Talent Management: Responding to Visible Expressions of Uncertainty & Risk

In yesterday’s Post I laid out the typical sources for TM (Talent Management) U&R (Uncertainty and Risk). Today, I will elaborate in greater detail how to approach anticipating and responding to these threatening events.

First let’s explore dealing with uncertainty.

Yesterday I suggested that:

These would be events where predictability (even foreseeability) are upset. these will typically be externalities.

Externalities take two forms: one, they are external to our organization; second, they are often external to our views on what is important in the external environment. These two notions overlap, but are not consistently identical. The first by definition includes all things external to ourselves. The second though is the recognition that the external environment is bigger than what we will tend to pay attention to.

External to our organization includes our competition, our customers, influencing stakeholders, sources of talent. All organizations that undertake any form of TM will have a reasonable understanding on what external parties constitute the various categories just listed. More attentive organizations take the time to “monitor” in one form or other these parties. To the degree these parties act as expected, we are dealing with risk like events.

Uncertainty, shows up when any of these parties begins to act out of character. It is the unexpected that is uncertainty. When these events occur we are caught in a “timeliness of response” dilemma. Why dilemma? Because, we are going always be responding later rather than earlier. It is just the nature of how things unfold. The first delay occurs in the external party who takes time to recognize, understand, determine what needs to be done and then enacts their responseWe can also look to what contributes to uncertainty. These would be events where predictability (even foreseeability) are upset. these will typically be externalities. So our observance of the “unexpected behaviour” may be as late as when the external party implements their response. The second delay happens within our organization. We will go through the same four steps (time to recognize, understand, determine what needs to be done and then enacts our response) as the external party.

I have observed that there can be considerable delay in the understanding and determining steps. Why? Because we often want to discount the significance of the unexpected event. “Surely, this is a passing phenomena.” “This won’t really impact us.”

Dealing with uncertainty in large part starts with sizing up where it is worth investing in intelligence gathering about what can “trip” our critical external parties. What can happen in their environments to compel the to begin citing uncharacteristically. This is not a bullet proof step, but it does alert us to events that may begin to influence our key external parties to change their activities. So being aware of what influences others collapses our time delay. we can begin to respond almost as soon as others do. The activity done in most strategy work around external stakeholders size up can be applied to critical TM priorities in our firm.

What else can we do? I suggested some thoughts at the end of yesterday’s post.

Well we can choose TM strategies that minimize or at least moderate the impacts of anticpateable (these are still uncertainties as long as we don’t understand their likelihood) events. For example, I as a matter of standard practice encourage my clients to have three in force TM strategies for all mission critical areas. Not all three will be given equal force, attention or use. However, because they are in force, we can more easily “dial them up or down” as situations change.

So knowing where to look for trouble and have the capacity to apply multiple strategies are two approaches we can apply to uncertainty in TM.

Second, let’s now look at risk like TM events.

I noted yesterday that we typically face three sources of TM risk: attrition, competency erosion, and jump shifts in our business. These are risk like events because we can predict their likelihood with varying degrees of confidence.

The first two are similar in that they are the result of impacts over time. It is the power of compounding change over time. For example, If we experience an attrition rate or competency erosion rate of 2% we can expect in ten years that we will be facing a 22% loss. If the loss rate is an  average of 5% our total loss after then years will be 63%. This is why I argue straggly that organizations do ten year horizon TM work. We can sometimes only appreciate what is happening if we extrapolate out this far.

The argument, that we have an effective intake and replacement process so we don’t need to do long term planning work can be very dangerous. If we are talking about roles that are technical, remember that what you are losing is highly skilled and proficient an replacing this talent with neophytes. Does a ten year view reflect our reality in ten years? Highly unlikely. But it does reflect the longer term implications of doing nothing (i.e., no TM work) or something where we can see the useful impacts of our choices.

Along with a ten year view, I also suggest that organizations factor in shifting productivity levels as new people grow into their roles (can be 4 – 6 years after initial hiring for technical roles).

The competency erosion risk is a subtle one. It can arise from two typical sources: our investments in technology and our business activity limits for growth.

It is not uncommon to make long term investments in methods of operation that last for ten even more years. What if the rate of technology change in a core business area shifts by 5% year (really this often a ridiculously slow rate of change in technology based areas). Within ten years (remember a 63% shift) it may become impossible to recruit anyone out of school who has any education in your systems. The implications on your internal TM development related efforts are going to be much more significant. I have dealt with such cases, so it happens.

Business shift changes can have a significant dislocating effect on our talent needs. Preparing our existing talent to become effective in the new “regime” takes time. If this is not planned for, it can result in “surprises” regarding how soon the new investments begin to provide a positive payback. More ironically, I learned of one situation where those leading a new venture just assumed they could recruit a critical technical talent in four years time. They couldn’t – the supply of this talent did not support their reqirements.

Understanding what is critical (in terms of talent) to a new business is a risk like situation, not thinking about it and planning for it makes the resulting situation a self inflicted uncertainty event.

Your thoughts?


About 123stilllearning456

As a management consultant I am passionately interested in talent management and risk/uncertainty issues. In the area of talent management I propose that we seek strategies that look beyond the staffing/employee centric frames of reference. I have been frustrated at the "closing down on possibilities" by these more conventional staffing/employee centric approaches. I have been impressed where people have found systematic solutions to their talent management issues by going beyond the conventional approaches. In the area of risk and uncertainty, I am interested in making this topic relevant to more normal decision making situations. My conceptual foundation is to use the micro-economist's fixed/variable cost theme. I also think it is important to look at these issues for people through their emotional and psychological lens. As a premise I think risk and uncertainty only exist where there is a person who cares about possible events and its consequences. Hence, risk and uncertainty are social based concepts (no sentience, no risk and uncertainty). A major influence on my thinking in this area is Nassim Taleb of "Black Swan" fame. This BLOG provides me with an opportunity to express my thoughts on topics that interest me. As this is an online diary, content is more important to me than polish. I apologize if this distracts from readers' enjoyment and learning. Still I find this a useful way to live up to my namesake, learn more from others and hopefully provoke creative thoughts and ideas in others.
This entry was posted in Creativity, Decison Making, Performance Management, Risk & Uncertainty, Strategy, Talent Manangement, Values. Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s