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CONFIDENTIAL
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Date
This report is solely for the use of client personnel. No part of it may be
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organisation without prior written approval f rom McKinsey & Company.This material was used by McKinsey & Company during an oral
presentation; it is not a complete record of the discussion.
Estonian Leadership
ConferenceSeptember 9, 2004
War for TalentHow to find, keep and
manage talents?
War for TalentHow to find, keep and
manage talents?
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2
Unit of measure
* Footnote
Source: Source
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Long-term forces fuel the war for managerial/executive talent in large
corporations
Talent is
more
mobile
Demographic
constraints
on supply
Demand for
talentedmanagers
Demand for
knowledge
workers
War
for
talent
War
for
talent
Viewpoint: Focus on
managerial/Top200executive talent in large
corporations Survey data and cases
from the USA
However, most principlescan be applicable to otherknowledge professions as
well
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3
Unit of measure
* Footnote
Source: Source
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Companies are generally poor at managing talent
Percent of top 200 executives who strongly agree it reflects their company
Source: McKinsey War for Talent top 200 executive survey - 5,679 respondents
77
23
Brings in highly talentedpeople
84
16
Knows who the highand low performers are
90
10
Retains almost all high
performers
Develops people quickly
and effectively
Removes low performers
relatively quickly
97
3 3
8/8/2019 18396710 War for Talent
4/394
Unit of measure
* Footnote
Source: Source
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Favorable
outcome
Marginally
acceptable
performance
Unmitigated
failure
Success in people decisions
COMPANY EXAMPLE
Percent
Companies acknowledge that they often fail when making key people
decisions
In no other area of
corporatemanagement would
we accept such
deplorable results
CEO
8/8/2019 18396710 War for Talent
5/395
Unit of measure
* Footnote
Source: Source
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Building a globally competitive workforce
Strengthenrecruiting
Instilltalent nurturing
mindset
Create agreat EVP
Developoutstandingleaders
Reward andrecognizeperformance
Globally competitiveworkforce andimproved company
performance
HEL ZYN093 20040909 W f T l t E t i L d hi C f
8/8/2019 18396710 War for Talent
6/396
Unit of measure
* Footnote
Source: Source
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Building a globally competitive workforce
Create a great employee value proposition
Develop outstanding leaders by developing people
to their full potential
Strengthen recruiting by making it a top team priority
Evaluate performance and differentiate actions
accordingly
Instilla talent nurturing mindset at all levels of
the organization
HEL ZYN093 20040909 War for Talent Estonian Leadership Conference
8/8/2019 18396710 War for Talent
7/397
Unit of measure
* Footnote
Source: Source
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
What is a talent mindset?
Belief in the importance oftalent
1
Link between business strategyand talent requirements2
Accountability for talent bysenior managers
3
Leadership by the CEO4
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8/39
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
8/8/2019 18396710 War for Talent
9/399
Unit of measure
* Footnote
Source: Source
HEL ZYN093 20040909 War for Talent Estonian Leadership Conference
Believe line managers
should be held
accountable for the
quality of their people
Percent of corporate officers
39 32
6
3
54
Think their
companies
actually do this
99
35
Critical
Very important
Somewhat important
Strongly agree
Somewhat agree
Managers are not held accountable for talent
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
8/8/2019 18396710 War for Talent
10/3910
Unit of measure
* Footnote
Source: Source
HEL ZYN093 20040909 War for Talent Estonian Leadership Conference
I will change
my behaviour if . . .
I have the skillsto behave in the
new way
Developing talent
and skills
Have training and
developmentprogrammes been
altered to reflect
the new desired
skill set?
. . . the systemreinforces the
desired culture
Reinforcing with
formal mechanisms
Have the formal and
informal policies andprocedures (including
compensation and
appraisal) been
changed to reinforce
the new desired
behaviours?
. . . I see my leaders
behaving differently
Role-modelling
Have the formalleaders and the
informal opinion
leaders embraced
the change by
role-modelling?
. . . I know what is
expected of me
Communicating
Has the who, what,why, when, and how
been communicated
throughout the
organisation?
