Do You Need an External Talent Cloud? | Harvard Business Review (2024)

Harvard Business Review | Do You Need an External Talent Cloud? | The article explores how external talent clouds can address the global talent crisis. They offer faster hiring, cost savings, and flexibility through digital platforms that engage a global workforce. The article also outlines steps for implementing this strategy and its impact on the future of work.

📊 DID YOU KNOW?

✨ OVERVIEW

The article "Do You Need an External Talent Cloud?" by John Winsor and Jin H. Paik addresses the growing talent crisis organisations worldwide face. It introduces the concept of "open talent," a globally distributed workforce accessible through on-demand digital platforms. The authors argue that embracing an external talent cloud can provide companies with faster hiring processes, lower costs, and greater flexibility. They outline steps for implementing this strategy, including establishing a centre of excellence, selecting appropriate platforms, and launching pilot programs. The article also discusses the future of open talent, including the potential impact of Web 3.0 technologies and decentralised autonomous organisations (DAOs) on the freelance market.

🧩 CONTEXT

The global business landscape is experiencing a significant talent shortage, with projections indicating that by 2030, over 85 million jobs could still need to be fulfilled. This crisis is exacerbated by the rapid growth of tech jobs, with 35 million new positions created in 2022 alone. Traditional hiring methods need to be revised to meet this demand, leading to a new pattern of behaviour where individual managers circumvent standard hiring processes and turn to digital talent platforms for quick and efficient solutions. This shift towards open talent represents a fundamental change in how work gets done, driven by technological advancements and the rise of empowered microentrepreneurs.

🔍 WHY IT MATTERS

↳ Addressing the talent shortage is crucial for business survival—With the potential for an $8.5 trillion talent shortage by 2030, companies that fail to adapt their hiring strategies risk falling behind in a competitive market. The open-talent model solves this crisis by providing access to a global pool of skilled professionals.

↳ Traditional hiring methods are becoming obsolete—The linear, top-down approach to hiring is no longer sufficient in meeting the rapidly changing demands of the modern workforce. Companies must embrace new models that offer greater flexibility and efficiency in talent acquisition.

↳ Open talent provides significant cost and time savings—Companies that embrace the open-talent model can get work done 4-5 times faster and 8-10 times more cheaply than traditional staffing models. This efficiency can provide a significant competitive advantage in today's fast-paced business environment.

💡 KEY INSIGHTS

↳ External talent clouds offer a new hiring paradigm—An external talent cloud is a pool of professionals from various platforms that can be accessed for temporary employment. This model allows companies to tap into a global network of highly specialised workers with interdependent skills, providing greater flexibility and access to expertise.

↳ Open talent is distinct from the gig economy—While the gig economy often involves exploitative practices, open talent empowers highly skilled professionals with significant negotiating leverage. These workers set their terms of employment, deciding what work to do, where, when, and how to do it, and what to charge.

↳ Digital platforms are revolutionising talent acquisition—More than 800 digital talent platforms worldwide offer access to an estimated 500 million skilled professionals. These platforms provide transparent matching of supply and demand, complete with job ratings, trust scales, skills certifications, and job history.

↳ Web 3.0 technologies are shaping the future of open talent—Platforms like Braintrust, which operates as a decentralised autonomous organisation (DAO), are introducing new ownership and reward distribution models in the freelance market. This shift could lead to freelancers having more control over their work and potentially owning some of the intellectual property they create.

🚀 ACTIONS FOR LEADERS

↳ Establish a centre of excellence—Create a dedicated team or division within your company to research, develop, and deploy open-talent practices. This centre should focus on retaining knowledge and skills, offering support in problem definition, incentive design, and post-submission evaluation.

↳ Develop a comprehensive open-talent strategy—Define clear goals and objectives for changing your operational models. Consider the exact problems external talent will solve, the skills you're looking for, and how you'll handle systems access, compliance, and security constraints.

↳ Select and build relationships with appropriate platforms—Research and carefully select platforms that best meet your needs. Build long-standing relationships with these platforms, treating them as potential partners rather than mere transactional services.

↳ Launch a pilot program—Test your external talent cloud strategy through a pilot program. Use this to learn about operational challenges, assess your organisation's readiness, and refine procedures before scaling up.

↳ Implement an internal communications plan—Develop a plan to help full-time employees understand that their jobs are safe and that the changes will boost the overall health and competitiveness of the company. Transparency is critical as you move to scale up your open-talent plan.

🔗 CONCLUSION

The shift towards open talent represents a significant opportunity for companies to address the growing talent shortage while improving efficiency and reducing costs. By embracing external talent clouds, organisations can access a global pool of skilled professionals, enabling faster and more flexible hiring processes. However, successful implementation requires careful planning, including establishing a centre of excellence, developing a comprehensive strategy, and building strong relationships with talent platforms. As the open-talent revolution continues to evolve, particularly with Web 3.0 technologies, companies that adapt to this new paradigm will be better positioned to thrive in the future of work.

🎯 KEY TAKEAWAY

Embracing external talent clouds is now optional but a strategic imperative for companies seeking to navigate the global talent shortage and remain competitive in a rapidly evolving business landscape.

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