In today’s uncertain world, managers can’t forecast their business needs accurately. In such a scenario, talent management becomes a problem but Prof Peter Cappelli offers ideas and tools you’ll need, to match the supply of talent to your demand for it today and tomorrow.
Is finding (and retaining) talent a challenge for your company? If so, you’re not alone. In fact, if recent corporate surveys are any indicators, “skills shortage and talent loss” have been listed among the biggest concerns of the top Indian CEOs for 2016, the year which, they feel, might “just make or break” their businesses. However, while acknowledging it to be an “extraordinary challenge,” they’re also admitting that, so far, they haven’t taken any steps to address this issue.
To know how really difficult is the future talent management scenario and what are the solutions, if any, Corporate Citizen spoke to Prof Peter Cappelli, the George W Taylor Professor of Management and director of the Center for Human Resources at the Wharton School of the University of Pennsylvania in Philadelphia, who is also recognized the world over as an authority on human capital. Having conducted a day-long Masterclass Workshop in Dubai for over 200 delegates at the recently concluded Asia HRD Congress 2015 on Talent on Demand in Asia: Building Capability Quickly, he spoke candidly about why finding, retaining and developing talent is one of the toughest challenges HR leaders face in the New Year. Excerpts:
Most people think of talent as something referred for managerial jobs only. But that is not correct. Any positions that are hard to fill or crucial to the growth of an organization should be counted as talent.
No, it is not. A company says, here is what we need. Here are the kind of things we think we need and that’s what we are interested in. We are not interested in whether you can paint or whether you can do sculpting or stuff like that.
We are interested in C++ programming; we are interested in your ability to manage people. These are specific things that they need. So, it is not subjective at all. You may talk differently about talent or other aspects of talent, that’s fine, but in the context of business, it has a definite meaning. Every company clearly says here is what we mean by that.
We are interested in C++ programming; we are interested in your ability to manage people. These are specific things that they need. So, it is not subjective at all. You may talk differently about talent or other aspects of talent, that’s fine, but in the context of business, it has a definite meaning. Every company clearly says here is what we mean by that.
In simple terms, it means, anticipating what your needs for talent are going to be and setting out some plan to make sure that you meet those demands. Getting the right people with the right skills into the right jobs is the basic people management challenge in any organization.
Yes, provided you understand how to explore the economic case for careful talent management. It means taking a sensible decision when you don’t have too much or too little talent and you don’t spend too much on it. So, that’s the challenge and the problem is the uncertainty.
A generation ago, companies would hire very carefully, keeping in mind your long-term value to the company. But today, they think of you for a short term only. They know you’ll leave them, sooner or later. So, that’s the first thing. Secondly, they would provide you all the fundamental skills you would need for your career going forward in that company. So that is become history.
They no longer do any talent management. Very few try to plan for internal succession, which means let’s try to anticipate who will fill each of our jobs in ten years from now. But that’s also attempted rarely.
Today there is no job security and the likelihood of lifetime employment with one company is a thing of the past. Moreover, in open market economies, why would you be investing in talented people who, you know, will soon leave your firm for a competitor
Interestingly, while most CEOs acknowledge that finding and retaining talent is becoming a big business challenge for them, yet, to address this concern, most of them are ironically turning to talent management practices that no longer work. As I said earlier, the environment they were tailored to no longer exists. Yet they keep trying those very methods that were practiced in an era when business was very certain, industries were regulated, markets were not very competitive, international competition was practically nil, business demand was very predictable and all talent was internal. But situations have changed now. In today’s uncertain business world, they just can’t forecast their talent needs accurately because there are inevitable leaks in their talent pipeline. Moreover, because of intense competition, there is an obsessive focus also on costs. So, they are going wrong in their strategy, especially when employees they had carefully cultivated over a period of time are leaving their firms openly for a rival. Their internal pipelines for talent are proving misleading because of unpredictable attrition and hence all their talent plans are turning out utterly wrong.
