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Dell and Toyota achieved success by transforming how computers and cars are made. Both companies put internal designers, engineers, production staff, and sales teams on the same page as outside suppliers. They share data, ideas, and information both internally and externally to improve product quality, efficiency, and to generate innovation. Through effective supply chain management both companies are world leaders in their fields.
Why not apply supply chain management to producing skilled workers?
American companies face a skills gap where the demand for skilled workers outstrips what the education/training system is supplying. Being the “end-customer” (in supply chain management parlance) for quality workers, businesses must lead, as Joe Fuller, a senior lecturer of Business Administration at the Harvard Business School explains:
The overarching objective of the system is to place people in jobs that provide economic security. Employers have those jobs on offer, know the capabilities required to perform them currently, and have the best sense of what will be required of workers in the future.
A new paper from the U.S. Chamber of Commerce Foundation recommends that we take what businesses have learned from managing supply chains and use it to develop talent. The idea is “Talent Pipeline Management.”
What is supply chain management?
Supply chain management is about logically arranging a business’ processes with its suppliers to achieve its goal—satisfying the end-customer. As the paper explains:
Supply chain management coordinates those activities needed to best serve requirements of the end-customer and, in so doing, achieves the best mix of responsiveness and efficiency for the market being served.
Each link of the supply chain is closely examined. Businesses work closely inside the company and with external partners to improve quality and efficiency.
How does Talent Pipeline Management work?
Talent Pipeline Management takes the supply chain framework and applies it to finding and developing talent.
Businesses have to align their talent strategy with their overall business strategy to determine what skills are most needed. Then, either by themselves or by working with other companies, businesses must organize and manage a network of education and skills providers to help find and develop talent.
Like in traditional supply chains, costs and results are measured and shared along the chain to create positive feedback loops of innovation and improvement. “By providing data and constant feedback on new hire performance, employers can ensure that there is complete transparency among partners on the quality of the workforce provided,” the report states.
What do students and job seekers get out of this?
Right now, students face the double whammy of large student debt loads and uncertain job prospects. Once clearly communicated, talent pipelines show students and prospective employees what skills a business needs, and just as important how to get those skills. They’re given a map showing a pathway to employment.
How are schools involved?
High schools and higher education institutions are critical for providing skills training that aligns with what employers need. These institutions, along with other nontraditional providers like community-based nonprofits, can work within a talent pipeline by learning what types of workers employers need and developing appropriate training programs. This includes:
removing unnecessary administrative and program barriers (e.g., degree requirements) and focusing more attention on core competency and credentialing requirements as well as work-based learning experiences that reduce on-boarding costs and time-to-full productivity.
What businesses are using talent pipeline management?
Aluminum producer Alcoa is applying the concept, reports Tim Lemke at the U.S. Chamber of Commerce Foundation blog:
Alcoa underwent an internal reorganization, with the Alcoa Foundation reporting directly to Human Resources. The new structure played a role in finding entry-level talent to build aluminum wheels at its facility in Baberton, Ohio.
Alcoa officials said they’ve been aggressive in targeting college campuses and offering young people real-world experience.
“Our internships are real internships … they are working on the shop floor and we get a lot of positive feedback from that,” said Greg Bashore, Alcoa’s global director of talent acquisition and workforce development.
Talent pipeline management fits the modern economy’s need for nimble change and relentless innovation, as former Assistant Labor Secretary Robert Jones writes:
The rate of change in today’s workplace and education systems are beyond our ability to manage. The only means of ensuring clear and effective communication between the workplace, educators and trainers, and students and job applicants is a vibrant engaged talent supply line partnership that creates valued success for each of the partners.
This is a Hayekian insight. In “The Use of Knowledge in Society” the Nobel Prize-winning economist wrote in 1937 [emphasis mine]:
The peculiar character of the problem of a rational economic order is determined precisely by the fact that the knowledge of the circumstances of which we must make use never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.
Just as supply chain management channels dispersed knowledge and aligns incentives to produce better goods and services more efficiently, talent pipeline management can do the same to produce more workers confident in knowing that they have the education and trained that's in demand by employers.
As the report states, it’s about “getting the right talent with the right skills at the right time and place.”
This is how you shrink the skills gap.