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Review of “Talent Management for the Twenty-First Century” by Peter Cappelli
War on Talent
In 1997 McKinsey conducted it’s ’war for talent’ research and since that time little has changed – it has never ended (Gutheridge, Komm & Lawson, 2008, p.49). It has been very difficult for companies to gain and retain top quality people (Heron, 2009, p.1). This has not slowed during the economic crisis, the top 10% of talent are still mobile (Donaldson, 2009) and this will accelerate when the good times return. Cappelli’s article is therefore timely in giving HR and Line Managers a process that can assist in talent management.
The main premise of the article is that talent management is ‘anticipating the need for human capital and then setting out a plan to meet it’ (Cappelli, 2008, p.1). The options for companies are to either do nothing or use 1950’s programs of succession planning and forecasting. Cappelli suggests that there is another, more effective way using a just-in-time concept (2008, p. 3-4) that includes:
- Make and buy to manage risk – talent is expensive to have waiting in the business and they will leave without opportunities. Therefore some roles can be sourced externally more effectively, while others could be internally.
- Adapt to the uncertainty in talent demand – the concept is to break up development programs for staff into smaller units so that staff complete the course over a longer period ie 3 years and this keeps them interested longer.
- Improve the return on investment in developing employees – get staff to part pay towards a course, whether this is financial or in time.
- Preserve the investment by balancing employee-employer interests – allow staff to apply for any internal job and make it easy for them to apply.
Cappelli concludes that by using a just-in-time concept and getting more engagement with talent through extended training, financial or time commitment and allowing staff to apply and move across the organisation that you can retain talent more effectively than using traditional systems.
Musselwhite (2007) writing for Talent Magazine noted that it is cheaper to develop and retain staff than to buy in new staff. In Ready and Conger’s 2007 article for Harvard Business Review they state that some organisations and managers still believe that they can find talent by buying staff (p.1). They disagree. This is in contrast to Cappelli who says that this is an old philosophy and that talented staff won’t wait ‘on the bench’ (p.3) for an opportunity, but will leave. He counsels that a balance is required to hire outside when necessary and promote from within if there is a talent available (p.4).
Training is important to retain top talent. Research reviewed by Deerly (VictoriaUniversity, 2008) found that there is a link between retain and training quality and satisfaction. However in Cappelli (p.4) there is research that says that people tend to leave organisations after training. Therefore Cappelli has developed the concept of extending training over a prolonged period to continue with engagement.
The area of strategic talent management that Cappelli has not reviewed in his article is that of other staff outside the top 10-20 staff and how to ensure that the organisation continues to engage with this staff. Guthridge et al (2008 p. 54-55) say that managers also need to focus on the B-team players as well as the top talent. It is important that companies do not neglect these people (p.55) and look at ways to ensure that they are valued to create a vibrant environment for all staff across the organisation. Ready and Conger also recommend that in managing staff that haven’t made it into the top talent pool is very important. They recommend that you frame the conversation around that they require ‘development and support’ (2007, p.3). This could help to reduce potential turnover from this group outside of the top talent in the organisation.
Regardless of the various theories proposed the reality is that 59% of all businesses in Australia believe it is important to retain skilled employees and top talent in the business (Heron, 2009, p.4). It therefore highlights that talent management must be a part of any business HR strategy (Guthridge, Lawson & Komm, 2006, p.8) While Cappelli’s theories are a new look at a long term issue it would appear that most authors still support internal development managing talent but there is an opportunity to take into consideration the concepts of sharing the cost, extending development courses and allowing cross departmental appointments. The main ‘issue’ is to determine whether it is better (and cheaper) to develop from within or to appoint external new talent just-in-time.