How to Win the Talent War

By Scott S. Smith | Friday, 29 April 2022 | Feature, Business, Interviews

Authors Anish Batlaw and Ram Charan argue that outdated recruiting methods are losing the battle for talent and the human resources department needs to become a more valued strategic player.

HR Needs to be Reimagined for Businesses to Thrive

Anish Batlaw had a formative conversation with the CEO of the pharmaceutical giant Novartis International in 2000, shortly after starting as the Global Head of Talent Management. 

"I have 200,000 employees," Daniel Vasella told him, "but I don't know where the talent is," Batlaw recounts in “Talent: The Market Multiplier” (written with Ram Charan, a leading consultant who has had 31 bestsellers).

Companies of all sizes face the same challenge that was posed to Batlaw when he joined Novartis. Throughout his career, Batlaw has had a front-row seat to high-growth companies, both from the vantage point of a Chief Human Resources Officer (CHRO) and as a Managing Director at General Atlantic, a leading growth equity firm. His work has provided him with the perspective that talent is the ultimate differentiator of company performance. 

In their new book, he and Charan explain why a new talent playbook is required to find, attract, and retain high-quality talent. Through a series of real-life case studies, they unpack this methodology in great detail. The companies showcased are diverse — some companies are based in the United States, two in the UK, one in Sweden, and one in India. Some have operations internationally, and others are domestic. Some are led by female CEOs, and some by male CEOs. Irrespective of the situation, each company deployed a talent playbook to compress time-to-value creation in order to maximize returns.

The playbook is a departure from traditional notions of HR leadership and instead requires deep data-driven analysis and outsized focus on the critical value creating roles within an organization. It is a methodology that can be used by companies of various sizes to help deliver growth and serves as a call to action for a new breed of human resources leaders.

"A CHRO should be a key driver of overall performance, not an isolated administrator operating in a silo … [managing] a series of discrete employee functions … a cost-cutter," they wrote. Charan, in a sidebar, noted that in his role as an advisor to top corporations "human capital plays an indisputable yet sometimes underappreciated role in delivering value because if you get that right, everything else follows." He added that "venture capital and private equity firms have the flexibility to embrace these insights quickly," but even the largest companies can become savvy about grooming high-performing talent.

This new type of HR leader would be deeply involved in both benchmarking potential candidates for recruitment at competitors and a wider array of firms and helping develop internal talent that will enable the organization to have the capabilities needed according to plans for the next five years. 

HR leaders of the future need to be equipped to help develop a talent strategy that serves as an enabler for growth, but they also need to build a new suite of tools for attracting, developing, and retaining high-quality talent. 

General Atlantic started creating a Talent Bank in 2015 to help it place leaders at the companies in its portfolio, and it now tracks over 4,000 high-performing executives. Over 30% of the senior executives they help hire come from this pool, and it has been key to reducing average time-to-hire to about 80 days vs. 120 previously (despite conducting multiple very thorough interviews). GA has also emphasized internal development to the point that 60% of its leadership team at the firm is homegrown. 

Another advantage of taking a more thoughtful and futuristic approach to external recruiting and in-house education and training is that this will help bring attention to candidates whose resumes might not be quite as traditional. By casting a broader and more savvy net, GA has been able to increase the number of female hires for its portfolio by 50% in just a few years, while more than half of the independent directors for their boards for US portfolio companies are diverse. 

GA's own growth in pursuing this strategy for itself and clients is reflected in having had $12 billion in assets under management in 2007 and over $80 billion in 2022.

Oak Street Health Revolutionizes Medicare

In 2012, Chicago-based Oak Street Health was founded by three Harvard graduates who had been working together at the Boston Consulting Group. CEO Mike Pykosz was from the law school, COO Geoff Price had been in the business school, and Griffin Myers completed his residency at the medical school.

They met with Batlaw in 2015 to see how General Atlantic could support them in developing a talent strategy that would help scale the business.

Oak Street had an ambitious vision that to outsiders seemed almost impossible to achieve: offer both Medicare and Medicaid insurers and the care providers better overall service at lower cost, even though many patients had low incomes and numerous chronic health conditions. 

They had opened their first clinic in 2013 to provide preventive care, easy access, and reliable treatment, reducing the number and length of hospital stays while enabling improved outcomes. They wanted to rapidly expand nationally, but their plan was not yet proven and involved a lot of moving parts, from training staff across many states to establishing rigorous controls. Insurers paid them a flat fee for most patients, giving Oak Street a potential profit by keeping costs low while maintaining positive results in care (now so good that it gets a 90% Net Promoter Score from patients). 

