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Learn the top 5 errors responsible entrepreneurs make
Talent: Build, don't buy

Build, Don’t Buy, Talent

This week’s podcast and blog are about the insane competition for talent, attracting and retaining talent and why most businesses go about this pursuit, to get the best people, in the wrong way.

If you do leadership searches your company will pay about 1/3 of the cost of their first year’s salary and up to $300,000 for top searches. The recruiting process is being increasingly driven by the candidates, not the searcher, and the process is making it harder to get the candidate you want. Your brand as the company is now as important to the people you hire as the people the business sells to. That is pressure.

Recruits and employers say it is difficult to find good people and they have too many unfilled positions. Sixty percent of recruits report bad experiences in being recruited. The success rate, i.e. stick rate, is closer to 50% in terms of a new hire staying for the first two years. Buying talent has a low productivity score and a very high cost. That is a lot of bad news. But is there a choice?

Having the right people on the bus is always listed as a top priority and challenge. This is not news. Businesses have been feeling the escalating race to hire the best talent. It is a practice that has been costly with many broken steps for a long time. It is assumed to be a problem that every company has to deal with and just try to get better over time at the task.

Summary of the HBR Article:

The title of the article points to the theme of the piece. Fernández-Aráoz argues that there have been four eras of approaches in the industry of talent search.

The first era was the search for the physical attributes because so much work in the industrial times was physically intensive. The second era happened when brain power was called on and the nature of work shifted. Then the search was for intelligence, experience and proven ability to perform. The third era was the move from intelligence to competencies, the possession of specific characteristics and skills that predicted outstanding performance. Often based on surveys of a set of “characteristics of top performers. The author believes, and I agree, that this era is still in full swing in most businesses.

The fourth era he advocates adopting is one of moving from pursuit and development of competencies to one of potential. He defines potential as the ability to adapt and grow into increasingly complex roles and environments as times and strategies change.

HBR Author’s Premises: Fernández-Aráoz believes that you need to interview and search for potential, and not experience or competencies. He suggests that moving away from overall intelligence quotient to emotional intelligence and generally the ability to learn and adapt. That is the achievement for which you are ‘searching’.

His entire argument is built on a very old premise.  There is a scarcity of top talent and you have to work harder and more diligently to find them and compete for them.

He further posits that this is increasingly necessary with the challenges of globalization, aging demographic shifts and the need for creating a pipeline of leaders for the future. This is a dire forecast given that it means large numbers of organization cannot succeed in such a race and they will have to hire people who cannot meet the criteria. It further implies that there is a very costly fight with only what he says is an 85% chance of getting it right.

Thank goodness, the entire argument is built on a flawed idea of how humans work and how organizations can work. HE, in fact, is drawing from a paradigm to assess the situation which circumscribes a very limited possible set of outcomes.

Background for the critique this week and beyond.

Free Download: I always suggest that you download the free paper that lays out the four paradigms at work in the world of business to prove a foundation for the source of the Business Second Opinion on the website. There is also a video on Five Worldviews from five eras in history that rule us today. You will enjoy the podcast and blogs more and be able to participate.  It is also a sample chapter out of my new book, The Regenerative Business: Redesign Work, Cultivate Human Potential, Achieve Extraordinary Outcomes. Hachette 2017.

Competition for talent

What Paradigms and Worldviews underlie the ideas in the article? What can that teach us?

Señor Fernández-Aráoz has unknowingly been thinking through what I believe leads him to a false and expensive, as well as an exhausting path. He is working with older and incomplete paradigms, even though he is using some language, e.g. ‘potential,’ from a newer paradigm

The scarcity of talent is based on the Aristocratic Worldview. The foundational premise is that each person’s intelligence is fixed at birth and some just come into the world smarter than others; more able to lead the rest. There is so much research made public in books and journals in the last decade that tells us this is not true, that I find it a bit startling to see it still in this piece. The entire article is about how to find these right people and what to look for to curate such beings.

Machine Worldview: Fernández-Aráoz is using the language of the Human Potential Movement but defining ‘potential’ mostly in terms of the machine-paradigm that emerged in the industrial revolution, where people were required to adapt as their surroundings change and make themselves “fit”, resilient and malleable. There is one idea from the human potential movement he posits as an add-on. Specifically, that they need to develop emotional intelligence.  I would propose that from his eras, there is one missing era, which is that of living systems. It means that he is limited in terms of what he can see; versus if he leapfrogs over specific problems to see a different foundation and therefore different outcomes.

Regenerative Paradigm: A different foundation.

Regeneration always builds from the potential of each person. About potential Fernández-Aráoz was right. But real potential comes from the essence of each person, not a standardized idea of growing. That is more than an ability to learn and grow. It includes that, but it is unique to each person and that is why each person can become top talent.  What makes a person who they are?  How can that be developed and contributed to at work? And the same is true for each customer! And material! What makes each of these unique and how it can that be developed in the context of the business’s strategy.

The highest ROI on getting and retaining the right people is to develop them. Everyone in the organization. This takes a significant shift in mindset but has a payout on so many levels.

Regeneration Premises:

  1. All humans have a unique and developmental essence which emerges and contributes when an organization is designed to bring it out and to be expressed in real work activities and outcome, increasingly over time.
  2. The organization must design systems to bring forth personal initiative in services of a significant benefit for the customer and other stakeholders for which an individual is responsible to deliver.
  3. Ongoing education and personal development is the foundation of the organization
  4. Having an organization.

You gain loyalty from your organization by designing and creating the ubiquitous understanding that you are investing in people. All of them.  The belief is that each person can grow, develop, and most importantly, express themselves uniquely with increasingly more complex and greater significance, over the course of their life. Further, such development and growth can happen over shorter periods of time than assumed.  In every case, this culture shift moves the organization to new results, not one person leading, but all producing market and financial return beyond the system of seeking to buy top performers. Especially by avoiding a standardized idea of what the ideal person looks like. To a fifth era perhaps. Except that this method is proven for over sixty years.

For example, in Colgate Palmolive South Africa, we needed to grow a highly capable management team to meet the new Constitutions required of the percent of managers at each level needed to match the racial mix of the population within five-year. This, in spite of the fact that black African’s had been prevented from attending schools during the decades and generation of apartheid. Colgate built outstanding management capacity in an organization-wide process in six months, promoting Black Africans into senior leadership roles who also become Governing Township leaders capable of bringing new governance capability to local areas, while they grew the business by double digits for the first 3 years.

This work, including the development of individuals, but also a very different organizational set of processes, systems, and structures on how to engage and development people, which is where the current shortfall originates. Colgate SA was able to combine how they developed people with how they structured work, moving away from using some training and top talent search and hiring as their primary tools. They had the top talent because they did not BUY it, they BUILT it.

The phases that made this possible are found in The Regenerative Business: Redesigning Work, Cultivating Human Potential, Achieving Extraordinary Outcomes.  There was no one to hire in the new era and we proved they did not need to. They only had to change the premise they worked from, i.e. you hire top talent, and begin to utilize practices that come from a Regenerative Paradigm and set of Premises[1].

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[1] Read more about this transformational story in The Responsible Business: Reimagining Sustainability and Success

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