We read with great interest an article from The McKinsey Quarterly called “Strategy in an era of global giants”. Since many Taleo customers are global giants, I was positively surprised to see the high importance placed on talent management.

The key finding here is the fact that large organizations have been able to increase their net income threefold while only increasing their revenue by a factor of two between 1984 and 2004.

Some of this success is rooted in the fact that “successful mega-institutions recognize an ever more direct link between their profitability and their large professional-talent pool”.

As shown on the charts below we can see the uplift created in 2004.

We all acknowledge the value of talent. We also agree strongly with the authors stating the fact that we need a new performance metric. While they recommend profit per employee, we tend to diverge a bit and recommend operating margin over total labor spend! Let’s not forget the increase in contingent labor in the last 20 years!

For more on this important issue, see our previous posting on People Metrics That Matter and our article for Accenture: Key Metrics for Today’s Talent Economy.