Viewpoints: Future-proof your business: invest in talent density

Talent density is defined as the collective amount of talent held by a company’s employees. If we build a team of professionals with an abundance of talent, our talent density will be high. Conversely, adequate and under-performers drive the overall talent density of a team down. A high talent density environment fosters efficiency and creativity – good work motivates great work and bad performance is contagious.

Why is talent density important?

In procedural work, the best is two times better than the average, while in innovative work, the best is exponentially better than the average. A significant premium can therefore be attached to creating effective teams of the best. When highly capable people work together well, they inspire each other to be more creative, more productive and ultimately more successful as a team than they ever could be individually. Eventually, the top performers deliver value that helps differentiate companies from competitors who employ average performers.

How do we increase talent density?

Define talent in the context of your company − Talent should be clearly defined within your company, also taking into account the company culture and values. Examples of how talent has been defined include a desire for continued learning, effectiveness (as opposed to productivity), the ability to prioritise and contextualise within role requirements and optimism as opposed to pessimism and doing the bare minimum.

Review your current recruitment process − Effective recruitment means that the candidate evaluation process has the rigour necessary to ensure that the successful candidate is talented, and displays values germane to organisational culture, in addition to the required skill and experience level. Consider tools such as ‘Top-grading Recruitment’, work sample tests, psychometric profiling and diverse interview panels to strengthen the recruitment process.

Build a talent pipeline − Talented employees need to continuously grow and learn. It is therefore vital to invest in people development and create growth opportunities throughout various levels of the organisation. Employees should have development opportunities to ensure excellent performance in their current roles, as well as well-defined paths and learning opportunities to develop themselves for their next. This will not only grow individual talent, but also build a talent pipeline and enable succession planning for the organisation as it grows.

Understand the impact on culture − high performers drive a culture of change, continuous improvement and excellence – they do not try to work to please their superiors but impress their fellow high performers. Furthermore, top performers thrive on freedom and are worthy of freedom – but with increased freedom comes increased responsibility. What we learn from the Netflix model is that their goal is to inspire people more than manage them. They want their teams to do what is best for the company, which, in turn, generates a sense of responsibility, accountability and self-discipline. This dance of freedom and responsibility inevitably shifts organisational culture towards one of strategic innovation.

Netflix has defied tradition for decades with a culture unlike any other, succeeding in adapting and innovating where others have not. This company has been one of the largest media and entertainment success stories of the 21st century, and this success can be largely attributed to the talent that they have attracted and retained. The concept of talent density has been made popular by their founder, Reed Hastings, as described in No Rules Rules, a book that he co-authored with Erin Mayer from INSEAD Business School.

Author

Lize Lubbe CA(SA), CGMA
Chief Growth Officer, Thrive Investment Managers, a venture capital fund manager that invests in affordable high-quality independent education.