From the May 2004 issue of Entrepreneur

Do you know how talented your employees really are? Every employee has hidden talents that could take your company from good to great. "People come with more talent than the job they're hired for," says Robert Kelley, a professor of management at Carnegie Mellon University in Pittsburgh.

Tapping the talent zeitgeist is more important than ever before. Employees want their hidden talents to be recognized and developed: When Indianapolis loyalty research firm Walker Information Inc. surveyed 2,400 employees last year, it found two-thirds wanted to leave their companies because there weren't enough development opportunities.

While skills and knowledge can be learned, talent is instinctive. An administrative assistant could have a knack for negotiation, or an accountant a penchant for spotting industry trends. Employees may also have "black market" talents-like photography or musical ability-that don't seem relevant to the workplace but can "make new things happen" if used strategically, says David Magellan Horth, program manager and a senior faculty member at the Center for Creative Leadership, a leadership training and research firm in Greensboro, North Carolina. He points to one manager who opened a meeting by playing his cello to get employees thinking. It worked.

Employees rise above the rest once they harness their natural talents, says Kenneth A. Tucker, seminar leader and managing consultant for The Gallup Organization in Washington, DC, and co-author of Animals, Inc.: A Business Parable for the 21st Century (Warner Books). His research has found that an employee using his or her true talents has more than twice the productivity of a person who doesn't have a natural talent for doing the same job. And a company rockets to the next level once each employee applies his or her talents. "Tiger Woods redefined our reality of what great golf looks like," Tucker says. "Talent will redefine the reality of your organization."

As an entrepreneurial company, you have a size advantage in unleashing talent. But it's hard for most managers to think beyond meeting quarterly projections and enforcing job descriptions. "It's not that they tell [employees] they can't use their talents," Kelley says. "[Managers] don't even think of it as a possibility."

You and your managers can master the possibilities with strategic thinking. Start by making sure your recruiting tools are centered on developing talent. "When you sit down for an interview, is the discussion and conversation about talent?" Tucker says. "It has to come down to individual employee performance."

Use one-on-ones to find out what drives each employee. What are their hobbies and interests, and how do they feel they're being underutilized at work? Contemplate how you can incorporate their hidden talents, and phase in change slowly. You might let the receptionist spend two hours a week on a marketing project, for example, or allow a software engineer interested in sales to sit in on an occasional sales meeting.

Alliant Technologies LLC, a 5-year-old IT engineering and consulting company in Morristown, New Jersey, uses a survey tool called the Predictive Index (published by PI Worldwide of Wellesley, Massachusetts) to assess employee workstyles. When the 80-employee company tested workers in 2003, it found some people weren't using their true talents. One engineer had an ability for sales, and another entry-level employee had a gift for detail-oriented projects. The company is having the engineer research market trends, and the entry-level employee is now in an administrative function. "We identified strengths and were able to move people into more effective positions," says founder and CEO Bruce Flitcroft, 38. Developing talent isn't hurting Alliant: Sales grew 34 percent in 2003 to $25 million.

Company meetings can also unearth hidden talents. Begin a discussion where employees can offer solutions to problems. You might be surprised what people know. "It's an opportunity for employees to unleash their talents," Kelley says.

What you do now will put your company ahead as talent wars heat up again, because the best firms will be consistent about identifying talent and putting it in the right place. "This is not a quick fix," says Tucker. "It's a cultural revamping."

Flitcroft's advice? Developing hidden talent takes time, but the results can be dramatic. "Of our 20 original [employees], 18 are still here," he says. "That's a damn good sign."