Uncertainty in Managing Talent

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5 Questions PETER CAPPELLI, University of Pennsylvania's Wharton School

In his new book, Talent on Demand, Peter Cappelli, director of the Center for Human Resources at the Wharton School, says that most companies fail to properly address one of their main challenges: how to manage the unpredictability of their talent needs. Cappelli recently spoke to Workforce Management New York bureau chief Jessica Marguez about talent management pitfalls and how to avoid them.

Workforce Management What are the common mistakes that companies make in managing talent?

Peter Cappelli: The big mistakes start with understanding what the problem is they are trying to solve. And the problem that is important for companies is to manage uncertainty. The uncertainty in talent management is about what we are going to need. Because they don't start out thinking that the problem is uncertainty, they assume that there is no uncertainty. They plan around the problem by laying out forecasting models predicated on the idea that they know what talent they are going to need many years in advance.

The problem with that is that when you are wrong, it ends up being quite costly. The second big mistake comes out of the first one. Companies say, "This is just too hard to do." They treat every opening as a surprise and, frankly, they rely completely on outside hiring, because that's the easiest way of doing it. That has a demoralizing effect on internal candidates and affects your ability to develop internal competencies.

WM: What's the most effective way of developing employees?

Cappelli: The problem is that companies invest in training and then the employees are hired away or the business changes and the company doesn't need those skills anymore.

One way to solve this is by getting employees to share costs of development. This is a reasonable thing to think about doing because employees get all of the benefits of the training right now. …