Four levers need to be addressed to change mindsets
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
8/8/2019 18396710 War for Talent
11/3911
Unit of measure
* Footnote
Source: Source
p
Building a globally competitive workforce
Create a great employee value proposition
Develop outstanding leaders by developing peopleto their full potential
Strengthen recruiting by making it a top team priority
Instill a talent nurturing mindset at all levels of theorganization
Evaluate performance and differentiate actionsaccordingly
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
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12/3912
Unit of measure
* Footnote
Source: Source
What is an EVP?
1. The experience employees have every day at work1. The experience employees have every day at work
2. The sum of the gives and gets that makes up therelationship an employee has with a company
2. The sum of the gives and gets that makes up therelationship an employee has with a company
3. A special blend of challenge, connection, professionalgrowth, respect, satisfaction, opportunity, and reward
3. A special blend of challenge, connection, professionalgrowth, respect, satisfaction, opportunity, and reward
4. The companys fingerprint that uniquely reflects the culture,
business model, leaders, management style, compensationstructure, and career paths
4. The companys fingerprint that uniquely reflects the culture,
business model, leaders, management style, compensationstructure, and career paths
Delivery is crucial!Delivery is crucial!
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
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13/3913
Unit of measure
* Footnote
Source: Source
Culture and values
Company industry reputation Meritocracy Advancement Lifestyle
Great company
Work content Development opportunities Job security
Freedom and autonomy Coaching, feedback and monitoring
Great job
Employees opinion of seniormanagement
Employees relationship with bossGreat leaders
Total compensation package Base pay Short term incentives Long term wealth creation
Attractive
compensation
Why would atalented personwant to work for
your company?
Most critical
What is an EVP?
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
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14
Unit of measure
* Footnote
Source: Source
There is significant freedomand autonomy to do my job
The position has exciting
challenges
Company is well managed
I like the companys valuesand culture
Future career advancement and
growth opportunities are strong
Company has many highlytalented people
Compensation is structured to
differentiate significantly betweenhigh, average, and low performers
Total compensation is high
Company is very good at developing
people
Company mission inspires me
Strong respect for lifestyle issues
and willingness to help me manage
my work/family balance
Job security is high
The company tells people wherethey stand relative to their peers
Reasonable pace and low stress level
% of top 200 executives rating statement essential or very important
Why executives join, stay with, or leave a company
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
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15/39
15
Unit of measure
* Footnote
Source: Source
% of Level 3 and Level 4 respondents
Company
effectiveness
Meets/exceeds
expectations
Importance
Absolutely essential or very important
Training
Mentoring
Careeradvance-ment
Politics
Annualcomp.
Differential
compensation Processes/red tape
Wealth creation
Promotion ofhighperformers
Seniormanagementcommitmentto growth
Opencommu-nication
Reward/recognition
Trust in sr. mgt.
AutonomyCompanyperformance
Culture/valuesWellmanaged
Ambitious goals
Interestof work
Problem areas
Strengths
0
0
20
40
60
80
100
50 60 70 80 90 100
Overview of company Xs current employee value propositionCOMPANY EXAMPLE
McKinsey clusters: What matters in a job
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
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16/39
16
Unit of measure
* Footnote
Source: Source
Building a globally competitive workforce
Create a great employee value proposition
Develop outstanding leaders by developing peopleto their full potential
Strengthen recruiting by making it a top teampriority
Instill a talent nurturing mindset at all levels of theorganization
Evaluate performance and differentiate actionsaccordingly
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
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17
Unit of measure
* Footnote
Source: Source
From To
Grow your own talent Pump talent in at all levels
Recruit for vacant positions Hunt for talent all the time
Go to a few traditional sources Tap many diverse pools of talent
Advertise to job hunters Use creative channels to reach passivecandidates
Specify a compensation range and staywith it
Pay what it takes to get the candidatesyou want
Recruiting is screening Recruiting is also selling
Levers to consider when rebuilding the recruiting strategy
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
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18
Unit of measure
* Footnote
Source: Source
Rich flow of
candidates
Rich flow of
candidates
Use many creative channels to find people
Personal networks
Executive search firms
Company Web site
Searching resums on the Internet
Advertising on job boards, other media
Long-term relationship databases
Direct mail campaigns
Experiential or educational events
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
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19/39
19
Unit of measure
* Footnote
Source: Source
Hewlett-Packard provides summer internships and part-time
jobs for hundreds of high school and college students
Amgen hires entrepreneurial refugees from the R&D
departments of big pharma companies
General Electric hired 650 military officers in the past 2 years
One company hired 50 of 300 graduating students from an
elite Indian high school and brought them to the U.S.
