With the pending mass exodus of senior knowledge workers due to the retirement of the Baby Boomer generation, it has become essential for recruiting departments to move from being isolated, reactive and administrative to become aggressive and proactive parts of the organization that are integrated and aligned with the top priorities of the business. By developing innovative, sophisticated forecasting and planning tools combined with the principles of Supply Chain Management (SCM) for talent, this transformation can occur within a surprisingly short timeframe.

Talent or Labor Supply Chains may represent the most promising solution to workforce planning so far devised. Whether in the energy sector or in healthcare, the talent supply chain is built using process mapping, modeling and process engineering. At Valero Energy, a company struggling with industry-wide skills shortages, a Labor Supply Chain (LSC) model instantly scales recruiting supply channels. Valero's LSC system provides the technology and departmental business infrastructure to rapidly adapt and scale recruiting supply channels and targets to meet changing business conditions, objectives, and competitive threats.

Valero's system design was patterned after Dell's "Just-in-Time" supply chain model taught at the University of Texas in Austin. The talent acquisition steps are modeled into six processes. The supplier interaction is modeled into three processes and the customer interaction is modeled into four processes. The processes are then mapped directly to talent acquisition and talent management software systems.

According to the Harvard Business Review, "The holy grails of supply chain management are high speed and low cost." Not surprisingly, these and the principles above are adhered to by those most respected for the sophistication of their supply chains, including Wal-Mart, Amazon.com and Dell Computer. However, the supply chains in these companies aren't just fast and cost-effective, they're also:

  • Agile: They respond quickly to sudden changes in supply or demand. They handle unexpected disruptions smoothly and cost-efficiently.
  • Adaptable: They evolve over time as economic progress, political shifts, demographics trends, and technological advances reshape markets.
  • Aligned: They align the interests of all participating firms with their own (business interests).

As each player maximizes its own interests, it optimizes the chain's performance as well.

These characteristics are similar to those required by recruiting organizations: Cost-effectiveness, high-quality, customer-service focused and scaleable. Add to this agile, adaptable and aligned, and it describes not only the makings of an effective staffing infrastructure model, but quite possibly the perfect staffing model for the globally competitive 21st Century.

The supply chain model enables levels of analysis and metrics impossible with current off-the-shelf talent acquisition systems. Nonetheless, the same level of metrics and analytics available to Wal-Mart and Dell for SCM, are now available for talent acquisition, delivery and management, but the tools must, in most cases, be custom configured and built into the talent acquisition platform.

Predictive Workforce - Managing from the Future
With next-generation predictive modeling systems, talent acquisition and workforce planning can be transformed from reactive administrative functions to proactive systems capable of accurately forecasting talent demand right to the individual job. Predictive modeling systems analyze historical employee records for turnover patterns and project turnover trends forward by position, location, level, division, department and salary. When talent needs for future capital projects and new systems, services and projects are added to the turnover data, a precise and comprehensive multi-year workforce needs map can be generated. The system becomes more accurate over time as the algorithms are adjusted based on projected gaps versus actual gaps on a quarterly basis.

Though much of the above might seem academic and theoretical, it is in fact based on what was accomplished at Valero Energy in just over two years time. However, the approach and methods are unprecedented  -- change of this magnitude requires courage and perseverance. For most of us, resistance to change, particularly change involving new technologies that we have to master, is natural.  A surprising number of people would prefer to live with a system that makes them miserable than have to learn a new system.

Yet most would agree that we are on the verge of a more acute and protracted "War for Talent" than that faced in the late 1990’s. It is imperative that talent acquisition departments in organizations respond to this challenge. Many will not and in some cases, this will cause their organizations to fail outright. Some will respond by adopting proven best practices and by following roads ploughed by others. These organizations will likely survive but they won't dominate, at least not on the strength of their staffing operations. A few, like Valero, will innovate. Some innovators will pursue the wrong paths but will be able to try again or fall back on good, if imperfect systems. A few will innovate successfully. These companies will gain a competitive advantage that will last for years. They will build a lead in proactive, predictive modeling-based talent acquisition during a time when talent is the scarcest and most valuable component of nearly every business. This will help vault their organizations to the top of their industries and will propel the staffing department into the most senior and respected parts of the business.


Dan Hilbert, Director of Recruiting at Valero Energy, contributed to this article.