NEW YORK (FORTUNE) - After 500 years or so the scarcest, most valuable resource in business is no longer financial capital. It's talent.

If you doubt that, just watch how hard companies are battling for the best people. Google hires a top Microsoft executive -- not an unusual event in the tech world -- and Microsoft files a mammoth lawsuit. Nortel Networks hires a former Motorola executive as president, and Motorola declares courtroom war. Yahoo hires a group of computer engineers from a small software firm, which immediately sues.

Top Talent: See 12 top executives on their way to the corner office.

The stakes are getting higher. Why now? After all, the law of markets says that prices go down when supply goes up, and the supply of talent is emphatically rising. U.S. business schools turn out more MBAs every year -- about 130,000 in 2005.

More broadly, the global talent supply is exploding as China, India, Russia and other places wholeheartedly join the world economy. With two billion or three billion new participants in global capitalism, how could top business talent possibly be scarcer and more valuable than ever?

The answer is that even amid today's massive new supplies of talent, there isn't nearly enough of the very best stuff. Even in China, where you can hire factory workers by the million, companies can't find enough managers. "They're constantly getting stolen away," says Tom Johnson, former CEO of Chesapeake Corp., a packaging maker with a plant in China. "Labor is abundant, but management is scarce."

The most valued traits in managers, especially if they're approaching the highest levels, are not entirely what they were five or ten years ago. Obviously they still have to deliver knockout results. It's how they do it that's changing.

Tom Neff, the SpencerStuart headhunter who is one of the world's top CEO recruiters, says, "The style for running a company is different from what it used to be. Companies don't want dictators, kings, or emperors." Instead of someone who gives orders, they want someone who asks probing questions that force the team to think and find the right answers -- "a subtle technique," Neff says.

Reinforcing that view is a new survey from Right Management Consultants, a major outplacement firm. It finds that the No. 1 skill companies seek in managers is "ability to motivate and engage others." Ranking a close second is ability to communicate, a trait Neff's clients also increasingly want.

How many people with those qualities are you likely to find if you just go out looking? The depressing answer -- not many -- is why many companies are getting serious about growing their own leaders. In a world where top managers can cost as much as top shortstops, a baseball analogy is apt: Companies want to find their future stars in their own farm systems rather than have to buy them from competing teams.

Trouble is, most companies aren't very good at leadership development. "Look at all the companies that just lately have gone outside to find CEOs -- Boeing, Hewlett-Packard twice, Sara Lee, 3M twice. The leadership pipeline is broken," says Noel Tichy, a University of Michigan business school professor and former chief of GE's Crotonville leadership development program.

Those rare companies that are great at it thus end up functioning as virtual CEO factories: think GE, Procter & Gamble and PepsiCo to name a few.

To their credit, companies increasingly realize their pipeline is broken: In that survey from Right, 77 percent of companies say they don't have enough successors to their current senior managers. Yet they have a miserable time doing much about it.

The reason isn't mysterious. At companies that are lousy at leadership development, they think it's HR's job. Successful companies know it's actually the job of all the managers. Sponsorship from the top is key. Not many bosses will match the 70 percent of his time that Jack Welch says he put into development when he was running GE. But at Yum Brands, CEO David Novak runs five workshops a year, part of a long-term talent-building program he's launched. Not many chiefs will match that either.

Even companies with the best intentions often create near-useless development programs that rarely change anyone's behavior. "There's lots of pontificating, but this is hard stuff," says Tichy. "When a company says it's getting serious about management development, I say great -- just let me see the CEO's calendar."

Read how David Calhoun is making a name for himself at GE...plus, other top leaders.

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