The best professional service firms (PSFs), like Bain & Company, are the world’s most successful human-capital supply chain firms.
PSFs need to reinvent the ‘people side’ of the organization continuously — talent development should be the firm’s largest single non-client investment. Advanced people and talent management systems and processes — performance appraisal, remuneration, hiring and firing, training, development, and promotion — are the body and soul of PSFs, shaping how people behave as they go about their work.
The objective of talent development is to close the gap between the current and desired ways of doing things. This requires understanding the nature and size of the gap to target the most important people skills for development. Many PSFs find that their HR, training, and development systems do not address these challenges effectively. Bain & Company seemingly discovered the Rosetta Stone.
Five distinctive characteristics of people development at Bain are:
☐ People development is the firm’s core management process. The ability to mobilize the right people for client projects stems from the large amount of time Bain spends recruiting, developing, evaluating, and managing the best of the best.
☐ There is a strong belief in enabling employees to grow. PSFs must provide the best platform for ‘organic’ growth, i.e., growth through people development.
☐ The ‘star system’ is discouraged. By hiring individual stars and rewarding them hugely, PSFs create divided, unstable organizations. PSFs cannot gain an enduring competitive advantage by hiring stars from outside the firm. Studying individual stars at PSFs for many years, I found that when they hire an outside star, his/her performance plunges, there is a performance decline in the team that the star works with, and the firm’s reputation — its most important asset — deteriorates.
☐ The recruitment and development process is primarily driven by the line, with relatively limited support. The best PSFs excel as ‘talent-catching machines’, thanks to their esteemed ‘war zone’ professionals.
☐ The people development process is characterized by a strong people ethos with a relatively informal atmosphere and a high degree of individual freedom.
There are many reasons to become great at talent development: [1] better relationship management skills, [2] a stronger firm (If you help people develop, they tend to develop the firm, too), and [3] more fun (People working in a development-intensive environment tend to enjoy themselves more, and good people who have fun attract other good people who also want to have fun).
Often, firms like Bain remain something of an enigma. But there is at least one thing that they have in common, namely a formidable talent development approach.