How To Get the Talent Your Company Needs, Part I

With recession looming, it must be time to talk about how to hire people.

Sure, things are uncertain, but they're always uncertain in the modern economy. That's the theme of Peter Cappelli's "Talent on Demand: Managing Talent in an Age of Uncertainty." Cappelli, a professor at the Wharton School, argues that companies have no idea what to do about this uncertainty. They've stopped developing internal talent, because it costs a lot to do, and people tend to jump ship. And some two-thirds of companies no longer try to plan for their talent needs. Thus every person who quits is a calamity, every new skill needed presents a crisis.

"The only good news is that most employers are essentially facing the talent management challenge with a clean slate: they have little idea how to address the challenge. Unfortunately, the advice they are getting is to return to the practices of the 1950s--"

forced ranking systems;
360 degree feedback;
assessment centers;
long-term succession plans.

Why would anyone think these ideas work in today's economy? Obviously, the business environment of the 1950s is gone. Companies no longer know what they'll be making in ten years, and thus have no clue what kind of people they should be hiring, or how to develop the people they have. Those people will probably go elsewhere. Hiring from outside is the default, but often companies need people need people who understand the organization's culture, or at least know where the bones are buried.

Cappelli spends the first part of the book building a picture of how management evolved over the last century, culminating in 1950s-era employee development and career management as a kind of gold standard. It was, for that era, where talent tended not to change jobs and companies could play chess with employees' careers.

This section includes a nice, short history of modern HR management, which features quotes like this one about the bad old days: "When a great president retires, a vacuum is created. And into that vacuum is swept the nearest guy who has not had a coronary." (from Ben Moreell, chairman of the Jones and Laughlin Steel Corp. in 1952). There are capsules on the rise of employee development at General Electric, AT&T and IBM, and how it fell apart at those latter two companies.

Cappelli, who is also a research associate at the National Bureau of Economic Research, peppers this section of the book with statistics showing just how different today's workplace looks from that of the 1950s and 1960s.

All of this is to make us long for a new model of developing talent, which of course he has. He says companies need look no further than operations research and supply chain management. He argues that forecasting product demand is similar to forecasting talent needs, looking at the most efficient ways to make something parallels developing talent, outsourcing production resembles outside hiring, and product delivery is like planning for succession.

Can processes for developing and delivering products actually work for people? He lays out his model in part two of this book, which I'll review next.

UPDATE: The second and final part of my review.