Why CEOs Need to Write a New Contract with Top Talent
Leaders must give the best of their talent attractive new options, helping them focus on their most significant strengths and gifts in ways that will benefit the company in the short and long term.
The CEO’s current dilemma about talent is very apparent in three numbers: 98, 71, and 2. Ninety-eight is the percentage of CEOs who see the need for a change in their business model in the next three years, a daunting enough prospect. Seventy-one is the percentage of CEOs who are worried about losing their own jobs to disruption as they pull off the transformation, according to the soon-to-be-released 2023 AlixPartners Disruption Index. And two is the number of consecutive quarters of economic slowdown in the United States this year, followed by a weak third-quarter uptick.
Throw all those numbers together into a backdrop, and you easily can see why an overwhelming majority of CEOs are concerned as they go about addressing what most consider their top challenge for the next year: recruiting and keeping talent. It’s become more-or-less an evergreen concern for business leaders in the modern era, but several factors — the pandemic transition to work-from-home, unfavorable demographics, lack of critical skills in the labor pool, and a continued red-hot war for people despite the slushy economy — make it even more urgent now than three years ago. The pressures on CEOs from our three numbers give them a very narrow margin for error on the talent front.
All of that is why, for CEOs to succeed across the board here, they’ll have to adopt a new kind of contract with talent, especially top talent. In fact, we’re proposing leaders embrace a “new contract” with premier talent that unleashes people to maximize their impact for their employers and for themselves. This could involve providing them with new opportunities to lead cross-functional initiatives, helm new products, or delve into mentoring, for instance.
Only this kind of step-change approach will help CEOs identify, understand and develop the very talent pool they will need to build and execute the new business models they’re undertaking. For the best talent won’t join, and especially won’t stay, if they aren’t unleashed in new ways that stand outside traditional management practices. Adopting an effective approach with them will require CEOs to exert a deliberate and genuinely new type of trust and empowerment.
To be clear: our proposition for a new contract with talent is not an over-reaction to developments during and coming out of the pandemic which might, for example, include the need to balance talent’s willingness to “come back to the office” versus the preference they might have for working from home. Also, we are not suggesting that you simply let junior talent run the company and throw out everyone’s job descriptions, especially in an era when so many CEOs are under pressure from their PE owners to both call the shots and simultaneously do the surgery on the companies they own. However, this is a clarion call to give top talent a newly disproportionate impact on your organization’s results and future. The new contract is a recognition that top talent now enjoy almost limitless possibilities to direct their own careers in an endless upward spiral of opportunities, including in the ever-flourishing gig economy. With the career world as their oyster, the reality is that today’s sublime talent won’t be happy if their bosses don’t recognize this leverage.
This new contract unleashes people to maximize their impact, on their own terms, and in their own unique ways. You’ve got to give the cream of your talent crop such truly attractive new options, helping them focus on their most significant strengths and gifts in ways that will benefit your company in the short and long term — and that will do the same for the talent.
Start by focusing on the top 10% of your talent. Vow to give them more unconditional support for how they make impacts for themselves and their teams, increasing both their autonomy and their agency in the process. This will require a culture change both among company leadership and the people who work with top talent. It demands that CEOs exert more trust, but it’s not unreasonable or irresponsible — especially given the broader goals that you’re trying to support.
CEOs report to boards and are accountable to a wide range of stakeholders. They often have a remarkable view of the full system of their organizations and their markets. We aren’t talking about leaders turning over the strategy and operating model of a business to managers down the line, brilliant and effective as they might be.
Instead, we’re urging CEOs to think more like professional basketball coaches who, while well-compensated monetarily, have gotten used to thinking of themselves as light-touch managers of supremely talented individuals with some of their own ideas about how to play the game, rather than as “head coaches” whose strategies and dictums must prevail. It’s talent, as they say, that wins NBA championships.
In other words, in this new contract, we’re talking about letting in and letting loose outsized talent who can bring bold ideas to the table, test and validate, implement and innovate. This top-talent pool should get a new contract for impact and, through that working arrangement, level a disproportionate impact on the organization’s results and future. Along the way, there is no better way to recruit and retain more top talent.
In the second and third installments of this series, we will examine the five questions CEOs should be asking and answering themselves as they seek to establish this new contract, and then, how CEOs can make sure their best selves are showing up to execute the new strategy, which is crucial for its success.