Talent on Demand: Managing Talent in an Uncertain Age Peter Cappelli Professor and Director Center for Human Resources The Wharton School
Talent on Demand: M
anaging
Talent in an Uncertain Age
Pet
er C
appe
lliP
rofe
ssor
and
Dire
ctor
Cen
ter
for
Hum
an R
esou
rces
T
he W
hart
on S
choo
l
What is Talent Management?
Why should we care about it?
�T
he is
sue
is r
esou
rces
.�M
atch
ing
supp
ly to
dem
and:
�T
he s
uppl
y ch
ain
anal
ogy
–
Two Options for Getting Human Capital -
�In
the
trad
ition
al m
odel
, sup
ply
mea
nt in
tern
al
deve
lopm
ent
�U
p-fr
ont i
nves
tmen
t in
can
dida
tes,
rec
oupe
d ov
er
time
thro
ugh
impr
oved
per
form
ance
�C
an m
ake
mon
ey t
his
way
�C
an a
lso
lose
mon
ey if
lose
the
inve
stm
ent
�O
utsi
de h
iring
, pay
as
you
go�
Can
’t ea
rn a
ret
urn
or b
e a
sour
ce o
f adv
anta
ge
Val
ue
Tim
e
$
The rise of the great corporate career
Different practices made sense at different times
�O
pen
mar
kets
in th
e ea
rly y
ears
�T
he R
ise
of th
e P
lann
ing
App
roac
h
�19
50s-
’60s
ave
rage
For
tune
500
exe
c ha
d be
en w
ith th
eir
com
pany
24
year
s
�E
ngin
eers
and
“bl
ocke
d” te
chni
cal c
aree
r pa
ths
�T
he ty
pica
l car
eer
path
…
�12
-18m
o tr
aini
ng
�18
-21
mon
th jo
b ro
tatio
n
�“H
i pot
entia
l” pr
ogra
m –
acce
lera
ted
prom
otio
ns
�75
% e
xecs
had
> 5
yrs
on c
orpo
rate
sta
ff
�40
% e
xecs
beg
an in
mar
ketin
g/sa
les
�D
etai
led
wor
kfor
ce a
nd s
ucce
ssio
n pl
ans
–15
yea
rs o
ut
Which is the Kindergarten Report Card
Which is the Performance Appraisal?
Sys
tem
AR
ank
cand
idat
es o
n a
scal
e of
…V
ery
Sat
isfa
ctor
y –
Sat
isfa
ctor
y –
Uns
atis
fact
ory
•D
epen
dabi
lity
•S
tabi
lity
•Im
agin
atio
n•
Orig
inal
ity•
Sel
f-ex
pres
sion
•H
ealth
and
Vita
lity
•A
bilit
y to
pla
n an
d co
ntro
l•
Coo
pera
tion
Sys
tem
BR
ank
cand
idat
es o
n a
scal
e of
…S
atis
fact
ory
–Im
prov
ing
–N
eeds
Impr
ovem
ent
•C
an b
e de
pend
ed u
pon
•C
ontr
ibut
es to
the
good
wor
k of
oth
ers
•A
ccep
ts a
nd u
ses
criti
cism
•T
hink
s cr
itica
lly•
Sho
ws
initi
ativ
e•
Pla
ns w
ork
wel
l•
Phy
sica
l res
ista
nce
•S
elf-
expr
essi
on•
Cre
ativ
e ab
ility
The internal model breaking up:
Demand is uncertain, people quit
The
not
ion
of a
sec
ure,
long
-ter
m c
aree
r is
har
der
to im
agin
e.P
resi
dent
/CE
O te
nure
was
:10
yrs
in 1
950s
; 5
year
sin
196
0s;
<3 y
rsno
w
CE
O tu
rnov
er (
and
exec
team
) up
53%
sin
ce ’9
5�
Ris
ing
2x a
s fa
st in
UK
and
Eur
ope
as in
US
�F
iring
for
perf
orm
ance
big
gest
cau
se, 2
x as
ret
irem
ent
�54
% V
P v
acan
cies
and
abo
ve h
ave
an o
utsi
de s
earc
h�
Tal
eore
port
s 2/
3rds
of v
acan
cies
now
fille
d fr
om o
utsi
deR
estr
uctu
ring
is n
on-s
top
�A
MA
sur
vey
–49
% h
ave
dow
nsiz
ings
eve
n du
ring
the
“boo
m”
year
s�
For
tune
500
now
em
ploy
½ a
s m
any
as 2
0 ye
ars
ago
�63
per
cent
cut
ting
in o
ne d
ivis
ion
and
expa
ndin
g in
ano
ther
�C
uts
happ
ened
fas
ter
in th
is d
ownt
urn
than
any
tim
e be
fore
�E
mpl
oyee
Ten
ure:
Dow
n w
ith e
mpl
oyer
/ Up
with
occ
upat
ion
Little Sophistication in talent
management now….
