Talent Management: Uncertainty & Risk Perspectives

How do uncertainties and risks (U&R) show up in talent management (TM) endeavours? This post outlines several forms that U&R show themselves in an organization’s management of talent efforts and a general principle for managing exposure such U&R.

We observe how our TM strategies and practices go awry by the subsequent consequences we observe.

How can a TM strategy and operation go wrong and what do we observe?

1. We may find we don’t have sufficient talent to meet our goals, commitments, or even importantly our obligations. Why? Obligations expose us to potential penalties and punitive responses by others such as the the legal system, regulatory system, etc. The first two just expose us to economic and financial consequences. In the first, we witness missed financial and operational targets. In the second we witness growing backlogs, quality control issues, etc.

2. We may find ourselves with too much talent (either in general or specifically). Here we expose ourselves to the financial consequences of “extracting” ourselves from these over investments.

3. We may find ourselves with out the capacity to access future new business activity driven talent needs. This is different from the first – it focuses on current operations that continue into the future. This jeopardizes our ability to execute our business futures.

4. We may find that the cost of past and current TM decisions and choices creates an unbearable burden on the future (witness the obligations in the big three automakers regarding ongoing growing retiree charges). Something that makes sense in the “now” can become onerous or even catastrophic to our economic/financial future well being.

5. We may find ourselves fighting over a limited talent pool with other competitors. This can impact our ability to grow and remain competitive, yet, our ability to engage in a price escalation strategy may be limited (our pockets are only so deep).

6. We may find ourselves losing our talent at rates that are faster than we can replace access to them. Organizations that went through a series of downsizings 10 Р15 years ago where they lopped off the newest and oldest in their complements. Now, they see an internal demographic shape that is skewed to the right. The reason these organizations have often never reshaped their demographics is they continue to deal with financial issues and have continued to restrain hiring and engaged in repeated layoffs. Even those firms who have not experienced  repeated layoff issues have often achieved this by constraining growth in staffing (thereby exposing themselves to the first circumstance above). When engaging in significant intake of talent we are dealing with three concerns: our ability in acquire the talent, our ability to develop it so that it is sufficiently self reliant and profitable, and do this while maintaining our ability to continue the business without disruption or undue additional expense. Remember the old adage, for technical roles the rule of thumb is you need four fully functioning/qualified staff for every trainee.

Readers of this Blog will observe something that has been a pet peace of mine: all of the above are TM through reliance on staffing strategies. But what about firms that meet their TM needs by utilizing a broader array of TM strategies? They also face talent issues. Some of these include:

7. A critical supplier begins to experience one or more of the first six issues. We will of course learn of this later as opposed to earlier. At least with a staffing oriented TM strategy, you get to potentially see the TM U&R consequences earlier because they are in front of your face so to speak. Why do I say potentially? Because, many firms do not understand how to “observe for” TM U&R consequences, and when they see them many seem to take a “casual” approach to meeting them. Why? I suspect that a major contributor is the reluctance to do long term planning (i.e., as in 10 years). Unfortunately in terms of talent U&R the “chickens” often take a while before they come home to roost. A second parallel reason, is the belief that because the consequences are “potentially” beyond our two to three year planning horizon, they are “hypothetical” and/or there will be time enough to deal with them in the future (we have more important urgent matters to deal with at this time).

8. A critical supplier to our critical supplier faces the consequence above. And, so on.

Hence, by relying on others to meet our TM needs, we are merely transferring the U&R issues to another party. Often this is still the best approach (they are better at managing some TM U&R than we are or it helps us meet better uses of our finite working capital resources).

The exposure to us by others experiencing TM consequences are twofold: first, our business activities and plans are exposed; second, we often sense the problem later, rather than earlier and this means our ability to respond is more limited. Why are they more limited? Time is the friend or enemy of good strategy and action because some potentially great strategies take longer to implement. So time limits create “shorter lists” of possible options. For example, if you wait for the vacancy – you are virtually limited to recruitment. If you engage in sound workforce planning, you can have somebody already onboard equipped to pitch in.

I have a general principle around moderating exposure to the sorts of TM U&R outlined above: do not become overly reliant on any one TM strategy.

I am not subscribing to contingency planning: have a Plan B on the shelf ready to pull off if Plan A goes awry. No, I suggest that as much as possible have at least two (better three) plans in action. We don’t have to rely on them equally at any one time. As any one strategy shows its vulnerability, we can “dial-up” another already in place strategy to pick up the slack/gap. Ideally, being able to do this means we buy the time necessary to recast our TM strategies into a more solid form so we can relieve ourselves of the effects of the evident consequences.


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, Risk & Uncertainty, Strategy, Talent Manangement and tagged , , , , . Bookmark the permalink.

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