At the time of the meeting with Batlaw, Oak Street had $13 million in annual revenues. The founders were incredibly bright and driven; however, none of them brought prior operating experience, he says. The real question was, could they scale themselves at the same pace as the company aspired to grow? After several conversations, GA gained confidence in its potential and became a minority investor in December 2015.

The business required an injection of several new leaders, such as CFO, General Counsel, and Head of HR. To enable the business to attract and retain top talent, GA supported the company by developing a total compensation plan which relied on an attractive long-term equity grant. 

Joining a high-growth company often requires leaders to trade a portion of their cash compensation for equity. "For pivotal roles, we encourage our companies to hire ahead of the curve and to benchmark compensation based on the scale the company is expected to reach, rather than its current size," Batlaw told Startup Savant. "This approach enables the company to successfully inject talent and also build a leadership team that is equipped to lead a larger and more complex organization.” 

The equity program was one of many forward-thinking tactics that Oak Street deployed to build a high-quality management team and organization. Since GA’s initial investment, the business scaled exceptionally fast and had its initial public offering in August 2020 (NYSE: OSH). The annual revenues for the year ending December 31, 2021, were $1.43 billion, and it had over 4,000 employees. It is the only primary care provider endorsed by the American Association of Retired Persons.

Carving Out Time for Highest Impact Agenda at HireRight

General Atlantic invested in General Information Services in 2017, and a year later, Guy Abramo took over as CEO. GIS was the fourth-largest company in the fragmented pre-employment background screening industry, which presented opportunities for consolidation. 

But there were a lot of barriers to growth:

• GIS had not attracted any major new clients for several years and had been losing some, so its culture was not supportive of ambitious, high-service leaders.
• It had weak technology, which meant it lacked a platform to provide better and faster service to customers. The Chief Information Officer was judged not capable of leading a transformation.
• Other leaders, the structure of the organization, and its operations were not prepared for fast growth.

One potential solution was to acquire a company of scale, which could bring new strengths to a merged partnership. HireRight, the third-largest firm in the industry, was an obvious choice, and the process was completed in a few months in July 2018. Since HireRight was the larger firm, its name was retained, but the headquarters was moved from a small South Carolina town to Irvine, Calif., making it easier to attract new talent. 

After the merger, Abramo became CEO of the combined company but quickly learned that there were a lot of unexpected challenges that could come with a merger. He realized there was a lot of resentment among the original HireRight executives about being acquired by a smaller company. He also felt that its technological infrastructure was fragmented and outdated, and there were few systems in place to evaluate performance. Still, he concluded that many in middle management had tremendous potential if they were supported and trained to be able to lead the envisioned scaling.

To manage the fast-paced transformation, GA supported Abramo with developing a refreshed talent strategy that included new leadership in HR, Product, Revenue, and Operations. Additionally, GA supported Guy with reducing his span of control (by almost half) to ensure his time was being spent on the highest-impact items. 

Given the extent of change being introduced, "Guy had concerns about trying to force too much change by injecting multiple leaders too fast on an already stressed system," Batlaw and Charan wrote. However, in the end, they concluded that "there was more risk in having mediocre talent in key positions and moved quickly to up-level the leadership team and build a high-quality board of directors."

Despite the impact of the pandemic on hiring in 2020, HireRight’s revenues for the full year 2021 was $730.1 million. The company went public in October 2021 (NYSE: HRT). Now based in Nashville, Tennessee, it has nearly 2,500 employees and serves 40,000 organizations. Its anticipated revenue for 2022 is $805 million to $820 million.

The bottom line lesson: nimble, imaginative, and disciplined leaders who understand their strengths and weaknesses and are comfortable with ambiguity will be able to anticipate and build capabilities ahead of the curve and become market multipliers, regardless of industry or the size of their companies.

About the Author

Scott S. Smith

Scott S. Smith has had over 2,000 articles and interviews published in nearly 200 media, including Los Angeles Magazine, American Airlines’ American Way, and Investor’s Business Daily. His interview subjects have included Bill Gates, Richard Branson, Meg Whitman, Reed Hastings, Howard Schultz, Larry Ellison, Kathy Ireland, and Quincy Jones.