Talent on Demand: Supply Chain Management Principles Are The Future of Talent Management

This article, exclusive to Human Resources iQ, draws on research highlighted in the whitepaper "Talent Management in the Twenty-First Century." You can download the free whitepaper, courtesy Human Resources iQ and SAP, here.

Failures in talent management are an ongoing source of pain for executives in modern organizations. Over the past generation, talent management practices, especially in the United States, have by and large been dysfunctional, leading corporations to lurch from surpluses of talent to shortfalls to surpluses and back again. It’s time for a fundamentally new approach to talent management that takes into account the great uncertainty businesses face today."

In order for the human resources function to earn that proverbial "seat at the table," the HR partners in an organization must learn to adopt the language that the C-suite and key stakeholders best understand.

"Just In Time" Talent Management:

Forecasting talent demand, according to Peter Cappelli, is not dissimilar from forecasting product demand. Think about it: in supply chain management, a manufacturer will evaluate the cheapest and most expedient ways to construct the product; certain parts of the process are outsourced; and fast delivery is top of mind. Liken these principles, respectively, to cost-effective talent development; hiring talent from outside of the organization; and succession planning.

Cappelli presents four principles adapted from supply chain management, addressing issues on both estimating demand and the uncertainty of the supply side.

Make and Buy to Manage Risk: Companies should underestimate their talent needs. Should there be any deficit, they can plan to hire from outside of the organization. Cappelli warns companies to bear in mind which positions are most difficult to fill from the outside, so firms should be strategic about which resources are allocated for development.

Adapt to the Uncertainty in Talent Demand: Demand is highly unpredictable. Cappelli points out that the most successful companies have a plan to adapt to fluctuating demand. This can be achieved by breaking up development into smaller units.

"Rather than put management trainees through a three-year functional program, for instance," Cappelli suggests, "bring employees from all the functions together in an 18-month course that teaches general management skills, and then send them back to their functions to specialize."
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Improve the Return on Investment in Developing Employees: Get employees to share the cost of their development! This could include volunteer stretch assignments, or keeping in touch with former employees to preserve the relationship-- should they decide to return to your company, thus bringing back the capital you have invested in their development.

Preserve the Investment by Balancing Employer-Employee Interests: Cappelli argues that good employees generally leave an organization for better opportunities. Talent development becomes a "perishable commodity." Preserve your investment by balancing the interests of both employer and employee by having them each share in advancement decisions.

The problem with modern development practices lies in an imbalance and conflicting desires of employer/employee. The "talent-on-demand" model presented by Cappelli allows employers to leverage their talent needs while recovering their development investments.