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External Talent Strategies for a Global Talent Pool

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Why Having an External Talent Strategy is Becoming Increasingly Important

External Talent Strategies for a Global Talent PoolThe old way of winning the talent wars was to search for and hire the very best talent and keep them inside your own four walls by offering them competitive compensation, benefits, and perks. Your hope was that your talent is better than your competitors’ talent. But over the last couple of decades, companies have increasingly found that employees who pursue what they do with passion will outperform an employee with a gun to their head every time. Circuit City learned very publicly that people are not commodities and went out of business from treating them as if they were. At the same time, we know that diversity is very important and hard to foster internally. And so it is to get to this diversity of thought in order to accelerate product launch and innovation timelines that companies must open up – it is a global economy with a global talent pool.

The question becomes: what is happening at the micro level with this global talent pool? Well, the world continues to move away from being a place where employees expect to have jobs for life, and fight against any change to this paradigm, to a world where portfolios, personal branding, and project-based work will become more common in an increasing number of industries. The evolving world of work is becoming a world in which individuals will need to be really good at collaborating and playing well with others, while also honing their skills at standing out from the crowd. At the same time, the external perception of your network value will expand from a focus on internal connections to also include the talented minds you might know outside the organization that can be brought in on different projects or challenges.

At the macro level, we are also confronted by an economy right now that is characterized by high unemployment – especially for the young. And for those that have jobs, many are underemployed. Meanwhile, at the other end of the age spectrum, many baby boomers will continue to look to make money and stay involved in the workplace in significant numbers. And for those not retiring who still have jobs, many employees now are doing more work but feeling less engaged. When you combine the macro and micro pictures, you can see that there is an army of talent out there looking to build their resumes or their balance sheets by working on interesting challenges and projects.

As your organization opens up and crafts a formal external talent strategy, there are several ways external talent can help benefit your organization.

Increased Speed:

  • External talent networks can form an expanded rolodex of experts that you can consult with to expand your knowledge on a particular search area or market and give you a running start instead of a standing one.

  • You can use your external talent strategy to find existing solutions from outside your industry. One example of this is a tire company adapting existing technology for cutting cheese to cutting rubber. Another is InnoCentive client OSRI, who used concrete construction principles for the purpose of oil spill cleanup (see sidebar).

  • To accelerate innovation and product development timelines, many companies strategically partner with external talent to advance their projects and help fight through roadblocks or work on other components when the lead team is off the clock. Dissecting work and distributing it to the individuals, groups, or partners that can best complete the work is an essential component of open innovation strategy.

Increased Success:

  • You can form a relationship with a particular expert and work together to solve a problem, to evaluate a range of potential solutions from internal folks, to tap expertise you lack currently in your organization, or to add diversity of thought.

  • You can use your external talent strategy to engage a large number of potential solvers on a tough problem. Through open innovation and crowdsourcing, Roche found a solution to a problem it had been struggling with for fifteen years by engaging the InnoCentive global solver community. At the same time, the company validated that the approaches it had already tried were the logical and correct ones.

  • When you engage external talent, you can collect lots of little ideas from outside, and connect them internally, uncovering some really big ideas that properly applied and executed can lead to some great new breakthrough innovations.

Increased Learning:

  • An under-appreciated and under-utilized benefit of working with external talent is to use it to learn new problem solving techniques by analyzing how the external talent solved the problem, to learn new technical skills not held internally by having external talent train internal talent, and by encouraging information sharing from the outside-in from external talent working in different disciplines.

Teamwork and Collaboration:

  • An increasing number of problem solvers are working together to solve challenges posed by organizations and this collaboration and teamwork is yielding higher quality solutions. Research by EMC into their own internal innovation challenges has shown that teams were more likely to successfully create winning challenge entries. InnoCentive, for instance, has responded to this behavior by creating more collaborative features for its global solver community to use in responding to challenges.

Consider scale for a moment. A person delivering a ton of value does not need a ton of headcount anymore if they are employing an effective external talent strategy. In an era where organizations are focused on increasing productivity and output without changing the number of headcount (focusing on revenue or profit-per-head), smart employees and business units will increasingly focus on being a force multiplier – getting more work done with the same number or even less headcount.

