The Missing Link

Yes, there is a connection between HR and SCM. Find out what it is

You may be thinking: “What does supply chain management (SCM) have to do with Human Resource (HR)?” The answer to this is simple and it boils down to an age-old problem of talent management. As first suggested by Peter Capelli (2008) in his book, Talent on Demand: Managing Talent in an Age of Uncertainty, failing to manage your organization’s talent needs is the equivalent of fai-ling to manage your supply chain. Supply chain managers ask questions like: ‘Do we have the right parts in stock?’, ‘Do we know where to get parts when we need them?’, and ‘Does it cost a lot of money to do inventory?’ These questions are just as important to companies that are trying to manage their talent needs. That is, the principles of SCM can be applied to talent management.

FACTORING IN COST AND RESOURCES

HR must fight for its place in the boardroom. It is essential now that HR strategies remain in line with business strategies. When considering talent management, cost and resources must remain the focus. Supply chain managers focus on these factors all the time. Managing supply chains is about managing uncertainty and variability. This uncertainty can also be found in the HR department. It has become essential for organizations to adapt to the changing demands of the market, which requires a dynamic strategic planning and a flexible workforce. Thus, the skills of the workforce must be high level and flexible in order to meet these demands. For employees, a narrow set of skills and a single career path are no longer sustainable in today' s business world, and for organizations, it is essential that they possess the most talented personnel in order to meet the market demands.

The term "talent management" simply means trying to forecast what we are going to need, and then planning to meet that need," Cappelli notes. The definition of SCM is essentially the same: "We think that demand for our products next year is going to be ‘X.’ How do we organize internally to meet that demand?"

Capelli highlights that inventory is an underlying issue in SCM. In terms of talent management, this comes into play when employers talk about having a deep pool of talent. Capelli states: "If you think about it in supply chain terms, a deep [pool] is the equivalent of lots of invent ory, which sounds terrible when we think of products. In fact, it is worse when we talk about talent. That is because an inventory of talent is much more costly than an inventory of widgets. Talent does not sit on the shelf like widgets do. You have to keep paying talent. 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."

THE WAR ON TALENT STRATEGIES

It is therefore essential that organizations have effective talent management practice in order to thrive in today’s business environment. There are three key strategies to remain ahead in the war on talent:

Recruitment. Organizations need to ensure that they are hiring talented personnel with the underlying attributes, qualities, and competencies to add value to the business.

Development. They need to ensure that talented personnel are developed and trained in skills that will meet the market demands, and this must be continuing as market demands change.

Retention. They need to ensure that measures are taken so that talented personnel are retained within the company,

During the recruitment stage, there are several issues to consider. It is important to recruit individuals with the right competencies that are aligned with future objectives. Many organizations found that advertising a job often results in mismatched applicants. Therefore, competency modelling has become a tool increasingly used in recruitment processes. To identify the right competencies at interviews, we can ask behavioral questions rather than hypothetical questions. For example, “how did you deal with X?” rather than “how would you deal with X?” Assessment centers are now increasingly being used as they allow employers to assess and review exactly how an individual would behave in given tasks that measure competencies associated with the job.

Many of us have preconceived ideas of where talent comes from. For example, a good education or a privileged upbringing can lead us to believe that they are the origins of talent. However, when recruiting, we need to be more open than this and prevent our preconceived ideas to influence our judgment. Talent is something that can remain hidden in the wrong role, but it can also be transferable into the right role. With talent pools decreasing, we need to start thinking laterally about our sources of talent. We also need to be open to a more diverse workforce. Talent comes in all shapes and sizes and is not determined by age, gender, ethnicity or disability.

A BIGGER POOL

To encourage wider recruitment of talented personnel, we need to broaden the talent pools further on a global scale. Organizations such as Infosys and Hewlett Packard are already setting up research centers in countries such as India and China to broaden their talent pools. However, broadening talent pools on a global scale may require immigration of employees, or virtual working flexibility. But, due to recent advances in technology, recruitment via talent pools on a global scale could be the way forward.

Once an organization has recruited its personnel, it is important that development activity links strategically with the selection and promotion decisions. With decreasing talent pools, it may mean that an organization has to take on someone less capable (who lacks skills and experience), but is a good learner – meaning, they will respond to development opportunities and have the potential to become talented personnel.

However, organizations should be careful not to make false assumptions about individual potential. By offering opportunities to everyone, it may be those that you least expect who embrace the opportunity and flourish.

When managing succession, organizations need to ensure that all or most personnel are developed in order to have the necessary skills and competencies to succeed managers when they leave. Organizations can go so far as to prepare all staff to be leaders. Th is allows the organization to be more strategic in who it chooses to succeed managers in particular departments.

People often welcome support in making their career choices. It can be helpful to encourage younger employees to broaden their perspective of possible career choices and future roles, like opening career paths and moving upwards and sideways. We cannot assume that senior roles will always remain the same, and organizations need to be prepared for these changes.

Ideally, personnel should be allowed to grow and develop into a role that suits them and that capitalizes on their competencies. Organizations can go further to develop the skills of their personnel by enlarging and enriching the job roles. They can increase the number of roles, responsibilities, and level of autonomy to make them more well-rounded and competent employees. By broadening the skills and development of its personnel, it allows

The last thing an organization wants is to invest time and money on forming and developing their own talent base, only for those individuals to leave to join its competitors. Th erefore, organizations need to think about how to retain their talent.

Culture fit is an important issue to consider. Many organizations have found that simply filling their organization with the best and brightest performers leads to corruption, malpractice, and illegal activities when the individuals did not fit the organizational culture and values. Individuals who fit into the culture are more likely to be dedicated to the organization and work hard to perform. You will actually see personnel realizing their full potential. It also creates a sense of “organizational citizenship” where people feel committed and will “go the extra mile” for the greater good of the organization.

The way in which organizations are structured and designed can have an impact on retention. Individuals need to be able to develop and move ahead. If talented personnel are unable to see a development pathway, they are more likely to progress their career with another organization. Organizations also need to be designed in such a way that allows talented personnel to have a level of autonomy and empowerment over their work. This may mean moving away from hierarchical structures toward a flatter organizational structure.

Financial rewards such as salary promotion and bonuses can be beneficial to the satisfaction of talented personnel. However, rewards can be more than financial. Making an individual feel valued for their contributions, allowing them more responsibility, praising their eff orts, and providing social support, can all give messages that the organization truly values that individual as a member. Th ese psychological rewards can also add to satisfaction and prevent talented personnel from leaving.

Organizations need to create a working environment and culture where the positive aspects of working outweigh the pulling factors that tempt personnel to move to alternative organizations. The more satisfi ed talented personnel are with the organization and their job, the less inclined they are to leave.

When it comes to managing talent, there is no “one size fi ts all” approach. To be successful, each organization needs to consider how they can use recruitment, development, and retention strategies to eff ectively manage their talent while ensuring that these strategies fall in line with their overall business strategy and organizational objectives. Just like SCM, there are oft en many choices, trade-offs, and strategic conversations made that are appropriate to the organizational culture and future business objectives.

MIKE A. POTTER is an International Management Development trainer and HR consultant and has been CEO of MPA Consulting and Michael A. Potter International, Manchester UK for the last 15 years. If you would like to discuss EVP’s or traditional training methods more with Michael, please email info@map-int.com or visit www.map-int.com.