Talent Wants to Be Free

WHY WE SHOULD LEARN TO LOVE LEAKS, RAIDS, AND FREE RIDING

Yale UNIVERSITY PRESS

Contents

CHAPTER 1

The Talent Wars

For a serial kidnapper, [the government headhunter] Philip Yeo looksharmless enough. But to hear some people tell it, he's a dangerous man.Over the past six years, Yeo has been roaming the world, trailing talentedscientists in Washington; San Diego; Palo Alto, Calif.; Edinburgh andelsewhere, and spiriting them back to his home country of Singapore.

—Time magazine

THE BALANCE OF THE BRAINS

"TALENT HAS BECOME the world's most sought-after commodity,"declared the Economist in 2006. Since then, the war to acquire talent hasbecome even fiercer. As the workplace has changed, the global economiclandscape has flattened. In the not-so-distant past, the developing world,including China, India, Brazil, Eastern Europe, and the Persian Gulfcountries, supplied cheap labor, while North America and a handful ofEuropean countries dominated the high-end labor market. But notanymore! The so-called Third World is catching up and presentingunprecedented challenges and competition. One indication of thesechanges is that, despite past traditions of lifetime employment andworker loyalty, the "stick rate"—the length of time hired candidates stay attheir jobs—is now lower in Asia than in the United States and Europe.

Like venture capitalists (or vulture capitalists, as some managersperceive them when these investors are poaching their best workers),countries around the world are engaged in intense efforts to draw talent.Singapore, a rising high-tech hub in the global arena, has an internationaltalent division within the government charged with finding ways to attractthe most highly qualified people from abroad. Philip Yeo, characterized asthe "serial kidnapper," heads Singapore's international talent division.More than a headhunter, Yeo prefers to describe himself as "a peoplesnatcher." In an interview Yeo describes the changes in the Americanmarket atmosphere which help Singapore lure talent: "In the past,America was like a Golden Mountain. Now it is very forbidding. Everyforeigner is a threat, and the whole atmosphere is changing." In his bookInnovation Nation John Kao calls for more attention to "the art of seduction"in global competition. According to Kao, talent is being lured toup-and-coming regions at alarming rates. New competition from Europeand the East has led the sociologist Richard Florida to sound similarlysevere warnings about the United States becoming "a second-rateeconomy that cannot deliver economic opportunities for the vast majorityof its people or the social welfare of Western European countries." And allthe warnings point to one country that seems to be leaping forward tosoon take over the lead as the world's strongest economy—China.

In January 2011 President Obama evoked the image of a new ColdWar. As in 1957, when the Soviet Union launched the first earth-orbitingsatellite, Sputnik, the United States now risks watching passively as a newempire, China, slowly but steadily becomes the dominant superpower inthe global economy. Obama warned that China has "the fastest trains andthe fastest computers in the world." And estimates abound that in just afew years other countries, not only China, will surpass the United Statesin vital technological fields. To catch up and take the lead, the UnitedStates must become more innovative in every field. The day after Obamamade his remarks then Senator John Kerry reiterated and elaborated onthe meaning of using the historical iconic image of the Soviet Sputnik forthe twenty-first-century challenge of innovation: "We need R-and-D; weneed science, technology, engineering, and math. We need to kickAmerica into gear. This is our Sputnik moment. We've sort of seenSputnik going across the sky, but we've done nothing similar to what wedid in the 1960s to respond to it."

The Cold War's balance of power focused on a nuclear arms race, butmodern international competition focuses on talent. And it is not justhigh-tech, biotech, and information markets that simmer with nationaland international movement. In The Flight of the Creative Class Floridawarns that the nation's talent base is weakening in every field of thesciences, art, and economics ventures. Although American universitiesdraw talented foreign students, many no longer seek to stay and work inthe American market. According to the National Science Foundation,about half of the doctorate degree holders currently working in the UnitedStates in the fields of science, engineering, and computer technology areforeign born. Yet now we can no longer rely on the best of the best stayingin the country as they begin their professional careers. In a dark ending tohis latest book, The Reset Economy, Florida gives even stronger warnings:"We can then expect an ever-increasing malaise and depression in ourR&D laboratories, ennui and apathy in our factories, and increased crimein our streets." Other authors, such as Amy Chua in her controversialBattle Hymn of the Tiger Mother, have further played into our fears of thenew Sputnik-like rivalry with China to promote their tough-love style ofparenting and careering. In her book Chua maintains that the Chineseparent their children in ways superior to those of Western parents, leadingto a clear competitive advantage in the race for academic and professionalsuccess. In reality, the prognosis is not as grim as that of Florida, and theright cure is not as radical as that of Chua. Western parents certainly neednot concede that they have become, in the words of the former governorof Pennsylvania Ed Rendell, "a nation of wusses." But there is truth in thenotion that the United States is losing its competitive edge. Parenting in acertain style or churning out ten thousand extra doctoral graduates a yearis not the way to regain our edge. Rather, our focus must be on the talentpool and our ability as businesses and as a society to nurture it.