Earlier
Later
Different
Global
Be creative about talent sources
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
R t ti t ti
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20/39
20
Unit of measure
* FootnoteSource: Source
% corporate officers who say company is very effective
Tell them they are
our best people
Mid-quintilecompanies
Top-quintilecompanies
Gold standardcompanies
Create a sense of
belonging
Give them exciting
jobs
Pay them more than
average performers
Retention tactics
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
B ildi l b ll titi kf
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21/39
21
Unit of measure
* FootnoteSource: Source
Building a globally competitive workforce
Create a great employee value proposition
Develop outstanding leaders by developingpeople to their full potential
Strengthen recruiting by making it a top team priority
Instill a talent nurturing mindset at all levels of theorganization
Evaluate performance and differentiate actionsaccordingly
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
J b d f db k d i d l t
8/8/2019 18396710 War for Talent
22/39
22
Unit of measure
* FootnoteSource: Source
Informalcoaching/
feedback
Special projects
Being
mentored
Development
plans
Job
rotation
360-degreefeedback
Non-traditionallearning programs
Traditional training inside
Traditional training
outside
Outside testing
0
10
20
30
40
50
60
70
80
0 10 20 30 40 50 60 70 80
Feedback/mentoring
Percentage of top 200 executives
Formal training
Stretch/
developmental jobs
Company
effecti
veness
Excellento
rvery
good
Importance to my development
Absolutely essential or very important
Jobs and feedback drive development
Individuallearning
Formal
performance
evaluation
Speedof job moves
Way jobs
structured
Role models
Told strengths/
weaknesses
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Promote your best people early often
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23/39
23
Unit of measure
* FootnoteSource: Source
% corporate officers who say this very much reflects their company
We give high-potential
individuals more/better
development opportunities
Mid-quintile Top-quintile Gold standard
We put high-potential
people in jobs before
they are ready
Promote your best people early, often
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Use staffing decisions to drive development
8/8/2019 18396710 War for Talent
24/39
24
Unit of measure
* FootnoteSource: Source
Use staffing decisions to drive development
Five most developmental jobs
1
2
34
5
New position with larger scope
Turning around a business
Starting a new business
Large, high-profile special projects
Working outside your home country
Most of these jobs arescarce, so give them
your best people!
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Making more/better feedback happen
8/8/2019 18396710 War for Talent
25/39
25
Unit of measure
* FootnoteSource: Source
Making more/better feedback happen
1. Value it
Kevin Sharer, CEO of Amgen
2. Sharpen insights about people
GE: Session C notes
3. Formal, written feedback once a year
McKinsey & Company
4. Support in various ways
Train managers
Assess managers on coaching 360-degree feedback
Arrow Electronics
Howwell
youperfor
medthisy
ear
________
________
________
____
________
________
________
____
Yourgrea
teststrengths
1.____
________
____________
2.____
________
________
____
3.____
________
________
____
Yourdevelopm
entneeds
1.____
_____________
_______
2.____
________
____________
3.____
________
________
__
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Use of talent building levers in European companies (1/2)
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26/39
26
Unit of measure
* FootnoteSource: Source
Percent
31
27
25
24
22
21
18
17
17
15
10
9
Systematic career planning Systematic job-rotation
Spain
Switzerland
Netherlands
Great Britain
Average
Ireland