Two of the most important job skills in this new world of work will be the ability of the individual and the organization to deconstruct the work into portable units that can be executed by a mix of internal and external talent, and construct a project plan for distributing, aggregating, integrating, and executing the component parts to achieve the overall project goal.

But to maximize the efficiency and effectiveness of your work with outsiders – as well the output – you need to be strategic in your approach because the speed of adaptation (your ability to adapt and integrate work from outside into the inside) will become more important. And the flexibility you show as an organization and the ability of your employees to execute under immense market and customer pressures will become increasingly important as well. You must be strategic because ultimately you want to design scalable external talent strategies, policies, and processes.

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Personal Innovation – Shine Your Star

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Personal Innovation - Shine Your StarI had a nice conversation with a friend from London today that I haven’t spoken with in a while and we got onto the topic of careers. We started talking about my article on Personal Innovation and how in most professional occupations there are the stars and then there is everyone else.

We talked about how stars in certain professions might only be 5% better at something than their peers but get paid 5x to 50x more than the rest. There are certain professions like professional athletics where this is particularly true. But at the same time in many professions including lawyers, consultants, managers, speakers, even cooks and hair stylists, the stars are those who are best at marketing themselves. So if you really want to become a star, you have to hone the skills necessary to market yourself and/or your ideas.

If you read my article about The Commodity Marketplace for Employees you’ll get a lot more background on this topic. Today I want to focus on a good point that my friend brought up. He had consciously tried to build up an ‘aura’ (or a “reputation for greatness”) in his organization and had been somewhat successful in doing so. But after succeeding at building his ‘aura’, some coworkers who had previously been helpful in building it, suddenly stopped supporting him. Why did they do this? Well, they began to feel that his ‘aura’ had become stronger than their own, and a potential threat to their own career ambitions.

So, if you are really good at what you do, is building yourself into a star doomed to failure?

Definitely not!

This is one of the hazards of focusing your personal innovation efforts within your organization. While it is important to have a reputation for greatness within your organization of a certain level, it is more important to focus on expanding your reputation for greatness outside the organization and here is why:

  1. To build a reputation for greatness within your organization you are dependent on your peers and managers saying flattering things about you and throwing their support behind your efforts, but at some point this support will likely decrease or cease
    • The only exception is a company growing so fast that there is endless opportunity for all
    • This is because people eventually become threatened and will not want to be seen as inferior
  2. Building up a reputation for greatness within your organization really only helps you
    • It might help your manager if he/she can show their bosses that they are a great developer of talent and deserve to move up to the next level
    • It does not add value to the organization
  3. Making yourself a star outside your organization increases the awareness of other companies to your promise and potential
    • It also increases the profile of your organization as being a thought leader
    • Upper management will eventually recognize this thought leadership benefit
      1. Improved reputation
      2. Free advertising
      3. Free public relations

Let’s face it, becoming an internal star will probably only get you a 3% annual raise instead of a 2% annual raise, and possibly on the fast track for promotions (but only until you become a little too threatening to the wrong person). If you truly are a star, begin preparing yourself mentally for the possibility that you may have to leave your current employer to be compensated appropriately, continue to execute brilliantly and start polishing your star.

If you do a good job building up your self-marketing skills and show that you do have something unique and valuable to say, then you will become of greater value to another organization than to your current one, and to a sufficient level where the other organization is willing to campaign to acquire you.

So, the following questions remain:

  1. Are you really a star?
  2. Are you committed to the hard work and learning necessary to shine your star?
  3. Are you ready to leave your current employer when the time is right for a new opportunity or to create your own?

Well, are you?

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The Commodity Marketplace for Employees

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The Commodity Marketplace for EmployeesThere is a plethora of articles and books out there about how difficult it is to be in a commodity business. Books like “Blue Ocean Strategy” talk about it in terms of swimming away from the red ocean to the blue ocean, or that the blood of fierce competition in a commodity marketplace has turned the ocean red.