I think a new approach to talent management is needed for two key reasons. On the public policy side, companies are not developing the talent the country needs to stay competitive. On the employer side, they aren’t doing any talent planning, or their planning is wrong, even as their ability to hire on a just-in-time basis is eroding. Employers can’t easily find people out there to poach; it’s an expensive and time-consuming process to even look at.
Right now, most companies are still trying to do some of those things of the past and they’re failing at them, like succession planning, because they plan and then it turns out that their plan goes wrong and it was all waste. Or they are simply relying on hiring. So, whenever someone quits, they run outside and hire somebody to replace him because they have nobody available internally. If they get a new project, they go outside and hire people because they have no other way to do it. They simply hire and so what I’m suggesting is a third way.
The third way is to use techniques that manage uncertainty rather than assuming that you don’t have any which is the old model. Or just raise your hands and react at the last minute every time which is what, at least in the US, most companies are doing. So, what I’m saying is that there is the third way in between. It argues that talent can and should be managed the way the supply chain of raw goods and materials is managed (i.e., managing for both need and uncertainty). It offers three options to the companies Build, Buy and Borrow for getting the talent they require. Build means getting talent through internal development which involves taking a risk. Buy means you hire talent from the outside by paying a premium to reduce the risk and Borrow is nothing but taking the help of contractors and staffing firms. It is truly just-in-time and there is even less uncertainty, even bigger premium.
I would say a common theme runs across many Asian countries but it’s not true for all. Most Asian countries are experiencing pretty fast growth rates and relative shortage of educated and trained workers. Now, that again is not true for every country. If you go to China, for example, they have a surplus of college graduates, now a big one, and in other parts of Asia, they might have higher levels of unemployment. But it is different from what exists in the Europe or the United States which have a surplus of educated and trained people but relatively low growth rate.
On the strength of their quality manpower, a lot of the tech companies are also trying to prove that Indian firms could succeed on the world stage, like the HCL and Infosys. In fact, the HCL has as its mantra with the tag line, “employees first, customer second.
The big companies in India take their human resources very seriously. So, compared to the US companies, they measure more aspects of human resources. They spend more money on training people. They pay more attention to empowering people. Most of them see their employees as assets and not costs to be cut. They think about the psychology of their workers more and they create a sense of meaning for the organization, not just try to make money. Some of them are also trying to achieve some bigger goals and all those things matter a lot. So, I would say they are pretty sophisticated.
The companies of the Tata Group have been particularly good at creating a sense of social purpose in their employees. They also spend a lot of money on the training of their manpower. In the banking sector, companies like the ICICI Bank have been working with a missionary zeal and trying to bank the unbanked. On the strength of their quality manpower, a lot of the tech companies are also trying to prove that Indian firms could succeed on the world stage, like the HCL and Infosys, which are competing internationally. In fact, the HCL has as its mantra with the tag line, “employees first, customer second.” It’s an eye catcher. There are many with a specific social purpose ranging from improving healthcare to getting cell phones to people who don’t have access to latest communication tools, and proving to the international community that Indian companies can lead in IT and telecommunications. I think Indian business leaders must be appreciated because they lead with a sense of social purpose. They are not just after money. In this respect, I think, the CEOs of the Western world can learn some lessons from their Indian counterparts. With the Indian economy all set to grow by 7.5 per cent as it is on the way to even higher growth trajectory, heads of India’s biggest companies have shown that they have a different approach to leadership as compared to their Western counterparts. They seriously invest in their employees’ training & development and having a social purpose also helps them in motivating their workers in achieving the goals of the organization.
No. I don’t know enough about it. I’m not well informed about the Prime Minister Modi but I think the Indian economy is doing very well under his leadership.
