The looming economic downturn served as a fitting backdrop to Peter Cappelli's closing keynote at the 2008 HR Technology® Conference in Chicago, as he called on HR leaders to rethink talent management in terms of cost controls and cheaper, more productive means of development and retention.
"The old ways do not work anymore," said Cappelli, professor of management at the University of Pennsylvania's Wharton School and director of Wharton's Center for Human Resources, in the closing keynote, "What You Should Know About Talent Management Before Buying Software."
"What is talent management?" he asked. "It's simply anticipating our demands for human capital and setting up plans for the long term. But given this economy and a business environment that is so uncertain, doing [that kind of] talent management without breaking the bank is almost impossible."
Likening today's talent problem to a car manufacturer's supply chain -- "getting the right engine and drive train to the right car at the right time" -- Cappelli bemoaned the fact that "in HR today, we still try to solve supply-chain problems through guessing."
Why is that? Because the old workforce-management solutions of the 1950s and 60s -- when Fortune 500 executives were well-ensconced in 25-year-or-longer careers and employees stayed long enough for companies to recoup their investments -- don't work anymore. Gone are the days of successful long-term succession plans, he said. Now, far more high-potential employees are leaving their companies just as their training and development phases are coming to an end and their employers' return-on-investments are beginning.
And yet, new solutions have not caught up to this new reality, he said.
HR and IT need to work together to devise or implement systems that answer these changing realities and needs, he said. Successful talent management should move away from forecasts and toward simulations; portfolios of succession possibilities must be created to balance out position mismatches; and succession and development programs will have to become more immediately responsive, he said.
Instead of setting up long-term specific development plans, companies should form more diverse talent pools to match basic development to basic demands. Just-in-time development should be fitting just-in-time needs.
"Can your IT department handle these challenges?" he asked. If not, start coordinating information. Then, if your forecast of demand is still not accurate, if you still don't have the scale to develop, if you wish to change the culture and direction of your company but your system doesn't support that, "do more buying," he said.
With growing numbers of workers leaving for, or being hired away by, competing companies in their first or second years on the job, Cappelli said, employers need to come up with systems that spot talent early and offer opportunities before hi-pos slip away.
They must find more cost-effective ways to keep these talented people on, such as nudging them into challenges that stretch their skills or providing them with tuition reimbursement, something Cappelli calls "the cheapest retention bonus you'll ever pay."
Lastly, they should be hiring more frequently to fill specific, short-term needs.
"What's the cost of having too many people on board," ripe for the picking? he asked. "What's the cost of having too few onboard when a need or problem arises?
"It's huge," he said.
Relocation Drives Volkswagen
Attendees got a concentrated, comprehensive lesson from Volkswagen and The Newman Group on how best to approach a complete cultural redirection by incorporating the right talent-management campaign.
Mike Beamish, executive vice president of human resources for Volkswagen Group of America, in his session entitled "VW Gets Very Talented to Grow 10 Times!," shared the story of his company's dramatic headquarters move from Auburn Hills, Mich., to Herndon, Va., which started in September 2007 and concluded at the end of this year. But the change entailed far more than two headquarters sites.
As part of Volkswagen's "New Vision for the U.S." campaign, it has involved a strategic relocation of 400 positions to Virginia, with an additional 150 employees who were specially invited there to lead the change.
More importantly, it involved the implementation of a whole new company structure and culture that would support the 2,500-employee organization's goal to sell more than 1 million cars in the United States by 2018 and eventually employ 2,000 more workers at its Chattanooga, Tenn., production facility.
Overall objectives of the move, Beamish said, were to re-energize the company and its U.S. brands by leveraging its new corporate home; create a dynamic culture that values trust, collaboration, customer orientation, creativity and performance; create a leaner, more market-driven organization in the new location; simplify or reduce processes and support systems by focusing on the organization's core competencies; and eliminate redundancies and overcapacities in the organization.
"Collaboration was needed and communication was critical if we were to broaden in this way in the United States," Beamish said.
So was an entirely new employee profile. Employee moves weren't simply arranged. With Newman Group's help, those making the move were carefully selected through a profile that combined an entirely new set of core competencies and employment-value-proposition attributes.
