Talent: Excess Inventory? Forgotten Customer?
by David Sears

Talent, once the prime driver of business success and growth in a technology-intensive economy, suddenly doesn’t seem to be getting any respect. Consider one key metric of the increasingly shaky market for highly-skilled professional talent — the monthly report on dot-com job cuts issued by Chicago-based outplacement firm Challenger Gray & Christmas. In its latest summary the firm reports April dot- com job cuts of about 7,500, bringing this year's total to 51,500, already eclipsing last year's total of 41,000. This data, coupled with other accounts of the steady downpour of job cuts, has signaled what seems a particularly abrupt and drastic reversal of fortune in the war for talent.

Is it a respite or a total rout?

We believe it‘s a respite. It may be a matter of months or quarters, but macro factors such as an aging work population and the fact that skill requirements in technology-intensive business always outstrip the supplies of those skills, assure that shortages will recur.

During this lull employers and hiring managers would do well to heed the logic of two core technologies responsible for the revolution in enterprise business processes: Supply Chain Management (SCM) and Customer Relationship Management (CRM).

Talent SCM

Our SCM business clients tell us that the essence of successful supply chain management is the "fine coupling" of supply chains to remove costly inventory buffers—using such techniques as “demand forecasting”, “modularity”, "postponement" (delaying final component assembly), rapid-transfer "cross-docking", and “positive tracking” (allowing customers to trace the progress of their orders).

Using such SCM vernacular, employment layoffs are really about squeezing out ‘excess inventory’, in this case shedding hiring mistakes, redundancies from previous mergers, stockpiled talent, and excess employees resulting from failed forecasts.

Many companies — especially in manufacturing and distribution — have effectively mobilized resources and policies to stop the recurring cycles of excess and insufficient inventory. Yet relatively few companies in any industry have been successful in "fine coupling" human inventory management.

This is unfortunate because the impact of "talent inventory" mistakes are both more costly and longer lasting than those made with materials and products.

While the calculated cost of talent inventory mistakes may be limited to severance payments and relocation expenses, the real long term costs are in reduced productivity, lost knowledge, damaged customer relationships and disrupted human lives.

Talent CRM

The compelling logic behind the concept of Customer Relationship Management and the business technologies marshaled to support it, is that retaining existing customers is considerably less expensive — and more profitable — than acquiring new ones.

If grafting SCM concepts to human talent issues seems in some ways a stretch, the linkage of CRM and “TRM” is no stretch at all. When it comes to talent, businesses are understandably more focused on CRM in a tight labor market (i.e. the last few years) and more particular about SCM during economic uncertainty.

But if companies can benefit from the logic of SCM through periods of growth and prosperity, they can also gain value from CRM practices through hiring freezes and layoffs.

While it makes perfect sense to suspend or defer incentive programs for employee referral and retention, it also makes sense to keep up recruiting communication and relationship building.

One bit of recent evidence points to a disappointing decline in Talent Relationship Management at one of its most visible ‘touchpoints’: the employer career site. According to a new study by Kennedy information Research Group, the responsiveness of employer career sites is generally slow—and frequently non-existent. In the Kennedy Group’s testing of a sample of sites, only 27% responded to potential candidate inquiries within 24 hours. And 63% never responded at all.

In a way, employers’ failure to practice “TRM” assumes that highly skilled talent is shelved and inventoried in a nearby warehouse.

One lesson of the very recent war for talent is that this is just not so. The best talent will go to employers who effectively manage the talent chain — and make the most of talent relationships.


David Sears is a Principal with McDermott-Sears Associates, LLC, a New Jersey-based Human Resources consulting firm which focuses on Strategic Compensation Design, Talent Strategy and Services and Business Information Services. David heads McDermott-Sears' Talent Strategy and Services practice which supports clients with: Retained Search for Key Leadership Positions; Talent Strategy for Sourcing, Acquisition and Retention, Talent Project Recruiting and Talent Assessment and Development. David's corporate experience includes executive HR roles for Dow Jones & Company and The New York Times Company. He has a graduate degree in Industrial Relations from Cornell University. David can be reached at dlsears@iteamtalent.com. Visit the McDermott-Sears web site at http://www.iteamtalent.com .

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