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Can a talent market work inside organizations?

“I'm free to do what I want any old time.” Lyrics from “I'm Free” - (M. Jagger/K. Richards)

Lately, I've been hearing this old Rolling Stones standard from the Sixties as a part of a television commercial for some brand of financial services targeted at Boomers with bloated bank balances (regretably only a half-accurate description of me). While this ad is aimed at helping people achieve their retirement dreams, it also aptly describes the attitude of talented individuals that many HR and business executives are increasingly facing within their organizations. Talent is freer to do and get what it wants “any old time” than it has been in many years.

Some companies find this hard to take - exhibiting a “let `em leave” attitude while many just shell out more money and perks to keep top performers. But maybe what many talented people really want isn't necessarily more money (although it doesn't hurt) but to move to new roles and learn new things. If they can't do this within their existing employer, they'll find a new job that suits them better. So if you want to keep ambitious workers, why not let them change jobs more freely inside the company?

Indeed, consultants McKinsey & Company have recently published a paper, “Making a Market in Talent,” which argues for establishing open markets for talent inside of organizations. It argues that internal markets will lead to better allocation of skills and knowledge than traditional hierarchies.

Freeing up talent
Despite all of the attention that many companies pay to recruiting "top talent," it's amazing to see how little attention some of them pay to how that talent is used once they are on board. Millions are spent on recruiting efforts, but relatively little is allocated to making sure their skills and knowledge are continuously developed and agilely deployed to the most appropriate opportunities throughout the organization.

Instead, people get stranded on functional islands - finance, IT, marketing, or out in a business division or regional unit. Little information is shared across these boundaries; indeed no one at all may have an enterprise view. As a result, talent gets stuck or is poorly redeployed. Performance drags and people leave throwing the ball back to that well-oiled but costly recruiting process.

McKinsey argues (as do others) that a different approach to talent should be taken, one that frees up people from many of these constraints. By implementing internal talent marketplaces, companies can give managers the best opportunity to mobilize the talent they need for success while giving the most talented people better opportunities to utilize and develop their talent. In their view, relying on individual self-interest rather than top-down mandates and job rotations is a better way to achieve productive enterprise-wide collaboration and resource synergy. The company gets work done more efficiently while individual workers expand their company-specific knowledge.

Top-down talent development and deployment models are often ineffective, especially in today's talent intensive businesses. Worker mobility is constrained to within departments and business units. Information about opportunities and skills is limited and not widely accessible. Too much development focus is on moving people vertically up the ladder into leadership positions rather than laterally across the organization. Attempts by HR departments to develop "high potentials" are usually confined to grooming a small group of people for specific management positions rather than applied to a wide group of talent to take on a broader set of roles.

McKinsey says these models that "push" talent to where companies deem they are needed most should be replaced with models that "pull" knowledge and talent.

Bringing the market inside the hierarchy

Talent marketplaces already exist in many legal and professional services firms, as well as in academia and within the R&D units of large corporations. According to McKinsey, they operate following informal rules of conduct and generally work best when relatively small (under 100 people). They also tend to involve high potential and elite performers within the organization. Managers try to woo these individuals to work for them while the performers seek out the most attractive assignments.

McKinsey, however, recommends that organizations create formal and managed internal talent marketplaces that “bind the interests of individuals to the interests of the company and ensure a fair exchange of value to both parties in the transactions.” They believe that talent marketplaces are not for every company or worker but work best in large, growing, knowledge-driven companies with individuals doing complex, judgment-based work.

McKinsey recommends implementing systems to make all pertinent information about the jobs and the candidates visible and consistent so that open and fair comparisons can be made and hiring decisions are transparent. The terms of employment should be formalized - laying out a specific contract for a job that spells out the role, duration, responsibilities, travel, etc. Contracts should be time-based, usually from one to three years. HR plays the role of talent broker to promote the process and the interests of both parties.

Talent participating in the marketplace should be treated as "restricted free agents" and competition for jobs should be non-price based because this would go against the interest of the company, which is to maximize profits. Instead, enterprise standards of pay for performance should be established and competition centered on other non-monetary factors such as the nature of assignments, opportunities for growth, and duration, etc.

To make the market work, consistent definitions of roles and qualifications, as well as standardized and comparable performance evaluations, are needed. The authors cite the U.S. military as an organization that has implemented a system of standardized role and qualification definitions that allows it to rapidly shift its people and skill mix around.

McKinsey asserts that talent marketplaces are especially suited to the most highly-talented, self-directed people. They will see greater demand for their services and have more mobility because bosses won't be able to block their movement and career progression. They will develop faster and build better knowledge of the organization and a network of contacts by moving around.

In addition, “such self-directed and talented people are the very ones an enterprise is most at risk of losing since they are the most likely to be actively testing external talent markets to find more attractive opportunities.” Leaders across the organization will have a bigger pool of internal talent to tap for important roles. The company wins because presumably the best people will always be in the roles best suited to their skills and credentials.

McKinsey admits that internal talent marketplaces are very difficult to create in companies with “well- established organizational silos.” So organizational structures will need to be redesigned and corporate culture changed for this approach to have any chance of working.

Why not a free-for-all?

Although not easy to implement even in the best of circumstances, the potential benefits of internal talent marketplaces make them worth piloting and more companies should try them. It's always been mystifying to me how easy it is for the typical worker, let alone top performers, to jump from one employer to another yet how difficult it is for many to move to another department on the next floor.

This "stay-put-or-leave-the-company" approach may be all well and good if you are in a business with little change and lots of cheap, easy-to-replace labor. But if you are competing, as most companies increasingly find themselves doing, on skills and brain power, then allowing talent - all of your talent - the freedom and mobility to move into new roles and different parts of your organization makes a lot of sense.

People will be more motivated to stretch and grow and their skills better developed and deployed than in static models. And staff will be more likely to accept and thrive in new roles for which they actively compete and qualify than those they are assigned to from higher ups or HR.

But why limit talent marketplaces to only top talent? Why should only certain classes of workers have greater levels of freedom to pursue jobs and careers than others? This simply reinforces the caste system that already exists in many large hierarchically structured organizations. Opportunities for job and development mobility should be determined only by a person's skills, experience, knowledge, performance, ambition, enthusiasm and potential, not whether they are part of the elite or a special group.

So make sure your organization's theme song for talent is “I'm Free” because anyone hearing “You Can't Always Get What You Want” will be sure to become a "Ramblin Man" (and woman).

How easy is it for you to move into different roles in your organization? Are you trapped in hierarchy or free to roam the market? Please e-mail Tony DiRomualdo at to share your experiences and perspectives.

Tony DiRomualdo is a researcher, author, consultant and founder of Next Generation Workplace. His work focuses on how changes in workforce trends and demographics, global business dynamics, talent management practices, and information technology-enabled tools and capabilities are transforming the workplace. He helps individual leaders and teams to create Next Generation Workplaces.

Recent articles by Tony DiRomualdo

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The opinions expressed herein or statements made in the above column are solely those of the author and do not necessarily reflect the views of The Wisconsin Technology Network, LLC. WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.


Laura Heldt responded 8 years ago: #1

So true, when will large organizations realize that retaining the best people is not something they can plan in HR or at the leadership level. Retention requires communication and an openness to discuss opportunities with everyone. Employees should not just feel valued with recognition programs or other strategies, but should actually be valued within the organization. Thanks for your wake-up call, I hope not everyone pressed the snooze button!

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