Things differ from country to country. While big companies in India seem very sophisticated in this area, their Chinese counterparts, even the larger ones, are not. In the developing countries, which are all over the place, countries with multinational connections have copied a lot from the Western and US models. However, most of their companies are still not very sophisticated. Their HR practices are very administrative and legal. So, it varies country by country and within countries too, they vary a lot.
Yeah, I would say some Indian companies that I mentioned are very good role models and they command respect in their people management, particularly in their training and development which they take very seriously.
How to develop talent cheaply is not easy. Similarly developing quality at low costs is also a pretty huge challenge because everything boils down to money and trying to figure out how to do this cheaply is a tricky job. I think if you go a little deeper, it turns out to be a supply- chain problem. If you go for building talented manpower internally, it looks good because it has the advantage of being cost effective, cheaper, better quality and with a consistent culture. Other option is to buy talent from outside. How much of that should you be buying from the outside which is expensive but fast and how much you will be developing internally? So, you can use these in combinations.
They shouldn’t. In fact, if you think about the consulting firms, they are not spending money on training. They are training people for being trained but not by sitting in a class for doing work. Rather than letting them sit in a classroom for training, they are giving them assignments to go and do the task and learn in the process. So, companies have to devise their own methods to get the work done.
They have to figure out how to put people of the right skills into the right jobs while giving them a say. They also have to put them into jobs where they can easily learn new skills without a lot of training, additional costs and without spending a lot of time. So, figuring all that out would matter a lot in this respect.
It is losing its dynamism. Even after some strong hiring in the last few months and a sinking unemployment rate, the US job market is just not what it used to be.
Job market has improved but only partially. So, if you are looking for jobs in the US, it’s a pretty difficult scenario. If somebody is leaving school and trying for a skilled kind of job, it’s very difficult. If somebody has very specific skills and they’re highly developed, it’s fine. So, it depends, who you are. If you are an investor, it’s terrific. If you’re a manager with specific skills, you’ll be doing fabulous. But if you’re a college graduate trying to find a job, it is terrible.
A generation ago, companies would hire very carefully, keeping in mind, your long-term value to the company. But today, they think of you for a short term only. They know you’ll leave them, sooner or later.
It has affected in a lot of ways. One of them is that it has overwhelmed companies. Because of Internet, companies have made it easy to apply.
So an individual can apply over thousands of jobs. As a result, companies are finding that they have a thousand applicants for every job and they have to process them. Most of the time, they don’t do it very well. They make lots of mistakes on the way and for individuals; they may apply for a thousand of jobs and yet may hear nothing from any one of them. So, the new technologies have complicated the scenario. I don’t think it has made it necessarily any better now.
I think we probably have to remember that in the post-colonial era, these countries were heavily influenced by the socialist philosophy of the Soviet era. So, compared to where they were twenty years ago, they have witnessed an enormous change. I think the big problem in these countries is, they really don’t have much of a private sector. They have got multinational companies who are conducting business directly with their governments or government owned firms. The rest of the family owned companies are not very sophisticated but the big ones among them do have very sophisticated HR departments. Economic liberalization has failed in the Arab World; consequently, they don’t have very sophisticated capitalism here. Instead of ushering in economic dynamism, they are still governed by family owned business empires. But they are slowly changing their practices and moving towards gradual democratic reforms.
I think big Indian companies are very much like the big US companies in managing people and human resources. They are very sophisticated and knowledge-based. Their HR practices are also highly professional and quality-driven. What India lacks is infrastructure. Though the government is implementing various infrastructure projects with renewed zeal lately, there are issues of co-ordination between the Centre and the States. Spending on things like education, and health also needs to go up substantially and government must go for a robust skill-development and vocational training program and provide support systems to the individuals. So, till such times, the Indian companies have to swallow a whole lot of it which they wouldn’t have to do in the West. But the good thing is that Indian corporate leaders are quite capable, sensitive and very nationalist in their approach, so they can take any risk and face any challenge to succeed and contribute in the nation-building.
BY PRADEEP MATHUR
