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Got too much or too little talent?

Cedric Christie

If you want to be prepared for the future, you must reassess your talent strategy, write Megan McConnell and Bill Schaninger for McKinsey Quarterly.

Whether you’re a CEO or an HR leader, you are aware of what is coming: disruption. Or rather, more disruption. Technology – digitisation, automation, AI – is going to transform the nature of work as we know it, causing job displacement on the scale of the industrial revolution in the 18th and 19th centuries. It will affect 800 million people around the world, forcing 375 million to switch jobs and learn new skills.


You know what’s coming, but do you know how to prepare for it? McKinsey’s Megan McConnell and Bill Schaninger cite a recent McKinsey survey showing that 60% of executives expect that up to 50% of their workforce will need retraining or replacing in the next five years. They believe you should begin by taking a fresh look at your talent strategy.

The future will bring opportunities as well as disruption. Do you have the right people with the right skills to take advantage of those opportunities? It’s time to take an “objective, skills-based look” at your talent pool and identify the areas in which you are short on talent and the areas in which you have a surplus of talent. Following this process, you can start to address the problem.

“Starting with a thought exercise such as this can help break down an otherwise intractable problem into smaller chunks that can be approached with discipline,” write McConnell and Schaninger.


There are three methods you can employ to cope with a shortage of talent: you can build, acquire or “rent” talent.

1) Build talent. If you have a shortage of employees with a certain skill set, it is no use simply focusing on hiring new staff. You must keep the staff you already have. Staff retention is key.

McConnell and Schaninger give the example of a global manufacturer suffering a shortage of employees with expertise in the field of data science in the face of competition from more high-tech firms. The company used machine learning to produce a talent-supply forecast, which showed that its data scientists were eight times more likely to leave the company than its other employees.

The company responded by creating a more meritocratic route to leadership roles and designing a new recruiting process, focusing on making potential and current employees feel more valued.

2) Acquire talent. Rather than focus on hiring one employee at a time in order to fill a talent gap, some companies hire in bulk through mergers and acquisitions. This method, referred to as “acquihiring”, was pioneered by the tech industry, but is becoming more common in other industries.

For example, Walmart purchased social-media company Kosmix in 2011, using its employees to form its digital technology unit, Walmart Labs.

You should also keep one eye on the future. Think ahead. For example, Michigan-based healthcare company Mercy Health created a paid apprenticeship programme, partly funded by the US Department of Labour, for students of local community colleges. Mercy Health was able to endow its apprentices with the specific skills it required, and ended up hiring most of the alumni from the scheme.

3) Rent talent. If you don’t want to hire full-time employees, why not opt for outsourcing tasks, or “renting” talent? Many companies now take advantage of the gig economy. For example, IBM has utilised crowdsourcing platform Toploader to find software developers for more than 35 of its projects.


There are two methods you can employ to cope with a surplus of talent: you can redeploy or release talent.

1) Redeploy talent. If you have a surplus of talent – temporary or permanent – in a particular department of your company, why not explore the possibility of setting some of your employees to work on a different project or even for a different company?

While admitting that redeployment is “the exception rather than the rule”, McConnell and Schaninger provide numerous examples of its successful implementation.

A European bank had an oversupply of employees with expertise in the field of IT infrastructure. It offered those employees secondment opportunities with not-for-profit organisations, with each party paying half the employees’ salaries.

Deutsche Post teamed up with a provider of elderly care in Bremen, training its postal employees to support local pensioners and thus creating a new source of revenue while performing social good.

Loaning out software engineers with specialist skills to competitors is a common practice in the video-game industry, too.

2) Release talent. Sometimes there is no alternative but to let people go, but even when it comes to this regrettable action, some companies have come up with innovative ways to sugar the pill. For example, each year, Amazon offers its customer service and warehouse workers – roles increasingly at risk from automation – with a severance package of up to US$5,000, calling it “The Offer”.

Other companies create early retirement packages for employees working in oversupplied departments.


If you want to future proof your company, you must turn your attention from specific fixed roles to transferable skills.

The aim is “lifelong employability” and, in order to achieve it, you must help your employees adapt over and over again as the economy evolves and your company’s needs change with it.

Source Article: Are We Long – Or Short – On Talent?
Author(s): Megan McConnell and Bill Schaninger
Publisher: McKinsey Quarterly