Talent Wars: The Employer Strikes Back

Rupert Merson

Partner
BDO Stoy Hayward

A long time ago, in an economy far, far away, the war of talent was skewed in favour of the employee. The recession has turned the tide for now and Rupert Merson explains the subtle changes at play that will turn it yet again.

The war for human talent is still being fought, but the other side seems to be winning at the moment. Employers have the upper hand. As job numbers and work flows decrease the pressure on salaries decreases in general. But there are subtle changes happening on the battlefield – changes that might having a lasting impact when the fortunes of war change back again and favour staff.

Old values die hard

Individuals whose ambition is defined only in terms of the size of their pay packets or how many sleepless nights they put in are being seen as increasingly less admirable and certainly old fashioned. It was ever thus in certain countries around the world – staff who work late in the office in Sweden are inefficient staff, not staff who put in the hours. Now that there’s less work around in the UK talented staff are, at last, having to find other ways to impress; and less easy money to pay for the talented means that professional service firms are having to find other ways of winning the war for talent.

A couple of years ago the suicide of one young lawyer after yet another all night deal re-opened briefly the debate about the right way to motivate highly talented staff, but City firms slipped quickly back into old habits. Perhaps the change will be more sustained this time.

It’s about time. In the Art of War Sun Tzu argues that if you have to fight a battle, make sure you fight with everything you have. More’s the pity then that too many City firms have chosen to fight talent wars just with money.

If you want to recruit the best it is too easy to assume that you just need to pay more, particularly when you have lots of money to throw at the problem. If you have the best already supposedly all you need to do to retain them is match any offer made during an enemy raid.

Conversely, if you want to recruit laterally, the logic of this war game demands that you bribe someone else’s employee to sacrifice the frontline trench that is their current firm for the risk of joining yours. This is a battle that only the fittest (and fattest) can win in the short-term. And in the long term? – a pay-based strategy is a zero-sum game in which, as recent history has shown, even the fittest risk destroying themselves.

Less fit or smaller organisations turn to performance-based remuneration to win temporary advantage on the battlefield. If you can focus your efforts on rewarding the best at the expense of the rest, you might be able to win a battle or two without suffering pyrrhic losses. But, as the HR Director of one leading firm told me once, a bonus scheme is just an excuse for not paying someone properly to start off with. ‘We only have good staff here,’ she said. ‘If they’re good enough to work here, they’re good enough to get well paid.’

Devising performance-related pay for professional service staff is a complex exercise, fraught with squabbles over which ambitious youngster introduced what client over whose bottle of champagne at which department’s marketing event. Any attempt to ride rough-shod over the complexities only fosters dysfunctional behaviour – with staff worried more about the amount of hours they spend in the office; where client service is equated to hours billed rather than intellect applied; and where staff are more excited by their bonuses than their integrity.

A resourcing strategy focused on money has other problems. It diverts attention from the qualities that distinguish one firm from another. A strategy too reliant on an influx of hires bribed to swap sides from the enemy runs the risk of diluting the uniqueness of your proposition. Where does this leave you? Paying too much for staff who accidentally destroy the very qualities that gave you the ability to afford them in the first place. ‘Keep things as simple as possible,’ Einstein wisely warned – ‘but no simpler.’

Grow your own

Is there a way out? At the moment, perhaps, the pressure is off . Wise firms ambitious to win the war for talent will be spending the down time investing more in growing their own. They will find that there’s no truth in the rumour that the staff you develop in house are never as good as the staff grown by others. They will find that this sort of cynicism is always matched by cynicism in staff, who always respond by suspecting that their next employer is bound to be better than you.

Firms that break out of this ‘grass is greener’ syndrome do so by ensuring they are not blinded by the glamour of the star individual they haven’t recruited yet, and force themselves to recognise and foster the real strengths of the staff they have already.

Deliver on work-life balance promises

When business returns, wise employers are going to find themselves needing to take a more holistic approach to remuneration. And it won’t be just to satisfy fashions for corporate social responsibility or work life balance. Such firms will recognise that the irrational and difficult-to-quantify aspects of their employment propositions are more important than money.

Anxious to play to a new generation of professionals who want a life as well as a career, many firms tell a story about the importance of ‘work-life balance’. Too many fail to deliver on the fine words. Count up the jackets left on backs of chairs, and lights deliberately left on in your offices after nightfall if you want some measure of whether the balance is balanced in your firm. Surely the days of firms that value hours over quality are numbered.

Throwing out this mindset is in clients’ interests as well as staff. Brave employers will make sure there is a fundamental disconnect between performance and reward – a space which will then be filled by an assessment of the value an individual really brings to the organisation. This is perhaps the only way of ensuring remuneration and reward will not once again descend into a numbers-driven spiral.

Win-win

Notions such as these are difficult to translate from fine words into actions, but firms that succeed find themselves creating sustainable win-win strategies for their people. And, such firms will also find that that they haven’t so much won the war, as risen above it. At the end of the day – and that includes a long day in the office – as John Ruskin noted, there is no wealth but life.

Rupert Merson
BDO Stoy Hayward

Rupert Merson is a partner at BDO Stoy Hayward and a Fellow of London Business School. He advises clients on organisational effectiveness and governance and is a regular contributor to the Financial Times and other broadsheets.