Talent on Demand: M

anaging

Talent in an Uncertain Age

Pet

er C

appe

lliP

rofe

ssor

and

Dire

ctor

Cen

ter

for

Hum

an R

esou

rces

T

he W

hart

on S

choo

l

What is Talent Management?

Why should we care about it?

�T

he is

sue

is r

esou

rces

.�M

atch

ing

supp

ly to

dem

and:

�T

he s

uppl

y ch

ain

anal

ogy

–

Two Options for Getting Human Capital -

�In

the

trad

ition

al m

odel

, sup

ply

mea

nt in

tern

al

deve

lopm

ent

�U

p-fr

ont i

nves

tmen

t in

can

dida

tes,

rec

oupe

d ov

er

time

thro

ugh

impr

oved

per

form

ance

�C

an m

ake

mon

ey t

his

way

�C

an a

lso

lose

mon

ey if

lose

the

inve

stm

ent

�O

utsi

de h

iring

, pay

as

you

go�

Can

’t ea

rn a

ret

urn

or b

e a

sour

ce o

f adv

anta

ge

Val

ue

Tim

e

$

The rise of the great corporate career

Different practices made sense at different times

�O

pen

mar

kets

in th

e ea

rly y

ears

�T

he R

ise

of th

e P

lann

ing

App

roac

h

�19

50s-

’60s

ave

rage

For

tune

500

exe

c ha

d be

en w

ith th

eir

com

pany

24

year

s

�E

ngin

eers

and

“bl

ocke

d” te

chni

cal c

aree

r pa

ths

�T

he ty

pica

l car

eer

path

…

�12

-18m

o tr

aini

ng

�18

-21

mon

th jo

b ro

tatio

n

�“H

i pot

entia

l” pr

ogra

m –

acce

lera

ted

prom

otio

ns

�75

% e

xecs

had

> 5

yrs

on c

orpo

rate

sta

ff

�40

% e

xecs

beg

an in

mar

ketin

g/sa

les

�D

etai

led

wor

kfor

ce a

nd s

ucce

ssio

n pl

ans

–15

yea

rs o

ut

Which is the Kindergarten Report Card

Which is the Performance Appraisal?

Sys

tem

AR

ank

cand

idat

es o

n a

scal

e of

…V

ery

Sat

isfa

ctor

y –

Sat

isfa

ctor

y –

Uns

atis

fact

ory

•D

epen

dabi

lity

•S

tabi

lity

•Im

agin

atio

n•

Orig

inal

ity•

Sel

f-ex

pres

sion

•H

ealth

and

Vita

lity

•A

bilit

y to

pla

n an

d co

ntro

l•

Coo

pera

tion

Sys

tem

BR

ank

cand

idat

es o

n a

scal

e of

…S

atis

fact

ory

–Im

prov

ing

–N

eeds

Impr

ovem

ent

•C

an b

e de

pend

ed u

pon

•C

ontr

ibut

es to

the

good

wor

k of

oth

ers

•A

ccep

ts a

nd u

ses

criti

cism

•T

hink

s cr

itica

lly•

Sho

ws

initi

ativ

e•

Pla

ns w

ork

wel

l•

Phy

sica

l res

ista

nce

•S

elf-

expr

essi

on•

Cre

ativ

e ab

ility

The internal model breaking up:

Demand is uncertain, people quit

The

not

ion

of a

sec

ure,

long

-ter

m c

aree

r is

har

der

to im

agin

e.P

resi

dent

/CE

O te

nure

was

:10

yrs

in 1

950s

; 5

year

sin

196

0s;

<3 y

rsno

w

CE

O tu

rnov

er (

and

exec

team

) up

53%

sin

ce ’9

5�

Ris

ing

2x a

s fa

st in

UK

and

Eur

ope

as in

US

�F

iring

for

perf

orm

ance

big

gest

cau

se, 2

x as

ret

irem

ent

�54

% V

P v

acan

cies

and

abo

ve h

ave

an o

utsi

de s

earc

h�

Tal

eore

port

s 2/

3rds

of v

acan

cies

now

fille

d fr

om o

utsi

deR

estr

uctu

ring

is n

on-s

top

�A

MA

sur

vey

–49

% h

ave

dow

nsiz

ings

eve

n du

ring

the

“boo

m”

year

s�

For

tune

500

now

em

ploy

½ a

s m

any

as 2

0 ye

ars

ago

�63

per

cent

cut

ting

in o

ne d

ivis

ion

and

expa

ndin

g in

ano

ther

�C

uts

happ

ened

fas

ter

in th

is d

ownt

urn

than

any

tim

e be

fore

�E

mpl

oyee

Ten

ure:

Dow

n w

ith e

mpl

oyer

/ Up

with

occ

upat

ion

Little Sophistication in talent

management now….