�In
the
man
agem
ent r
anks
-20
03 S
HR
M fi
rm
surv
ey –
60%
hav
e no
succ
essi
on p
lann
ing
of a
ny k
ind
�M
ore
than
70%
had
it in
late
197
0s
�In
the
wor
kfor
ce a
s a
who
le -
2004
IPM
A-H
R
surv
ey –
63%
hav
e no
wor
kfor
ce p
lann
ing
of
any
kind
�96
% o
f lar
ge c
ompa
nies
had
a d
edic
ated
pla
nnin
g de
part
men
tin
195
0s!
What changed
on the employee side?
How
did
they
res
pond
to e
nd o
f life
time
empl
oym
ent?
I would change jobs for…
?
I wou
ld le
ave
for…
25%
of W
orke
rs50
% o
f Wor
kers
75%
of W
orke
rs
Uni
tsD
olla
rsU
nits
Dol
lars
Uni
tsD
olla
rs
Sto
ck G
rant
F
ace
Val
ue50
sh
ares
$500
100
shar
es$1
,000
1,00
0 sh
ares
$10,
000
Vac
atio
n D
ays*
7 da
ys$6
5210
day
s$1
,400
15 d
ays
$2,7
69
Bon
us
Opp
ortu
nity
$1
,000
$1,0
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0,00
0
Sal
ary
Incr
ease
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entia
l Sal
ary
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ive
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0
Ledf
ord,
G.,
& L
ucy,
M.
(200
3).
Th
e re
war
ds
of
wo
rk:
Th
e em
plo
ymen
t dea
l in
a c
han
gin
g e
con
om
y.N
ew Y
ork:
Sib
son
Con
sulti
ng, T
he S
egal
Com
pany
.
Does the Next Generation
Really Have Different
Attitudes Toward Employers?
Wha
t do
they
exp
ect f
rom
jobs
?H
ow s
houl
d w
e m
anag
e th
em?
Characteristics in First Employers*
Please rate the importance of each of the following in choosing a first
employer
�C
halle
ngin
g as
sign
men
ts�
Com
pany
val
ues
bala
nce
betw
een
pers
onal
life
and
car
eer
�C
ompe
titiv
e be
nefit
s�
Com
petit
ive
sala
ry�
Fin
anci
al s
tren
gth
�G
ood
refe
renc
e fo
r m
y fu
ture
car
eer
�H
igh-
achi
ever
pro
gram
�H
igh
ethi
cal s
tand
ards
�Im
med
iate
res
pons
ibili
ty�
Like
able
/insp
iring
col
leag
ues
�O
ngoi
ng e
duca
tiona
l opp
ortu
nitie
s�
Opp
ortu
nity
to in
fluen
ce m
y ow
n w
ork
sche
dule
�O
ppor
tuni
ty to
spe
cial
ize
�O
ppor
tuni
ties
for
cont
inuo
us le
arni
ng�
Sec
ure
empl
oym
ent
�V
arie
ty o
f tas
ks o
r as
sign
men
ts*
Fro
m P
ricew
ater
hous
e su
rvey
of 1
500
MB
A s
tude
nts
from
aro
und
the
wor
ld
Characteristics in First Employers
Please rate the importance of each of the following in choosing a first employer
Goo
d re
fere
nce
for
my
futu
re c
aree
r --
----
----
----
----
----
----
----
----
----
----
----
----
-42%
Com
pany
val
ues
bala
nce
betw
een
pers
onal
life
and
car
eer
----
----
----
----
--41
%Li
keab
le/in
spiri
ng c
olle
ague
s --
----
----
----
----
----
----
----
----
----
----
----
----
---3
7%C
ompe
titiv
e sa
lary
----
----
----
----
----
----
----
----
----
----
----
----
----
----
----
-34%
Cha
lleng
ing
assi
gnm
ents
---
----
----
----
----
----
----
----
----
----
----
----
---3
3%C
ompe
titiv
e be
nefit
s --
----
----
----
----
----
----
----
----
----
----
