The Ten Years' War

It's been nearly a decade since McKinsey published the seminal article, The War for Talent, but many of its abiding observations remain true today and indeed are worth revisiting. What they found ten years ago started from the implacable demographic reality that the baby boom generation was passing through the senior management pipeline and that there were far fewer bodies coming down the pike in the future.  It can be summarized thus:

"What we found should be a call to arms for corporate America. Companies are about to be engaged in a war for senior executive talent that will remain a defining characteristic of their competitive landscape for decades to come. Yet most are ill prepared, and even the best are vulnerable."

And their recommendations?

• First, make the war for talent a top priority of the entire organization, starting at the top. That means spending senior partner time interviewing not just lateral partners, but lateral associates and all associates, at regular intervals, to discover what's on their minds.
• Make sure you have a compelling answer to the question, "Why would a very talented person want to work here?"
• Recruit continuously. Not just seasonally, and not just when you think you have an opening. Constantly be on the lookout for talent. (I might add that in the current fear-of-recession marketplace, this is more true than ever; perfectly good talent may find itself on the street, or on the fence, for no good reason. Be opportunistic.)
• Put people in situations before they're entirely ready. This is one of the hardest for lawyers to endorse, but if you think back on your own career, I'm sure you'll find it the most penetrating of all the observations and recommendations on this list. When you were thrown in the deep end of the pool, you did learn to swim, didn't you? And you've never forgotten it, right? Give someone else that opportunity. After all, you'll be standing by the side ready to throw them a rope all along.
• Move the poor performers out. It's not only humane (in the long run), it's essential for the morale of the high performers and it's essential for you, in order to give yourself time to concentrate on the higher performers.

But that was then and this is now.

Today, McKinsey has a ten-years-after update, Making Talent a Strategic Priority. If anything, the problem is more acute. According to two new surveys, executives consider finding talent their most pressing priority, and they also expect intensifying global competition for that talent. No other consideration ranked higher in priority over the next five to ten years.

Yet the obstacles to giving talent management its due are high, and familiar:

• Senior management can't spend enough high-quality time on it;
• The firm is "silo'ed" and departments don't share information about promising up and comers;
• There's no real talent management "strategy;" it's more catch as catch can; and
• Practice group managers don't adequately address underperformance, even when it's chronic.

Interestingly, McKinsey cites three developments as intensifying the new 21st Century war for talent. Each seems as if it were designed to target our industry:

• The rise of knowledge workers;
• Globalization; and
• Demographic changes (read: Gen X/Y).

But haven't we all heard that the enormous graduation rates of professionals in the developing world will raise all our boats? That we'll be able to find talented Indian lawyers, native English speakers, to walk hand in hand (well, I speak figuratively) with us into the developing world's future? That Silicon Valley will be able to find the talented electrical engineers, Boeing the mechanical engineers, the Big 4 the CPA's, etc., etc.?

Not so fast.

Here's a striking graphic compiled in response to the question, "Of 100 graduates with the 'correct' degree, how many could you employ if you had demand for all?"  In other words, this is asking—aside from the technical baseline qualification—what percentage would actually be suitable material to bring into your organization.

Since this is hard to read, here are some top-line figures:

• The highest percentage deemed suitable, 50%, are engineers from Central & Eastern Europe.   Notably, Russia scores drastically lower, at a mere 10%, a figure matched by China and barely exceeded by Brazil.
• In "finance and accounting," where India and China are supposed to have superior educational systems, only 15% would be considered suitable.
• But the most interesting figures for our crowd are of course in the "generalist" column, where a virtually nonexistent 3% of Chinese would be suitable, and a bottom-scraping 8% of Brazilians and 10% of Russians and Indians (11% of Mexicans).

In other words, the vaunted fecundity and educational rigor of the developing world is not exactly going to ride to our demographically-challenged need for talent.    Shortcomings cited in the McKinsey survey included poor English, dubious educational qualifications, and, overall, "cultural issues" such as inexperience with teamwork and a reticence to take a leadership role or show initiative.  While some shortfalls (English fluency) can be remedied through training, in my experience cultural ones essentially never are—certainly not on the wide scale needed to make a big difference here.