Sweden
Norway
Denmark
Germany
Finland
France
36
31
29
24
24
23
21
20
19
19
16
10
Finland
Switzerland
Norway
Spain
Sweden
Netherlands
Average
Ireland
Great Britain
Denmark
Germany
France
Use of talent building levers in European companies (1/2)
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Use of talent building levers in European companies (2/2)
8/8/2019 18396710 War for Talent
27/39
27
Unit of measure
* FootnoteSource: Source
Succession planning High-potential programs
58
48
44
34
33
29
27
26
25
22
19
13
64
54
44
41
31
31
30
25
23
23
12
8
Germany
Switzerland
Great Britain
Norway
Average
Ireland
Spain
Finland
Sweden
Netherlands
France
Denmark
Norway
Sweden
Spain
Switzerland
Average
France
Germany
Denmark
Great Britain
Netherlands
Ireland
Finland
Use of talent building levers in European companies (2/2)
Percent
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Building a globally competitive workforce
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28/39
28
Unit of measure
* FootnoteSource: Source
Building a globally competitive workforce
Create a great employee value proposition
Develop outstanding leaders by developing people totheir full potential
Strengthen recruiting by making it a top team priority
Instill a talent nurturing mindset at all levels of theorganization
Evaluate performance and differentiate actionsaccordingly
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Managers/executives perform develop differently a performance evaluation and
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29/39
29
Unit of measure
* FootnoteSource: Source
management system is needed for an organization to develop to its full potential
An honest and ethical evaluation system neededas the backbone of performance management
Reasonable distribution along performance levelsis practical
Evaluation
Differentiated
actions
Reward and provide development opportunitiesfor best performers
Affirm and grow the solid performers (majority) Have a consequence management system for
non-performing executives/managers
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Having a consistent consequence management system for non-performance
8/8/2019 18396710 War for Talent
30/39
30
Unit of measure
* FootnoteSource: Source
is important
high performers
leave the company
development/advancement
opportunities are blocked
fewer A players
are attracted to join
the company
Complacency on underperformance is damaging
subordinates are not
developed
productivity and morale
of group is low
performance in job is low
By having low
performers in critical
executive/management
positions without any
consequence
management Large variety of options
exist for consequence
management, fromhard to soft
In every case, thesystem needs to be
consistent and aligned
with the culture and
values of the
organization
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Consequence management should reflect the culture and values of an
i ti l f th US
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31/39
31
Unit of measure
* FootnoteSource: Source
organization some examples for the US
Immediate dismissal
for missing targets
Dismissal for repeatedly
missing targets
Demotion or
sideways move
for missing targets
Gillette
Un-
successful
executives
usually
given
second
chancesand are not
dismissed
Merck
Underperformers
given
second
chance
through
retraining or
transfer
Nucor
We rarelyterminate
anyone for under
performance,they figure it out
from their pay
checks
Emerson
Electric
Underperformers
movedsideways
but not
usually
dismissed
AIG
Continu-ous low
performers
dismissed
Hewlett
Packard Under
performers
moved toalternate
position
Johnson
& Johnson
Non per-formance
frequentlyleads to
dismissal
Barrick Gold
(CEO) willnot settle
for lower
quality andthis attitude
carries
through to
the people
he hires
and fires
GE
Peoplewho miss
the numbers
but have thevalues get a
second
chance.
