The Art of War for Talent. How Companies Can Gain a Competitive Advantage by Fostering a Culture of Intrinsic Motivation and Meaningful Work

Bachelor Thesis, 2019

76 Pages, Grade: 1.3







2.1 Background Information
2.2 A Purpose-Driven Approach
2.3 Employee Value Proposition Rankings
2.4 Event Study: The Big Poaching Four

3.1 The Resource-Based View of the Firm
3.2 The Irrational Agent Problem
3.3 Limits of Extrinsic Motivators

4.1 Meaningfulness in Working
4.2 Event Study: Higher Purpose at KPMG, Recognition at PwC
4.3 Meaningfulness at Work


6.1 Sample Selection & Matching Procedure
6.2 Methodology & Measures
6.2.1 Return on Assets (ROA)
6.2.2 Market-to-Book Ratio of Equity (P/B-Ratio)
6.2.3 Total Shareholder Returns (Stock Returns)
6.2.4 Hypotheses
6.3 Statistical Analysis & Results
6.4 Implications & Limitations





The Art of War for Talent

How Companies Can Gain a Competitive Advantage by Fostering a Culture of Intrinsic Motivation and Meaningful Work

Study program: B.Sc. Management & Technology

Submitted by: Niklas Baier

Submitted on: 28.01.2019


The underlying bachelor thesis combines theories, literature, lab and field experiments, event studies from the industry, and its very own empirical research to argue from both, a strategic as well as a financial perspective, that an inimitable organizational culture of intrinsic motivation and meaningful work may constitute a source of competitive advantage within the War for Talent. One of the key findings of this argumentation implies that meaningfulness in work and working could not only be a source of intrinsic motivation, but also serve as a compelling employee value proposition to attract and retain higher-skilled workers. This thesis further contributes to the existing literature by investigating the financial performance of publicly traded companies featured on the 2017 Fortune Best Companies to Work For list in comparison to that of an artificially crafted control portfolio of similar companies and the broad market. The empirical analysis thereby confirms significantly superior cumulative stock market performance over a defined market proxy and provides suggestions for future research.

Munich, January 28th, 2019

Niklas Baier

Die zugrundeliegende Bachelorarbeit kombiniert Theorien, Literatur, Labor- und Feldexperimente, Fallstudien aus der Industrie, und eine eigene empirische Forschung, um sowohl aus einer strategischen, als auch einer finanziellen Perspektive zu argumentieren, dass eine unnachahmliche Unternehmenskultur von intrinsischer Motivation und bedeutungsvoller Arbeit eine Quelle für den Wettbewerbsvorteil im War for Talent darstellen könnte. Eine der Haupterkenntnisse impliziert dabei, dass die Sinnhaftigkeit in und bei der Arbeit nicht nur eine Quelle der intrinsischen Motivation, sondern auch als überzeugendes Wertversprechen gegenüber den Mitarbeitern dienen könnte, um höherqualifizierte Arbeitnehmer anzuziehen und sie an das Unternehmen zu binden. Diese Abschlussarbeit trägt weiterhin zur bisherigen Literatur bei, indem sie die finanzielle Performance von börsennotierten Unternehmen der 2017 Fortune Best Companies to Work For Liste mit der eines künstlich erzeugten Kontrollportfolios aus ähnlichen Firmen und dem breiten Markt in Vergleich setzt. Die empirische Analyse bestätigt dabei eine signifikant bessere kumulierte Aktienmarktperformance gegenüber einem definierten Markt Proxy und liefert Vorschläge für die weitere Forschung.

München, 28. Januar 2019

Niklas Baier


Figure 1: Selected Posters of the KPMG Higher Purpose Initiative (Left) and the 10,000 Stories Challenge

Table 1: Selected Company Purpose Statements, Mission and Slogans

Table 2: “Best Companies to Work For 2017” included in study by industry classification (2-digit Thomson Reuters Datastream SIC Code)

Table 3: Median Accounting Ratios and Z-Statistics for Sample Companies and Matching firms

Table 4: Mean Annual and Cumulative Total Shareholder Returns for Sample Companies, Matching firms and the NASDAQ/NYSE Value-Weighted Index

Table 5: Placements of Deloitte, EY, KPMG, and PwC on the Fortune List throughout the years 1998 to 2018

