Wednesday, June 25, 2008

'Just in Time' people management

Kanishka Ghosh

Managing talent in a global organisation is getting more complex and demanding than in their domestic counterparts. This is partly due to the fact that multinationals need to share resources and knowledge across a number of business units and countries.

However, organisations that have the courage to step forward and take talent seriously can deliver greater shareholder value and start to realise the promise of competitive advantage through better talent.

Findings in a research study by the global consultancy McKinsey support the contention that there exists a very strong correlation between a company's financial performance, as measured by profit per employee, and global talent management practices, which can be defined in terms of the following 10 dimensions:

1. ensuring global consistency in management processes;

2. achieving cultural diversity in global setting;

3. developing and managing global leaders;

4. translating human-resources information into action;

5. relocating work to locations with good supply of talent;

6. shaping the corporate HR agenda for managing global talent;

7. creating internal talent pools;

8. managing overseas assignments;

9. sourcing and recruiting global talent;

10. responding to changes in global talent market.

This explains why the war for management talent is intensifying dramatically. And improving the strength of the talent pool has increasingly become a priority of senior leaders. But, quite paradoxically, most senior leaders haven't been quite as successful in aligning the talent management strategies with their organisations business strategies.

As a panacea to the problem of finding and retaining the right amount of talent at the right time as envisaged by the business needs, Prof Peter Cappelli of Pennsylvania's Wharton School offers a fresh perspective by looking at talent issues through a supply-chain lens.

According to Prof Cappelli, "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."

In his recent book, Talent on Demand: Managing Talent in an Age of Uncertainty, Prof Cappelli has defined the term "talent management" which simply means "trying to forecast what we are going to need, and then planning to meet that need", and according to the author, 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 organise internally to meet that demand?" Organisations have made phenomenal progress in supply chain management over the past couple of decades. Using IT, companies including Dell, WalMart and UPS have streamlined their supply chains. But for some reason talent management has not received the same level of attention by any organisation.

According to the author, part of the problem is that many companies are locked into an older paradigm based on the assumption that they can accurately meet their talent needs through static forecasting and planning models, even though the global marketplace is increasingly unpredictable. Thus, companies can now exploit their understanding of supply chain management and apply it to its talent management.

One of the supply chain practices that Prof Cappelli relates to talent development is shortening the forecasting cycle. It is a well documented fact in supply chain planning that a shorter forecasting cycle leads to a diminished "bullwhip effect" - a major problem organisations encounter with inventory management. Shorter and more frequent dynamic forecasting will lead to "just in time" need for talent. Thus the propensity to mismatch supply and demand for talent can be mitigated.

In conclusion, today's hypercompetitive global environment calls for a fundamentally different paradigm for thinking about talent, which in supply chain terms may be referred to as "just in time" talent management, using the following framework:

A) "Make" and "buy" to manage risk:

- Undershoot your estimates of the talent you need to develop.

- Make up the shortfall with outside hiring.

B) Adapt to the uncertainty in demand for talent:

- Break development programmes into shorter units for more flexibility.

- Create an organisation wide talent pool to be allocated as needed.

C) Improve Return on Investment (ROI) in development:

- Ask employees to invest their own time in stretch assignments.

- Maintain relationships with former employees who may return someday.

D) Protect your investment by balancing employee/employer interests:

- Have employees share in advancement decisions.

Kanishka Ghosh is joint ventures operations manager with Thai Summit Group.

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