Discovering Hidden Talent Within Your Organization

Incentives, recognition and rewards are typically targeted to very tactical issues such as sales results or customer satisfaction index scores.  But a well thought-out company-wide strategy can make a  huge difference in a company being somewhat successful and VERY successful. 

Consider your employee base.  One of the most expensive investments a company makes is their employees.  And the cost is only going to keep increasing.  Add to this the fact that your only real competitive advantage is the asset that leaves each day at 5:00 p.m.

What prompted this post was this posting back in December on Richard Florida’s blog called the Creativity Exchange.  The post references this post which references this research from University of California-Berkeley.  (Sorry for all the connections but I want to be sure to attribute my sources correctly.)

Here’s the gist from the originating blog Stumbling and Mumbling …

"Start from the premise that talent is initially unknown, and can only be
revealed by working with expensive equipment. So, for example, we can only find
out if a manager is any good if he’s in charge of a big venture, or if an actor
has box office appeal if he’s in a mega-costly film. It is, therefore, very
expensive to learn who’s got talent and who hasn’t."

The abstract on the research introduces it this way:

"A model of a labor market is proposed where the level of individual
talent can only be learned on the job and where job positions are
scarce. Inability to commit to long-term contracts leaves firms with
insufficient incentives to hire novices, causing them to bid
excessively for the pool of revealed talent instead. This causes the
market to be plagued with too many mediocre workers and inefficiently
low output levels, while simultaneously raising the wages for high
talents."

Here’s how I interpret that in today’s business environment.

Start with the premise that a new, inexperienced hire, is an unknown quantity relating to talent.  Add to that a shrinking employee pool that believes the company won’t be loyalty to them.  This causes them to try to maximize their short-term compensation – or look for a work environment that is risky in hopes of getting noticed.

The company faced with higher costs for new hires, shifts their focus internally to the investment they have already made, and in order to keep those employees who are a known quantity, continues to increase salary and perks.  However, as the equation keeps getting more out of whack (cost of new versus incremental cost of existing) the performance internally can actually decrease – hence the "mediocrity" issue mentioned in the abstract above.

But here’s how to avoid the issue…

Give people an incentive to reveal their talent faster.

That’s it. 

One of the elements in this equation is time.  In order to take reduce the impact of the cost/risk equation, simply reduce the time needed to find out which new hire is going to provide the best return for the company.  This reduces the company’s investment in talent overall by allowing new talent to rise and puts pressure on old talent to step up.

This shouldn’t be done through pure compensation either since it would mess with all the work you’ve done creating "bands" and "levels" within your overall compensation strategy.  A solid recognition and reward strategy will give your new hires (and old hires) a way to show what their made of and create that emotional connection outside of compensation that drives longer term loyalty.

Try this.  Create a "wish list" bulletin board on your company intranet and list out those things that you "wish someone would do" (don’t put in something that can’t be done by an individual such as install an enterprise accounting system) and attach an award value to it – could be team or individual.  The internal talent in the organization will self-select and attack these things.  Through the program you will identify the appropriate talent to invest in. 

Is that too simple to be strategic?