Table 6: Rankings of Marc Benioff on Glassdoor Top CEOs list and Salesforce on Fortune List

Table 7: Sample Companies and their respective Matching Firms

Table 8: Graphical Investigation of Normality of NASDAQ and NYSE Annual Returns

Table 9: Statistics of NASDAQ and NYSE Annual Returns

Table 10: Median Accounting Ratios and Z-Statistics for Sample Companies and Matching firms, Unadjusted

Table 11: Mean Annual and Cumulative Total Shareholder Returns for Sample Companies, Matching firms and the NASDAQ/NYSE Value-Weighted Index, Unadjusted

Table 12: Performance of Facebook in Comparison to the Matching Portfolio

Table 13: Median Accounting Ratios and Z-Statistics for Sample Companies and Matching firms, Adjusted for Fortune and Glassdoor List

Table 14: Mean Annual and Cumulative Total Shareholder Returns for Sample Companies, Matching firms and the NASDAQ/NYSE Value-Weighted Index, Adjusted for Fortune and Glassdoor List

Table 15: Test Statistics Comparison for Sample Variations.


Appendix A

Appendix B


AMT Amazon Mechanical Turk

BC Before Christ

Big Four Deloitte, EY, KPMG, and PwC

cf.1 confer/conferatur (compare)

CSR Corporate Social Responsibility

Datastream Thomson Reuters Datastream

Deloitte Deloitte Touche Tohmatsu Limited (DTTL)

e.g. exempli gratia (for example)

esp. especially

et al. et alii/et aliae/et alia (and others)

EY Ernst & Young Global Limited (EYG)

Fortune List Fortune 100 Best Companies to Work For

Glassdoor List Glassdoor Best Places to Work

HR Human Resources

i.a. inter alia (among other things)

i.e. id est (that is to say)

Ibid.2 ibidem (in the same place)

KPMG KPMG International Cooperative

M million

P/B-Ratio Market-to-Book Ratio of Equity

PwC PricewaterhouseCoopers International

R&D Research & Development

RBV Resource-Based View

ROA Return on Assets

sample 2017 Fortune List

peers control portfolio

SDT Self-Determination Theory

SIC Standard Industrial Classification

SMB Small-to-Medium sized Business

Stock Returns Total Shareholder Returns


“Therefore, just as water retains no constant shape, so in warfare there are no constant conditions.” (Tzu, 2017, p. 32)

About 2,500 years ago, the infamous Chinese general Sun Tzu wrote down 13 chapters dealing with the different aspects of warfare, as well as strategies and tactics to secure victory, forging “. . . a framework for waging war and valuable observations on the nature of battle” in the process (Dimovski, Marič, Uhan, Đurica, & Ferjan, 2012, pp. 151-152). Titled The Art of War, Sun Tzu ’s aggregated wisdom has since permeated the studies of military scholars and is known for being amongst the most influential literature on war to this date (Dugdale-Pointon, 2001).

But Sun Tzu ’s influence on the modern world does not only relate to tactical warfare. As Dimovski et al. (2012, p. 151) point out in their assessment of the implications of The Art of War on leadership, its principles have also found their way into a wide array of business and management studies; the discipline of strategic management particularly profits from the ancient Chinese general’s theorems (Lee, Roberts, Lau, & Bhattacharyya, 1998, p. 98). Lee et al. (1998, p. 96) further argue that certain management practices in East Asian countries are tightly interwoven with their cultural heritage, which might explain why Dimovski et al. (2012, p. 152) state that Sun Tzu ’s guidelines still heavily impact Chinese business executives’ speeches. However, this phenomenon is not exclusively bounded to the Asian business world. Dimovski et al. (2012, p. 154) also accentuate the substantial influence of The Art of War on Western management science.

Drawing on a study conducted by the Korn/Ferry Institute in cooperation with the Economist Intelligence Unit on the relationship between ex-military involvement and CEO performance of companies listed in the S&P 500 Index (Korn/Ferry International, 2006, p. 2), it appears not too absurd to relate business to warfare. Their research shows that companies led by CEOs with military background outperform the S&P 500 Index by an average of three to 20 percentage points regarding share price returns, suggesting that the leadership experience aggregated during their military involvement accrues to a substantial amount to their superior performance (Ibid., p. 3). It seems that there is a reasoning after all, for why C-level executives of firms are generally adorned with the title of an officer.