�In

the

man

agem

ent r

anks

-20

03 S

HR

M fi

rm

surv

ey –

60%

hav

e no

succ

essi

on p

lann

ing

of a

ny k

ind

�M

ore

than

70%

had

it in

late

197

0s

�In

the

wor

kfor

ce a

s a

who

le -

2004

IPM

A-H

R

surv

ey –

63%

hav

e no

wor

kfor

ce p

lann

ing

of

any

kind

�96

% o

f lar

ge c

ompa

nies

had

a d

edic

ated

pla

nnin

g de

part

men

tin

195

0s!

What changed

on the employee side?

How

did

they

res

pond

to e

nd o

f life

time

empl

oym

ent?

I would change jobs for…

?

I wou

ld le

ave

for…

25%

of W

orke

rs50

% o

f Wor

kers

75%

of W

orke

rs

Uni

tsD

olla

rsU

nits

Dol

lars

Uni

tsD

olla

rs

Sto

ck G

rant

F

ace

Val

ue50

sh

ares

$500

100

shar

es$1

,000

1,00

0 sh

ares

$10,

000

Vac

atio

n D

ays*

7 da

ys$6

5210

day

s$1

,400

15 d

ays

$2,7

69

Bon

us

Opp

ortu

nity

$1

,000

$1,0

00$5

,000

$5,0

00$1

0k$1

0,00

0

Sal

ary

Incr

ease

*10

%$3

,750

20%

$7,5

0035

%$1

5,00

0

Pot

entia

l Sal

ary

in F

ive

Year

s$6

,000

$6,0

00$1

5k$1

5,00

0$3

5k$3

5,00

0

One

-tim

e

Ret

irem

ent

Con

trib

utio

n$5

,000

$5,0

00$2

0K$2

0,00

0$5

0k$5

0,00

0

Ledf

ord,

G.,

& L

ucy,

M.

(200

3).

Th

e re

war

ds

of

wo

rk:

Th

e em

plo

ymen

t dea

l in

a c

han

gin

g e

con

om

y.N

ew Y

ork:

Sib

son

Con

sulti

ng, T

he S

egal

Com

pany

.

Does the Next Generation

Really Have Different

Attitudes Toward Employers?

Wha

t do

they

exp

ect f

rom

jobs

?H

ow s

houl

d w

e m

anag

e th

em?

