Four Lessons to Winning the Talent War

Date:   Friday , July 26, 2013

Milibo, headquartered in Tracy, California is an invitation only network of top echelon of technology leaders and professionals worldwide for richer learning, mentoring, and business opportunities.

In Silicon Valley, not a day goes by without some mention of the “war for talent” that rages as companies (startup and giants) outdo each other in their quest to hire the best. But if it is a war we are interested in winning, should we not start by listening to that age-old master Sun Tzu? Here is what he said:
“One hundred victories in one hundred battles are not the most skillful. Seizing the enemy without fighting is the most skillful.”

An example of an organization that wins the talent war “without fighting” is America – yes, the country. It is remarkable that the most productive nation in the history of mankind was engineered not by attracting the wealthy, the powerful, the intellectual, or “the best and the brightest” from foreign lands. In fact, America conspicuously eschewed the elite as Emma Lazarus reminds us in the inscription on the Statue of Liberty "Keep, ancient lands, your storied pomp!" America was slowly and painstakingly built over generations by attracting the ordinary “doers of deeds.” Indeed, Alexis de Tocqueville attributes America’s success in attracting immigrants to its shores to its twin promises of equality of opportunity and inequality of outcomes. Labor and effort are lauded and rewarded, not pedigree or titles.

Here are my key takeaways for organizations seeking to attract talent based on the story of America.

Lesson #1: Promote Autonomy & Decentralization

As the story of America shows, people value freedom, people want to be given the room to perform their tasks and take initiatives. Too often an individual initiative is snuffed out by layers of approvals that are required or consensus that must be obtained. Policies put into place to prevent failure work so well that they prevent successes also!

Decentralized organizations enable top talent to operate with higher degrees of autonomy and influence. Consider, for example, Warren Buffett’s Berkshire Hathaway. If you are a CEO of a company and Warren buys your company, not only do you keep your title (which is important), you do not need to engage in bureaucratic infighting to get resources from common service organizations: there are none.
Explicit in Warren’s philosophy (as articulated in his wonderful shareholder letters) is that he does not – and cannot – know better. Acknowledging that is hard, and building an organization upon that principle is truly remarkable.

Lesson #2: Promote Equality of Opportunity and Inequality of Rewards

Effective managers provide outsize rewards (money, perks and titles) to their top performers, while managing their poor performers out of their organization. Nothing is worse than being sympathetic to the poor performer and trying to be equitable to all performers. Such a policy infuriates the top performers while promoting a sense of entitlement amongst the average performers.

Lesson #3: Talent is often latent – in Plain Sight

Managers often focus on hiring the best talent from the outside in hopes that great results follow. There is a major issue with this emphasis on hiring the super-talented (as is currently the rage in Silicon Valley): it is not durable. Super talented can leave just as easily when recruited by someone else with a better offer.

Therefore the only durable answer is for an organization to figure out how to grow talent indigenously: that is, how do you develop the ordinary performers so that they become extra-ordinary? History is replete with people who have performed at extraordinary levels when presented the chance.

Consider Alexander Hamilton. What do you think would have happened had he “applied” at the age of 36 for the position of Treasurer (or, equivalent) to the court of King George III in Britain? Yet, Hamilton served successfully as the first Secretary of the Treasury.

Here is the point for all managers. You need to look creatively at people within to see how to tap their latent talents. Take risks. Great pedigree is no certain predictor of future success.

Lesson #4: Promote Organizational Churn

An amazing innovation by the American Founders in their design of the American government was their use of elections to choose the rulers. Elections churn the roster of the powerful as the rulers once again need to become supplicants to the people that choose them.
We could learn a lesson or two from America in how we manage our businesses. While organizations tend to be pretty good at managing poor performers out, they tend to be pretty bad about managing those who are coasting at the top. Someone may have performed well in the past and been rewarded with a step up in responsibility – but now they have plateaued. What do you do with them? By keeping them on in their position, the entire organization beneath them suffers.

Unique amongst organizations (as far as I know), Goldman Sachs actively manages to make room in its elite partner group by eliminating the bottom 20 percent of the performers in this partner group periodically. This is important because without seeing a way to the top tier, people lower in the organization choose to leave.

Every individual at every level must prove themselves over and over again or make room for those who can. No coasting or resting on previously won laurels.

Ask most top performers about why they leave their company, and the real answer (the ones they share with their friends, not HR) will be that they cannot see a career path that advances their career. They feel “capped” or have hit the proverbial “glass ceiling.”
In summary, great organizational performance is the result of careful thought. Beyond perks, money and fun, it is a carefully crafted system of organizational policies that prevent stasis at all levels of the company, encourage autonomy and freedom to perform, promote from within, and encourage exceptional performance with exceptional rewards. Such a culture then is advertised broadly so that everyone is aware of how the company operates – attracting those who find such a culture appealing, and equally, repelling those who do not.