Which brings us back to Gen Y, people born after 1980.  Here's the best synopsis of all that's different about Gen Y that I've seen to date:

"People in this group see their professional careers as a series of two- to three-year chapters and will readily switch jobs, so companies face the risk of high attrition if their expectations aren’t met. The Gen Y cohort, already representing 12 percent of the US workforce, is therefore perceived as substantially harder to manage than its predecessors. As one North American HR director explained, 'The millennial generation doesn’t want to work 100 hours a week. These kids want a different deal; they have seen their parents work all their life for the same company and then get fired. They are not interested in killing themselves for work.'"

Whether we have only ourselves to blame for this, in the sense that the past few decades have seen a terminal severing of the reciprocal bond of trust between employees and employers, is a question I shall leave to economic historians.  The point is the reality of Gen Y is quite different, and in some ways unprecedented.  But as I've said in other contexts, denial is not a coping strategy.

If, then, the ten-year-old war for talent has not only not been won but has actually escalated—which is the soundbite conclusion of McKinsey's survey—what's to be done?  A redoubled commitment to gaining a leg up on your competitors, in a word.   And that takes place through three complementary initiatives.

Target talent at all levels

It's not just about senior lateral partners, and it's not even just about lawyers.  Your firm should cultivate top talent at all levels (what the insurer Aviva calls "the vital many").  For a few reasons:  First, it's just smart business.  Second, if you only focus on the top people you broadcast a remarkably hypocritical message if you then expect all the underlings to think they matter as well.  And last, human nature loves a community—and study upon study has shown that workplaces where people feel a sense of inclusion and belonging perform at consistently higher levels, with less attrition, less unproductive navel-gazing, and less energy devoted to bureaucratic machinations.

Communicate your firm's (various) "value propositions"

A cliche, to be sure, but there's a reason so many people stress the criticality of the value proposition:  It's what motivates behavior.  It answers the question, "Why would an ambitious and talented person, with other alternatives, want to work here?"

And whereas ten years ago McKinsey speculates that there might have been one unitary response, today there clearly must be many.  The expectations of a Gen Y in Asia are likely to be quite different from those of a Gen Y in the UK or the US.  Career aspirations will also vary across geographies, backgrounds, and age and gender demographics.  But for almost all cohorts, the value of training and professional development will be a key calling card.  In the era of "free agent nation," people know that they are ultimately the only ones responsible for their own careers.

Bolster HR

This is McKinsey's last recommendation; I beg to differ.  As they note:

"Unfortunately, the credibility and influence of HR executives have declined over the past decade, and the function has failed to develop many critical capabilities. According to our research, 58 percent of all line managers believe that the HR function lacks the wherewithal to develop talent strategies in line with a company’s business objectives."

Whereas their view is that HR needs to be repaired, mine is that in many firms its reputation—certainly as a strategic asset—is tarnished beyond salvation.  Nevertheless, many of the functions McKinsey wants the new & improved HR to perform surely have to be carried out by someone somewhere.    I nominate your office managing partners.

Permit me a brief digression.  There's a long and honorable history of debating whether firms should be organized geographically by office or functionally by practice area (or, in a few more iconoclastic cases, by primary clients' industries).   This is one of those perennial debates that never seems to settle into the repose of equilibrium.  Geographic organization has its advantages and backers, and so does practice group organization.

In general, I come out pretty firmly in favor of organization by practice group.  It simply has to make more sense to focus management's attention on the collective capability of people to serve a given legal need than it does to focus on their somewhat random grouping by the happenstance of geography and history.  (And if you want to take to me about being organized along lines that follow your key client industries, that would be great fun.)  Nevertheless, the office manager organizational matrix should probably be superimposed in light grey dotted lines over the heavy black solid lines of practice group organization, and the primary reason is that office managers have the strongest sense of the local market for talent. Who's available?  What's hot/what's not?  Which firm is "damaged goods" locally?  Etc.  So I would appoint your office managers your de facto local champions of recruiting.

That our only assets are our people is a bromide too often observed in the breach.  Yet it bears repeating; they really do leave every evening in the elevator and the only thing that brings them back up tomorrow morning is their individual desire—a decision which can be reversed in a heartbeat—to give their professional best to the firm.  That HR has acquired (earned?) a bad name can't obscure this fundamental truth.

People must be your priority.  And yes, they are hard to recruit, can be hard to retain, and are almost always hard to select.  But if the last decade of advances and declines in firms' reputations and standings proves anything, it's that people make all the difference.