Fuller (1993) even draws a direct comparison between business and “. . . a civilized version of war”, which, in his opinion, “. . . has much to learn from war“. Just as opposing enemies in the field fight over strategic positions in the terrain, invaluable resources for the army and survival, their modern organizational counterparts compete over advantageous positions in the market, firm resources and solvency. According to Dimovski et al. (2012, p. 154)’s interpretation, Sun Tzu viewed positioning the organization in an advantageous state relative to their competitors as the most important strategic aspect of warfare. Bartlett and Ghoshal (2002, p. 34) translate this thought in their study of the transformation processes of over 20 companies into a business context by depicting that “. . . managers’ outdated understanding of strategy” is an impediment for change and adaption to the requirements the “. . . information-based, knowledge-driven, service-intensive economy” of today is imposing on companies. One substantially imperative of these requirements has been revealed through a study conducted by the management consulting firm McKinsey & Company in 1998, suggesting that talent will be the most sought for resource of the future (Chambers, Foulon, Handfield-Jones, Hankin, & Michaels III, 1998, p. 48). In what Chambers et al. (1998, p. 46) primed as the War for Talent, firms will have to employ novel strategies and refine employee value propositions to attract and retain high-performing, talented employees.

Thus, this thesis strives at highlighting the importance for firms to adapt to the newly emerged competitive environment that the ongoing War for Talent has created by considering their people as their most valuable asset for the success of the organization, as already hinted at throughout The Art of War by Sun Tzu in 500 BC (Lee et al. (1998, p. 110); Dimovski et al. (2012, p. 154)); hence the reference in the title of this thesis. After a brief review of the circumstances that led to the emergence of the War for Talent and first implications for the industry, it is argued from a strategic perspective why motivated talent depicts the key resource for competitive advantage and why conventional extrinsic incentive measures aimed at maximizing productivity are no longer effective. Afterwards, a proposition will be made of how capitalizing on intrinsic motivation, human’s inner drive to accomplish inherently interesting and challenging tasks, fostered through a framework of meaningful work, might be the decisive driver to get ahead in the quest for talent. A second string of argumentation draws a connection between meaningful work and superior financial performance. This proposition is then tested by an empirical analysis, comparing the financial performance of publicly traded companies featured on the 2017 Fortune 100 Best Companies to Work For list against a control portfolio and the broad market, confirming significant differences for cumulative stock returns.


“Superior talent will be tomorrow’s prime source of competitive advantage.” (Chambers et al., 1998, p. 48)

2.1 Background Information

A multitude of factors and developments play together in the emergence of the War for Talent. Chambers et al. (1998, p. 47) point to the opposing trends in economic growth and demographic development, specifically a 15% decrease of 35- to 44-year-olds in the United States between the years 2000 and 2015. Under the assumption of further economic growth, this trend has to result in an undersupply of talented executives as the demand for them rises (Ibid.). In a brief update of the initial study three years later, Axelrod, Handfield-Jones, and Welsh (2001, p. 9) find confirmation of this assumption: 89% of the 6,900 initially interviewed managers of the 1998 study report attracting new talented people to be more troublesome than three years before, while 90% affirm increased difficulty in retaining them. In their assessment of literature on the War for Talent, Beechler and Woodward (2009, p. 275) also point to global demographic and economic changes for being one of four identified main factors “. . . affecting the quantity, quality and characteristics of talent”.

Another imperative driver of the quest for talent is characterized by the shift from a product-owned to a complex, knowledge-centered and service-based economy (Chambers et al. (1998, p. 47); Bartlett and Ghoshal (2002, p. 34); Beechler and Woodward (2009, p. 275)). Johnson, Manyika, and Yee (2005, pp. 24-25) reveal that 70% of jobs created in the United States since 1998, the date of the initial War for Talent study, heavily depend on what they define as tacit knowledge. These skills and experiences employees have to draw upon when faced with ambiguous and complex tasks stand in stark contrast to the more routine-based transactional knowledge needed in less intellectually challenging tasks (Ibid.). Differentiating between two types of work, algorithmic and heuristic, Pink (2011, pp. 27-28) picks up these implications to illustrate how the mostly algorithmic and rule-based jobs of the 20th century are being expelled by the heuristic and creative jobs that modern economies depend upon. Be it through the ongoing outsourcing of repetitive tasks or progressing automation – the demand for algorithmic left-brain work is declining, whilst heuristic right-brain work is flourishing in the age of service-oriented customer value propositions (Ibid.; Beechler and Woodward (2009, pp. 275-276)).

