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The War For Diverse Talent Executive Summary

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Raj Tulsiani
Raj Tulsiani

This document discusses the importance of diversity in talent acquisition and management. It argues that organizations are facing unprecedented changes and a talent shortage. Diversity provides a competitive advantage by increasing an organization's cognitive diversity and ability to adapt. Recent research from fields like mathematics, evolution, and Broadway shows that diverse groups outperform homogeneous groups. The document advocates moving beyond traditional diversity training to new approaches that focus on diversity as a driver of value.

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1Published by Green Park Diverse Leaders | June 2010 GREEN PARK DIVERSE LEADERS THE WAR DIVERSE TALENT The War for Diverse Talent is a new take on an old truth: that in difference lies possibility. It takes a fresh look at the war for professional talent in the context of an organizational world experiencing unprecedented change. ¡®Managing uncertainty¡¯ and ¡®attracting & keeping top talent¡¯ are now top concerns for global business leaders. We present recent mathematical research to crisply rede?ne diversity ¨C and simultaneously strip off the unhelpful, old- fashioned political baggage. Our analysis suggests this more rigorous approach to diversity offers a new lens on this fast-changing world as well as a powerful and highly competitive way to tackle the current and future ¡®talent crunch¡¯, and to exploit the power of collective difference. The War For Diverse Talent isn¡¯t a list of answers or solutions; rather, it¡¯s a series of theories opening the discussion on diversity, talent, and competitive advantage. We hope it inspires you to join the debate. 1. THE HALF-MINUTE VERSION Executive Summary FOR
2Green Park Diverse Leaders The War For Diverse Talent When McKinsey launched The War for Talent a dozen years ago, it touched a nerve. Although organizations live or die by their talent-base, fundamental demographic changes ¨C in particular ageing rich world populations ¨C are reshaping the talent pool. Throw in globalization, migration as well as cultural shifts, and the struggle to ?nd (and retain) talent remains sharper than ever. This problem is not going away, even in the economic downturn. Some basic ?gures tell the tale. Today¡¯s students will have 10-14 jobs by the age of 38. One in four workers has been in their current role for under a year ¨C half for less than 5. The top 10 ¡®in demand¡¯ jobs of 2010 didn¡¯t exist in 2004. No wonder American business leaders place ¡°managing uncertainty¡± (1), ¡°attracting and keeping top talent¡± (3) and ¡°innovation¡± (5) in their top ?ve worries. This paper tightens the focus on the large, but relatively untapped, pool of talent lying in diversity. It further demonstrates that forging the right combination of vision and processes in delivering diverse talent can add signi?cant and enduring value. In fact, we believe diversity is one of the very last frontiers of competitive advantage: an untapped power that ¡°smart¡± organisations will harness to distance themselves from the crowd. We live in an ever more complex world, undergoing an unusually intense period of change. Punctuated equilibrium, a term coined by evolutionary biologists, captures this well: it suggests most systems stay in a steady state for long periods before undergoing a phase of rapid, repeated change. The seemingly relentless speed and ferocity of this change is dif?cult to grasp, but a couple of statistics give a ?avour. Mobile phone penetration in Africa happened faster than anywhere on earth, and now stands at over 50%. To reach a market audience of 50 million took radio 38 years, television 13 years, the internet 4 years, the iPod 3 years and Facebook 2 years. No wonder organizational leaders talk of ¡°exponential times¡±. And change is not just limited to technology (although technology is a driver): are we approaching a new dawn in the drive toward diversity? The announcement of the new Governance Code ¨C which speci?cally references leadership diversity ¨C is a major ripple on the leadership pond, but the tidal wave is yet to come. Much of the thinking and action around ¡®diversity¡¯ has been captured (and often cynically used) in politics, in particular the New Left. A politicised emphasis on identity diversity (how people appear on the outside) has obscured the most important underlying factor: cognitive diversity (how people think on the inside). Identity diversity is an imperfect, albeit generally robust, proxy for different ways of thinking and problem solving. Nevertheless most ¡®diversity training¡¯ simply doesn¡¯t work. Squaring this circle is straightforward: making people feel ¡®policed¡¯ about difference is unproductive. Helping people understand variation as a mathematically proven way to succeed ¨C well, that¡¯s worth talking about. That way lies progress for all who wish to create increased value in the future. If we can embed the concept of diversity of an accepted, proven driver of organisational value, individuals, teams and organisations will be drawn to diversity, rather than having to be pushed toward it. 2. THE WAR FOR TALENT 3. ALL CHANGE 4. A NEW AGENDA
