For years, there has been much talk about the 'war for talent'. The idea was that talented people were a scarce resource for which companies had to compete. But hiring talented people is only half the battle. They must be found jobs where they can be truly effective. If they are given the wrong jobs, with the wrong things to do, they will be square pegs in round holes, no matter how much potential talent they have. The authors argue that hiring and promoting people on the basis of past experience and past performance is not enough. Instead, companies would be better advised to plan more rigorously, identify where and when particular talents and skills will be needed and then find, train and develop the right people for the right posts. This is neither quick nor easy. The authors cite a senior executive at one IBM division as saying it takes at least two years to prepare an employee to fill a responsible position in a complex working environment. The book starts from the premise that human resources requirements must follow on from strategy. The first step is to identify the business's goals and the strategy for reaching them. The next is to prepare a 'human capital plan’ that indicates what kinds of people with what kinds of talents will be able to carry out the strategy. The book's main impact is to raise the idea that human capital needs to be planned and treated systematically. Out-of-date HR policies mean too many businesses end up following the 'Peter Principle', promoting employees so to the level of their incompetence or they end up full of clones where every employee is recruited and trained according to a set pattern. Differentiating among employees and investing in the key ones means that talent should operate in the right place at the right time. This can have a powerful impact on a business. According to the authors, Sears, the US retailer, measures its human capital carefully and believes its levels of human capital are responsible for both customer satisfaction and overall financial performance. It even believes its method has some predictive value of financial performance in the future. At Microsoft, the case is put still more strongly. The authors quote Nathan Myhrvold, the company's former Chief Scientist, as saying that 'the top software developers are more productive than average software developers not by a factor of 10 times or 100 times or even 1,000 times, but by 10,000 times’. As the authors comment: 'Few jobs show the enormous variation in performance cited by Microsoft, but differences in performance of 20- to 50-toone are common, especially in knowledge-intensive roles.'
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