There is a wide consensus on the fact that knowledge has become the key resource of the 21st century’s economy. Knowledge has value, but so too does knowledge about knowledge. The key issue is knowing how to create and to capture that value. Our research and international experience in the field with a vast number of clients enables us to conclude that: i) the creation of value lies essentially in talent and innovation management and ii) to capture value created depends much more on the reinforced practise of strategic leadership rather than on the implementation of rigid procedural and organizational control systems. Leadership that energizes ideas and emotions in favour of high performance becomes therefore the most decisive organizational process.
O evento da Sociedade do Conhecimento implica grandes mudanças para as organizações. Hoje estima-se que entre 70% a 80% do crescimento económico na OCDE resulte da aplicação de novo e melhor conhecimento.
The advent of the Knowledge Society implies major changes for organizations. Today, it is estimated that 70 to 80 percent of economic growth in OECD countries is due to new and better knowledge.
The key consequence of these changes is that talent becomes the central element of the new competitive model – brought into operation by professionals with qualities and skills considered decisive to replace the limitations arising from hierarchy, planning and rules by autonomy, responsibility and real time decision-making capacity:
- The most important property is intellectual property, not physical property – the mind (ideas) and the heart (emotions) are more important to the creation of a supply chain and a value service than technical expertise;
- The creation of value is centered on those professionals who are able to create value from intangible assets like brands and collaborative and knowledge networks;
- There is a large percentage of these professionals in industries such as telecommunications, financial services, high tech, healthcare and pharmaceuticals, media and entertainment, high consumption products, among others;
- Their importance is growing even in the more traditional industries;
- The existing struggle between “organization” and “talent” is tending towards the latter since the key to productivity and competitiveness is centered on these highly talented professionals.
1. Implications for Companies and Organizations in General
There are three major implications associated with the need of companies to evolve from a structure essentially based on hierarchy and rigid control systems into a structure based on project portfolios, collaborative networks and internal talent markets, supported by knowledge and performance management systems.
First of all, companies must learn how to better address the challenges of knowledge and innovation management.
Knowledge management is based on a different economy from that which companies are used to. Knowledge can be shared at a low marginal cost and its value is not reduced / extinguished by its application (consumption). On the contrary, its economic and social value increases when it is shared and used by others. Many Knowledge Management systems fail to meet expectations as there are no incentives to permanently feed knowledge – “You take what you put in”.
In this context, incentives must be created for the sharing of knowledge to be seen as an asset that generates economic value for the company and for those who produce/share it, in order to create internal knowledge markets within the organization. However, the metrics and adequate enhancement of such processes are not yet fully developed in each of the business areas and organizations.
On the other hand, continuous innovation reduces the durability of knowledge. Hence, knowledge is increasingly perishable. We have to date it, and to consider its validity period, which can be quite short. Continuous innovation, be it revolutionary or evolutionary, is a necessity. In the future, there will only be two types of organizations – the fast and the dead.
To this end, there is the need to promote a continuous learning and sustainable innovation based culture, and to attract the talent that generates innovation, freeing it from bureaucratic constraints.
Additionally, it is important to invest in strong brands as, in a context marked by such a complex evolution regarding the supply of products and services, brands manage to reduce uncertainty and to inspire trust. Brands are capable of conveying an image of the company’s identity.
Secondly, companies must seek to link Business Strategy to Talent Strategy in an operational manner.
As talent is a scarce commodity, it should be subject to acquisition strategies in the same way as there are client acquisition strategies. These strategies are based on the following aspects:
- Making talent management a priority;
- Developing an “Employee value proposition”;
- Seeking talent in an aggressive way;
- Developing talent in an ambitious way;
- Retaining talent.
Thirdly, companies should streamline their organizational structures in order to unlock and promote the potential of highly talented professionals in the scope of new economic opportunities.
Predominant vertical structures can hamper talent management, which needs interaction, networks, knowledge dissemination. To this end, the following is required:
- Streamline organizations – removing complex structures and replacing them with a results-oriented culture, leadership and collaborative tools (portals, etc.);
- Create formal knowledge and talent sharing networks;
- Reduce formality within organizations in order to bridge hierarchical distances and promote interaction;
- Organizations based on high performance teams and projects with measurable results.
2.Implications for Human Resource Departments
First of all, Human Resource Departments (HRD) should focus and specialize on the management of talent to the detriment of other more administrative activities which tend to be outsourced. Rather than focusing on the “cost” of human resources, HRD should focus on the “value” of human resources, which has a multiplying effect on the company’s business.
Furthermore, HR Departments should develop talent management metrics in order to make their work more effective and credible across the entire organization. The workforce will have an increasing number of self-oriented professionals, reason why performance metrics are more important than direct control.
The defined metrics should help professionals to become more oriented towards collective success, particularly those dedicated to developing talent or to disseminating knowledge within the company. HRD should be able to show the operational linkage between talent management related activities and the company’s bottom line – impact on results.