As a third decisive cause, Chambers et al. (1998, p. 48) mention increasing job mobility. According to their study, the average executive will change their employer up to five times during their career, an enormous development relative to the rather stable employer-employee relations ten years ago (Ibid.). More recent evidence supports this projection. Carr, Inkson, and Thorn (2005, pp. 387-388) point out how, in the process of ongoing globalization, economies might lose talented people through emigration to more developed countries (brain drain). Respectively, countries might also be able to attract said skilled immigrants (brain gain), e.g. through a compelling culture; a development which overall results in what they define as talent flow across nations (Ibid.). With respect to four identified main generations of workers, namely Matures, Baby Boomers, Generation Xers and Millennials, Lyons, Schweitzer, and Ng (2015, p. 16) find empirical evidence for increased job mobility, especially amongst Generation Xers and Millennials. Their results imply the need for rethinking traditional employee recruitment and retention to satisfy young workers’ desire for fast-paced upwards mobility (Ibid., p. 18). This coincides with Fishman (1998)’s notion of “. . . a silent battlefield in the war for talent” which addresses the attrition of employees aged 25 to 35 that often depict some of the best workers the company employs. While the initial McKinsey study focuses on the scarcity of executive talent (Chambers et al., 1998, p. 46), Beechler and Woodward (2009, p. 283) expand this scope to “. . . encompass not only ‘top talent’, but a wider range of employees . . .”.

The ongoing trend of job mobility is in line with recent developments in the labor market. As reported by EY Global (2018b), a decline in permanent employment contracts during the recession starting in 2009 as well as further developments in information technology, has led to a so-called Gig Economy, which prominently features freelancing and contingent work. This new form of self-employment entices most of all with flexibility, “. . . especially for younger people and higher skilled workers” (Ibid.). Be it flexible work schedules, the ability to work from anywhere in the world or job rotation opportunities, the benefits of gigging seem to be the foundation for its rapid growth (Ibid.). In their 2018 Millennial Survey, Deloitte Global (2018, pp. 19-20) even issues a warning to employers that their workers might turn to the Gig Economy if the company i.a. cannot provide enough flexibility and freedom, thus resembling yet another leak for talent flow.

Speaking of job mobility and losing talented employees, the rise of startups and small-to-medium sized businesses (SMBs) further aggravates the competition for talent (Chambers et al., 1998, p. 47). These firms offer opportunities for rapid career advancements, which coheres with the findings of Lyons et al. (2015, p. 18) (workers’ desire for fast-paced upwards mobility), self-fulfillment, impact and flexibility (Chambers et al. (1998, p. 47); Fishman (1998)). Regarding autonomy, Benz and Frey (2008, p. 453) refer to higher job satisfaction in self-employment, building upon Hamilton (2000, p. 628)’s findings that entrepreneurs even accept lower wages in return for non-pecuniary aspects relating to greater autonomy. Cassar and Meier (2018, p. 216) also speak of a utility premium in this context and Pink (2011, p. 47) even lists autonomy to be one of the drivers for genuine motivation. Barck (2017) further confirms the attractiveness of SMBs to students to be one of the key findings of the 2017 Universum study (cf. Universum Global (2017, p. 10)).

Throughout the years, many assessments on the War for Talent have come up with their own, sometimes even diverging, opinions and implications. Beechler and Woodward (2009, p. 278), for instance, criticize the strong competitive framing conjured by the association of talent acquisition with warfare. However, there seems to be one universally valid conclusion. In order to position themselves favorably in this newly emerged competitive environment, firms will have to create compelling employee value propositions for attracting, motivating, and retaining talent (Chambers et al. (1998, p. 50); Fishman (1998); Axelrod et al. (2001, p. 10); Bartlett and Ghoshal (2002, p. 36); Beechler and Woodward (2009, p. 279)). The fact that most companies are still stuck somewhere in between the knowing-doing gap regarding talent management (Beechler & Woodward, 2009, p. 279) hurts one of Sun Tzu ’s earliest commandments:

“Thus, though we have heard of stupid haste in war, cleverness has never been seen associated with long delays.” (Tzu, 2017, p. 5)

2.2 A Purpose-Driven Approach

Though it has become evident that “better talent is worth fighting for” (Chambers et al., 1998, p. 45) and that compelling employee value propositions are needed to attract, motivate, and retain higher skilled workers, the question on what exactly makes up these outstanding benefits remains. Opportunities for upwards mobility, flexibility, self-fulfillment and autonomy have already been identified throughout chapter 2.1 Background Information to be decisive drivers of (young) talent in choosing their employer.

