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Do We “Buy” or “Produce” Talents?

Talent management – another priority during the crisis? What do we choose – competence and innovation, or cost? Short term or sustainability? What changes must take place in the hiring process in order to achieve a better balance versus talent? How to form the cores of indispensable employees with talent and loyalty? How to communicate and how to work with them? How to support, during crisis, employee career plans, so that they could be motivated and competent, involved and useful to the company? How to estimate and monitor the efficiency of talent management programs to avoid loss and to maximize the positive results?

I had the chance and courage to try to offer an answer to all these questions from the perspective of my consultancy company in an area of crisis: Supply Chain. The context: a human resources club where I met extraordinary people, eager to approach the talent management (which unfortunately became tabu for many companies).  I dared to do this on my behalf, on behalf of a prestigious management training institution and on behalf of the millions of human resources specialists, who shyly try to bring out talents from crisis. However, I’m afraid that our efforts find increasingly harder echo in the current concerns of an economy in financial collapse and in a permanent identity crisis.

Whom can you convince nowadays that anticipating and satisfying the need of human capital are necessary, as well as the right man with skills to the right place is necessary? Whom can you convince that people are the most valuable assets, that societies are measured according to their skills and potential of their people, and that talent management has an important social nature, contributing to the creation of “social segments”?! Who is interested in all those things when the only concern seems to be saving one’s own profit or, at the extreme, the company’s short-term survival? I witness the demolition of a social construction hailed for years as being the number one concern and care in companies: people’s TALENT.

I kindly remember the intervention of one of the outstanding leaders of the 20th century, David Whitwan, former CEO at Whirlpool Corp. He said that “the only thought that would wake him up in the middle of the night is related not to economy issues, not competition and profit, but to the possibility of having to face an acute shortage of leadership in his own organization.”

An interesting study undertaken by Forbes Insight for Delloitte in late 2009 underlined, unfortunately, a different mentality among companies in crisis. The study, including responses from over 1000 International Executives, on distinct geographical zones (Americas, EMEA, Asia-Pacific) and various industries (consumer products, financial services, telecom, media, energy& utilities, science and health) identified the main concerns with the current companies, are acquisition and retention of customers, reduce costs, management and development of new products and services, improve financial performance, and only the last place for human capital management and talents.

The only industries consistent to the approach that development of human capital is second priority in the company remain health, science, technology, media, telecom, while areas such as financial services and FMCG seem to have long forgotten the statements of the 1990-1995, when “nursery” of human resources was placed with honor within the functional corporate strategies. Of course, the study does not generalize, does not extrapolate, and does not wish to cancel completely the efforts that still enough companies make in order to balance the need for economic survival and the need to develop resources for the future! What is extraordinary in this study is “patience” and bending down toward the formation of valuable resources and talent retention, the extrinsic motivation through training programs.

The latter turns sharply in times of crisis from leadership and sales area, to the risk management, operations, cost reductions in companies ‘ apparent quest to produce human resources to pull the company from crisis. Is this forced step the most suitable alternative for talent management? Is company’s expectation towards performance in crisis different from that of the avant-garde? Are “old talents” different from “new talents”? Can we can talk about a required talent?

During a consultancy offered by InCharge Company, we witnessed a fundamental talk about how to identify and stimulate talent in an organization. We received confirmation on Forbes study: “Yes, X was good and had much potential before the crisis, but now we find on the market cheaper just like him, and we will most likely invest even less in his training. We most likely can find a younger one, who perceives crisis differently, who is more suitable to cut costs, and so on.”

A legitimate question that I wish to address those who will read this article is related to exactly this resource availability during the crisis. Is there any kind of talent available “on the shelf”, already formed in the spirit of competencies during crisis, with performances in crisis, with expectations of crisis and wage claims of crisis? Like in a supermarket, can you simply choose the “crisis” talent box and carelessly pass over the more popular brand called “regular”? Do we ever take a look on a tin, otherwise than on the outside, reading the label? I remember a friend who used to say that he prefers to work for months in his own greenhouse and eat tomato sauce made from his grandmother’s “true” vegetables, even more expensive and much worked, than to buy ready-made products, regardless of how “equally suitable” or guaranteed as 100% natural.

I make a personal opinion and I courageously state that most likely, beyond any comparison, what actually happens is that we are witnessing a mutilation of talents training in internal and outsourcing of this approach to other companies that have discharged people. We make use of the economic context in order to choose on lower costs, using existing resources, talents that others does not need anymore, not necessary the ones we need, or those we’ve seen growing in our own companies. Perhaps it is not by chance that in 1700 years of history of 18 companies, including American Express, Marriott, Pfizer, IBM, P&G, the role of the CEO was assumed by an “outsider” only 4 times (Stocking your Talent Pool with Knowledge Capital). Also it is by no means accidentally that in 80% of cases hiring “outsiders” on key positions is correlated with a dramatic decrease in company performance (Challenging a Corporate Addiction to Outsiders Gabor NYT Andrea – Money & Business Financial Desk).

Last but not least, we witness a radical change of views in human resources management beyond the much-debated crisis period. In the 1950s, intricate patterns of planning and forecasting were used. In the 80s-90s, human resources need are no longer anticipated, plans for their satisfaction are no longer developed, massive external human resources are hired massively, ignoring the danger of talent erosion in the market. 2009-2010 bring massive changes. Company’s performance with high benefits and low costs become important, as well as the anticipation of economic or strategic changes, risk management as a business constancy. The events cost is hard to anticipate, thus we witness a permanent dilemma of cost related to too many or too little prepared resources, of the risk to loose employees by a lack of a retention policy. By default, the internal preparation resources and stimulation of talents seem unreliable and expensive. Also, the “purchase” seem cheaper, but hardly suited to the organization.

Peter Capelli speaks of a “new wave” in addressing talent (Talent on Demand-Managing talent under an age of uncertainty), insisting on an interesting comparison between Supply Chain and Talent Management. He compares the talent purchase or training decision with the decision-making process of internalizing or externalizing processes, the need for talented resources planning with the demand for goods and services planning, efficient development of talents with cheap and quality mode of production identification, and the talents that leave the company with the goods and services that accumulates the value of the company. As in the related Supply Chain models, the “produce or buy” dilemma can find an answer in the analysis of a simple equation, in which analytical variables are associated cost to “lack of talented resources”, cost associated to “surplus of talents” and employee satisfaction.

And if in the end the only concern would be to keep the COST and not the TALENT itself, I think it is still worth the effort to analyze this equation. I believe that even now there are solutions for internal talent management through a more attentive approach to the succession plans with diverse solutions, correct management of capital profile invested in developing talents and balancing employees interests by creating an internal working place, resigning from the theory “Chess Masters” in talent management.   It is just an opinion. Rather, a personal belief!