People Chain Management

The latest Knowledge@Wharton has an intriguing article titled Talent on Demand: Applying Supply Chain Management to People.  As the author notes,

Supply chain managers "ask questions like, ‘Do we have the right parts in stock?’ ‘Do we know where to get these parts when we need them?’ and ‘Does it cost a lot of money to carry inventory?’ These questions are just as relevant to companies that are trying to manage their talent needs," he says. In other words, the principles of supply chain management, with its emphasis on just-in-time manufacturing, can be applied to talent management.

Of course we immediately note that a major B-school has just invoked "just-in-time" instead of "overly complex ERP system" therefore we are compelled to read further.

Underlying supply chain questions is the issue of inventory, which in talent management terms often comes up when employers talk about having a "deep bench" of talent. "You hear that phrase a lot — ‘we have a deep bench,’ or ‘we have a big talent pipeline’ — and it is said with pride," Cappelli says. "Yet if you think about it in supply chain terms, a deep bench is the equivalent of lots of inventory, which- sounds terrible when we think of products. In fact, it is worse when we talk about talent. That’s because an inventory of talent is much more costly than an inventory of widgets. Talent doesn’t sit on the shelf like widgets do. You have to keep paying talent. And the best way to have a piece of talent walk away is to tell it to sit on the shelf and wait for opportunity. Anyone who is ambitious will leave, and then you will lose the big upfront investment you made in that person."

But that is based on the presumption that talent is still a cost… a figment of traditional accounting methods.  To use some of the phraseology of that snippet, talent shouldn’t sit on the shelf like widgets do.  Talent is an asset that should be leveraged; if it sits on a shelf it becomes a cost.  That is lean leadership.

Reducing bottlenecks is another supply chain concept relevant to talent-on-demand. The CIA had this problem when it faced a two-year waiting list to get people through security clearances, according to Cappelli. "New hires were stacked up with nothing to do, exactly the way goods can get stacked up in an assembly line. It’s important to remember that the assembly line can move only as fast as the slowest part."

Which is tied to batch thinking, perhaps driven by an anomaly that could be called "batch supply?"

Cappelli says. "You see this in many companies, including those that hire people only once a year, like college grads. Say they hire 50 graduates in June into training slots. At the end of the year, they have 50 people expecting to move from the training program into more permanent positions. Why doesn’t the employer stagger the process and hire people twice a year instead of once? Not all college grads prefer to start work in June; some want to travel and start later in the year." The advantage of staggering the hires is that the company then needs only half the number of training positions and, more important, can adjust the amount of hiring in the latter period to changes in demand.

Capelli then goes on to describe some of the more innovative talent management practices at major corporations.  Just a few examples:

He describes the sophisticated forecasting model at Dow, which incorporates traditional statistical-based forecasting with such factors as the political and business climate in each of Dow’s countries of operation, changes in labor and employment legislation, and business plans for the operating units.

Chubb "opened up its internal labor market by eliminating both job tenure and supervisor approval as requirements for changing jobs within the company."

During the IT downturn in 2001 and after, Cisco offered a "voluntary sabbatical" to its employees in which the company agreed to pay one-third of their salaries while they spent time working at nonprofit organizations."

The concept of talent management being analogous to supply chain management is an interesting one.  Just remember that talent is an asset, not a cost.