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Chapter 1: What are the key changes in talent demand and preparation strategies?
Welcome to McKinsey Talks Talent with Brian Hancock and Bill Shaninger. I'm Lucia Rahilly, and today I'm in New York City with Brian and Bill to talk about demand for talent, how it's changing, and what boards, CEOs, and the rest of us can do now to prepare.
We have created a a managerial system and a reporting mechanism that disproportionately focuses on the wrong capital and focuses on financial capital, not human capital.
Stay tuned. More coming up. Everyone's talking about the future of work and the potential for automation and artificial intelligence to transform jobs and working as we know it. But frankly, talent and talent shortages are not a new issue. It's not a newsflash that having the right people in the right roles is a big part of what drives an organization's success.
Bill, you have spent years, possibly decades, maybe...
Chapter 2: Why is there a disconnect between financial and human capital priorities?
researching and working on organizational issues. You got a doctorate in this stuff. Why this disconnect when it comes to making talent or human capital as high a priority as financial capital? What do you think?
Well, good afternoon first, and thank you for pointing out the decades. Look, I think we have a really interesting conundrum. When we ask people, do you have enough talent? They almost universally say no. But as soon as they say that, then they go back to attending a capital review meeting and a financial capital review meeting or looking at KPIs around that quarter's performance.
We have created a managerial system and a reporting mechanism that disproportionately focuses on the wrong capital and focuses on financial capital, not human capital.
Chapter 3: How do automation and AI transform the talent landscape?
So we've grown multiple generations of leaders who are fixated on the point estimate and of data around money, not that that's terrible, but don't spend nearly enough time on who, who is actually leading the organization. What are the critical roles? What are the critical skill pools? And so, you know, we're spending a bunch of time helping leaders say, can we reboot how we lead with an
equal if not more emphasis on the scarce capital, human capital.
Right, right. So you're starting out with a challenge that's tough. It might not be intractable, but it involves short-term financial metrics and so forth. Anything that involves actual human behavior is going to be tough in practice.
Chapter 4: What is the importance of identifying critical roles in organizations?
And then you layer in digitization and AI. Brian, how do those forces compound the challenge and what is at stake for companies that don't get this right?
When we've gone through and worked with CEOs on setting the value agenda and figuring out where new value is going to come from in the company, you know, somewhere in the order of magnitude of 70 to 80 percent are somewhat involved in building of a digital business or capability. And those are the areas where we find that there are gaps.
I mean, so when we do the value analysis, we're looking at the top. You know, 25 to 50 roles that drive a disproportionate amount of value. And the way we typically do that is go down and break down the value agenda of the company. How are we going to make money in the future? And there are going to be parts of that that are new. There are going to be parts of that that are sustaining.
Chapter 5: How can companies effectively analyze their value agenda?
And when we look at new, it's the new that is disproportionately in the digital and other space.
You know, it's a really interesting thing for people to get their head around.
Yeah.
You say value agenda, what does that mean? And picking up where Brian was talking about, there's such a basic way of saying, what's our business as usual? If you were to do nothing different, how does the business make money today? And you could take an org chart and literally take the revenue or the profit and just write the number in the boxes and disaggregate it all the way down.
And that's just basically protect the core. Now for companies that are trying to improve things, they'd say, Hey, we've got three or four things going on that kind of work across the company, procurement, pricing, lean, or whatever. You could write them on the side and just write the little numbers in going left to right and go, Hey, look at that.
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Chapter 6: What role do soft skills play in the future of work?
I mean, it's a relatively small number across each of the units, but when we add them up, boy, that's a really big number. Should we think about a role for that? And that's, you know, improving the base business. Then you get into the really interesting thing that Brian's talking about, which is net new. So if you were to look at the company today,
If you look at a company today, you'd have to draw a box in and go, that's the move when we're going consumer into China. That one there is going to be the new digital platform, right?
And it doesn't exist, but somewhere you convince somebody to give you money for the plan and you should write that number in because the minute you ask for capital or you make a commitment to the board, you're on the hook for that number. So that's what the role should count for.
You're a CEO and you're asking yourself this question, what's my supply-demand ratio look like?
Chapter 7: How can gamification improve talent assessment methods?
Am I long? Am I short on talent? What's your first step?
Yeah, I mean, sometimes what's interesting is, you know, we like to think of the strategy and looking at the value levers kind of individually, looking at the initiatives individually and figuring out where the roles and value are. But sometimes in conversations with clients, CEOs or CFOs or CHROs, they think about it in a different level of aggregation, different chunks.
So one of the recent conversations we had, the leadership team was thinking about it in three ways. One was, hey, I've got this new attacker business that I need to create that over time may take over and integrate the new business, but I want it to be unconstrained by current processes, unconstrained by current IT platforms, and I need somebody to lead that business.
Okay, well, that's the net new that, you know, we had talked about before. There's another piece that is, hey, I'm really interested in this digital and automation and future of work.
Chapter 8: What strategies can enhance the CHRO's role in driving value?
And to make that happen, I know I'm going to need to have maybe changes in technology. The amount of people in digital areas in the company, I may need less people in the routine work, but they're like, hey, that feels like a discrete group.
And then, hey, you're telling me the most important people in that are the people who are designing the new tech tools and maybe one or two of the people that are actually driving the implementation. And then you're saying, hey, there's a part of the business that is not net new, that is not being hit by future of work. And you know what?
I just need to make sure because procurement is my number one value capture that I've got the best procurement person in the world in that role. And sometimes by breaking it into those three chunks, so you're like, okay, I got your value agenda.
I got where you're talking about the enablers and pieces, and I've got how those pieces fit against three different parts of my agenda or how I'm thinking about the company.
I mean, I might make one point where I think we regularly confuse people with roles and talent with broad skill pools. In many cases, organizations, the roles they have today are often an amalgamation that bears no resemblance to what they would have done if they were given a clean drop. And so part of it is, get really clear in your head, what are the very few critical roles?
And there's probably a couple dozen of them. That's it. Everything else probably sits in a skill pool. A version of a similar common clustering of skills that are deployed different ways. And if you can get to that, it starts looking more homogenous. If it starts looking more homogenous, you can start finding types of people, not a person.
And then I think one of the toughest conversations that leaders have to have, say in some skill pools, we are going to be long and we have too many people.
So what does that mean when you're mapping current roles against future roles? And how do you get to that? You're disaggregating at the role level rather than at the incumbent level.
Oh, yeah. They take the incumbent out of it because we're attacking the role first. And what do they really need to do? We're more likely to try to make the role fit the person, which is the 180 of what we're trying to do, which is get really clear on the roles and then decide whether or not the person fits. It is a relatively unique opportunity when you recast how you're going to make money.
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