Here is an excerpt from a “classic” McKinsey Quarterly article by Wouter Aghina, Marc de Jong, and Daniel Simon, published by McKinsey & Company. To read the complete article, check out others, learn more about the firm, and sign up for email alerts, please click here.
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Our conclusion was that talent management, more than anything else, is what the best R&D operations consistently get right (See Exhibit 1). While all the practices we looked at are clearly correlated with high performance in labs, talent is the most important driver of their productivity and shows the highest level of correlation. Interestingly, talent management is also the practice that has the highest opportunity for improvement. That makes this a tremendously powerful lever to improve R&D productivity, regardless of its current level (See Exhibit 2). Strategy is the second most correlated practice, but here the respondents saw the least opportunity for improvement.
What top labs get right
Talent management isn’t simply about hiring the best; not everyone can. It’s about managing talent appropriately through selection, recruitment, development, and rewards. Just about any lab can do so, yet many don’t. We looked at each of these areas, and while all are correlated with performance, some matter more than others
Among practices that influence a lab’s productivity, talent is the one most correlated with high performance.
Top-quartile academic labs are five times more productive than bottom-quartile ones. Similar differences exist among industrial labs. Yet many research institutions don’t understand how well they are doing, because the people who work there wildly overestimate their own performance: in our survey, 12 percent of them suppose that their own lab is in the top 1 percent, and 70 percent think it is at least in the top 25 percent. Most researchers don’t know how productive great labs are or how they become great. In fact, most labs can assess how well they do only by basic output measures. A halo effect further distorts perceptions: researchers who think that their lab performs well assume that its talent-management practices are also strong.
Talent management isn’t simply about hiring the best; not everyone can. It’s about managing talent appropriately through selection, recruitment, development, and rewards. Just about any lab can do so, yet many don’t. We looked at each of these areas, and while all are correlated with performance, some matter more than others (See Exhibit 3).
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What did they learn? Here is a direct link to the complete article.