practices To Strategic Talent Decision Science.” University of Southern California, Center for Effective Organizations Working Paper #G04-6, 2004.

3 Boris Groysberg, Ahshish Nanda, and Nitin Nohria, “The Risky Business of Hiring Stars,” Harvard Business Review, May 2004.

4 Successful companies have higher average returns on assets. Source: “CEO Challenge 2004,” The Conference Board, August 2004.

5 “Before It’s Too Late,”National Commission on Mathematics and Science Teaching for the 21st Century, U.S. Department of Education, 2000.

6 Boudreau and Ramstad, supra, n.2.

7 Ibid. See http://www.hcbridge.com.

8 Eurostat, HRI Fortnight Report, May 12, 2004.

9 “The Next Society,” The Economist, Nov 1, 2001. http:// www.economist.com/surveys/displaystory.cfm?story_id=770819.

10 “Keeping America Competitive: How a Talent Shortage Threatens U.S. Manufacturing,” National Association of Manufacturers, The Manufacturing Institute and Deloitte & Touche, 2003.

11 “Vaunted German Engineers Face Competition from China, The Wall Street Journal, July 15, 2004.

12 Inc.com 25th Anniversary issue. http://www.inc.com/magazine/ 20040401/25goodnight.html.

13 Jay Greene and Greg Forster, “Public High School Graduation and College Readiness Rates in the United States,” Manhattan Institute for Policy Research, Sept. 2003. http://www.manhattaninstitute. org/html/ewp_03.htm.

14 The Gallup Organization. www.gallup.com.

15 Ibid.

16 In the U.S., companies spend $1,415 on average in recruiting costs for every $10,000 of new-employee compensation. But the median training expense per full-time worker in 2000 was $288. In companies of more than 5,000 people, it was only $109.

17 “HR Executive Review: Implementing the New Employment Compact,” The Conference Board, 1997.

18 Tom Allen, Managing the Flow of Technology, Cambridge, MA, MIT Press, 1977.

19 Rob Cross, The Hidden Power of Social Networks, Harvard Business School Press.

20 This is a core tenet of social network theory.

21 www.ccl.org. Results of the original CCL research are summarized in Morgan McCall, Michael Lombardo, and Ann Morrison, The Lessons of Experience: How Successful Executives Develop on the Job, Free Press, 1988.

22 Christina A. Douglas, “Key Events and Lessons for Managers in a Diverse Workforce,” Center for Creative Leadership, 2003.

23 LexisNexis Deutschland, GmbH, Ergebnisse der Wissensmanagement Studie 2004“ March 2004, http:// www.lexisnexis.de/downloads/040305praesentation.pdf.

24 “Microsoft’s Vega Project: Developing People and Products,” Harvard Business School case study, 1999.

25 Chris Collison and Geoff Parcell, Learning to Fly: Practical Lessons from One of the World’s Leading Knowledge Companies, Oxford: Capstone Publishing, 2001. A very helpful overview of peer assists can also be found on the Web site of the National Electronic Library for Health in the UK: http://www.nelh.nhs.uk/ knowledge_management/km2/peer_assists_toolkit.asp.

26 Interviews with Caroline Israel and Denise Montana, Deutsche Bank, July 2004 and January 2005.

27 This quotation came from Denise Morrison, president of global sales and chief customer officer at Campbell, in an Aug. 17, 2004, Wall Street Journal article by Carol Hymowitz, “Unlike Politicians, Business Executives Seek Profit, Not Votes,” Page B1.

28 Peter Cappelli, “A Market-Driven Approach to Employee Retention,” Harvard Business Review, February 2000.

29 Inc.com 25th Anniversary issue. http://www.inc.com/magazine/ 20040401/25goodnight.html and SAS website http:// www.sas.com/news/feature/16feb04/softbusiness.html.

30 “CEO takes HR to primetime – Between the lines – Jim Goodnight, SAS,” Workforce, December 2002, summarized at: http:// www.findarticles.com/p/articles/mi_m0FXS/is_13_81/ai_95120706.

31 Ibid.

32 Interview with Frank Leistner, SAS, August 2004.

33 Ibid.

34 A “quant jock” is someone with superior quantitative skills.

35 From the corporate history section of McDonald’s Web site: http:// www.mcdonalds.com/corp/about/mcd_history_pg1.html.

36 Kara Swisher, Aol.com, Times Business, 1998, p. 27.

37 Herminia Ibarra, “How to Stay Stuck in the Wrong Career,” Harvard Business Review, December 2002.

38 Interview with Phillipe Wallez, Retail Director, ING Bank, 2003.

39 Katrina Brooker, “The Chairman of the Board Looks Back,” Fortune, May 28, 2001.

40 Jody Hoffer Gittell, The Southwest Airlines Way, McGraw-Hill, 2003.

41 “Southwest Airlines (B): Using Human Resources for Competitive Advantage,” Stanford Graduate School of Business, 1995.

