The new science of talent: From roles to returns
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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...
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.
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.
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.
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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Chapters
8 chapters
1
What are the key changes in talent demand and preparation strategies?
0:00–1:08
2
Why is there a disconnect between financial and human capital priorities?
1:08–1:59
3
How do automation and AI transform the talent landscape?
1:59–2:38
4
What is the importance of identifying critical roles in organizations?
2:38–3:31
5
How can companies effectively analyze their value agenda?
3:31–4:18
6
What role do soft skills play in the future of work?
4:18–5:01
7
How can gamification improve talent assessment methods?
5:01–5:55
8
What strategies can enhance the CHRO's role in driving value?
5:55–26:14