Paying For Talent
Quality, Consequences and the Construction Industrial Complex (part 125).
1. Should recruiters in property design and development be more like Hollywood agents?
2. Should high level talent in the property design and development world have agents and be paid signing bonuses?
3. Who is the one hire your firm can make that will transform business and what should be paid?
In the property design and development world it is people and their talents that make the difference because it is a world of ideas, innovation and technical ability. People at all levels matter and high level talent can make the difference between a firms success or failure. We have all seen what happens when a key person leaves and the team or firm then goes into a downwards trajectory.
Recruiting and retaining talent speaks to leadership, management and economics. IMHO, a true leader can recruit, inspire and retain people that are more talented than they are.
IMHO, talent is not scarce, proven talent is scarce. Company risk management requires proof of talent via actual outcomes. This fits in with the great “Mick Philips” (https://www.linkedin.com/in/michael-phillips-12a9b32b/) observation, “average people are paid too much and good people with track records, not enough”. I agree, there is a talent premier league in every business that should be recognized through remuneration.
I think there are two approaches to hiring talent:
Mid Level or Unproven Talent
Assuming basic qualifications are met, the decision points are:
- Replacement costs – What is market rate to fill position?
- Skill stack – What do they bring above basic qualifications?
- Team fit – This is a judgement call, are they potentially a crazy person or super A type personality that will upset others? Hard skills but poor soft skills can be a disaster. References matter here.
With mid-level, unproven talent, firms should be “long to hire and quick to fire” i.e interview and investigate candidates well, but if the hire does not work out, recognize a mistake early and move on.
High Level Proven Talent
There is a 3 point bargaining model at play here:
- Fall back options – What is next best alternative for hiring firm?
- Joint surplus – How much of the payoff (benefits of hiring) goes to both parties?
- Bargaining power – How much of the surplus can be extracted for each party?
Hiring top talent with proven track records is a bit like hiring an A list actor or star football player. They have track records from box office receipts and goal scoring. This hiring model works for all professionals and artisans however, lets use the example of an architect with an exemplary body of work:
- Fall back options – what other star architects are available at the time the firm needs to hire / expand? What other firms are an option for the star architect?
- Joint surplus – How much will new star architect increase business and attract other talent? How much is that worth in remuneration?
- Bargaining power – How much of the joint surplus can be extracted for the firm and for the new star architect?
Item 3, is a balance equation depending on current trajectory of the architects stardom. e.g. if the architects star is just starting to rise and the firm offers a quantum leap in project profile opportunity, then it is worth it for the architect to work for less than super star status for a while until their star rises higher.
There are no market rates for high level, super star talent. It is a negotiation that must benefit both sides.
I think there is a role to play for agents at the high end of the talent pool. They are currently called recruiters but I think they should be more like hollywood agents who manage the career of their talent and cover hiring, speaking gigs, book deals, endorsements etc.
If firms had to negotiate with professional agents and pay signing bonuses, I believe they would be more deliberate and successful in their hiring, enabling true talent (the 1%?) to be properly identified and rewarded.
Successful firms, large and small, hire for performance. If talent is a key difference between success or failure why not find and hire the best?
Related posts & links:
#107 – CxM Talent Stack – The 1% ( https://www.linkedin.com/pulse/cxm-talent-stack-1-adam-muggleton/?trk=mp-reader-card )
#105 – Bad Projects? No, Only Bad Leadership ( https://www.linkedin.com/pulse/bad-projects-only-leadership-adam-muggleton/?trk=mp-reader-card )
#108 – Qualifications Vs Experience Plus 8 Things Students Should Know ( https://www.linkedin.com/pulse/qualifications-vs-experience-plus-8-things-students-should-muggleton/?trk=mp-reader-card )
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