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The Ticking Talent Time Bomb and Its Impact on Established Corporations

What are the implications of talent moving to startups?

27Oct

When I meet with corporate leaders we invariably get onto the topic of their business challenges. Some reoccurring themes include increased competition, cost/margin pressures, regulatory hassles, globalization, etc. However, the more recent discussions have centered around one theme - Talent.

The talent conversation usually includes vague points that lead back to concerns with the 3 R’s: Retention, Recognition and Recruitment. But in my experience, a key perspective is often being missed.

I believe that established, mature companies are facing an existential crisis with talent management that is often flying under the radar of leadership. This crisis could lead to a “talent time bomb” with far reaching consequences.

First, let’s get some context, with a simple exercise. All you need to do is open any business magazine, online publication or newspaper and note that they are plastered by two interlinking forces; Startups and Entrepreneurs. Entrepreneurs are the rock stars of our age, commanding society’s attention like never before. Everyone (likely including you) is seduced by their power and the freedom that they embody. In tandem, startups are positioned as bucolic business environments, with free amenities, a collaborative atmosphere, potential for massive financial upside and association with societal goals. In both cases the reality on the ground is often quite different from the vision, but the positioning is important here.

This startup and entrepreneur success drumbeat has been taking place within the broader context of an economy that has struggled over the past 7-8 years. Over this time established companies have taken their eye off talent, in part due to more immediate threats. Quite frankly, they didn’t have to worry about their people. Where were their employees going to go?

Well they now have a place to go. As establish corporates struggle to focus back on talent, their best and brightest employees or recruits are making the decision to either start their own companies, or work with smaller, early stage businesses. In the past this may have been seen as a risky proposition, but no more. Individuals who want to take an alternate career track see little downside to taking the leap, even if it fails. New perspectives on career mobility only drive this societal change. In this new world, failure is just a new promotion opportunity.

The impacts on more established organizations are only now starting to be felt. An improved economy is once again leading (in the US at least) towards full employment, with more focus and effort needed to attract and retain the best and brightest. This is happening to all sized companies, but the combined forces of startups and entrepreneurialism are winning the beauty contest, hands down.

Within this environment, established organizations face new challenges in recruiting top-tier talent. The traditional levers, such as established career tracks, stability, title promotions, etc. lack the pull of days gone by. The medium-term outcome could be that these established organizations face a leadership vacuum, where the best and brightest choose alternate career paths. The longer-term impact could be established corporates being outsmarted by new competitors lead by the best and brightest, that deliver more customer insight and value. As a friend of mine who leads Strategy at a multinational services organization recently asked, “Why are we spending so much time worrying about a startup with $5 million in funding?”

To address this time bomb, established organizations need to swing their focus back to their 3-R’s and be realistic about how central the role of talent management is going to be to their future success. They need to assess how aligned their talent strategies are to the corporate strategies and future direction of the organization. They need to be realistic about how much they are willing to invest in their people, and how they can retain employees by giving them the opportunity to develop new thinking.

Ultimately, they need to replicate key facets of the startup and entrepreneurial culture, in ways that can be scaled within a larger corporate context. Forming more solid partnerships between HR and Innovation programs is absolute in the right direction. More specifically employee focused intrapreneur programs are absolutely a step in the right direction. Companies as diverse as Pfizer, Target, Exxon Mobil, GE, Intuit, etc. are taking these intrapreneur efforts seriously.

There is clearly a growing undercurrent of activity across established organizations towards these efforts, but there is plenty of room for improvement. Time and again established organizations have demonstrated the ability to adapt, but the need to consider talent management in the context of a more innovative environment is now urgent.

This article originally appeared in Innovation Management.

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