3Green Park Diverse Leaders The War For Diverse Talent Recent work on evolutionary and complexity economics, using frameworks informed by our understanding of ecosystems, is generating exciting new insights on how businesses and organisations thrive or fail. Evolution is essentially the product of two forces: variation (or diversity), and selection (ampli?ed over time) on that variation. This process lies at the very heart of competition for ?nite resources. Diversity is thus essential to the ability to evolve at all. Further, in a period of punctuated equilibrium, previous evolutionary strategies (which may have tended towards the monocultural) are less likely to succeed. The importance of deploying new and diverse approaches to help enhance adaptation thus becomes even more critical to success (or survival). In the organisational context, the theory holds true: diversify to survive, and diversify to thrive. The rumblings following the recession hinted at this theory: would the recession have been as deep if there wasn¡¯t a culture of unadulterated machismo underpinning the economy? The latest research by McKinsey suggests a growing awareness that ¡®top talent¡¯ is just one part of a more complex war for talent. Further, it reports that for all the increased focus on talent in organizations, successful strategies remain elusive. In part, this is due to a lack of concentration on human resources (HR) at the most senior levels, coupled with over- formulaic approaches to and by the HR function. The status of HR needs enhancing ¨C but HR people need to up their game, too. Acquiring a deeper and more profound understanding of the importance of diversity, and the need to ¡®garden¡¯ such talent over time, offers a good start, as well as a way out of the thicket of unproductive but procedurally driven recruitment. When we talk about diversity of workforces, we must look to the gatekeepers and question their approach to accepting or denying applicants. The recruitment and professional services industry is notorious for its own lack of innovation, internal diversity and reliance on old boys¡¯ networks. In short, there is strong institutional prejudice at a pivotal stage of the employment lifecycle. Until that link in the diversity chain is established, we¡¯ll be left with a few tired diverse role models that serve as the exception to the rule. Recent work by Dr Scott E Page has unpacked the power of diversity to a startling degree. His two most profound ?ndings are suf?ciently robust to have the status of theorems. The Diversity Trumps Ability Theorem demonstrates that, under a reasonable set of conditions, diverse groups consistently outperform expert groups. The reasoning is essentially that experts, who tend to share much of their cognitive ¡®toolsets¡¯ in common, provide an excellent partial view of a problem. By contrast, although the diverse group may have less tools on average than individual experts, between them they cover off those experts tools, while adding several more ¨C they offer a good complete view. Furthermore, diversity confers a mathematical property known as superadditivity. In short, diversity isn¡¯t simply a shuf?ing of risk like a well-balanced share portfolio ¨C it adds more. The Newtonian analogy of ¡°standing on the shoulders of giants¡± to see further helps: diversity provides a wider array of perspectives, and helps groups see ¡®further¡¯. 5. COMPETITIVE DIFFERENCE 6. THE GREAT ESCAPE 7. THE MATHEMATICS OF DIVERSITY
4Green Park Diverse Leaders The War For Diverse Talent Page¡¯s second theorem is more formally mathematical: ¡®Crowd error¡¯ = ¡®Average error¡¯ ¨C ¡®Diversity¡¯. This asserts that the error or failure rate in a crowd, society or organisation is comprised of the average individual error-rate and the degree of diversity. Traditionally we seek gains by reducing the ¡®average error¡¯, for example by attempting to recruit better-quali?ed individuals and so on. This insight suggests we can achieve greater gains by bringing more diversity into the equation. Further, it shows diversity is not simply a side issue, a sprinkling on of difference as it were: it¡¯s a fundamental strategy. New insights about diversity are emerging from evolution, economics and mathematics ¨C and, from the business of Broadway, too. A study of teamwork by Dr Brian Uzzi