Here is an excerpt from a “classic” article written by Wouter Aghina, Marc de Jong, and Daniel Simon for the McKinsey Quarterly, published (in 2011) 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 (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 (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 (See Exhibit 3).
Some behaviors are more important to high performance than others are.
Recruiting for potential
Managing talent appropriately starts with recruiting appropriate talent. The head of a top-ranking academic lab told us that “the most important intrinsic we look for is scientific curiosity.” Great labs such as this one evaluate the potential of researchers by appraising their basic intellectual ability, general problem-solving skills, and enthusiasm. They also test a candidate’s cultural fit, important to support teamwork and collaboration, which in turn drive productivity. Candidates may, for example, spend an afternoon devising answers to a specific question or working in the lab with the team. This approach helps labs assess a candidate’s social compatibility as well. Before making a decision on recruitment, the best labs also solicit the views of team members about each candidate.
Average labs typically look mostly for specific technical proficiencies—say, the ability to use a piece of equipment or to run certain tests. Specific technical capabilities are sometimes required, but even when hiring for them, top labs want people who can adapt to new roles as the research evolves. Those new roles, especially in industrial settings, should include project management and business experience—something many labs overlook.
Nurturing people
Talent management doesn’t stop once researchers are hired. As an R&D executive told us, “Many of our research leaders don’t have the capabilities they need to succeed in senior positions in the organization. We are trying to give people more experience across the business to round out their future leadership potential.” A top lab, unlike a weaker one, actively supports its researchers’ development throughout their careers. Senior team members, for example, spend significant time in solo sessions with new researchers and mentor them continually. Year-end reviews appraise these activities. The most productive labs also require all researchers to develop annual personal-development plans.
Recognizing success
Many researchers crave recognition, and labs have a number of ways to provide it: public acknowledgement in meetings, awards, opportunities to present at conferences or to attend symposiums. Even more recognition comes from giving high performers active opportunities, such as larger research budgets, leadership of bigger efforts, and part-time professorships. These incentives, our work shows, often inspire researchers more effectively than money does. They cut turnover significantly and almost always cost far less than financial compensation.
Although public recognition is important, it isn’t everything: we found that researchers also want financial rewards for performance. In the best labs, such incentives are linked transparently to achievements or outcomes—great research, publication in a leading journal, the attainment of a milestone, or successful patent applications. One lab gives small cash bonuses to researchers chosen by peers for exceptional helpfulness. Another offers stock options for killing projects early, to avoid wasting money on futile or low-value efforts. Many academic labs, however, must rely more on nonfinancial motivators.
Not everyone succeeds in the laboratory. Obviously, failure should have consequences, but often it doesn’t: in one research unit, the weakest performers were moved to another lab rather than counseled to leave. The best labs don’t tolerate poor performance for long. If foundering researchers don’t improve, they are asked to depart, which carries the added advantage of importing fresh talent and ideas.
Building diversity
Another driver of high performance is a diverse team of people with different backgrounds, specialties, and forms of expertise to help solve problems. The most important aspect of building such a team is encouraging turnover, not only by weeding out underperformers, but also by encouraging rotation to adjacent research areas, other geographies, different roles, or, for an industry lab, to the business side of the company. To help researchers better understand the needs of business and to create a greater appetite for career opportunities outside R&D, one commercial lab organizes regular presentations by former group members who have rotated into business positions.
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Here is a direct link to the complete article.
Wouter Aghina and Marc de Jong are principals in McKinsey’s Amsterdam office; Daniel Simon is a consultant in the London office.
The authors wish to thank Ajay Dhankhar, Michael Edwards, Mubasher Sheikh, and Tony Tramontin for their support with the research behind this article, as well Ankita Gupta, Eoin Leydon, and Kate Smietana for their help with the analytics.