OUR NEW SPUTNIK MOMENT

We all recognize that human capital and knowledge have become thedominant assets of the twenty-first century. But we have not yet figuredout how to reconcile the key need for talent with the new realities ofmarket competition. Companies must rely on strong, innovative peopleto maintain their edge, and workers must rely on their ability to changeemployers to remain in the labor force. We move among jobs far morefrequently than we did just a decade ago, and most of us don't expect tostay at the same workplace for more than three or four years. More thanthat, the movement between jobs does not occur at random. Inventors ofmore valuable patents are more likely to move. A recent study finds thatin many competitive industries one in three employees is approached byother firms attempting to recruit him away from his current job. ThomasEdison once modestly claimed that inventive genius is "99% perspirationand 1% inspiration." Yet the intensity of competitive bidding for superstarsin every market suggests that we believe talent is rare enough forbusiness competitors to launch a full-on war to attain it. Companies willgo so far in their efforts to collect talent as to acquire start-ups for multimillionsof dollars only to discard the purchased product and absorb theacquired team of people.

President Obama previously invoked the image of the Soviet Sputnikand the new race for innovation in a speech at the Forsyth TechnicalCommunity College in Winston-Salem, North Carolina, on December 6,2010. He explained that he chose to speak at the tech college because itprovides everyone, from high school graduates to laid-off autoworkers,new skills that enable them to work in the industries of the future. Thepattern is set: re-skilling, moving to new jobs, and nurturing talent for theindustries of the future. Today's market expectations, however, are intension. While there is no longer job security, there is far more relianceon talent. This is our new Sputnik moment, but we have yet to understandhow to get our talent rocket into space. The problem is that we'vebeen focusing only on part of the picture. We're debating parenting stylesand internal management styles, and we're thinking about colleges andtraining centers. But we have yet to think of ways to generate talent poolsand then sustain them at the very core of economic production: withinthe market itself. Not just before entering the market or during juncturesbut over the course of lifelong careers, the key is that we need to understandhow to fight over talent in lasting and productive ways.

LESS SECURITY, MORE TALENT

During the late twentieth century, as mass manufacturing was rapidlybeing transplanted to less costly facilities overseas, the United States andother developed countries experienced dramatic shifts in the way peoplework. We began focusing on specialization and advanced technologycoupled with higher expectations of skill and adaptability to change. Asindustries came to rely on constant innovation and change to remaincompetitive, they transformed our expectations about employmentlongevity. During the industrial era, work relations were based on a socialcontract that promised secure, long-term, and full-time work. Promotionwas internal, which assured long-term job security and progressiveseniority-based compensation structures. At companies like Ford Motors,the iconic industrial-era company, workers expected to begin and endtheir adult working lives with the same employer. The postwar NewDealers relied on these assumptions of lifetime employment as they instituteda regime of collective bargaining through unions. Job security andstability continued to be the gold standard of employment until quiterecently. IBM, one of the first megacompanies of the high-tech industry,was originally built on the same concepts of loyalty and long-termcommitment as earlier industrial companies like Ford. So when IBMbegan laying off its employees in the early 1990s, it signaled a dramaticground shift. The old expectations of long-term employment becameapparent in the anger of IBM workers: "To be an IBM executive was tohave great significance. 'We were part of a great big family,' said JohnYoung, a tall, broad-shouldered man of 52. 'The manager was a fatherfigure. In exchange, workers put in long hours and the spouses dutifullydid their part.'" When asked about the layoffs, John's wife described a"sense of great betrayal." In the two decades since IBM's startling layoffs,a new model of flexible relationships between employers and theiremployees has become the new gold standard for organizing work.

Boundaryless is the new buzzword of the modern work model, signifyingthe rapid movement of workers from job to job. Workers can nolonger expect to stay at the same worksite or with the same employer formore than a short period of their work cycle. Production is itselfunbounded in the sense that it now occurs over long chains of subsidiaries,each step often taking place in a number of countries around theworld. As businesses seek more flexibility in their hiring and productionpractices, they contract with employment agencies, themselves a boomingindustry dedicated to serving as intermediaries in the placement andrecruitment of workers. Until recently we had two distinct circles ofemployees: the core insiders, working for large, stable firms, and theoutsiders, part-time, temporary, seasonal, or simply atypical workers. Theoutsiders formed a secondary labor market typically employed in low-wage,low-skill, unstable jobs that disproportionately included minorities,women, and immigrants. These were the workers that were also morelikely to be leased employees, working temporarily through an employmentagency. Nowadays, insiders and outsiders mean something verydifferent. Almost a third of all workers today do not follow the traditionalfull-time, permanent employee status. Even in established high-techcompanies such as Microsoft, approximately one-third of the workforce isleased or employed as temporary employees or independent consultants.In short, the atypical worker of the past, the part-time, temporary, leased,and subcontracted worker, is becoming the twenty-first century's typicalworker. The lines between insiders and outsiders have collapsed. Mostimportant, even if you are a full-time employee hired directly by a largecompany, the likelihood that you will switch jobs within the next few yearsis high. From high-tech to entertainment, from services to sales, skilledworkers are growing accustomed to moving between various short-termjobs.