Innovation is such a hot topic right now because an increasing number of industries that used to be places where differentiation existed, have suddenly turned into commodity industries. When differences between the offerings of different companies become small, competition increasingly turns to price, and the product is commoditized. The customer becomes ambivalent about which offering they choose – there are a number of choices good enough for their purposes.

Why don’t we see the same plethora of articles and books out there about Personal Innovation?

Ah, but you might say the marketplace is full of self-help and personal growth books. Yes, but Personal Innovation is about more than personal growth. Personal Innovation is about self-transformation and in the employee context, about creating a strategy for swimming away from the red ocean.

Yes, if you choose to be an employee you are choosing to swim in the red ocean. The employee marketplace is an incredibly commoditized industry. A System Administrator job pays x, a Bookkeeper job pays y. Have you ever heard this before – “I’d love to give you a raise, but you’re already at the top of the salary range (aka salary band)”?Or maybe you’ve heard this one – “We think you’re the best person for the job, but the money you’re asking for…nobody in that role makes that much.”

Despite what some people may tell you, the employee marketplace has little room for value-based selling (especially after you are in the door). The Human Resources department in the same way as the Purchasing department, has made sure that every “product” purchased has an approved price. Want to buy a photocopier? It can’t cost more than x. Want to hire a finance manager? You can’t pay them more than y.

Continuing with our photocopier example, employees who don’t know their own value ruin the marketplace for employees who do in the same manner that companies willing to sell their photocopiers for thin or negative margins to build market share ruin the marketplace for other copier companies. So what is an employee to do?

Unionization is one way that employees can improve their lot, but it has its own set of problems in that “stars” or extraordinarily high performers have no way to make above average income on their above exceptional contribution.

Professional athletes are probably the only set of employees that have managed to guarantee themselves a high level of minimum compensation and benefits without eliminating the possibility of stars to earn much more. Professional services (lawyers, consultants, CPA’s, etc.), venture capital, and private equity firms with a partner structure offer the potential for “star” compensation, but “stars” are defined not by ability to do the job but their ability to bring in business.

Professional Services independents have the opportunity to generate “star” earnings as well, but again this has more to do with the professional’s ability to create business, although it is more closely linked to at least their perceived ability.

So where does this leave the average employee?

In today’s reality, if you are a “star” your best investment will be to build yourself into an industry expert within the confines of your existing employment. This is where Personal Innovation comes in. You have to determine how you can achieve differentiation and competitive separation from your peers. First you have to determine why you are a “star” and they are not, and how you can prove to the world that you are a “star” and deserve to be compensated outside the traditional salary range. Creating a “star” quality is all about proving in a tangible way that you deliver extraordinary value beyond that of other employees, and showing that you deserve to be treated differently. It’s not good enough to be a strong performer, or the best performer. You must achieve competitive separation and differentiation from your peers.

This can be achieved through the continuous pursuit of industry education, improvement of your public speaking and writing skills, creation of an industy blog, and volunteering to represent your company as a speaker at industry conferences and trade shows. The industry blog and public speaking engagements will expand the perception as a “star” beyond the bounds of your organization. If you combine these efforts with other publishing efforts like magazine or journal articles and possibly even a book, and you will expand your reach even farther and faster. You do need to have something unique and useful to say however, which is why the continuing education is so important. Doing all of these things will not only potentially improve your ability to do your existing job, but will also increase the possibility that another company will become interested in you.

Let’s face it, the best hope you have of getting better compensation is to move on to a different company (otherwise you are limited by your salary range) or start your own. If you do manage to get another company interested in you enough to try and entice you away, make sure first that it is not just to be their employee, but that they are recognizing that you are a “star” coming in and need to be compensated in an appropriate manner. CXO’s typically manage to negotiate in this way, as do some VP’s (particularly Sales VP’s). For a “star”, being compensated in an appropriate manner means of course a high base salary, but more importantly it means a package that includes things like signing bonuses and a large opportunity to earn via incentive-based compensation and stock options or awards. Negotiating this kind of package is difficult to achieve unless you have risen to the top of the organizational hierarchy and is the reason that most true “stars” end up starting their own company, even if initially it only provides an auxiliary source of income.

