This post explores the implications of uncertainty & risk (U&R) in talent management (TM). Several themes will be explored including ones touched on in earlier posts.
I use the classical concept of U&R:
- Uncertainty is when we do not comprehend the impacting event or we sense the event but are unable to assign it any meaningful probability.
- Risk is when we know about the potential event and understand it enough to be able to assign a probability to it.
In life we are faced with more uncertainty than risk situations. The present is not entirely understandable and the future is is one of possibilities many of which we are unaware of. The consequences of U&R events runs the range of extremely beneficial to extremely extremely catastrophic. Even though range of consequences is positive to negative, we usually concern ourselves with negative consequence inducing events when talking about U&R. In this post we will concern ourselves with the negative connotation.
The concept of probability is an interesting one in that it purported that many of us do not understand the concept to some even advocating that it is a purely human concept with no basis in reality (I will let those who care about this stuff do their own research). In this BLOG I will assume that we share a similar notion of the concept (the event occurs with a ratio of the frequency that it could occur (e.g., if we cross the middle of a busy road, we will likely get in an accident with a vehicle x times out of 1,000).
What is the connection of U&R to TM?
Organizations need talent to get things done. U&R event occur when the talent is unavailable when it is needed due to some event (resignation, death, illness, mental incapacity, work stoppages, etc.). In the TM field we also include in the U&R package inability to replace, renew, upgrade, etc. needed talent. These latter circumstances may affect current operations, however, they most certainly will affect future operations and aspirations (growth, new markets, etc.).
Much of the public discussion is about how organizations can better secure the probability of being able to attract and retain needed talent. This notion concerns itself with an organization’s employees (and in some cases contingent talent).
So the U&R events are those that adversely affect our ability to attract and retain staff. Hence any U&R mitigation strategy will determine the range of events that can derail attraction and retention and look for strategies that reduce the likelihood of the event occurring and/or moderate the consequences of the event when it occurs. Examples of the two types of strategy include:
- Likelihood: improve our “brand” “reputation” with those who we wish to attract. Impact is we will compete more favourably with others for the same talent.
- Strategy solution: have a standby contingency for those circumstances when we are facing a critical talent gap (e.g., succession planning). Impact is we will suffer a shorter duration of a talent gap and/or reduced economic loss.
For organizations who are concerned about tomorrow, they do workforce planning to determine where they are most likely exposed to future talent shortages and attempt to ascertain the predictable components of likely loss (e.g., retirements) and take measures to undertake an orderly replacement action plan.
For organizations who are going through a future business shift (e.g., their business model is shifting or they are planning on expanding) they will make the effort to determine their critical future talent needs and set up a plan and schedule to hopefully ensure the required talent is on board as it is needed. In this circumstance strategies may include acquiring and/or developing in-house the necessary new/shifted talent.
On the surface this almost meets the description of a risk environment. Unfortunately, its more uncertain than risk like. Reasons include:
- Even if we have a reasonable handle on where our risk like events are and we have a pretty good idea on what to do. We may fail in some significant way to execute. Lesson: U&R is not just about knowledge/being informed, it’s about competent, properly supported and (just maybe) being lucky enough to do the appropriate things well enough to succeed.
- Even if we are capable at execution, the external competitive forces may make our best more than good enough efforts fail. In other words the external market, in some fashion or other, conspires to checkmate our efforts (e.g., they become a better employer than our best employer efforts). Lesson: U&R is rarely just an internally driven affair.
- Even if we can handle our competitor efforts, there may be general environmental forces that significantly impact talent supply markets or have an economic advantage that far outweighs yours and your direct competitors ability to respond (i.e., they have far deeper pockets).
My experience is that it is this latter circumstance that is hardest to envisage or foresee – it is the “black swan” or “out of the blue” like event. Yet it happens with enough frequency (unpredictably so though) that many of us have encountered such evens. I would argue that we should have U&R tools to cope with these situations.
I have an example of one such circumstance.
A client had a production facility that was quite old. The technology in it was old and dated and it was near its end of life. These were assets that would be expected to operate thirty or more years. Also, even though the client had other facilities that had a similar economic role for the firm its technology was unique and different in significant ways form these other facilities.
The project was to do a large scale maintenance overhaul. Why? Because it was more cost effective than doing a major retrofit of the facility with new technology.
Then the workforce planning questions just happened to arise and two critical observations were tabled:
- The critical facility technical talent skills were nearing retirement, and based on history could leave in a predictable fashion. The ability to replace internally would mean that significant costs would be incurred in training on the facility’s systems and safety related aspects (experience in other facilities would be of limited transferable value). This would mean that transfers would have to occur before the vacancies occurred and this would result in budget issues and talent shortages in other facilities before they were really called for.
- The technology was such that it was no longer taught at education institutions. So recruiting trainees was impractical (they would have been grounded in completely different technology forms than that found in the facility). This external environmental observation was almost overlooked.
This is a story with a happy ending. The decision changed to upgrading the facility with current technology and the ability to deploy (let alone attract and retain) needed talent was practical and cost efficient.
For me there are some critical lessons:
- Looking only at the people with talent is a practice that clouds the U&R for the critical talent. It is important to look at the role too. This will give us insight to what talent is critical in terms of the role system it operates in and the implications of the other system parts.
- Only by understanding how the external (including other areas within the organization) market place supports the supply of talent do you see more obscure U&R situations.
- For technology based talent areas, it is always helpful to understand the rate of technology change in conjunction with the technology asset replacement schedule (in the above story, the asset replacement schedule is measured in decades, in the knowledge area it is measured in years).
- Not doing substantive TM U&R analysis (I mean qualitative analysis more than quantitative) is a very scary proposition (in the sense it blinds you to the big U&R issues) when dealing with critical business processes.
But there is more:
One way to think about U&R mitigation is to think about how we can transfer it to another form or area.
- Use investments in technology and systems to reduce the need for “troublesome” talent (in terms of attraction & retention). Done well there are economic benefits (increased productivity), better employee relations, etc.
- Change the business model enough to obviate the need for the talent entirely.
- Give the “troublesome” talent issue to someone else (contract out, joint venture, etc.) who are better equipped to manage the related U&R.
Readers of this BLOG know that I am a strong advocate of stretching the concept of talent beyond the “employee” FOR (Frame Of Reference).
What are the two important implications achieved through transference?
- Working capital within the firm may be freed up and redirected to other noteworthy investment opportunities.
- Transference of U&R is, however, not the same as eliminating U&R.
Why is transience not elimination? Because, no matter what you do and how you do it, it can always go sideways.
So what do we gain (in the U&R game) with transference? You get to shape the U&R package that you are most comfortable living with. More importantly, you get to shape the U&R package to the form that you are best equipped to deal with, especially with the U side of the equation.
It is important to remember, just because you are comfortable (familiarity?) with something doesn’t mean it is the best option for you. The dark side of comfort, is we can become less aware of subtle but powerful changes in the related environment:
- We don’t see/notice them (frog in the slowly warming pot of water?)
- We discount the data indicating U&R shifts when we do see them
I see two fundamental, all too common, human traits that can confound our ability to see U&R as clearly as would be helpful:
- Lack of subject matter knowledge and experience – what should we pay attention to? What is relevant?
- Deep subject matter knowledge and experience – partial blindness to significant changes affecting the prince and/or likelihood of U&R events.
As a consultant, I have found that I have to help clients deal with these above mentioned risks (yes they are more risk like).