One of the process issues I face when helping clients think through how best to meet their business goals through effective accessing talent is to consider the following:
Economic principle of comparative advantage. This principle is used to help explain how trade happens. It loosely means that we make where we have some advantage and we buy when we don’t. This notion is not as simple as it sounds especially when we are quite capable as the alternatives (i.e., can produce just as cost effectively). Why would we choose to buy when we face this situation?
I believe comparative advantage should explicitly hold two sub principles:
- The buy choice is better (cost, quality, timeliness, etc.) than if we tried it ourselves. (this is conventional notion of comparative advantage).
- The buy choice is better when doing it ourselves creates a form of distraction or strategic focus dilution. This notion picks up and utilizes our sense of our core business competence.
One of the reasons we like to do it for ourselves (regardless of the answers to the two points above) is we feel more comfortable with the uncertainty & risk (U&R) profile. In this situation we are not comforted by the notion of “out of sight, out of mind”. In fact it bothers us, our U&R sensitivity goes up. We believe the U&R is less if we keep our hands on the task.It does not take much argumentation to rattle this seemly comforting assumption. If doing something creates a distraction or dilution of focus away from other priorities, we have only transferred the U&R from one area to several, and we may not be better off.
Turning back to TM (Talent Management) is we can consider the categories of access that comparative advantage consideration brings.
The four categories below are identifiable through the answer to the question:
“What are the ways we can get what we want, and what work do we have do each way?”
Way one: We make it with our own people. We allocate our workforce to this task (as opposed to other tasks and do all the work until we get the desired outcomes (benefits). Think of a product you have purchased because it was produced by an artisan who also created the materials for the product (purchaser perceives a sense of superior quality/uniqueness?).
Example: we run the mine, do the refining, create the steel, fabricate it and manufacture the finished product.
Way two: We focus our people on other tasks and we use a contingent workforce to achieve the outcomes This is different than “Way one” in that we use a variable form of workforce talent. From the business process perspective it is the same as “Way one”. This is recognizing the comparative advantage principle from the cost perspective.
Example: We hire contract people to meet fluctuations in the example outlined above.
The above two options are essentially the “Make it” options.
Way three: We purchase an input product somewhere mid process and adapt it further to meet our final product. This is recognizing the comparative principle advantage from “someone else can do it better or we don’t to commit ourselves to the effort to do this (distraction) perspectives.
Example: We buy our steel and further process it into our finished for sale product.
Way four: We do as little as we can in manufacturing our for sale product. Our relationship with our customers is based on the product itself, not the efforts that went into it. In this situation we are accessing the “resultant benefit” of talent access and use.
Example: Magnum produces whole car assemblies that manufacturers like Chrysler, Ford, etc. purchase and do final assembly work on.
Is there a best “Way”? Of course not. It depends upon your concept of business and the antecedent sense of business success. Using the automobile example: Rolls Royce cars are not produced the same way as Toyotas (in terms of using their respective accessed talent). Yet both have striven to provide an aura of quality and satisfaction in personal transportation business.
These categories are of course “coarse” they are intended to draw attention to the fact that we can think of the best approach to accessing talent from business model perspective.
At the end of the day we want the benefits of accessing and using talent and it makes sense to keep our options open on how best to achieve this.
The above may come across as somewhat mechanistic: talent (another word for people?) is more than a spreadsheet. I totally agree.
However, I do not subscribe that the most humane, benign, generous, people oriented approaches mean that in my business meeting TM needs means hiring people.
The kindest most humane TM approach should respect the fact that to be “there for people” means having a successful enterprise. This means having a great business model. A great business model may or may not mean meeting TM needs always through staffing.