----
----
----
32%
Opp
ortu
nitie
s fo
r co
ntin
uous
lear
ning
---
----
----
----
----
----
----
-31%
Opp
ortu
nity
to s
peci
aliz
e --
----
----
----
----
----
----
----
----
----
----
--30
%S
ecur
e em
ploy
men
t--
----
----
----
----
----
----
----
----
----
----
----
----
-30%
Fin
anci
al s
tren
gth
----
----
----
----
----
----
----
----
----
----
----
----
----
29%
Hig
h et
hica
l sta
ndar
ds -
----
----
----
----
----
----
----
----
----
----
----
-29%
Ong
oing
edu
catio
nal o
ppor
tuni
ties
----
----
----
----
----
----
27%
Hig
h-ac
hiev
er p
rogr
am--
----
----
----
----
----
----
----
----
----
-26%
Var
iety
of t
asks
or
assi
gnm
ents
----
----
----
----
----
----
---2
6%Im
med
iate
res
pons
ibili
ty--
----
----
----
----
----
----
----
----
24%
Opp
ortu
nity
to in
fluen
ce m
y ow
n w
ork
sche
dule
-24
%
UNIVERSUM GRADUATE
SURVEY 2007
IDEAL™ Employer Ranking -MBA Overall
•P
refe
rred
indu
strie
s:M
anag
emen
t con
sulti
ng (2
2%),
Fin
anci
al s
ervi
ces
(22%
) , C
onsu
mer
goo
ds (
16%
)•
Attr
activ
e C
hara
cter
istic
s: I
ndus
try
lead
ersh
ip (3
8%)
, Attr
activ
e lo
catio
n(s)
(26%
), In
nova
tion
(25%
)
Em
ploy
erR
anki
ng
2007
Pre
ferr
ed
by 2
007
Ran
king
20
06E
mpl
oyer
Ran
king
20
07P
refe
rred
by
200
7R
anki
ng
2006
Goo
gle
120
.58%
2B
ooz
Alle
n H
amilt
on16
6.28
%15
McK
inse
y &
Com
pany
216
.31%
1P
roct
er &
Gam
ble
176.
19%
11G
oldm
an S
achs
313
.95%
3D
eloi
tte18
6.19
%17
Bai
n &
Com
pany
410
.99%
4M
erril
l Lyn
ch19
5.58
%20
The
Bos
ton
Con
sulti
ng
Gro
up5
10.8
9%5
Wal
t Dis
ney
205.
23%
14
App
le C
ompu
ter
610
.78%
7JP
Mor
gan
Inve
stm
ent
Ban
k21
5.11
%21
Mic
roso
ft7
7.82
%16
Yah
oo!
224.
80%
26G
ener
al E
lect
ric8
7.71
%8
IBM
234.
71%
23N
ike
97.
21%
12B
MW
244.
70%
19B
ank
of A
mer
ica
106.
91%
18C
oca-
Col
a25
4.44
%27
Citi
grou
p11
6.82
%6
Am
azon
.com
264.
24%
32M
orga
n S
tanl
ey12
6.75
%10
3M27
4.13
%24
John
son
& J
ohns
on13
6.73
%9
Toy
ota
284.
11%
31S
tarb
ucks
146.
66%
22T
arge
t29
3.99
%34
Lehm
an B
roth
ers
156.
49%
13A
mer
ican
Exp
ress
303.
82%
33
What do ourstudents say?
“In your last job…
”
�%
who
cou
ld id
entif
y th
e ne
xt p
rom
otio
n __
_�
% w
ho th
ough
t the
y ha
d go
od c
hanc
e of
ge
tting
that
pro
mot
ion
___
�%
who
thou
ght t
hey
coul
d be
com
e a
lead
er if
st
ayed
with
thei
r co
mpa
ny _
__�
% o
f the
ir ex
ecs
who
cam
e fr
om w
ithin
___
�H
ow lo
ng th
ey w
ould
wai
t for
opp
ortu
nity
___
The New Challenge for Talent
Management…
.
�G
ener
atin
g th
e su
pply
of t
alen
t to
mat
ch
estim
ated
dem
and
�W
hen
dem
and
is v
ery
hard
to p
redi
ct�
Whe
n th
e su
pply
of t
alen
t won
’t st
ay p
ut
�T
he “
mis
mat
ch p
robl
em”
that
kill
ed c
orpo
rate
ta
lent
mgm
t in
the
1970
s�
The
tale
nt g
lut i
n th
e 19
80s
�…
abso
rbed
by
the
1990
s ex
pans
ion
The Four Principles of Managing Talent
�1.