Characteristics in First Employers*

Please rate the importance of each of the following in choosing a first

employer

�C

halle

ngin

g as

sign

men

ts�

Com

pany

val

ues

bala

nce

betw

een

pers

onal

life

and

car

eer

�C

ompe

titiv

e be

nefit

s�

Com

petit

ive

sala

ry�

Fin

anci

al s

tren

gth

�G

ood

refe

renc

e fo

r m

y fu

ture

car

eer

�H

igh-

achi

ever

pro

gram

�H

igh

ethi

cal s

tand

ards

�Im

med

iate

res

pons

ibili

ty�

Like

able

/insp

iring

col

leag

ues

�O

ngoi

ng e

duca

tiona

l opp

ortu

nitie

s�

Opp

ortu

nity

to in

fluen

ce m

y ow

n w

ork

sche

dule

�O

ppor

tuni

ty to

spe

cial

ize

�O

ppor

tuni

ties

for

cont

inuo

us le

arni

ng�

Sec

ure

empl

oym

ent

�V

arie

ty o

f tas

ks o

r as

sign

men

ts*

Fro

m P

ricew

ater

hous

e su

rvey

of 1

500

MB

A s

tude

nts

from

aro

und

the

wor

ld

Characteristics in First Employers

Please rate the importance of each of the following in choosing a first employer

Goo

d re

fere

nce

for

my

futu

re c

aree

r --

----

----

----

----

----

----

----

----

----

----

----

----

-42%

Com

pany

val

ues

bala

nce

betw

een

pers

onal

life

and

car

eer

----

----

----

----

--41

%Li

keab

le/in

spiri

ng c

olle

ague

s --

----

----

----

----

----

----

----

----

----

----

----

----

---3

7%C

ompe

titiv

e sa

lary

----

----

----

----

----

----

----

----

----

----

----

----

----

----

----

-34%

Cha

lleng

ing

assi

gnm

ents

---

----

----

----

----

----

----

----

----

----

----

----

---3

3%C

ompe

titiv

e be

nefit

s --

----

----

----

----

----

----

----

----

----

----

----

----

----

32%

Opp

ortu

nitie

s fo

r co

ntin

uous

lear

ning

---

----

----

----

----

----

----

-31%

Opp

ortu

nity

to s

peci

aliz

e --

----

----

----

----

----

----

----

----

----

----

--30

%S

ecur

e em

ploy

men

t--

----

----

----

----

----

----

----

----

----

----

----

----

-30%

Fin

anci

al s

tren

gth

----

----

----

----

----

----

----

----

----

----

----

----

----

29%

Hig

h et

hica

l sta

ndar

ds -

----

----

----

----

----

----

----

----

----

----

----

-29%

Ong

oing

edu

catio

nal o

ppor

tuni

ties

----

----

----

----

----

----

27%

Hig

h-ac

hiev

er p

rogr

am--

----

----

----

----

----

----

----

----

----

-26%

Var

iety

of t

asks

or

assi

gnm

ents

----

----

----

----

----

----

---2

6%Im

med

iate

res

pons

ibili

ty--

----

----

----

----

----

----

----

----

24%

Opp

ortu

nity

to in

fluen

ce m

y ow

n w

ork

sche

dule

-24

%

UNIVERSUM GRADUATE

SURVEY 2007

IDEAL™ Employer Ranking -MBA Overall

•P

refe

rred

indu

strie

s:M

anag

emen

t con

sulti

ng (2

2%),

Fin

anci

al s

ervi

ces

(22%

) , C

onsu

mer

goo

ds (

16%

)•

Attr

activ

e C

hara

cter

istic

s: I

ndus

try

lead

ersh

ip (3

8%)

, Attr

activ

e lo

catio

n(s)

(26%

), In

nova

tion

(25%

)

Em

ploy

erR

anki

ng

2007

Pre

ferr

ed

by 2

007

Ran

king

20

06E

mpl

oyer

Ran

king

20

07P

refe

rred

by

200

7R

anki

ng

2006

Goo

gle

120

.58%

2B

ooz

Alle

n H

amilt

on16

6.28

%15

McK

inse

y &

Com

pany

216

.31%

1P

roct

er &

Gam

ble

176.

19%

11G

oldm

an S

achs

313

.95%

3D

eloi

tte18

6.19

%17

Bai

n &

Com

pany

410

.99%

4M

erril

l Lyn

ch19

5.58

%20

The

Bos

ton

Con

sulti

ng

Gro

up5

10.8

9%5

Wal

t Dis

ney

205.

23%

14

App

le C

ompu

ter

610

.78%

7JP

Mor

gan

Inve

stm

ent

Ban

k21

5.11

%21

Mic

roso

ft7

7.82

%16

Yah

oo!

224.

80%

26G

ener

al E

lect

ric8

7.71

%8

IBM

234.

71%

23N

ike

97.

21%

12B

MW

244.

70%

19B

ank

of A

mer

ica

106.

91%

18C

oca-

Col

a25

4.44

%27

Citi

grou

p11

6.82

%6

Am

azon

.com

264.

24%

32M

orga

n S

tanl

ey12

6.75

%10

3M27

4.13

%24

John

son

& J

ohns

on13

6.73

%9

Toy

ota

284.

11%

31S

tarb

ucks

146.

66%

22T

arge

t29

3.99

%34

Lehm

an B

roth

ers

156.

49%

13A

mer

ican

Exp

ress

303.

82%

33

What do ourstudents say?

“In your last job…

”

�%

who

cou

ld id

entif

y th

e ne

xt p

rom

otio

n __

_�

% w

ho th

ough

t the

y ha

d go

od c

hanc

e of

ge

tting

that

pro

mot

ion

___

�%

who

thou

ght t

hey

coul

d be

com

e a

lead

er if

st

ayed

with

thei

r co

mpa

ny _

__�

% o

f the

ir ex

ecs

who

cam

e fr

om w

ithin

___

�H

ow lo

ng th

ey w

ould

wai

t for

opp

ortu

nity

___

The New Challenge for Talent

Management…

.

�G

ener

atin

g th

e su

pply

of t

alen

t to

mat

ch

estim

ated

dem

and

�W

hen

dem

and

is v

ery

hard

to p

redi

ct�

Whe

n th

e su

pply

of t

alen

t won

’t st

ay p

ut

�T

he “

mis

mat

ch p

robl

em”

that

kill

ed c

orpo

rate

ta

lent

mgm

t in

the

1970

s�

The

tale

nt g

lut i

n th

e 19

80s

�…

abso

rbed

by

the

1990

s ex

pans

ion

The Four Principles of Managing Talent

�1.

Avo

id M

ism

atch

Cos

ts –

Bal

ance

“M

ake

and

Buy

”�

2. R

educ

e R

isk

with

Sho

rter

For

ecas

ts a

nd

Por

tfolio

App

roac

hes

�3.

Des

ign

Dev

elop

men

t to

Ens

ure

Pay

back

�4.

