Four steps to making talent management a core competence

According to a study reported in the June 2005 issue of the Harvard Business Review, ‘people-driven’ businesses are now predominant. But many companies, even in people businesses, don’t yet have the talent management processes they need to excel. While organizations have perfected sophisticated techniques for managing capital investments, suppliers and the production and flow of goods and services, their capabilities in managing people seriously lag.

In their article, "The Surprising Economics of a ‘People Business’" http://harvardbusinessonline.hbsp.harvard.edu/b01/en/common/item_detail.jhtml?id=R0506D consultants Felix Barber and Rainer Streck argue that people are now the most significant cost in many industries when compared to spending on capital, R&D and suppliers. In industries like advertising, IT services, financial and brokerage, engineering, telecommunications and health care, personnel represents the largest component of total spending (40 percent to 70 percent). These are what the authors refer to as people businesses. They have high overall employee costs, a high ratio of employee costs to capital costs and limited spending on activities like R&D.

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