SUPPLY CHAIN MANAGEMENT

A HARVARD BUSINESS REVIEW ANALYTIC SERVICES REPORT
HOLISTIC TALENT
SUPPLY CHAIN
MANAGEMENT
Copyright © 2015 Harvard Business School Publishing.
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HOLISTIC TALENT
SUPPLY CHAIN
MANAGEMENT
AS MARKETS, TECHNOLOGIES, AND PRODUCTS quickly adapt and shift, companies are scrambling to have the
right talent in the right place at the right time. To meet the challenges, more organizations are turning to
the “external workforce”—contingent workers, independent contractors, or former employees—who can
help them meet their talent needs.
But are companies so focused on the short-term filling of gaps that they miss opportunities to fully leverage
these talent communities?
Harvard Business Review Analytic Services recently surveyed 316 senior executives and managers online
to understand the talent challenges organizations are facing and—most importantly—identify the best practices
among leading companies working with external talent.
This report found that by using a talent supply chain management approach, human resources leaders can
acquire talent from multiple sources and deploy it for maximum business impact. A holistic talent management
approach looks through a wide lens to see the whole talent picture, using analytics to optimize all the
talent available to an organization. It seeks to incorporate the external workforce into workforce planning,
employment branding strategies, learning and development systems, and succession planning.
To do so, it must overcome legacy organizational barriers, such as outdated policies and practices or legal
concerns.
But the result is the ability to leverage a highly skilled, motivated, and flexible workforce—a distinct strategic
advantage for any company in any industry.
HOLISTIC TALENT SUPPLY CHAIN MANAGEMENT 1

FINDING THE RIGHT TALENT AT THE RIGHT TIME
In the Harvard Business Review Analytic Services survey, almost a third of organizations reported they
“struggle” to find the talent they need, and nearly 60 percent anticipate talent shortages in the next three
years. figure 1
It is no surprise, then, that organizations see value in using external workers. That value lies in the flexibility
for the organization, access to talent, and lower total cost compared with using full-time employee
equivalents (FTEs).
John Boudreau, professor of management and research director at the University of Southern California’s
Marshall School of Business and Center for Effective Organizations, forecasts a shift, where companies will
be motivated to hire external workers less for cost reduction and more for the expanded pipeline of talent
they bring to an organization.
Boudreau, who is also author of Retooling HR: Using Proven Business Tools to Make Better Decisions About
Talent (Harvard Business Review Press, 2010), advises organizations to go beyond the concept of “employment”
when thinking about engaging the optimal workforce: “Should you hire as if your workforce will
stay a month, a year, or their entire career? The answer makes a big difference in the qualifications you set,
how well candidates must fit with the job, the team or the organizational culture, and the deal you offer.”
FIGURE 1
TALENT SUPPLY, TODAY AND THREE YEARS FROM NOW
Which of the following best describes your organization’s (current) supply
of talent? Over the next three years, what do you anticipate your organization’s
supply of talent will be?
TALENT IN SHORT SUPPLY
13%
24%
It is/will be adequate to meet our needs
Have/foresee shortages in some areas
56%
59%
● Current
● Next 3 years
17%
31%
We struggle to find talent we need/see talent shortages ahead
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RESPONDING WITH AGILITY TO MARKET DEMANDS
Some 70 percent of respondents to the survey said they agree that using external workers allows their organization
to meet market demands and maintain efficiency that would otherwise be difficult. And more than
half see the value of the external workforce increasing in the next several years. figure 2
Nasdaq is one such company. Currently, says Rebecca Arnold, vice president and global head of talent
management, external workers compose about 20 percent of Nasdaq’s workforce. But Arnold and her colleague
Doug Kortfelt, vice president and global head of strategic sourcing and procurement, say they expect
to deploy an even higher percentage of external workers in the future.
“We’ve been growing at a rapid pace, through acquisitions or new products,” Arnold says. “Our objective is
to develop a workforce that enables the organization to identify and respond to talent needs and
organizational constraints so as to forward our business strategies in both the short and long term.”
FIGURE 2
ATTITUDES ABOUT EXTERNAL WORKERS
Please rate the extent to which you agree with each of the following statements.
(Percent somewhat/strongly agree)
BENEFITING FROM THE EXTERNAL WORKFORCE
Using external workers allows our organization to meet market demands
and maintain efficiency that otherwise would be difficult
69%
66%
Using external workers is beneficial to our organization and the external workers
Using external workers allows us to bring in expertise that
our full-time staff lacks
53%
Using external workers will be increasingly valuable to
our organization in the next two to three years
52%
39%
We would use more external workers if it were easier to manage them
HOLISTIC TALENT SUPPLY CHAIN MANAGEMENT 3

