The Open Talent Economy, Part One: What will Talent Look Like in the Near Future?
“Managing talent used to involve at least a few certainties,” says Deloitte Consulting LLP’s report on the open talent economy. But the open talent economy, a paradigm shift in the talent marketplace which is just starting to unfold, will change the way companies think about, source, and utilize talent. “The open talent economy is a new way of looking at how talent will be sourced for organizations in the future,” said Andrew Liakopoulos, U.S. talent strategies leader at Deloitte.
In the old talent marketplace, organizations generally relied on what Deloitte’s report calls “balance sheet talent.” Balance sheet talent, to quote the report, consists of “full-time, statutory employees of your organization.” This is the system that employees and employers are used to: organizations have a role to fill, so they look for someone to hire, interview people, bring one candidate into the organization, provide them with a paycheck and benefits — hence the name “balance sheet talent,” because such employees show up as SG&A costs on the balance sheet.
But balance sheet talent is “closed” talent — that is, balance sheet talent is fairly stationary. Employees work for one and only one company for an extending period of time. “That will continue to be the case going forward,” Liakopoulos said. “However, given the shift that we see happening in the marketplace right now, [closed talent] won’t be the only talent that you have. There are different types of talent emerging in the marketplace.”
A Continuum of Talent
“What’s really kind of emerging is that it’s really no longer just looking at talent as balance sheet talent. A wider, diverse set of components are going to come together to make up the workforce of the future,” Liakopoulos said.
In the open talent economy, organizations will no longer rely on balance sheet talent. Instead, they will have to strategically utilize a variety of talent from along the talent continuum. Deloitte’s report explains that the continuum comprises five categories of talent, ranging from absolutely closed to absolutely open:
- Balance Sheet Talent: This is the old talent that most organizations utilize today. It is the most closed form of talent.
- Partnership Talent: This consists of employees who are “part of a partnership or joint venture that are on a related balance sheet.” A good example of partnership talent would be outsourced talent, which we have seen happening more and more over the past couple of decades.
- Borrowed Talent: Deloitte defines borrowed talent as “employees who are part of your value chain or ecosystem, but who reside on someone else’s balance sheet.” These are people like contractors, consultants, and advisers. Deloitte itself would be an example of borrowed talent, as employees from Deloitte advise other organizations on an as-needed basis, said Liakopoulos.
- Freelance Talent: This kind of talent is a fairly recent phenomenon, stemming from the proliferation of social media and telecommuting technologies, and most organizations are already familiar with it. Liakopoulos described freelance talent as “people [who] can go out to openly bid themselves to work for organizations,” usually on a per-project basis.
- Open Source Talent: This is the most open end of the talent continuum. Open source talent is “similar to open source in technology, in that organizations are leveraging the masses to help them with everything from innovation to using blogs in lieu of help desks,” said Liakopoulos. For example, consider Procter & Gamble’s Connect + Develop program, which the organization uses to crowdsource new ideas. Open source talent, like open source software, is free.
The open talent economy is not a shift from one end of the continuum to the other, but a trend toward embracing the whole continuum. Organizations may not use all five types of talent, but they will draw from various pools according to their needs at a given time, Liakopoulos explained. “Organizations using strictly balance sheet talent will definitely be the minority going forward,” he said.
When will the Open Talent Economy Arrive?
While Deloitte’s predictions about the open talent economy are meant as a long-term forecast, organizations should expect to see signs of the shift today. “I would say we’re at the beginning of it right now. When we look at it, I do think that organizations have started down the path,” Liakopoulos said. He offered the common practice of outsourcing — or partnership talent, as it is known on the talent continuum — as evidence of the current emergence of the open talent economy.
“When we develop concepts like this, we try to look out five years, and ask, ‘Where do we see talent going?’ This is the direction it’s heading in right now,” Liakopoulos said. “We’re just at the beginning in the journey of making that shift.”
Look out for part two of our feature on the open talent economy, where we’ll explore why this shift is happening and how the shift will affect the worlds of recruitment and talent management.