Why The CHRO Should Operate As COO Of The Talent Supply Chain

This article originally appeared in Forbes

Imagine your CEO comes to you with a question: “How much data science capability do we currently have in the company?”

Your human capital management (HCM) system can tell you how many employees you have with the title of data scientist, but that’s not what your CEO is asking. The request boils down to this: “We currently have extra demand for data science skills, and I need to know what our current talent supply is to meet those demands.”

It’s a reasonable request, and the talent analysis process is similar to the management of a manufacturing supply chain, in effect. And most HR practitioners don’t go into the field thinking they’ll need to understand supply chain management. However, to effectively manage their internal talent resources, they need to act as the chief operating officer of their company’s talent supply chain.

Understanding The Talent Supply Chain

When we think of talent as the asset in a supply chain, it’s imperative that HR moves into a role that manages an inventory level of skills within the company. Companies of the future will require someone whose responsibility is ensuring that supply for certain skill sets does not dip below the company’s demand for employees with those skills.

HR leaders will need to effectively manage the ebb and flow of critical skills before they’re irrelevant or urgent. This will require visibility into their workforce in order to manage their supply, set strategies to reskill or upskill, move employees around to fit changing business needs and close talent and skill gaps in the process.

Without understanding which skill sets to keep “in stock” and how to match their demand, strategy isn’t optimized; revenue suffers, and competitive advantage falls behind. HR is left to question, “Do we actually know who’s in our organization or how best to leverage our resources?”

Lessons From The Gig Economy

The rise of the gig economy indicates a trend — with organizations moving from outside the traditional workplace to the inside, with its contract workforce as a model of skill supply and demand.

Consider the idea of the gig economy model to the standard modern-day company. Employees are hired to complete designated tasks and expected to stay within their lanes. Even if a new project would benefit from the skills of a particular employee, the employee isn’t tapped to contribute if it doesn’t fit within their job description. The best employee for the project isn’t necessarily the one who ends up working on it, which is a missed opportunity.

And this isn’t necessarily a conscious decision. Company leadership generally isn’t aware of the range of skills that exists within its walls or who possesses those skills. HCM infrastructure tends to emphasize jobs but doesn’t easily illustrate an inventory of skills.

But without it, companies must manage projects with unnecessary restrictions and incomplete information. Knowing the skill sets required to perform work and what talent capabilities exist in the company allows you to tap the right person with the right skills at the right time.

Embracing Talent Optimization

A company’s problems can’t be solved by employees working in silos. Talent optimization is something HR leaders must prioritize, especially with limited talent pools and the reality that the skill sets of tomorrow will look different from those of today.

Low unemployment rates and a shrinking skill “shelf life” require HR leaders to have a pulse on not just the people they employ, but also on the skills they bring — and take — with them. These market conditions make it more difficult, but also more important, to keep the right talent and skills in supply consistently. Additionally, some skills might be worth more than others during certain periods of time, and they might change quickly with business disruption.

At any point, your company may be operating without the appropriate supply of a certain skill set. However, if the business needs to pivot and you need a new skill set that’s in high demand but impacted by low supply, you’ll have to determine a creative solution to manage your workforce. That might look like optimizing talent from the inside — such as reskilling or upskilling — or it could mean outsourcing. Whenever possible, it’s optimal to embrace a flexible workforce and create opportunities for employees to move around, gain new experience and apply their skills.

Giving employees assignments outside of their day-to-day job benefits both the company and its employees. The company has a more productive workforce, and employees can spread their wings and learn by contributing to projects they wouldn’t normally be exposed to. Employment is increasingly dependent on skills, rather than degrees, certifications or jobs. Thus, skills are becoming the new currency we must manage.

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