In order to adequately meet this challenge, HRD should overcome a number of obstacles to the development of talent management metrics, namely:
- Lack of legal obligations to report on talent management, as at financial and accounting level;
- Lack of culture and habit, on the part of HRD, to use metrics with impact on business results;
- Difficulty in “tangibilizing” the value drivers associated with talent;
- Lack of common standards to enable comparability among companies;
- Lack of technology with a well developed analytical capacity in this area.
Lastly, HRD should develop technological sensitivity and knowledge in order to interact with the new and emerging technological tools designed to support their work. Technology is becoming simpler and more intrusive into Senior Management options. HR Managers cannot be excluded. Technology is increasingly present in various business processes which need to be understood for talent to be conveniently managed.
Technology provides increasingly powerful and accessible solutions to improve the management capacity of human resources managers regarding the talent component; internal portals (collaborative portals/ HR portals/ corporate portals), e-learning, business intelligence (scorecards), and mobility.
3.Implications for Countries
Countries should focus as much as or more on employment and talent attraction and development strategies than on industrial strategies.
Productive delocalization brought about by the knowledge economy allows countries to more easily change the specialization pattern of their economies, namely through technological modernization. It also enables to create new economic sectors (activities), such as the Information and Communication Technologies (ICT), particularly in value chain segments at worldwide level, where geographically disintermediated services (telework) may be delivered in a more competitive way.
In this context, competition for talent at worldwide level will increase, reason why countries should stay competitive, and focus on:
- Implementing employment and talent attraction and development strategies;
- Promoting innovation, research, science, continuous learning and ICT (including innovative public services);
- Ensuring access to broadband services (knowledge motorways).
The example provided by ICT offshoring is significant (it represented an amount of USD 39 billions in 2003). The delocalization of ICT services from developed countries to emerging markets registers a strongly positive trend, with an estimated annual growth of 30% between 2003 and 2008, and the creation of 2.6 million new jobs.
4. Implications for Leadership
The most important talent within organizations is leadership. Leaders create magnetic fields which motivate, develop and mobilize results-oriented talent rather than just managing the status quo
The mortality rate of leaders in the FTSE 100 companies has increased, reducing the average tenure of 8 years to only 2-3 years. The level of expectations regarding the performance of leaders is rising due to the growing diversity and complexity of factors: staff expectations, shareholder expectations, social values, organizational culture, intercultural sensitivity, etc.
The new organizational context requires a new type of leadership oriented towards unlocking the talent of others, e.g., the leader as a coach, a facilitator, an energizer.
In the present context, the new leadership highlights are:
5.Implications for the Training of Business Leaders
In this context, the success of companies (and of the modernization of Public Administration) involves emphasis placed on the development of leaders on an intentional, formal and active basis. Major companies with a record of consistent success over the past decades are those which regard the “training of leaders” as being part of their business, such as GM, 3M, Coca-Cola, etc.
There is a need to invest in strategic leadership development capable of aligning talent with strategic priorities and organizational culture.
Leadership Business Consulting was the name chosen for the company, as it believes that in the 21st century, leadership is the most important process for organizations and talent management the key to competitiveness.
Companies should essentially abandon the currently dominant “Non structured Training” scheme (which consists of selecting courses from training catalogues presented by training entities and then enrolling half a dozen staff members in those courses) which is not aligned with the company’s strategy, does not involve top management, is neutral vis-à-vis organizational culture, is not consistent in terms of course content; if anything, it may bring some benefits for the employee but very few or even none for the company. It’s like throwing money into the air.
What seems to be really effective are the “Strategic Leadership Development Programmes” where training is aligned with the organization’s strategic goals, it is extended over time, it has a mix of interventions (classroom training , hands on training, coaching, rotation schemes, including IT support tools, etc.), it has a positive impact on the organization’s corporate culture, it directly involves top management, it is compulsory and not optional, it is oriented towards the future, it is associated with talent and succession management, incentives and change within organizations. This effect has a multiplying effect on organizations and should involve all organizational levels.
The critical success factors are:
For Elena Ibañêz, Country Manager at the Madrid Office, it is talent, and the imagination and innovation associated with it, that form the soul of successful organizations. This is why, an effective leader has to be, above all, a talent facilitator, along three key components: intellectual capital (creative and rational), emotional capital (capacity to work with others) and social capital (value of knowledge network).
- Unlocking the talent of others (coach);
- Promoting trust within organizations (the new organizational oxygen) that operate within a network context and which are internally and externally interdependent;
- Facilitating the access to development and execution resources (responsible autonomy) to the benefit of change;
- Motivating a continued talent attraction and retention within the organization;
- Energizing in a positive way in order to obtain high performance and results (ideas and emotions);
- Promoting a learning based culture oriented towards results;
- Adopting ethical principles and values enabling the coaching talents in the absence of control procedures and the legitimation of leadership;
- Developing cascade leadership, aligned with organizational culture and business strategy.
- top management direct involvement, strategic alignment (being linked to the company’s core objectives);
- having a strong hands on training component (associated with the effort of rethinking the organization);
- having continuous feedback; and
- being linked to HR and incentive management.