One of the great truths in life is that superior talent, whether on the playing field, in the Executive Suite, or in the laboratory, usually wins in the end.

Good Coaches – and good Managers – have always intuitively grasped this concept.

Alfred Sloan, the former head of General Motors once famously said:

“Take my assets, leave my people, and in 5 years I will have it all back.”

 

 

Yet, the question remains, exactly how much difference does talent make?

In the mid-1990s, consulting firm McKinsey & Company set out to answer that question. After interviewing hundreds of executives and extensively studying numerous companies, the consulting firm reported having strong talent in key positions creates huge improvements in performance.

For instance, top Plant Managers grew profits 130% while the lowest performing managers achieved no improvement; the best Center Managers in Industrial Service Firms grew profits 80%; and Portfolio Managers in Financial Services institutions grew revenues by nearly 50% while average performers’ portfolios remained flat.

But the positive effects of superior talent extend beyond improvements at the individual and/or departmental level. The most striking effect of talent is seen on the company’s bottom line. The consultants at McKinsey stated that the companies that excel in talent management achieved total returns to shareholders that were 22 percentage points better than the average in their industry.

The difference talent makes is striking.

The concept that superior talent enables superior results is not something that we need to only grasp intuitively.

The data shows that companies with better talent are not merely better than their peers – They are vastly superior to them.