and others looked at decades of Broadway shows. Traditionally, success or failure on Broadway gets established brutally and quickly ¨C often overnight. And while it may be show business, successful shows are sure business, too. Uzzi and his colleagues found that when the core creative team comprised people with previous experience working together and ¡®fresh blood¡¯, success followed ¨C whereas those consisting of either only ¡®old hands¡¯ or entirely new teams tended to fail. They have explored this effect across several sectors, and it shows that, where teamwork and innovation are needed ¨C which would be most organizations facing a challenging landscape ¨C diversity, once again, is demonstrably bene?cial. This work also highlights a need to think about a ¡®diversity of diversity¡¯: a multi- layered concept of difference harnessing the power of collective difference. On the one hand, within our wider networks, we see the recently documented failure of most diversity training schemes, growing uncertainty, rapid change and ongoing problems in the war for talent. On the other, we have a strong new set of tools, including the mathematics of diversity, insights from evolutionary thinking, and deeply practical and diverse hands- on expertise. As well as this paper, Diverse Leaders is instrumental in pushing forward a global conversation around diversity among business and other leaders. We are generating diverse connections across sectors, industries and continents while also developing a varied set of practical and results- oriented approaches to diversity. By stripping away the choking undergrowth of an over-politicised and underpowered approach to diversity, we have helped clear new ground to sow some fresh seeds, working with some of the most forward-thinking organisations in the world. We bid a long overdue goodbye to unproductive diversity ¡°training¡±, although we¡¯re still happy to help organisations raise awareness in different ways). Instead, welcome to a diverse new world of games, talent boutiques, social networking events, debates and global high-level conversations. Tailored, bespoke and stylish solutions ¨C not one-size-?ts-all. And it¡¯s not just about education: at the coalface we¡¯re bringing an embedded commitment to diversity to the way we identify and recruit talent on behalf of our clients. We¡¯re not the sorts of gatekeepers who judge you by your cover. There¡¯s no reason why diversity should be dull ¨C life isn¡¯t, and as the poet William Cowper put it ¡°Variety¡¯s the very spice of life, That gives it all its ?avour.¡± So if you are interested in joining a new kind of conversation around diversity, with the leaders of today and tomorrow, read on ¨C and do get in touch. 8. DIVERSE LEADERS

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The War For Diverse Talent Executive Summary

  • 1. 1Published by Green Park Diverse Leaders | June 2010 GREEN PARK DIVERSE LEADERS THE WAR DIVERSE TALENT The War for Diverse Talent is a new take on an old truth: that in difference lies possibility. It takes a fresh look at the war for professional talent in the context of an organizational world experiencing unprecedented change. ¡®Managing uncertainty¡¯ and ¡®attracting & keeping top talent¡¯ are now top concerns for global business leaders. We present recent mathematical research to crisply rede?ne diversity ¨C and simultaneously strip off the unhelpful, old- fashioned political baggage. Our analysis suggests this more rigorous approach to diversity offers a new lens on this fast-changing world as well as a powerful and highly competitive way to tackle the current and future ¡®talent crunch¡¯, and to exploit the power of collective difference. The War For Diverse Talent isn¡¯t a list of answers or solutions; rather, it¡¯s a series of theories opening the discussion on diversity, talent, and competitive advantage. We hope it inspires you to join the debate. 1. THE HALF-MINUTE VERSION Executive Summary FOR
  • 2. 2Green Park Diverse Leaders The War For Diverse Talent When McKinsey launched The War for Talent a dozen years ago, it touched a nerve. Although organizations live or die by their talent-base, fundamental demographic changes ¨C in particular ageing rich world populations ¨C are reshaping the talent pool. Throw in globalization, migration as well as cultural shifts, and the struggle to ?nd (and retain) talent remains sharper than ever. This problem is not going away, even in the economic downturn. Some basic ?gures tell the tale. Today¡¯s students will have 10-14 jobs by the age of 38. One in four workers has been in their current role for under a year ¨C half for less than 5. The top 10 ¡®in demand¡¯ jobs of 2010 didn¡¯t exist in 2004. No wonder American business leaders place ¡°managing uncertainty¡± (1), ¡°attracting and keeping top talent¡± (3) and ¡°innovation¡± (5) in their top ?ve worries. This paper tightens the focus on the large, but relatively untapped, pool of talent lying in diversity. It further demonstrates that forging the right combination of vision and processes in delivering diverse talent can add signi?cant and enduring value. In fact, we believe diversity is one of the very last frontiers of competitive advantage: an untapped power that ¡°smart¡± organisations will harness to distance themselves from the crowd. We live in an ever more complex world, undergoing an unusually intense period of change. Punctuated equilibrium, a term coined by evolutionary biologists, captures this well: it suggests most systems stay in a steady state for long periods before undergoing a phase of rapid, repeated change. The seemingly relentless speed and ferocity of this change is dif?cult to grasp, but a couple of statistics give a ?avour. Mobile phone penetration in Africa happened faster than anywhere on earth, and now stands at over 50%. To reach a market audience of 50 million took radio 38 years, television 13 years, the internet 4 years, the iPod 3 years and Facebook 2 years. No wonder organizational leaders talk of ¡°exponential times¡±. And change is not just limited to technology (although technology is a driver): are we approaching a new dawn in the drive toward diversity? The announcement of the new Governance Code ¨C which speci?cally references leadership diversity ¨C is a major ripple on the leadership pond, but the tidal wave is yet to come. Much of the thinking and action around ¡®diversity¡¯ has been captured (and often cynically used) in politics, in particular the New Left. A politicised emphasis on identity diversity (how people appear on the outside) has obscured the most important underlying factor: cognitive diversity (how people think on the inside). Identity diversity is an imperfect, albeit generally robust, proxy for different ways of thinking and problem solving. Nevertheless most ¡®diversity training¡¯ simply doesn¡¯t work. Squaring this circle is straightforward: making people feel ¡®policed¡¯ about difference is unproductive. Helping people understand variation as a mathematically proven way to succeed ¨C well, that¡¯s worth talking about. That way lies progress for all who wish to create increased value in the future. If we can embed the concept of diversity of an accepted, proven driver of organisational value, individuals, teams and organisations will be drawn to diversity, rather than having to be pushed toward it. 2. THE WAR FOR TALENT 3. ALL CHANGE 4. A NEW AGENDA
  • 3. 3Green Park Diverse Leaders The War For Diverse Talent Recent work on evolutionary and complexity economics, using frameworks informed by our understanding of ecosystems, is generating exciting new insights on how businesses and organisations thrive or fail. Evolution is essentially the product of two forces: variation (or diversity), and selection (ampli?ed over time) on that variation. This process lies at the very heart of competition for ?nite resources. Diversity is thus essential to the ability to evolve at all. Further, in a period of punctuated equilibrium, previous evolutionary strategies (which may have tended towards the monocultural) are less likely to succeed. The importance of deploying new and diverse approaches to help enhance adaptation thus becomes even more critical to success (or survival). In the organisational context, the theory holds true: diversify to survive, and diversify to thrive. The rumblings following the recession hinted at this theory: would the recession have been as deep if there wasn¡¯t a culture of unadulterated machismo underpinning the economy? The latest research by McKinsey suggests a growing awareness that ¡®top talent¡¯ is just one part of a more complex war for talent. Further, it reports that for all the increased focus on talent in organizations, successful strategies remain elusive. In part, this is due to a lack of concentration on human resources (HR) at the most senior levels, coupled with over- formulaic approaches to and by the HR function. The status of HR needs enhancing ¨C but HR people need to up their game, too. Acquiring a deeper and more profound understanding of the importance of diversity, and the need to ¡®garden¡¯ such talent over time, offers a good start, as well as a way out of the thicket of unproductive but procedurally driven recruitment. When we talk about diversity of workforces, we must look to the gatekeepers and question their approach to accepting or denying applicants. The recruitment and professional services industry is notorious for its own lack of innovation, internal diversity and reliance on old boys¡¯ networks. In short, there is strong institutional prejudice at a pivotal stage of the employment lifecycle. Until that link in the