Thursday, 26 June 2008

McKinsey: Multinational talent

McKinsey Multinational Talent

First, the findings:

There is a surprisingly tight relationship between financial performance, as measured by profit per employee and ten dimensions of global talent management (see graph).

Companies scoring in the top third of the survey (when all ten dimensions were combined) had a 39% higher profit per employee than those in the bottom third.

The correlations were particularly striking in three areas:

  • The creation of globally consistent talent evaluation processes
  • The management of cultural diversity
  • The mobility of global leaders.

"Companies achieving scores in the top third in any of these three areas had a 70 percent chance of achieving top-third financial performance (see graph). Companies scoring in the bottom third of the survey in these three areas had a significantly lower probability of being top performers, particularly if the company had inconsistent global talent processes."

Those are pretty remarkable findings. But there are some problems, and McKinsey themselves point out that:

"Although providing no evidence of true causality and lacking a longitudinal perspective, the strong associations between company financial performance and these global-talent-management practices strengthen our belief that these are important areas on which businesses and HR leaders should focus their attention."

But my main reservation focuses on their choice of profit per employee as a measure of the impact of talent management. This is clearly going to be much higher in knowledge based sectors where the 3 or 10 practices identified by McKinsey are going to be more common.

So the research basically says that companies which invest more in talent are often knowledge based (as talent is where their knowledge comes from). Knowledge based companies have higher profits per employee (as knowledge based work has higher margins than production based work). So, companies that invest more in multinational talent management will have often have higher profits per employee.

It's as good as saying this is research. Research is supposed to show you something. This is supposed to show you something.

Unfortunately, it doesn't.