Peter Cappelli’s presentation at the HCI Summit presented some of his ideas from his book, Talent On Demand. These are his points (apart form where I couldn’t restrain myself anymore). My review is at the end.
Cappelli uses an analogy of an assembly line (getting the right engine and the right drive chain into the right car) for talent management. And just as production has shifted to a just-in-time, supply chain management, pull model, so must talent management: “The push model is broken on the business side so therefore we’ve got to abandon the HR model that supports it”.
Cappelli suggests that the issue with the traditional career model is down to the difference in the value provided to the organisation, and in the cost of compensation and of training and development provided to the employee, over time (see graph).
The first problem here is that other organisations will poach your staff during the period in which their value is higher than their received compensation. The second problem is that the model only works if you can accurately predict how many people you need in the future – and if you don’t know what your business is doing in 6 months time, , if planning is irrelevant and responsiveness is all that counts, how can you predict what talent you need 3 years ahead. This is why, whereas all organisations used to support this model, now it only ‘academy organisations’ which do so.
So whereas it used to be that 9 out of 10 positions were filled through promotion, not 2 out of 3 are filled from outside. This is also why, whilst tenure in firms is down, it’s up in organisations – people don’t get moved about so much any more. And why re-engineering from 1981 was just about taking out the people who were recruited through ineffective planning (I think that last point’s pure rubbish actually).
This means that the key questions for organisations are:
Make or Buy?
Cappelli suggests that most organisations should therefore hire on a just-in-time basis, only bringing in talent when the organisation needs it. You may see inventory as useful in manufacturing but if talent is unused, sitting on the bench, it’s going to leave.
Managing uncertainty, and the costs of being wrong
Deciding whether to make or buy isn’t about long-term forecasting because these are terrible – it’s about simulations. Integrating planning with simulations and clarity in assumptions brings HR into the front of the process not the end of the process. Eg use scenario planning to help hedge bets about the future – to understand whether the 2nd or 3rd most likely outcome will provide something different (if so, the point forecast is useless).
Making development pay off
You can’t develop people because then they’ll be more attractive to competitors (I thought we’d trashed this argument decades ago!). You can’t pay them for training because then you’re rewarding them twice. So you might want to ask employees to cover their own costs of development (yeah right!).
I have to say I’m not convinced.
I certainly don’t think the difference between a pull and push model is the difference which makes the difference between Human Resource and Human Capital Management.
My challenges include:
- Recruiting talent when it is needed is a very reactive approach to something that should be driving organisational success. Organisations doing this are never going to be able to compete on talent vs their more proactive competitors.
- If you’re not paying people what they’re worth in the marketplace, then of course you’ve got problems. This isn’t a problem in the model, it’s poor execution – and lack of alignment between your recruiting and reward strategies.
- Plus you could focus on organisational capability and recruit the people who are core to this. That’ll mean they’ll be more valuable to you than they will to their competition – so there’s even less chance of them being poached.
- What works on the assembly line doesn’t necessarily apply in people management. People aren’t widgets. Excess talent doesn’t just sit on the bench in the manner of excess inventory. Smart organisations and smart people will always be able to figure out value adding activities to undertake.
- In fact, the very best organisations will be doing the very opposite of what Cappelli suggests. This isn’t about being an academy organisation, but truly treating people as sources of competitive success. Taking advantage of this opportunity is about finding the best people and bringing them into an organisation, knowing that they will create advantage for an organisation (eg job sculpting) rather than just plugging them into a particular hole in the organisation.