Bal

ance

Em

ploy

ee In

tere

sts

in C

aree

r M

oves

#1 How to Think About

The “M

ake or Buy” Decision:

�“M

akin

g” T

alen

t is

Che

aper

, Bet

ter

IFY

ou’re

Cer

tain

Y

ou’ll

Nee

d it

�“B

uyin

g” T

alen

t/Jus

t-in

-Tim

e H

iring

, Cos

ts M

ore

but

Red

uces

Ris

k�

How

acc

urat

e is

you

r fo

reca

st o

f dem

and?

�If

not v

ery,

do

mor

e bu

ying

�H

ow lo

ng w

ill th

e “t

alen

t” b

e ne

eded

?�

If no

t lon

g, d

o m

ore

buyi

ng

�D

o yo

u ha

ve jo

b la

dder

s or

“sc

ale”

?�

If no

t, ea

sier

to h

ire

�H

iring

als

o ch

ange

s or

gani

zatio

nal c

ultu

re

Use a Mix of “M

ake andBuy” to Reduce

Mismatch Costs

�F

rom

fore

cast

s to

sim

ulat

ions

�C

an y

our

IT s

yste

m h

andl

e th

is?

�U

se s

uppl

y ch

ain

anal

yses

to m

inim

ize

“mis

mat

ch c

osts

”�

Are

“D

eep

benc

hes”

inve

ntor

y?�

Ove

rsho

otin

g is

ofte

n m

ore

expe

nsiv

e –

�U

se o

utsi

de h

iring

to fi

ll in

gap

s�

Onl

y hi

ring

from

out

side

als

o a

mis

take

�E

xpen

sive

, dis

rupt

s un

ique

ski

lls a

nd c

ultu

re

#2 –Managing Uncertainty

�T

he lo

gic

of p

ortfo

lios

for

redu

cing

unc

erta

inty

�C

entr

aliz

e al

l dev

elop

men

t pro

gram

s –

�B

alan

ce o

ut m

ism

atch

es

�F

orge

t “su

cces

sion

pla

nnin

g”�

“Tal

ent p

ools

” in

stea

d –

mat

ch b

asic

dev

elop

men

t to

basi

c de

man

d�

Just

-in-t

ime

deve

lopm

ent t

o fit

�Im

prov

e re

spon

sive

ness

–�

Hire

mor

e fr

eque

ntly

�D

elay

spe

cific

dev

elop

men

t �

E.g

., no

“5

yr m

anuf

actu

ring

prog

ram

” In

stea

d, “

3 yr

gen

eral

m

gmt d

evel

opm

ent”

& “

2 yr

spe

cial

man

ufac

turin

g pr

ogra

m”

Val

ue

Tim

e

$

Making Development Pay Off…

#3 Developing Talent Internally –

The Challenge is Earning a Return

�R

educ

ing

upfr

ont c

osts

–fin

ding

che

aper

de

liver

y op

tions

�Im

prov

e em

ploy

ee r

eten

tion

�M

ake

it m

ore

pred

icta

ble

�S

harin

g de

velo

pmen

t cos

ts w

ith e

mpl

oyee

s�

Tra

inin

g w

ages

, tu

ition

ass

ista

nce

plan

s, p

rom

ote

then

dev

elop

, et

c.�

Incr

ease

em

ploy

ee v

alue

thro

ugh

wor

k-ba

sed

trai

ning

and

exp

erie

nce

�A

skin

g fo

r vo

lunt

eers

The Real Key to Creating Value -

�S

pot t

alen

t ear

ly a

nd g

ive

oppo

rtun

ity b

efor

e th

ey c

ould

get

it e

lsew

here

�P

erfo

rman

ce v

. pot

entia

l in

iden

tifyi

ng

cand

idat

es –

wha

t’s th

e si

gnal

?�

Sel

f-se

lect

ion

as a

n al

tern

ativ

e ap

proa

ch�

How

to s

pot t

alen

t and

giv

e op

port

unity

?�

Can

try

to a

sses

s/pr

edic

t w

ho w

ill s

ucce

ed?

�G

ive

it a

try–

P&

G m

otto

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ail q

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heap

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all P

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for

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What was your best

developmental experience?

Q: W

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an y

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hel

p yo

ur o

wn

empl

oyee

s?

The skill of developing and managing

talent means…

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tech

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#4 –Balancing Employee Interests

How much control should employees have over their career?

�T

he “

Che

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est c

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s ca

n go

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ams

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% la

rge

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pani

es

have

them

�

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uire

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val

�M

cKin

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vs. M

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soft

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ow m

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n an

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to

give

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se e

xpec

tatio

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s. lo

sing

con

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idel

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inde

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The Long-Run Trend

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halle

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Old

“pl

anni

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quire

s ce

rtai

nty

�P

ress

ure

for

cost

con

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in ta

lent

mgm

t lik

ely

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row

�“S

kill

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lianc

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out

side

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and

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�W

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