The key role of dynamic talent allocation in shaping the future of work

Courtesy of McKinsey & Company

By Elizabeth Foote, Bryan Hancock, Barbara Jeffery, and Rob Malan

As companies emerge from the COVID-19 pandemic, they are realizing that talent management has become even more urgent. Given the disruptions to so many business models, organizations are grappling with how to make hybrid teams function better, which new skills are needed, and what the workforce of the future will look like more broadly. Then there is the perennial challenge of how to deploy talent to the highest-value opportunities within an organization.

The pandemic has also increased pressure on organizations to respond to three long-term talent trends that have been building for at least a decade: on-demand skills are scarce, made worse by digitization and automation; responding rapidly to changing and uncertain conditions is essential; and flexibility reigns supreme.

Reskilling is an important part of the response to all three challenges, especially as the scarcity of skills continues. But organizations also need to get better at utilizing employees’ existing skills and capabilities.

To make this pivot, forward-looking organizations are choosing flow-to-work operating models, which create pools of resources that can be deployed flexibly and on demand. These pools are formed based on similarity of skills, rather than similarity of business functions, making it easier for organizations to access the right skills when they need to. The leader of these resource pools matches and deploys workers to tasks or projects based on the highest-priority work areas for the organization and the combination of skills required to complete them.

A flow-to-work model is an effective organizational response to all three talent challenges highlighted above. By deploying scarce talent to the highest-priority work, companies can avoid the inefficiency of hoarding valuable skills in just a few parts of the organization. By creating mechanisms to reallocate and redeploy talent based on evolving priorities, organizations are well placed to respond rapidly to external changes, including shifts in customer or business demand. By forming flexible teams, roles can be tailored to best match the skills to the work to be undertaken, with individuals playing different roles on different teams as required.

Changing the operating model in this way isn’t an overnight task, and it requires significant process and mindset shifts. However, it can be a critical way of improving organizational speed and responsiveness, people leadership, and talent development. McKinsey research during the pandemic showed that responsive organizations outperformed their less agile peers by pivoting teams to solve new problems as they arose.

In this article, we will highlight the benefits of allocating talent more dynamically, pose four questions organizations can ask as they start their flexible-resourcing journey, and discuss the factors that organizations must get right as they move to this new talent model.
 

The benefits of flexibility

The flow-to-work model is not new. Companies such as Procter & Gamble have used this approach in corporate and business services for the past two decades to ensure that appropriate knowledge flows to projects. Until recently, however, the concept remained predominantly in the realm of corporate functions such as human resources and finance.

Today, organizations are looking beyond their corporate functions to reshaping their talent operating models much more broadly. The shift toward skill pools applies to job categories such as project management, economics, data and analytics, and engineering. McKinsey research backs up this approach: companies that rapidly allocate talent to opportunities have more than twice the likelihood of strong performance, and they also deliver better results per dollar spent (Exhibit 1).

With this model, employees who were assigned full-time to a mission or client can now be part of a flexible pool that is deployed to activities that most need their skills.

For example, UK water regulator Ofwat organizes itself around a flow-to-work model to manage scarce critical resources and bring programs relevant expertise, such as policy and analytics experts, portfolio and project managers, lawyers, specialist operations experts, communications professionals, and case officers.

Each of Ofwat’s resource pools is led by a “strategic-resource manager” who is responsible for ensuring that the pool has the skills and experience required by the organization. The role includes workforce planning, learning and development, and succession planning.

The strategic-resource manager deploys these skills to programs as needed, enabling the organization to share and act on information quickly in a rapidly changing environment. This allows individuals to use their skills on projects for which they don’t necessarily need to be assigned full-time.

This is an important consequence of organizing talent by skill pools: by designing an operating model around groups of skills, it brings into sharp focus where gaps exist, as well as how and where to focus on building skills and knowledge. When talent is organized by professional expertise, it naturally creates the need for a new role—someone who can lead that pool and drive career development and learning across the group.
 

The flexible-deployment journey: Four questions to consider

Before moving toward a flexible-resourcing model, organizations should seek answers to four fundamental questions:

1. What types of work would benefit from flexible deployment?

Flexible deployment is not suitable for all types of work—a fixed team, for example, makes more sense for work that involves highly repeatable tasks. A flexible-deployment model is more appropriate for work needing scarce skills across multiple projects. For instance, one organization shifted to flexible deployment for analytical and project-based policy work but decided to keep fixed teams for compliance, assurance, finance, and operations.

2. What types of talent should be organized into pools?

For many organizations, a shift to organizing around talent and skill types rather than functions, regions, or business areas is a big change. It requires thinking hard about existing job families, the skills they include, how they should be developed over time, and how they contribute to the work to be done.

3. How should the talent within each pool be deployed?

Once talent pools have been designed, the decision about how that talent should be deployed becomes critical. We typically see three deployment archetypes: project-based deployment, advisory/business partnering, and centers of excellence (Exhibit 2).

For project-based deployment, the employee is allocated for a specified period to a project team and is given a clearly defined role and a problem to solve. For the duration of that project, the day-to-day work is managed by the lead for that team, rather than by anyone in their pool.

Many different knowledge professionals can play a project-based role, including policy experts, economists, and technology specialists. HR, finance, and legal experts can also be deployed in project roles across the business when the project calls for this kind of expertise. For instance, HR compensation experts can be deployed to a job-design team as part of large reorganization efforts, or legal experts can be deployed to policy projects within a regulator.

By contrast, an adviser or business partner would work among multiple teams. Rather than being responsible for part of the project, their role would be to provide continuing trusted advice. These are typically senior leaders in corporate functions, such as the most senior finance and HR business partners and legal counsel. Ultimately, they would be managed on a day-to-day basis within their pool rather than by the project lead.

Knowledge professionals with deep content expertise in a center of excellence can work within multiple teams. Their primary role would be to provide targeted research and content expertise; a research analyst, analytics expert, or legal analyst can play this role. Similar to the business partner, they would be managed within their own pool.

All these archetypes would be appropriate in different situations. Deploying them with some flexibility within a pool would allow individuals to plug into work in a variety of ways, sometimes to a project team and at other times playing a business partner or center-of-excellence expert role within a team.
 

4. What is the mechanism for making staff deployment decisions?

It is important to design a mechanism for assigning individuals to the work or to a team. As in all models, there are trade-offs between professional development, skill-to-work matching, strategic priorities, and available capacity.

There are many ways to design the staffing function that manages these trade-offs. Some organizations stand up a specialist function dedicated to this task, while others take a more technologically driven, decentralized approach. Tata Communications, for instance, set up an internal matching platform that enables individuals to register their skills and team leaders to find talent who meet their needs.

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About the author(s)

Elizabeth Foote is an associate partner in McKinsey’s London office, where Barbara Jeffery is a partner and Rob Malan is a consultant. Bryan Hancock is a partner in the Washington, DC, office. The authors wish to thank Sherina Ebrahim and Maria Carolina Helo for their contributions to this article. This article was edited by Barbara Tierney, a senior editor in the New York office.