The ability to manage talent effectively is a key source of competitive advantage in business today. Why is this so important? A lot of writers talk about demographics when answering this question. They say that baby boomers are retiring and the loyalty of younger workers isn’t what it used to be. These facts are part of the story, but the deeper explanation is that much of today’s work is knowledge work. Now that many services and much of manufacturing are being outsourced to China, India and similar low cost locations, it is harder for North American businesses to be successful.
The Importance of Innovation
Low cost, commodity products and services have little future in a high cost economy, except those that need to be delivered locally, such as in restaurants and hotels for example. We have known for a few decades that innovation is a key source of competitive advantage, but now thanks to the rise of China and India, innovation is really all that North American companies have got. This reality drives home the hard truth that talent management is absolutely critical to business success. In the past, when businesses could succeed with efficient execution and low cost, but friendly service, with a bit of innovation here and there, employees could be seen as less indispensable. So, it’s not so much the potential scarcity of talent that is the problem. The real issue is just how important such talent has become for a company’s future survival, never mind prosperity.
What Talent to Retain
All businesses including gambling and casinos like casino-online-canada.ca need a wide variety of people, from accountants through human resource specialists and engineers, but their strategically most important people, those with the most potential to deliver new sources of competitive advantage, are their technically brightest people, those who can create new products and services, higher value added offerings that cannot easily be copied in China or India.
How to Retain Top Talent
When we focus on strategically critical knowledge workers we see the need to move beyond merely creating a supportive culture or a best place to work. Top innovators understand their worth. They are independent and entrepreneurial, like the originators of eBay, Google and Facebook. To keep such people, it is necessary to make them feel like they are building their own businesses within the larger organization. This can be achieved partly by recognizing their status as thought leaders but they also need to be given a stake in the new lines of business they develop.
Employees as Partners
The bottom line is that organizations need to view key talent as partners, less as employees or “resources”. Like it or not, the balance of power has shifted such that highly skilled innovators need to be seen as partners or they are gone.
Innovation vs. Efficiency
In a complex world, excellence in management is hard enough without managers being pulled in opposing directions. But they are faced with two organizational objectives that are not easy to reconcile: how to make a profit today and how to create the future. This is not just the simple conflict between short-term priorities and long-term needs. It is the much harder problem of how to foster efficiency and creativity at the same time – two opposing skill sets and organizational cultures.
Managerial Success Criteria
Even non-profit organizations have to use scarce resources wisely. They need to be efficient, even without profit goals. Efficiency requires organization, discipline and smoothly running processes. When there is a premium on avoiding mistakes, the experimentation that is necessary for innovation can be stifled.
However, constant innovation is essential today for competitive advantage. Think of Apple Computer, a very innovative company. At one time they struggled to make a profit because they were better at innovation than efficient execution. Other companies go under because they excel at execution but fail to innovate. For example, companies that failed to move from making typewriters to personal computers became obsolete.
Because we like simplistic solutions, there has been a great push to make companies more innovative, more entrepreneurial. But these companies are forgetting that it is not either/or but both. It is essential to be both efficient and innovative.
Balancing Innovation and Execution
An obvious solution is to assign different people or functions to these opposing tasks. But organizations have learned that a silo mentality does not work. Everyone needs to take some ownership for both tasks. Does this mean that specialization is impossible? Clearly not. Organizations could not function without specialization. In fact, the more complex the world becomes, the more specialists we need. No, it’s more a matter of cross-functional working than everyone trying to be generalists.
The real challenge is to get the organization’s culture right so that it is not overly dominated by either efficiency experts or totally creative types who can sometimes hate each other. The management challenge is to foster team work across both types, making them realize that business success needs them both. When designing an organizational culture, it is essential to match its complexity to its environment. All businesses need some innovation. If they don’t need a constant stream of new products, they still need to develop new processes to reduce costs or improve services. Where the need for innovation is lower, such as in a car rental company, the culture can focus on service, cost and quality. But high tech or knowledge driven businesses need a more even balance between innovation and efficiency.
This is an era of talent and proper management to run and expand businesses. Without the two it becomes tough to resist the competition from rival companies. Simultaneously, it is important to understand the changing taste of customers that shifts over time due to various reasons including monotonousness and looking for more varieties. The business strategies today call for adding variations to the products and services equipped with innovations. The variations should be based on ample research and survey done on potential customers or markets. Moreover, it is important to use technologies to reduce the cost of operation.