So if you believe you have that “star” quality, hopefully your mind is churning out ways that you are going to achieve that competitive separation and differentiation from your peers. If you pursue Personal Innovation with the same or greater gusto than you pursue product or service innovations for your current employer, I’m sure you will find a way to swim away from the bloody waters of the commodity mentality that is the traditional employee marketplace.

It will require unwavering commitment and determination, but those are qualities that all “stars” have. Personally, I am swimming as fast as I can, but I recognize that it is a difficult journey with an uncertain length. I hope you will join me on this journey. Do you have what it takes to be a “star”?

What do you think?

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Innovate Yourself – Becoming Overpaid

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Innovate Yourself - Becoming OverpaidA fun one from the archive (2007)

I came across this article from MarketWatch on the Ten most overpaid jobs in the U.S. and thought it was worthy of discussing. I don’t want to focus on whether these occupations are overpaid or not (I’m sure the people working in these roles would disagree with the author), but instead on what we can all learn from this article. First here is a list of the ten occupations:

  1. Wedding photographers
  2. Major airline pilots
  3. West Coast longshoremen
  4. Skycaps at major airports
  5. Real estate agents selling high end homes
  6. Motivational speakers and ex-politicians on the lecture circuit
  7. Orthodontists
  8. CEOs of poorly performing companies
  9. Washed-up pro athletes in long-term contracts
  10. Mutual-fund managers

Next, here is my list of some of the common threads amongst the ten occupations chosen by Chris Pummer of CBS MarketWatch with the input from anonymous compensation experts, and an academic examination of how someone might approach the “problem” of increasing their income by looking at these common threads:

  1. Power
    • Create a situation where meeting your demands becomes an extremely attractive alternative to not meeting them. Some people would refer to this as identifying points of leverage.
    • Banding together with other highly skilled co-workers into a union is one approach that people take.
    • Another is to take create sufficient revenue for an organization so that the company doesn’t want to risk interruption of that cashflow.
  2. Fear
    • People are afraid of someone messing up their wedding photos, their investments, or their safe journey.
    • Put yourself in a position to directly protect a customer’s memories, finances, or their life itself.
  3. Establish a “tradition”
    • Pro-actively create the perception that it is the usual way of doing things for a customer to tip you or pay you a percentage of their bill (regardless how big).
    • The people at the airport taking your bags at the check-in counter do the same job as curbside check-in (they give you a ticket and check your bag), but we all believe it is accepted practice to tip the curbside check-in person and not the person at the check-in counter inside. We tip a “waiter” for taking our order and giving us food and drink, but we don’t do the same for the “cashier” at McDonald’s do we?
  4. Create a shortage
    • Organize the people in your “profession” and work to create barriers to entry that can be used to control supply.
    • Trade unions do this to some extent with apprenticeship programs and the like.
    • In addition to Orthodonists, Pharmacists and Veterinarians have been accused of this.
  5. Turning garbage into gold
    • Identifying a job that most people wouldn’t want to take, but where a highly qualified person is desired, can result in a job that might pay quite well.
    • If you are a supervisor, try to position yourself to supervise the group of people in your organization that makes more money than the group you supervise now (usually a supervisor will make more than the people he/she supervises).
    • Most talented managers won’t take on a position at a struggling company, and as a result the company will either have to over-pay to get good talent to join or be satisfied with hiring people who want to stay in the local area or couldn’t get hired by a better performing company in the industry. If you have a tolerance for risk, seek out opportunities at underperforming companies in your industry and play up the career risk about moving from your successful company to their unsuccessful one in the compensation discussions.

Would it be wrong for an individual or a group of employees to look to game these common threads consciously?

Organizations are constantly looking for ways to put downward pressure on wages, so would it be wrong for individuals to look after their own self-interests and attempt to maximize their ability to take care of their family?

I would argue that it is the responsibility of the individual to protect their own self-interests and look to maximize their wages in the same way it is the responsibility of the organization to look to minimize wages for the self-interest of the shareholders.

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