42 Gittell, supra, n.37.

43 Ibid.

44 Ibid.

45 Among the pioneers in Social Capital and Social Network theory are Ron Burt (University of Chicago) and Mark Granovetter (Stanford University).

46 Julian Orr, Talking About Machines: An Ethnography of a Modern Job, Cornell University Press, 1996.

47 Research by Tom Allen of MIT summarized in Rob Cross, The Hidden Power of Social Networks: Understanding How Work Really Gets Done in Organizations, Harvard Business School Press, 2004, p. 11.

48 Conversation with Rob Cross, University of Virginia (discussing research done with Wayne Baker, University of Michigan). Also see Rob Cross, Wayne Baker and Andrew Parker “What Creates Energy in Organizations?” MIT Sloan Management Review, Summer 2003, Vol. 44, No. 4, p. 51-56.

49 Boudreau and Ramstad, supra n.2.

50 Council of Graduate Schools, Ph.D. Completion Project, http:// www.phdcompletion.org.

Acknowledgements
This study has benefited from the diligent help and wise insights of many people. Jeff Summer, National Director of HR, has been an unwavering sponsor, lending his intellectual and organizational support to transform the ideas into practice, both externally and internally. Jörg Schiele and Bill Chafetz, who head our Organization and People Performance practices in Europe and the United States, are also leading that campaign. Tina Witney has done a heroic job linking the concepts to an actionable framework. The study would not have been possible without the help of Deloitte Research interns Neeme Raud and Mara Rose who in a few months pulled together fodder for an entire series. Deloitte Research Global Director Ajit Kambil provides continuous sage advice, and Georgia Tech professor Luis Martins offered selfless thinking on the comprehensive talent model that has evolved from this piece. Frank Leistner offered generous insights on the unparalleled practices of SAS, and John Boudreau of the University of Southern California provided intellectual seeds from which the piece sprang forth. Other very helpful insights have been provided by Deloitte colleagues Sabri Challah, Randy DiBernardo, Mike Evangelides, Dick Kleinert, Sanjiv Kumar, Alice Kwan, Britton McMullian, Neena Newberry, Michele Ruskin, Heide Schroeder, Stan Smith, Jim Wall, and Sarah Wooddy. Finally, I thank Bob Buday for his wise editorial guidance and Steve Barth for lending the title to the series.

About Deloitte Research
Deloitte Research, a part of Deloitte Services LP, identifies, analyzes, and explains the major issues driving today’s business dynamics and shaping tomorrow’s global marketplace. From provocative points of view about strategy and organizational change to straight talk about economics, regulation and technology, Deloitte Research delivers innovative, practical insights companies can use to improve their bottom line performance. Operating through a network of dedicated research professionals, senior consulting practitioners, and academic and technology partners, Deloitte Research exhibits deep industry knowledge, functional understanding, and commitment to thought leadership. In boardrooms and business journals, Deloitte Research is known for bringing new perspective to real-world concerns.

About the Author
Robin Athey
Deloitte Services LP
Tel: +1.212.436.2547
e-mail: rathey@deloitte.com
Robin Athey leads Deloitte’s research on the people aspects of organizational performance. Her studies investigate the links between organizational knowledge, learning, leadership, collaboration, and performance. Her current series on Talent Management will be offered in five parts. She has recently conducted research on strategic account management and led a bi-annual Sales Executive Forum with partners from Columbia University and INSEAD. She has also produced studies and articles on diverse topics, such as knowledge and content management, e-learning, privacy, and the mobile enterprise, teaming with faculty from MIT and Harvard Business School. Ms. Athey has sat on councils at the Conference Board and Harvard, and served on the board of the UN Association, the civic branch of the United Nations. Prior to joining Deloitte Research, Ms. Athey spent ten years as a consultant with Kurt Salmon Associates and was VP Global Production with Cole-Haan, a subsidiary of Nike. She speaks Spanish fluently and has lived and worked in eight countries across Asia, Europe, Latin America, and the former Soviet Union. She holds a B.S. in Industrial and Systems Engineering from the University of Florida, an M.A. in International Economic Policy from Columbia University, and an advanced certificate in Organizational Development and HR Management from Columbia University and the University of Michigan.

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