Elements of an Optimized Internal Talent Marketplace

“There’s a way to do it better. Find it.”—Thomas Edison

This chapter explores the critical elements necessary for optimizing an internal talent marketplace (ITM), highlighting the importance of being (1) mission-responsive; (2) innovative yet disciplined; (3) accurately informed and informative; (4) understood and trusted; and (5) collaborative and agile.¹ By examining these key attributes, as well as the role of advanced technology and iterative design, we will identify how organizations leverage ITMs to create a responsive and engaged workforce.

Mission responsiveness describes an organization’s ability to effectively respond to emerging missions and address strategic capability gaps. A 2021 study published by the National Academies of Sciences, Engineering, and Medicine further elaborates that the “Air Force requires [a human capital management] system that is mission-connected and strategic (e.g., assessing and developing Airman competencies to meet changes to the mission; providing incentives to retain individuals that have mission-critical competencies such as pilots or cyber).”² As mentioned previously, the Air Force is not alone in the challenges associated with competing in the new talent market or the need for a mission-responsive ITM.

While organizations may adopt various approaches in implementing an ITM to address these challenges, Deloitte has identified three common strategies focused on “talent deployment,” “talent mobility and management,” and the “future-of-work model.”³ Understanding an organization’s pain points through the identification of user personas, goals, objectives, and incentives is key to defining the strategy for an ITM and ensuring successful implementation. Despite organizations beginning with one distinct strategy, the organizations interviewed remain agile in their approach and evolve their strategy as the market matures.⁴

An innovative yet disciplined ITM maintains a forward-looking approach by encouraging innovative solutions and continuous improvement. As strategies transform, researchers recommend utilizing an iterative design process to assess and align the ITM across the following four P’s:

• Purpose: Define your strategy based on different possible use cases and measurable outcomes;
• Plan: Determine the iterative steps required to activate the internal talent marketplace;
• Program: Define the policies and processes that enable talent and career mobility; and
• Platform: Work toward an integrated technology ecosystem.⁵

Schneider Electric’s ITM journey illustrates such an approach. Their decision to implement an ITM was motivated by an internal exit survey, which revealed that 50 percent of departing employees noted the lack of internal growth opportunities as the primary factor for their resignation.⁶ With a clearly defined purpose, Schneider Electric developed a three-part strategy to improve retention, empower employees in their career-path choices, and increase learning and development opportunities.⁷ Leveraging artificial intelligence, their Open Talent Market solution matches employees to opportunities based on their skills, experience, and interests. This approach has given employees more autonomy in their careers and has resulted in Schneider Electric saving $15 million in enhanced productivity as well as reduced recruiting expenses by unlocking hidden capacity and skills within the company.⁸ While its ITM solution began with retention in mind, it has since transformed its ability to embrace a future-of-work model through flexible assignments and encouraging a culture of continuous employee development.

The usefulness of an ITM depends on the system providing enough information on available opportunities. Additionally, it should contain detailed information about individuals applying for these opportunities to ensure the alignment of matches based on skills, interests, and career aspirations.

As seen in Schnieder Electric’s Open Talent Market solution, matching employees with opportunities requires the system to be both accurately informed and informative through market design. Market design “brings science to matchmaking” by integrating game theory and market behavior insights to create systems that facilitate efficient and equitable transactions.⁹ Alvin Roth, a leading expert in the field of market design and the inspiration behind the Air Force’s Talent Marketplace, emphasizes that markets must be thick, uncongested, and safe to function properly.¹⁰ Thickness implies having an equally large pool of job opportunities and candidates. While thickness is desirable, it can lead to congestion, or “the economic equivalent of a traffic jam, a curse of success,” if participants don’t have adequate time or information to make informed decisions.¹¹

The collaboration and agility of an organization are gauged by its adaptability to evolving business needs and workforce dynamics through an interconnected ecosystem approach. The emergence of new technology and automation continues to shape organizational structures and increase the need for employee skill-tracking and upskilling as existing jobs are transformed and new jobs are created.

As an example, Booz Allen implemented a skill-based job architecture and recommendation algorithms to mitigate congestion. Despite the structured approach, initial adoption by employees and managers was slow, highlighting the need for better engagement to gather employee profile data for tailored recommendations.¹² To drive desired behaviors, they integrated their existing skill badging program with their ITM to serve as a holistic talent management solution called Career Hub. This integration created a structured and systematic way for employees to engage with the system, requiring regular updates of skills and preferences. Booz Allen’s talent system investments resulted in improved talent marketplace adoption, a heightened focus on employees acquiring essential skills essential for the company’s strategic growth, and a notable 4 percent improvement in their retention rate.¹³

The overall effectiveness of an ITM and its matching mechanisms depend on the clarity, transparency, and understanding of the marketplace rules by all key stakeholders and system users.

For instance, Google chose to adopt a deferred acceptance algorithm in the development of its Chameleon platform to ensure market matches adhere to defined rules while maintaining scalability and prioritizing choice and fairness.¹⁴ To establish confidence among individual contributors and managers, Google focused on providing them with an understanding of the system’s operations and dispelling any opacity surrounding the black box algorithm that generated matching outputs.¹⁵ By addressing these concerns, they successfully aligned the preferences of managers and workers with business goals while ensuring the process was seen as fair by its users.

As an ITM becomes more informed and informative, it provides valuable workforce-related data that can be used to inform strategic human capital management (HCM) decisions. Researchers note combining human resource metrics with talent analytics “forms a powerful approach to optimizing the utilization and experience of the chief resource of most organizations—the people.”¹⁶

Through talent analytics, Google identified low-performing employees whose skills were mismatched to opportunities and poorly managed. This awareness enabled Google to address these issues through personalized incentives, thereby retaining employees and supporting their success.¹⁷ These insights can also enhance organizational responsiveness by fostering collaborative efforts within the HCM system. A collaborative system integrates traditionally siloed functions such as talent acquisition, talent management, learning and development, and performance management into an interconnected solution, creating value across the organization.¹⁸

Creating an optimized ITM requires a balanced, agile approach that ensures the system is mission-responsive, innovative, informed, trusted, and collaborative. The following chapter will provide recommended actions for the Air Force to develop a well-designed Talent Marketplace that facilitates efficient talent matching while supporting continuous improvement and organizational resilience in a dynamic labor market.