March 11, 2019
Professor Peter Cappelli is the George W. Taylor Professor of Management at the University of Pennsylvania’s Wharton School, where he directs the Wharton Center for Human Resources. Professor Cappelli was named one of the top five most influential thinkers in management by HR Magazine. He earned his D. Phil. in Labor Economics from Oxford University. Professor Cappelli’s research deals largely with adapting human resources to a changing labor economy. Among the many articles and books published throughout his career is Talent on Demand: Managing Talent in an Age of Uncertainty, which serves as a guide for retaining, developing, and acquiring employees.
Qlicket had the opportunity to ask Professor Cappelli about his research and its applications to frontline labor.
Qlicket: In 2008, you authored an article in the Harvard Business Review that proposed a new approach to human resources management based on just-in-time supply chains: a talent-on-demand framework, which incorporates both outside hiring and developing employees internally. What is the first step for a company that needs to boost its employee retention and to simultaneously build relationships with its frontline workers?
Cappelli: It is about building relationships, and the most important one appears to be with our supervisors. If we think they are looking after us, we are much more likely to stay.
Qlicket: In the Wall Street Journal a few weeks ago, you debunked the outdated idea that low-skilled staff members will exit if they receive employer-sponsored higher education. Considering labor shortages for frontline workers in the American labor market, should employers in high-churn industries still invest in training?
Cappelli: Sure. I think this has just become an excuse at the C-suite level to save money by not training; it’s not that they have evidence that it is true, it just sounds smart. The key is to find ways for people to learn by doing, as apprentices do, rather than sitting them in classrooms for long periods of time. Many companies dismantled their training departments a decade ago, and getting started again takes some big investments.
Qlicket: The coursework at Wharton emphasizes the importance of treating employees as stakeholders. How can businesses engage their frontline workers and align their interests with the company mission?
Cappelli: It starts with actually being persuaded that they are important. I don’t think you have to believe that they are as important as shareholders to not treat them as an afterthought. The reason we have so much trouble in hiring, for example, is we are paying so little attention to people who are quitting, which is a simple place to get started.
Qlicket: What are the consequences of maintaining outdated talent management strategies—namely, the historical failure to anticipate employee churn and talent needs?
Cappelli: You end up spending a lot of money on hiring that wasn’t necessary. Poor internal accounting practices hide the cost of churn—turnover costs, hiring costs, lost productivity when new hires are figuring out how to perform, and so forth.
Qlicket: In the Harvard Business Review article, you mentioned that employees and employers often experience tension when workers desire more opportunities for career advancement. How can employers minimize this tension while still preventing employee dissatisfaction?
Cappelli: Promotion from within is the place to start. A good test is to see how many jobs a company has filled from the outside where there were direct reports underneath.
Qlicket: To close, what is one quick tip for frontline managers seeking to improve the accuracy of forecasting their talent needs?
Cappelli: Do surveys and ask people whether they are interested in quitting.
Learn more about Qlicket and how we use the latest research to help companies boost retention.