"It all came down to determining competencies and profiles of people who could drive the culture change Volkswagen wanted," said Ed Newman, president of the Newman Group. "Competency management is the DNA of a change of this magnitude."
Newman started by reviewing the competencies Volkswagen had in place, a list he called "fairly dated -- focused more on skills and competencies for job traits, not for corporate goals."
Using the objectives of the move as a base, core competencies went from automotive-focused skills to traits such as innovation, teamwork, customer focus, performance-driven approach and change-leadership skills.
Once the new competency framework was in place, 14 separate focus groups were established to survey the 150 employees who would be invited to the new location and who would eventually lead the corporate change.
So far, the transition is working well and is being noticed by corporate leaders.
"This has been a huge opportunity for us to take a step forward," Beamish said. "People used to think of HR when a problem occurred or when we introduced something that didn't make business sense. Now, the strategic direction we took is being noticed throughout, and is already driving our growth."
Overhauling HR Silos
Hewlett Packard's vice president of human resources, Laura Desjardins, and Bobby Yazdini, Saba Software's CEO, brought their shared story of HP's people-management, talent-management and career-development transformation to conference attendees at a session entitled "Hewlett Packard Puts it all Together."
The newly transformed HR focus, called Grow@HP, is "much more than learning management now," said Desjardins. "It's now much more into experiential learning in real time."
A key element of the Grow@HP initiative, which started close to three years ago, is something HP calls "People Promise," an integrated platform that brings data into one global process and collates career frameworks throughout the Palo Alto, Calif.-based, 310,000-employee technology company, which recently acquired Plano, Texas-based EDS.
It's no longer just about competencies and goals, Desjardins said. "We're now taking in data on people's geographical experience, business-group experience, customer experience, functional experience ... . We want to start to grow people along these lines.
"Now HR is showing up in all aspects of performance evaluations," she said, "and working to tightly link career development to business strategy, and improve the succession pipeline and leadership capabilities at all HP levels."
Human resource leaders need to move away from an "HR-centric point of view" when thinking about talent management, said Heidi Spirgi, president of HR consulting firm Knowledge Infusion, as she co-moderated "The Second Annual Talent Management Panel" at the conference.
"True talent management," she said, "is about the process of managing the supply and demand of talent to manage business results."
HR leaders too often fail to focus on business results as the true goal of talent management, she said.
To do that, Cassie Fireman, vice president of talent for Echelon Resorts and one of four panelists speaking at the session, said HR must move away from "HR-speak."
"It's really important to not look at talent metrics in a vacuum," she said. HR leaders need to layer those metrics with business strategies and financial performance.
However, co-moderator Jason Averbook, CEO of Knowledge Infusion, cautioned the audience that talent-management initiatives have "to be tied back to the organization's business goals," he said.
Rather than thinking of ROI and cost savings, he said, HR must begin thinking of "VOI" -- the value of the investment.
"You can't make the talent-management business case on cost savings," he said. "It's going to be about effectiveness, not efficiency."
And with the economy in turmoil, wise HR executives will start thinking about the opportunities inherent in the situation instead of focusing all of their attention on the downside, said panelist Bill Ingham, director of global talent management at The Clorox Co., based in Oakland, Calif.
"This really represents a unique time to be opportunistic," he said, urging the audience members to think like Warren Buffett. "How do we invest when everybody else is selling?"
He noted that "this is ... an excellent time to upgrade talent."
One retention strategy that Kelly Lowe, director of organizational capability for Mountain View, Calif.-based Intuit, says her company is working on is the creation of a system that profiles the aspirations of employees -- compiling information on skills and capabilities and cross-referencing that with "where the business most needs them."
"We are just on the cusp of this," Lowe said.
Mary Leahy, vice president of talent management systems for Franklin Templeton, said her company was working on a similar process. "Talent profiles are probably one of our biggest initiatives," she said.
When it comes to talent-management strategies, Spirgi said, HR should listen to what business leaders are asking for.
And when choosing technology vendors, the panelists said, HR leaders must know in advance what's most important to their company. Each vendor has its own strengths and weaknesses, so HR must decide "what do we most, most need?" Lowe said.