Tuesday, June 24, 2008

Operations Principles Applied to Talent Management

Talent Management for the Twenty-First Century.
By: Cappelli, Peter,
Harvard Business Review,
March 2008, Vol. 86, Issue 3

Operations Principles Applied to Talent Management

A supply chain perspective on talent management relies on four principles, two that address the risks in estimating demand and two that address the uncertainty of supply.

Make and Buy to Manage Risk
A deep bench of talent is expensive, so companies should undershoot their estimates of what will be needed and plan to hire from outside to make up for any shortfall. Some positions may be easier to fill from outside than others, so firms should be thoughtful about where they put precious resources in development: Talent management is an investment, not an entitlement.

Adapt to the Uncertainty in Talent Demand
Uncertainty in demand is a given, and smart companies find ways to adapt to it. One approach is to break up development programs into shorter units: Rather than put management trainees through a three-year functional program, for instance, 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. Another option is to create an organization-wide talent pool that can be allocated among business units as the need arises.

Improve the Return on Investment in Developing Employees
One way to improve the payoff is to get employees to share in the costs of development. That might mean asking them to take on additional stretch assignments on a volunteer basis. Another approach is to maintain relationships with former employees in the hope that they may return someday, bringing back your investment in their skills.

Preserve the Investment by Balancing Employee-Employer Interests
Arguably, the main reason good employees leave an organization is that they find better opportunities elsewhere. This makes talent development a perishable commodity. The key to preserving your investment in development efforts as long as possible is to balance the interests of employees and employer by having them share in advancement decisions.

Peter Cappelli (cappelli@wharton.upenn.edu) is the George W. Taylor Professor of Management and the director of the Center for Human Resources at the University of Pennsylvania's Wharton School in Philadelphia. He is the author of several HBR articles and the book Talent on Demand, forthcoming from Harvard Business School Press, which further develops the ideas presented in this article.

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