THE BLOG

Creating Talent Agility

03/24/2015 12:37 pm ET | Updated May 24, 2015

The world of business is changing faster and faster. Yesterday's performance is no longer good enough. In today's competitive environment, what organizations used to do is no longer good enough. Organizations must be increasingly agile in ways that allow them to change what they do and how well they do it. This is hardly news. I state it here only to get it on the record before we move to a discussion of how organizations need to manage talent in order to be sure that they are agile enough to match the rate of change that exists in their environment.

Organizations have always had to change the skills of their workforce. The big difference today, however, is how rapidly this needs to happen and how much change needs to occur. With that in mind, let's look at three different approaches to creating talent agility that we consider in my recent book, The Agility Factor, and where they may best be utilized.

The first is the career approach that organizations including General Electric, IBM, 3M, and a host of others used for decades. Fundamentally, it relies on a career model of talent development and agility. Individuals are told that if they will commit themselves to a career at the company, it will "look after them" and be sure that they are trained and developed for tomorrow's jobs. When new skills are needed, individuals are expected to want to learn the new skills because they know it is in their best interest for their long-term job security and career development.

The second approach is becoming increasingly popular and is used in companies including Netflix, LinkedIn, and many other "valley firms". It tells individuals that they will be well-paid and have a job as long as they can perform at a high level and do the work that needs to be done. There is no promise of a career, skill development, or job security. This approach produces low transaction costs when it comes to shifting the skill sets of the organization. Training is not required and terminations can be relatively easily executed without individuals feeling the organization has violated their employment contract. Additionally, individuals with the "right skills" are hired so training costs are kept low. The approach has some obvious downsides with respect to building loyalty to the company, and it often requires a higher pay rate in order to attract and retain people despite such low job security.

The third approach involves the crowdsourcing of labor. Odesk and other companies have developed crowdsourcing technologies that allow organizations to buy labor that is willing and able to perform tasks for a contracted amount. In essence, the organization relies on outsourcing much of its labor and may outsource anything from a few hours to a few months' worth of work. It is frequently used by companies that are looking for software development, but also for less skilled labor such as survey respondents and a host of more transactional activities. One obvious advantage of this approach is the low transaction costs of changing skill sets and the ability to "employ" individuals for short periods of time. In many cases, the labor costs are not high since an increasing number of individuals are willing to take on this kind of work and to make careers out of patching together cloud-based assignments from multiple companies such as Uber and Odesk.

There are some factors, which can be identified, that should guide organizations when choosing which talent agility strategy to adopt. First, it is clear that the traditional model is not likely to fit very many organizations in the future. Most organizations will encounter a rate of change that makes using this approach for a majority of their employees too expensive and too slow. When you consider the training time involved in helping individuals acquire new skills and the transaction costs involved when they are unable or unwilling to learn new skills, the costs are obvious.

There are two cases where it may make sense for an organization to use the career approach. The first is when it needs a core group of long-term employees to provide some stability with respect to its basic business model and corporate culture. The second is when an organization is the technology or knowledge leader in their industry. The organization may be the best able to train employees in the skills they need to make the business work. Some examples include technology companies, such as Google, which have a technology lead and are often the best developers of people to do the work they have to do. This in turn gives them a significant competitive advantage that justifies the development costs organizations incur.

For most organizations in highly competitive and rapidly changing businesses, the best approach is having highly paid employees who are not provided with training, development, or job security. It recognizes the reality that organizations cannot know the future; all they can do is respond to it. As a result, any promises they make with respect to future employment and the need for skills are likely to be misleading and have negative consequences for both the organization and its employees. Admittedly, this approach shifts the risk to individuals, but in today's competitive business environment, this is not unreasonable. What organizations should do is make a serious effort to give individuals advance warning of change, encourage them to learn new skills, and give them generous severance packages. Doing much more than this will put the firm at risk in a way that is not defensible.

The final approach is likely to gain tremendous popularity over the next twenty years. It fits well with the changing nature of work and the capability that technology has to do knowledge work and integrate the work of others. It does raise numerous questions, including some as basic as: what is an organization? And how much self-management can individuals handle?

Overall, the best way to think about the issue of talent agility is to take a strategic view that recognizes that the talent agility of a corporation is determined by its policies and practices more than the ability of its talent to change. An organization that looks for agile talent that can adapt is likely to be less successful than one that has talent management practices that allow it to change talent at the appropriate rate and time.