Book Review of : 'TALENT ON DEMAND': by Peter Cappelli, Head of ‘Wharton Centre Of Human Resources’

'TALENT ON DEMAND'
Book Written by: Peter Cappelli, Head of ‘Wharton Centre Of Human Resources’
Published: February 21, 2008 in India Knowledge@Wharton


Peter Cappelli, establishing analogy of supply chain management with that of HR practices,says "Managing supply chains is about managing uncertainty and variability. This same uncertainty exists inside companies with regard to talent development. Companies rarely know what they will be building five years out and what skills they will need to make that happen; they also don't know if the people they have in their pipelines are going to be around."

The term "talent management" simply means "trying to forecast what we are going to need, and then planning to meet that need," Cappelli notes. The definition of supply chain management is essentially the same: "We think that demand for our products next year is going to be 'X'. How do we organize internally to meet that demand?"
Underlying supply chain questions is the issue of inventory, which in talent management terms often comes up when employers talk about having a "deep bench" of talent. Talent doesn't sit on the shelf like widgets do. You have to keep paying talent. And the best way to have a piece of talent walk away is to tell it to sit on the shelf and wait for opportunity. Anyone who is ambitious will leave, and then Company looses the big upfront investment.

The next challenge is to reduce the odds of being wrong. That points to another technique from operations research -- the portfolio approach, whose goal is to minimize the variability that occurs when different markets are headed in different directions. In the financial world, investors create a portfolio of diverse investments where some are likely to be up when others are down in order to reduce their overall risk exposure. Applied to talent management, the concept means balancing out the kinds of errors that might occur in employing employees in different divisions, but the bottleneck is: the companies have decentralized so much that they stopped even thinking about how to coordinate talent

The organization shouldn't make hires at once. The advantage of staggering the hires is that the company then needs only half the number of training positions and, more important, can adjust the amount of hiring in the latter period to changes in demand.
Other operations research practices that Cappelli relates to talent development include shortening the forecasting cycle, reorganizing the delivery of development programs to improve responsiveness, and working out "queueing problems." Queueing problems occur in situations where, for example, employees are waiting for rotational assignments but can't get them because the incumbents have no vacancies to move into -- the result of a business downturn, change in assignment length or a product redesign, for example. "The analogy in manufacturing is an 'unbalanced [assembly] line,' in which inventory builds up behind the slower-moving station, or in this case, the assignment that takes longer to complete."


Many of the so-called new ideas in talent management now -- like 360-degree feedback, assessment centers, job rotation and especially long-term succession planning -- were common in the heyday of big corporations and stable growth that followed World War II.
Companies are left facing a dilemma: On the one hand, it's hard to get a payback from investing in talent development when priorities suddenly shift and employees change jobs every few years instead of once or twice a career. But doing no internal development and relying only on outside hiring is also problematic since it leaves the employer vulnerable to the whims of the labor market.

In his book, Cappelli cites the talent management processes at a number of companies, including Unilever, IBM, General Electric, EDS, Dow, Capital One, Citibank, Corning, Johnson & Johnson and Bear Stearns, to name a few.

At Unilever, New hires were given extensive training, including job rotation, and they were encouraged to compete for important positions. But after 2000, Unilever turned into a flatter organization, demand for its products slowed and there were fewer opportunities for executives to advance within the company. The company was faced with a surplus of managerial talent Reluctant to institute layoffs, Unilever transferred most of these managers to Foreign Operations.

During the IT downturn in 2001 and after, Cisco offered a "voluntary sabbatical" to its employees in which the company agreed to pay one-third of their salaries while they spent time working at nonprofit organizations." Deloitte tries to keep former employees of Deloitte & Touche plugged in to the company for as long as five years after they leave (often for family reasons), provided they don't take a new job. Its Personal Pursuits program covers certification and skills programs fees to help them stay current, and offers access to company career and work-life programs, among other things. The idea in both cases is to keep employees "on the hook" with the company so that they can be brought back to work
GE possessed the ability to make matches between people and opportunities -- but other components aren't as efficient, such as the goal of having deep benches of talent. IBM no longer guarantees people lifetime employment and they do some amount of outside hiring, but they still direct the careers of their managers from headquarters.

IBM had 15-year business plans that were pretty accurate. Companies in the defense industry had 10-year plans. Demand can change within a year. Authority and accountability are pushed onto individuals and not systems, and career mobility across companies is high. Employers must adapt to that reality.