Failing to manage your firm’s talent needs, says Wharton management professor Peter Cappelli, “is the equivalent of failing to manage your supply chain”. And yet, the majority of employers have abysmal track records when it comes to the age-old problem of finding and retaining talent.
Supply chain managers “ask questions like, ‘Do we have the right parts in stock?’ ‘Do we know where to get these parts when we need them?’ and ‘Does it cost a lot of money to carry inventory?’ These questions are just as relevant to companies that are trying to manage their talent needs,” he says. The principles of supply chain management, with its emphasis on just-in-time manufacturing, can be applied to talent management.
Illustration: Jayachandran / Mint
According to Cappelli, the author of a forthcoming book, Talent on Demand: Managing Talent in an Age of Uncertainty: “Managing supply chains is about managing uncertainty and variability. This same uncertainty exists inside companies with regard to talent development.”
Part of the problem is that many companies are locked into an older paradigm based on the assumption that they can accurately meet their talent needs through static forecasting and planning models, even though the global marketplace is an increasingly unpredictable, unforgiving environment. “The idea that we can achieve certainty through planning is no longer true,” Cappelli states.
In his book, Cappelli advocates a “portfolio approach” to balancing out talent oversupply and undersupply across different divisions. The portfolio solution addresses the problem by encouraging companies to coordinate different talent development efforts into one common programme. When some divisions overshoot demand and others undershoot it, “the company can offset the mismatch by moving candidates around.”
The Indian software company Zensar Technologies Ltd conducted exactly this kind of analysis, Cappelli says. He adds: “Fearing retention problems, Zensar initially undershot the estimate and filled the gap with outside hiring. As the labour market began to tighten and the ability to hire from the outside grew more difficult, the mismatch costs changed. Now it was more costly to undershoot demand because shortfalls could not be filled on the outside and the company could be stuck with too few programmers to meet business demands. So, it switched its plan to increase the proportion of talent it developed internally, expecting to overshoot the estimate of demand in order to make up for attrition.”
The issues around talent management, Cappelli adds, “are most important where labour is scarce, which helps explain why the most innovative talent management practices may well be in Indian companies… Their ability to get enough capable employees is one of the biggest threats to corporate success.”
Investors unsure of bets on green technology
Most energy experts agree that green technology has the power to reshape how business gets done. But these experts—including investors—are finding it hard to separate truth from exaggeration when it comes to the benefits green technology can offer.
That was the consensus of industry speakers at the recent Wharton Energy Conference. An aura of uncertainty surrounds the electric-power industry, according to panelists who noted that old-line players, like investor-owned utilities, are cautiously awaiting signals from politicians, regulators and even the public. Companies want to know whether the US will adopt a so-called “cap-and-trade” system to govern carbon emissions or a more straightforward carbon tax. In addition, they are wary of betting too heavily on new technology, such as wind or solar, until they know that it will be broadly supported.
Yet, at the same time, venture capitalists and new investors such as Google are eagerly pouring money into just about any start-up that brands itself as pursuing “clean tech”. Technologies that remain unproven on a massive scale are seeing huge run-ups in value. Stock in US-based First Solar, for example, has returned nearly 600% over the last 12 months. “We are not in a bubble (for renewables), but there are valuation issues,” said Michael Liebreich, chief executive of New Energy Finance, an energy consultancy. “There is $100 billion (about Rs4 trillion) of new money that has been invested in clean energy across all sectors and countries. What you have is enormous inflation of asset prices, which is driven by that liquidity, not by fundamentals. In the fear-and-greed balance of capitalism, we’re definitely in the greed phase.”
People are so giddy over solar power’s potential that they are making investments that simply don’t add up, Liebreich said. Germany, a country with relatively weak sun, has committed to producing electricity via solar. Germany “is papering over agricultural land with solar,” he said. “It’s absurd.”
Barney Rush, chief executive of H2Gen Innovations in Alexandria, Virginia, agreed that some renewable energy sources may be impractical for widespread use. Still, he said, the rapid development of India and China leaves little choice. “Within 20 or 30 years, the number of cars in China and India will be no different than what we expect here in America,” he added. “If you look ahead to that kind of demand, the fuel isn’t going to come from oil. It’s going to have to come from other sources… There’s going to be a gradual lightening of carbon in the mix.”
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