Avo
id M
ism
atch
Cos
ts –
Bal
ance
“M
ake
and
Buy
”�
2. R
educ
e R
isk
with
Sho
rter
For
ecas
ts a
nd
Por
tfolio
App
roac
hes
�3.
Des
ign
Dev
elop
men
t to
Ens
ure
Pay
back
�4.
Bal
ance
Em
ploy
ee In
tere
sts
in C
aree
r M
oves
#1 How to Think About
The “M
ake or Buy” Decision:
�“M
akin
g” T
alen
t is
Che
aper
, Bet
ter
IFY
ou’re
Cer
tain
Y
ou’ll
Nee
d it
�“B
uyin
g” T
alen
t/Jus
t-in
-Tim
e H
iring
, Cos
ts M
ore
but
Red
uces
Ris
k�
How
acc
urat
e is
you
r fo
reca
st o
f dem
and?
�If
not v
ery,
do
mor
e bu
ying
�H
ow lo
ng w
ill th
e “t
alen
t” b
e ne
eded
?�
If no
t lon
g, d
o m
ore
buyi
ng
�D
o yo
u ha
ve jo
b la
dder
s or
“sc
ale”
?�
If no
t, ea
sier
to h
ire
�H
iring
als
o ch
ange
s or
gani
zatio
nal c
ultu
re
Use a Mix of “M
ake andBuy” to Reduce
Mismatch Costs
�F
rom
fore
cast
s to
sim
ulat
ions
�C
an y
our
IT s
yste
m h
andl
e th
is?
�U
se s
uppl
y ch
ain
anal
yses
to m
inim
ize
“mis
mat
ch c
osts
”�
Are
“D
eep
benc
hes”
inve
ntor
y?�
Ove
rsho
otin
g is
ofte
n m
ore
expe
nsiv
e –
�U
se o
utsi
de h
iring
to fi
ll in
gap
s�
Onl
y hi
ring
from
out
side
als
o a
mis
take
�E
xpen
sive
, dis
rupt
s un
ique
ski
lls a
nd c
ultu
re
#2 –Managing Uncertainty
�T
he lo
gic
of p
ortfo
lios
for
redu
cing
unc
erta
inty
�C
entr
aliz
e al
l dev
elop
men
t pro
gram
s –
�B
alan
ce o
ut m
ism
atch
es
�F
orge
t “su
cces
sion
pla
nnin
g”�
“Tal
ent p
ools
” in
stea
d –
mat
ch b
asic
dev
elop
men
t to
basi
c de
man
d�
Just
-in-t
ime
deve
lopm
ent t
o fit
�Im
prov
e re
spon
sive
ness
–�
Hire
mor
e fr
eque
ntly
�D
elay
spe
cific
dev
elop
men
t �
E.g
., no
“5
yr m
anuf
actu
ring
prog
ram
” In
stea
d, “
3 yr
gen
eral
m
gmt d
evel
opm
ent”
& “
2 yr
spe
cial
man
ufac
turin
g pr
ogra
m”
Val
ue
Tim
e
$
Making Development Pay Off…
#3 Developing Talent Internally –
The Challenge is Earning a Return
�R
educ
ing
upfr
ont c
osts
–fin
ding
che
aper
de
liver
y op
tions
�Im
prov
e em
ploy
ee r
eten
tion
�M
ake
it m
ore
pred
icta
ble
�S
harin
g de
velo
pmen
t cos
ts w
ith e
mpl
oyee
s�
Tra
inin
g w
ages
, tu
ition
ass
ista
nce
plan
s, p
rom
ote
then
dev
elop
, et
c.�
Incr
ease
em
ploy
ee v
alue
thro
ugh
wor
k-ba
sed
trai
ning
and
exp
erie
nce
�A
skin
g fo
r vo
lunt
eers
The Real Key to Creating Value -
�S
pot t
alen
t ear
ly a
nd g
ive
oppo
rtun
ity b
efor
e th
ey c
ould
get
it e
lsew
here
�P
erfo
rman
ce v
. pot
entia
l in
iden
tifyi
ng
cand
idat
es –
wha
t’s th
e si
gnal
?�
Sel
f-se
lect
ion
as a
n al
tern
ativ
e ap
proa
ch�
How
to s
pot t
alen
t and
giv
e op
port
unity
?�
Can
try
to a
sses
s/pr
edic
t w
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How much control should employees have over their career?
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