People with no
values and no
numbers getfired; those
who make the
numbers butdont have the
values are now
also fired
Microsoft
3 strikesand
youre
out
Frito Lay
Unaccep-table
performers
given 90-120 days to
improve orface
dismissal
SAP
Those whodont fit or dont
meet targets
are laterally
transferred. Its
the only way to
encourage
innovation
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Building a globally competitive workforce
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32/39
32
Unit of measure
* FootnoteSource: Source
g g y p
Strengthenrecruiting
Instilltalent nurturing
mindset
Create agreat EVP
Developoutstandingleaders
Reward andrecognizeperformance
Globally competitive
workforce andimproved company
performance
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
APPENDIX
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33
Unit of measure
* FootnoteSource: Source
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Employee value proposition example (1/3)
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34
Unit of measure
* FootnoteSource: Source
Distinctive Common practice
Inspired to learn,
required to develop,
recognized for
contributing,
supported by ourglobal network
Company
supports individuals
needs
Effective knowledge
sharing
Active career
development
Personalised
performance
recognition
Connected,effective
communication
Inspiring leaders
Flexible to suit
individual
Tools to do the job
Personalized and
incentivized
knowledge networks
Knowing what we know
Tailored career
development
Transparent
job opportunities
Individual feedback, pay
for performance and
choice of benefits
Clear goals for all
bonus for meeting them
Visible leaders givingtimely updates
Business directionshared
High potentials identified
early; actively managedand developed through
their careers
Leaders who walk the
talk and develop theirpeople
COMPANY EXAMPLE
Flexible to suitindividual
Tailored careerdevelopment
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Employee value proposition example (2/3) Tailored
career development COMPANY EXAMPLE
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35
Unit of measure
* FootnoteSource: Source
career development COMPANY EXAMPLE
Established a project matching system Projects posted in same manner as jobs with employees showcasingtheir capabilities
Project leaders select from bids Central co-ordination balances needs of employee, project, and
company
Employees create their own CVs by bidding for projects aligned with
career aspirations As employees are placed on new projects, learning system informs
them of appropriate development activities
Same system also be used for role changes
Developed and publicized expertise maps
Maps detail potential career paths through company Employees follow company career paths, or create their own
On reaching the executive level, staff get a talent account to spend
on self development. What they spend it on is up to them
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Employee value proposition example (3/3) Creating your own
lifestyle and work environment COMPANY EXAMPLE
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36/39
36
Unit of measure
* FootnoteSource: Source
Introduced flexible working package
Employees can propose own flexible working hours/location. After review with
supervisor can start flexible working on three-month review cycle Virtual offices provided to all working from home using a budget; interactive ordering
of tools via Home Workers website
Career breaks and sabbaticals actively encouraged (paid or unpaid) for: communityprojects, personal development, family care, and so on
Established points-based menu of lifestyle options
Concierge service Help with personal life 1 per hour of concierge time
Childcare
assistance
Vouchers to spend on selection
of external childcare facilities
4 per 200
Life planning Financial/legal planning 10 per hour
Vacation Purchase additional holiday 10 per week
Employee
assistance
programme
Online informational assistance
lifestyle and work environment COMPANY EXAMPLE
Description Points
U it f
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Company example Recruiting process for senior-, mid-level professionals
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37
Unit of measure
* FootnoteSource: Source
1. Manager completes
staffing requisition
form and sends toHR
REQUISITION
Contact execu-tive search firm
Query sourcingdatabase
Post position onRLR intranet andinternet sites
Place newspaperads, etc.
3. Staffing specialist accesses avariety ofchannels to identify
qualified candidates
2. Staffing specialistand hiring managerplan
strategy for obtainingbroad slate of candidates
7. Hiring managermakes offer, closes thedeal and begins tointroduce the new emp-
loyee to the company
6. Hiring manager,with input from staffingspecialist, evaluatesand selects best
candidate
5. Hiring managerand interview team useSelecting forSuccess to interview
candidates
4. Staffing specialistdelivers a shortlist of candidatesto Hiring Manager
CANDIDATES
1.Alex Smith
2. JuileJones
3.TomHall
4.Sue Cook
5. Mary
U it f
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Example performance/potential criteria for managers/executives
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Unit of measure
* FootnoteSource: Source
Performance
Resolution
Attainment of objectives
Scope and complexity ofthe objectives attained
Efficiency in managing
resources
Mastery of technical skillsand/or education
Potential
Personal skills Responsibility Initiative Vision Flexibility Energy Exemplary
Interpersonal skills Leadership People development Team work
Unit of measure
HEL-ZYN093-20040909-War-for-Talent-Estonian-Leadership-Conference
Looking at the talent pool by Business Unit in a large company
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39
Unit of measure
* FootnoteSource: Source
33.3
71.4
23 22.2
42.9
100.0 55.6
42.9
40.033.3
22.214.2
55.640
37.5
25.033.3
20.0
62.5
38.5
33.3
50.0
28.6
25.0
33.3
38.5
11.116.7
50.0
but across Divisions, there is a broad spread of talent quality
A D GB C
100% = 9 8 10 4 13
E F
6 2
Tracking
Low Medium High
Potential
Performance
4 2 1
5 3
6
Outstanding
Issues H I J
10 3 77
K
Percentage of individuals
7
9 8
High
Medium
Low
Business units
Recommended