Talent, culture, and strategy ... which comes first, chicken or egg?

Groundbreaking research a few years ago from Stanford University economist Eric A. Hanushek focuses on school teachers, but could apply equally to "talent" in home building.

No single word, by the way, was uttered more often at the recent Housing Leadership Summit in Miami, as the force of talent underpins strategy, culture, and process, three business areas every company would consider in their control vs. out of it.

So, the lightbulb findings of Hanushek's analysis--"How Much is a Good Teacher Worth?"--are instructive because they quantify specifically the variability spectrum of measurable outcomes of a "good" teacher, vs. an average teacher, vs. a poor teacher. Simply put, here's the math of Professor Hanushek's conclusions:

The magnitude of variation in the quality of teachers, even within each school, is startling. Teachers who work in a given school, and therefore teach students with similar demographic characteristics, can be responsible for increases in math and reading levels that range from a low of one-half year to a high of one and a half years of learning each academic year.

Talent and effectiveness vary widely among teachers, but also among home building associates.


So when home building leaders speak of the word talent, they're speaking of a "pain point." Almost every company is pushing hard to accelerate community count openings, expand their number of "stores," and broaden their offerings beyond the A Lot higher end homes into second and third tier [lower] price neighborhoods. At the same time, they're doing so in a context of narrowing margins.

So, is home building cycle-bound, and stuck in an Albert Einstein definition of insanity, doing the same thing over and over again, and expecting a different result in this area of the pursuit and retention of talent? Time will tell.

What they're doing is poaching people from one another, from an overall pool of "talent" that is constrained for the same reasons that the trade labor pool is constrained--no pipeline of new talent during the dark downturn years and many people left the business. So, high salaries are dangling in front of people, sometimes deservedly, and--given Hanushek's illuminating analysis--some of it not.

Here's a piece, from PayScale's Tim Low that may resonate, "Why It’s So Hard to Figure Out What to Pay Top Talent," that notes that, even as skill-sets morph and evolve, the tools and transparency of opportunities are changing how talent matches up and gains traction with opportunity. Some of the examples are outside the direct disciplines of home building and development, but the issues are thematically and directionally spot on.

This week, focus on talent is doubly understandable, as it's a "jobs, jobs, jobs," week, in a monthly cycle of employment and payroll growth data released by government agencies. Economists are fixated on the how jobs growth benchmarks have seemed to decouple from income and wage growth.

For a clear understanding of that dynamic, most of us need only to look at our own companies. Simply put, we want talent, but our business goals and cost bases may conflict with paying for it. Lip service is not a strategy. We have to get better at understanding who is a 1.5x producer and who's a .5x producer, and fix that, not just talk about it. Attracting and retaining the 1.5x producer results in 100% better outcomes than hiring the .5x producer.

A comment to the HBR story from Tim Low says it well:

The foremost challenge appears to be in the simple words of Oliver Wendell Holmes Jr: "There is something much more scarce and rarer than ability. It is the ability to recognise ability."

And we'd add ... "to pay for ability."