Bartlett and Ghoshal (2002, p. 36) propose a sense of (organizational) Purpose and Meaning 3 in individual effort to be the main contributors senior management needs to consider in order to attract talented workers. This organizational context is meant to combine the overall objectives of the organization with their efforts in order to create a community that employees desire to be a part of (Ibid.). The authors highlight how the role of the organization exceeds mere profit maximization by depicting a social entity that enables people to find meaningful purpose in their work and make an impact that is aligned with their interests and dreams (Ibid., p. 40). Ulrich (2007, pp. 32-33) picks up this thought and develops it further by introducing an equation that resembles the three fundamentals in attracting, upgrading, and retaining talent:

Abbildung in dieser Leseprobe nicht enthalten

By making the terms multiplicative, any non-existence of one factor will diminish the efforts of the others, i.e. unless employees are given the opportunity to find meaning and purpose in their work (Contribution), their willingness (Commitment) to harness their sought-for skills and abilities (Competence) will fade (Ibid.). Ulrich (2007, pp. 32-33) further stresses that a company offering its employees i.a. a sense of purpose as well as opportunities for development and impact will increase their commitment to the firm. Beechler and Woodward (2009, p. 274&279) use above equation to extend the definition of a compelling employee value proposition to include the aspect of meaningful work and further define the scope of the War for Talent to not only attract, motivate, and retain highly competent and committed individuals, but also those “. . . who can find meaning and purpose in their work” (Ibid., p. 274). Furthermore, and as it will be argued later (cf. 4 A Framework to Foster Intrinsic Motivation), meaningfulness in work and working could in fact also constitute a key driver of intrinsic motivation, ultimately leading to strategic competitive advantage (cf. 3 Implications for Strategic Management). A number of studies conducted on the wants of the future workforce corroborates these considerations. For instance, 72% of students and around 53% of workers surveyed by Zukin and Szeltner (2012, pp. 15-16) state that being able to make an impact through their job is a very important to essential life goal for them, whereas the Deloitte Touche Tohmatsu Limited (2015) Millennial Survey reveals that 60% of Millennials chose their current employer due to a sense of purpose. The Universum 2017 study finds that 50% of their 80,000 student participants see being dedicated to a cause or serving the greater good as one of their most important career goals (Universum Global, 2017, p. 10). Furthermore, Barck (2017) highlights purposeful work to be the most sought for characteristic in employers in aforementioned Universum study. Some companies seem to have already understood the relationship between meaningful work and talent acquisition. Table 1 depicts a selection of explicit purpose statements, mission descriptions, and slogans found on company websites, most likely aimed at motivating their employees beyond remuneration and increasing the attractiveness of the firm’s image:

Abbildung in dieser Leseprobe nicht enthalten

Table 1: Selected Company Purpose Statements, Mission and Slogans


1 Used to hint at further literature which has not been considered directly for the argumentation; used to refer to previous/subsequent chapters of this thesis.

2 Used to refer to the exact same source that was last mentioned (including pages, if not other stated).

3 Purpose and Meaning are often used synonymously in the literature; a differentiation of some sorts will be made later throughout chapter 4 A Framework to Foster Intrinsic Motivation.

Excerpt out of 76 pages


The Art of War for Talent. How Companies Can Gain a Competitive Advantage by Fostering a Culture of Intrinsic Motivation and Meaningful Work
Technical University of Munich  (TUM School of Management, Chair for Management Accounting)
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ISBN (eBook)
ISBN (Book)
intrinsic motivation, meaningful work, strategic competitive advantage, war for talent
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Niklas Baier (Author), 2019, The Art of War for Talent. How Companies Can Gain a Competitive Advantage by Fostering a Culture of Intrinsic Motivation and Meaningful Work, Munich, GRIN Verlag,


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