We have been on a fully on growth and hiring explosion for a number of years and the ubiquitous “war for talent” a phrase coined in the 1990s and beyond a dip in 2008/2009 it broadly has not let up. Many leaders are assuming that with high profile layoffs and hiring cooling this would be the time for the talent challenges to be availed and as such they have looked to release many in talent acquisition and talent intelligence. I would argue though that this is absolutely the time to double down. Let me talk you through an analogy that has been playing in my mind and that is a formula 1 racing team.
If you assume that the bull markets are the formula 1 season and the bear markets and associated cooling are the off season what we have seen recently is a tighter market and the equivalent of F1 team bosses being given a choice. We can’t afford all the staff, do you cut the mechanics that keep the car moving and will get us to the starting line for next season, or do you cut the R&D function that will improve the performance for next season (this is I know overly simplistic but nevertheless this is where my brain has been going). What a large number of leaders have chosen is to save the mechanics and lose R&D. This is understandable. What I feel many are not foreseeing though is the downstream impact of this.
When the new season starts (the bull market returns and hiring is hotter again) everyone will have the mechanics in place but those that cut R&D (Talent R&D) will be disproportionately impacted. Those teams that held on to their R&D will have a huge advantage going into the season be it improved aerodynamics, braking technology, chassis design, engine performance, tyre performance or materials sciences. These advantages will not only give an initial impact but one that will be felt throughout the season and for seasons to come as competitors will be playing catch up from further back than ever before. I would argue that this is equally true for those that heavily throttled back on R&D and looked to have minimal investment. The increased R&D capability of those investing more will drive innovation across the F1 team organization.
In fact we see this played out in the real world also, this research by Dr Yvonne van Everdingen revealed that “competing in F1 generates a significantly positive effect on innovation, but it benefits only those manufacturers that spend at least €3.8 billion annually on R&D (e.g., Daimler and Honda). This effect is not found for manufacturers such as Fiat or Renault that spend less than this amount on R&D. Thus, if manufacturers decide to invest in F1 to enhance their innovation performance, i.e., to enhance the number and impact of patents for new and unique technology they hold, then they must complement it with an R&D budget that matches the €3.8 billion spend of Daimler or Honda to fully exploit the innovation potential offered by competing in F1.”
People are our greatest asset is declared by every C suite member and access to the best talent is often cited as the number one inhibitor for growth and innovation. I don’t think the stretch is far to see the parallels between F1 R&D and Talent R&D especially when viewed in the broader definitions of Talent Intelligence that also encompass Talent Assessment, Talent Management Analytics, Talent Acquisition Analytics, People Analytics, Sourcing Intelligence, Competitor and Market Talent Intelligence etc.
To see the value driven throughout the talent lifecycle, the increased efficiency, the increased effectiveness, the improved organizational design and effectiveness, the right sizing and right shoring of organizations, the increased levels of competitor intelligence and early warning threat detection etc it is clear to see that those that have and do continue to invest and even increase their investment into Talent Intelligence / Talent R&D at this moment will see an increased ROI and competitive advantage as we move forward.
“Life is like riding a bicycle, to keep your balance, you must keep moving.”
Albert Einstein
Companies that double down in this period. Invest in their Talent R&D. Build the foundations of research to enable future growth and development. These companies will have such a powerful head start that I fear those that aren’t using this period for Talent R&D will possibly fall behind, lose momentum, lose balance and fall and potentially be organizationally fatal.
8 comments
I can’t agree more. I believe part of the problem is attributed to the accounting practices; for example, in layoffs, the companies easily capture the cost avoidance, and you can hear about it in the quarterly management calls. But never for lost revenue opportunities because of bad management decisions in our context related to Talent. And the best example is this summer in Canada. The travel season was a mess at all levels due to strong demand with short supply. The airlines delayed the recall of the employees and prepared for the summer season. They prefer to play cost avoidance even if the government subsides a significant portion of the salaries by pumping millions of dollars to help the company keep their employees in their ledger and keep them floating. Did we hear about the lost opportunity regarding the revenue in their quarterly review? No.
I’m sure this story will repeat itself with the inflation-cause narrative. Also, sooner the central banks will reverse end recommend the increase in production and hiring because finally, they discover that the inflation is due to a shortage in supply, not the labour market….
Very well done, Toby! You perfectly illuminated such an important, cyclical issue in TA/TI. This prompts me to question how we as Talent Intelligence leaders can move the needle on getting C-Suite leaders to truly understand that “If you want to stay afloat, stopping getting on, and then off, the boat.” Ha, that just came to me as I was typing 😉.
With Talent Intelligence being the true experts in internal and external workforce insights, is the onus ultimately on us to help leaders understand why this phenomena is problematic? While we aren’t the final decision makers, we are certainly key decision enablers. How does the cycle stop?
Audacious yet entertaining and compelling analogy. Well done.
“People are our best assets” doesn’t mean “our best asset are the people” (either as in someone, or when not categorized individually).
Subtle difference with HUGE implications.
We’re human, it’s enraging to witness how cynical the situation can be. One day referred to as best asset, the next day the same CEOs launch waves of “preventive” or “mimicking” lay-offs.
But…. What if we were NOT fair to react as we do?
Indeed, we are naturally bias human beings. We want hear too much “BEST”, and dismiss or completely ignore the “ASSET”side.
Let’s pay attention to the dull and unfair life of an asset…
A company valuation is the sum of the valuations of all its asset parts; therefore a company reason d’etre is to increase and ever maximize the current and potential value of any asset components (people, but also tangible and intangible property, etc)
If any asset fails to perform, individually or as a group of assets, a company is structurally designed to address and immediately solve the problem. In theory, the past value of assets have limited/no influence a current value.
Sure, it is people who make such decisions on behalf of the organization. Therefore we can naturally challenge the decision-making activities quality and efficiency, debate on future projected counter-productive outputs or even business threats, etc.
They say not to mix business and personal feelings, don’t they?
Good food for thought.
Teams that shift into an era of maintaining team standards often lose the competitive advantage. One of the old communities I managed for corporate innovation (50K+ members) had a serious overlap in that high-innovation companies required growth, requiring talent acquisition, requiring positive market shifts, feeding back to competing more. It was a great cycle that could be completely derailed by just one or two frugal quarters where the executive team lost focus on the whole cycle.
Love the analogy Toby. There’s a big disconnect somewhere in the corporate food chain. When we speak to CEO’s and see research about the things that keep them awake at night, it’s typically 50%+ talent, skills and workforce related concerns.
When we look at the investment in and influence of future focused workforce functions (SWP, PA, TI, Strategic TA) – there simply isn’t alignment.
Time to reinvent / re-prioritise a few things. Simples. 👍