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The War for Talent Is Over, and Everyone Lost

This story reflects the views of these authors, but not necessarily the editorial position of Fast Company.

In 1998, after a year-long study on the subject, McKinsey researchers declared that a “war for talent” was underway. In the years ahead, they said, organizations’ future success would depend on how well they could attract, develop, and retain talented employees–an ever more valuable asset in ever higher demand.

Today, in a world full of many more Chief People and Chief Happiness Officers, that war nevertheless appears to have been lost on all sides. Of course, many workers excel in their jobs and make pivotal contributions to their organizations. But for every one employee who does, there are many more who are underemployed, underperforming, and just plain miserable at work.

What went wrong?

The Rise Of Passive Jobseekers >

More people than ever are dissatisfied enough with their current jobs to want to consider other opportunities. Over the past few years, LinkedIn has estimated that figure at anywhere between 45% and 60% of its more than 400 million users. Some recruiters believe these so-called “passive jobseekers” now comprise up to 75% of the overall workforce. Just imagine if three out of four people in long-term relationships were still holding out for a better option to come along.

The Growing Appeal Of Self-Employment

With so many people holding their current jobs in low esteem, it’s no surprise that many dream of ditching them to go work for themselves–even in countries where job opportunities abound. In the U.S., many people who dabble in freelancing say they’d love to quit their day jobs to work for themselves full-time, if it weren’t for income instability and other factors.

But it’s clear that the flexibility and freedom to pursue more meaningful work is pretty alluring. Interestingly, self-employed people tend to work longer hours only to earn less, suggesting that traditional jobs are under-delivering on what employees want to such a degree that many are willing to take pay cuts in order to get them.

The Unwavering Allure Of Entrepreneurship

Younger workers especially tend to be disenchanted with traditional career paths and are seduced by the idea of becoming entrepreneurs instead. But the notion that activating all these entrepreneurial ambitions will prove a useful weapon in the war for talent is dubious. A decade ago, author Scott Shane estimated that only 30% of startups live longer than 10 years, fewer than 10% ever grow, and just 3% grow substantially.

None of this has stopped corporations from trying to attract entrepreneurial talent, though. Juggernauts from GM to Goldman Sachs are experimenting with embedding startup-like cultures inside large corporate structures, hoping to draw in disruptors who can change the status quo and drive innovation. Yet even when big companies like these are able to recruit entrepreneurial talent, they often struggle to manage and engage them.

Turning Things Around

Instead of winning a war for talent, organizations appear to be waging a war on talent, repelling and alienating employees more successfully than harnessing their skills. The result is a highly inefficient job market where most companies complain about their talent shortages while most employees complain about their pointless jobs. The definition of a bad deal is when both sides lose.

So what can organizations do to improve the situation? Three things.

1. Get better at measuring and understanding talent. This means shifting from intuitive toward scientific assessment methods. It also means refocusing on the proven predictors of job performance, such as the raw ingredients of talent: being rewarding to deal with, and able and willing to work hard.

Instead, most organizations either go by gut instinct or they overcomplicate things, coming up with long and incoherent competency models that omit the essential drivers of job success. Shoddy, bias-prone selection methods like unstructured interviews, resume screening, and performance reviews end up taking precedence over more rigorous tools, like scientifically grounded personality and cognitive ability assessments and structured job interviews.

2. Stop developing people’s “leadership skills.” Shockingly, research suggests there’s a strong negative correlation between the amount of money spent on leadership development (which in the U.S. totals over $14 billion a year), and people’s confidence in their leaders. One of the reasons is that leaders are often deprived of negative feedback, even in training programs. We’ve gotten so used to coaching to people’s strengths that weaknesses get left unaddressed. The basics of human psychology magnify that issue; people are already prone to judging their own talents way too favorably, especially after experiencing a measure of success.

Contrary to what most people think, leadership isn’t really about the leader, but about the group. In fact, one MBA professor’s recent informal survey found that while his students ranked their leadership skills as their top selling points in the job market, recruiters put them near last. Any effective coaching intervention should really be focused on things that boost the performance of the team or organization; they, not the leader, are the true clients in a well-designed coaching effort.

3. A little more self-awareness can go a long way. The better people understand their own strengths, limitations, and interests, the smarter career choices they’ll make. They’ll end up liking their jobs more, performing better, and staying put longer. Self-awareness, in other words, is a sorely undervalued talent enhancer because it can help people identify jobs that actually match their values and skills.

Remember: talent is largely personality in the right place, and most talent management problems are solved once you get the right person in the right job. But organizations can’t assume the whole burden of finding those fits.

For individuals to make better choices themselves, they’ll need some data, and in recent years there have been some efforts to democratize personality assessments and offer free, career-related feedback (like these two by our respective companies). The war for talent, in other words, is at least partly personal: If organizations want to turn around current trends and start unleashing human potential, one good place to start is simply helping individuals understand their own talents–and limitations–a lot better.