diversity chain is established, we¡¯ll be left with a few tired diverse role models that serve as the exception to the rule. Recent work by Dr Scott E Page has unpacked the power of diversity to a startling degree. His two most profound ?ndings are suf?ciently robust to have the status of theorems. The Diversity Trumps Ability Theorem demonstrates that, under a reasonable set of conditions, diverse groups consistently outperform expert groups. The reasoning is essentially that experts, who tend to share much of their cognitive ¡®toolsets¡¯ in common, provide an excellent partial view of a problem. By contrast, although the diverse group may have less tools on average than individual experts, between them they cover off those experts tools, while adding several more ¨C they offer a good complete view. Furthermore, diversity confers a mathematical property known as superadditivity. In short, diversity isn¡¯t simply a shuf?ing of risk like a well-balanced share portfolio ¨C it adds more. The Newtonian analogy of ¡°standing on the shoulders of giants¡± to see further helps: diversity provides a wider array of perspectives, and helps groups see ¡®further¡¯. 5. COMPETITIVE DIFFERENCE 6. THE GREAT ESCAPE 7. THE MATHEMATICS OF DIVERSITY
  • 4. 4Green Park Diverse Leaders The War For Diverse Talent Page¡¯s second theorem is more formally mathematical: ¡®Crowd error¡¯ = ¡®Average error¡¯ ¨C ¡®Diversity¡¯. This asserts that the error or failure rate in a crowd, society or organisation is comprised of the average individual error-rate and the degree of diversity. Traditionally we seek gains by reducing the ¡®average error¡¯, for example by attempting to recruit better-quali?ed individuals and so on. This insight suggests we can achieve greater gains by bringing more diversity into the equation. Further, it shows diversity is not simply a side issue, a sprinkling on of difference as it were: it¡¯s a fundamental strategy. New insights about diversity are emerging from evolution, economics and mathematics ¨C and, from the business of Broadway, too. A study of teamwork by Dr Brian Uzzi and others looked at decades of Broadway shows. Traditionally, success or failure on Broadway gets established brutally and quickly ¨C often overnight. And while it may be show business, successful shows are sure business, too. Uzzi and his colleagues found that when the core creative team comprised people with previous experience working together and ¡®fresh blood¡¯, success followed ¨C whereas those consisting of either only ¡®old hands¡¯ or entirely new teams tended to fail. They have explored this effect across several sectors, and it shows that, where teamwork and innovation are needed ¨C which would be most organizations facing a challenging landscape ¨C diversity, once again, is demonstrably bene?cial. This work also highlights a need to think about a ¡®diversity of diversity¡¯: a multi- layered concept of difference harnessing the power of collective difference. On the one hand, within our wider networks, we see the recently documented failure of most diversity training schemes, growing uncertainty, rapid change and ongoing problems in the war for talent. On the other, we have a strong new set of tools, including the mathematics of diversity, insights from evolutionary thinking, and deeply practical and diverse hands- on expertise. As well as this paper, Diverse Leaders is instrumental in pushing forward a global conversation around diversity among business and other leaders. We are generating diverse connections across sectors, industries and continents while also developing a varied set of practical and results- oriented approaches to diversity. By stripping away the choking undergrowth of an over-politicised and underpowered approach to diversity, we have helped clear new ground to sow some fresh seeds, working with some of the most forward-thinking organisations in the world. We bid a long overdue goodbye to unproductive diversity ¡°training¡±, although we¡¯re still happy to help organisations raise awareness in different ways). Instead, welcome to a diverse new world of games, talent boutiques, social networking events, debates and global high-level conversations. Tailored, bespoke and stylish solutions ¨C not one-size-?ts-all. And it¡¯s not just about education: at the coalface we¡¯re bringing an embedded commitment to diversity to the way we identify and recruit talent on behalf of our clients. We¡¯re not the sorts of gatekeepers who judge you by your cover. There¡¯s no reason why diversity should be dull ¨C life isn¡¯t, and as the poet William Cowper put it ¡°Variety¡¯s the very spice of life, That gives it all its ?avour.¡± So if you are interested in joining a new kind of conversation around diversity, with the leaders of today and tomorrow, read on ¨C and do get in touch. 8. DIVERSE LEADERS