"A MIND THAT'S WEAK AND A BACK THAT'S STRONG"

Winston Churchill predicted in a prophetic speech at an assembly in1943 that "the empires of the future will be empires of the mind."Churchill's words resonate with what we expect today from the talent weemploy; innovation must happen everywhere and depends on inspiredpeople. A specialized research setting and the shop floor of a factory canboth become creativity nurseries, but "empires of the mind" don't justhappen by accident. Our ability to fan the sparks of productivity andcreativity into raging fires of productivity and creativity depends on ourability to support these empires and thereby help workers reach theirpotential.

The recognition that we need to cultivate our workers' creativity hasbrought us to a startling point in history because for a long time mostwork was not conceptualized as being creative. It is illuminating to lookback on how our expectations of our labor force have changed. Throughoutthe industrial era of the nineteenth and early twentieth centuries workerswere not expected to invent, innovate, or be creative; they were expected tomanufacture a widget and package it. As a result, work environmentswere not at all conducive to enhancing innovative capacities. Theprevailing image of the worker was captured in lyrics by the countrysinger and songwriter Merle Travis describing the woes of his fellow coalminers: "Some people say a man is made out of mud/A poor man's madeout of muscle and blood/Muscle and blood, skin and bones/A mind that'sweak and a back that's strong."

Even further back, in the eighteenth and early nineteenth centuries,the imagery of workers resembled one of dependent children. Theyserved their employers for a prolonged and in some cases involuntaryperiod of time. Historians of this preindustrial era describe employmentas being akin to family relations since employees often worked theirentire adult lives for one employer. Status (work status and social status)was fixed and defined the entirety of work relations. In the legal world,rules about work were given a very appropriate title: master–servant law.Obedience was the iron rule. In return for obedience the master had anobligation to care for the worker's basic needs, including food and shelter.At the same time, although obedience was the rule, because of the morecontained nature of early agriculture and artisan production, in which anentire product was made in the confines of one place, the actual workdaywas often less controlled than the industrial workday. The shift to massindustrialization during the late nineteenth century profoundly transformedthe labor market. Work began to convert rapidly from small-scaleproduction to large-scale manufacturing. The rise of commerce alsoproduced increasingly complex employment relations. Layers of managerialand supervisory positions were invented and staffed; hierarchies werebuilt. Now organized in large assembly-line factories, work became moreand more impersonal. The modern corporation became the prevalentform of economic organization. By the early twentieth century, we haddeveloped into what the historian Raymond Hogler terms "the Era ofManagement." In the Era of Management industrial production wascentrally controlled, meticulously organized, and strictly supervised.

Henry Ford, the father of the Era of Management (or Fordism),implemented great control over the workers of the Ford Motor Company:rows of uniformed laborers performed identical movements in his automobileassembly line. Under his leadership, the auto industry became theepitome of the industrial era. As in Travis's somber ballad, the paternalisticimage of the industrial worker was that of an individual with "a mindthat's weak and a back that's strong." Leaders of the industrial revolutionbelieved that the best way to define jobs was strictly and narrowly. Workon the assembly line at the Ford Corporation was standardized andisolated with clearly defined hierarchies. Men would punch in at precisely8 a.m. and, except for their designated breaks, stand at their post for ninehours. Assembly-line production was as revolutionary as it was central tothe auto industry's ability to mass-produce affordable cars. Instead ofworkers working together as a team of skilled manufacturers building acomplete car from beginning to end, Ford introduced the idea of the carcoming to the worker: the worker remains at his fixed line location andperforms the same task over and over. Such compartmentalization ofroles was applied even across company departments, discouraging interactionamong coworkers. Frederick Taylor, the father of the earlytwentieth-century theory of scientific management (or Taylorism),provided the academic backing to Ford's practical reforms. Taylor believedthat groups of people working together were less efficient than individuated,autonomous workers. According to his theory, managerial planningof the production must be strictly monitored from top to bottom.Tasks should be so specified and production steps broken down so finelyas to eliminate the need for workers to think. Applying Taylor's scientificmanagement theory, managers were trained to use time and motionstudies, which measured the exact performance pavement and movementof an average worker, to develop the rules of performance for eachstep of assembly-line production. The ideal worker of the era was anunskilled cog in a machine, robotically performing the same task as efficientlyas possible.
(Continues...)Excerpted from Talent Wants to Be Free by ORLY LOBEL. Copyright © 2013 Orly Lobel. Excerpted by permission of Yale UNIVERSITY PRESS.
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