Nasdaq finds value in this workforce, Arnold and Kortfelt say, because using external workers allows
time to assess candidates’ skills. What’s more, some of the skillsets a position or project requires are highly
specialized and difficult to find in the FTE talent pool.
“Our sourcing approach is undifferentiated, meaning we focus on a joint go-to-market approach to acquire
the most qualified talent. Our teams are unified in establishing best-in-class sourcing programs while being
fiscally responsible,” says Kortfelt.
OWNING THE PROCESS
In a plurality of organizations, HR owns the process for hiring external workers, with some 40 percent of
survey respondents anticipating that HR’s role will increase in the next three years. A similar proportion of
respondents reported that the business units were in charge of engaging non-FTEs. Procurement handles
this process in just over 10 percent of organizations represented in the survey. figure 3
Forward-looking organizations practicing talent supply chain management, such as Nasdaq, have HR and
procurement working together to source and manage talent. Until recently, though, procurement alone
handled non-FTEs at Nasdaq.
“Procurement recognized that a best-practice solution demanded a strong partnership with HR to
jointly engage business stakeholders,” says Kortfelt. “The vision of the program involved expanding the
partnership to include HR and a best-in-class managed services program (MSP) with a vendor management
system (VMS). Effectively, procurement manages the construct of the program, including the MSP/VMS and
supplier relationships, while HR delivers operational excellence to the business partners.”
FIGURE 3
WHO OVERSEES EXTERNAL WORKFORCE
Who oversees the process for engaging external workers?
OWNERSHIP OF PROCESS FOR ENGAGING EXTERNAL WORKFORCE
HR
45%
The business unit
39%
Procurement
12%
Other
4%
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69%of respondents say using external
workers allows their organization to meet
market demands and maintain efficiency
that otherwise would be difficult
Arnold adds, “We partner with each other to ensure we create a well-balanced workforce for our business’s
needs and goals. The talent acquisition team is responsible for partnering with the business to attract and
hire the most qualified talent for the company based on its needs and objectives. The talent acquisition team
is able to assess the external talent supply and labor market, and provide guidance to the business based
both on the role requirements and on where the talent pool may be greater.”
INTEGRATING THE EXTERNAL WORKFORCE
Considerable variation exists among organizations in terms of how fully they integrate external workers
into their workforce as a whole. More than a third of respondents’ organizations include contingent workers
in learning and development programs and about a quarter give them performance reviews. But nearly 20
percent of organizations do not include contingent workers in either team or departmental meetings.
What stands in the way of integration? For nearly one-half of respondents, corporate culture is the largest
barrier. Almost as many organizations find that resource limitations stand in the way, with legal concerns a
third leading reason the contingent workforce is not fully integrated.
At Nasdaq, external workers are often included in critical role assessment, talent reviews, and learning and
development programs, says Arnold.
“It’s increasingly important for organizations to align their external workers with their corporate culture
and integrate them into it,” says Phil Fersht, chief executive officer of HfS Research.
“The more culturally integrated their external workers, the more they will feel invested, and the greater
likelihood they will devote extra effort to support the business, as opposed to operating like contractors who
only put in the bare minimum of effort,” adds Fersht.
He advises that companies considering expanding their use of external workers, or looking to more fully
engage them in their core business, should take the issue of corporate culture seriously. Is the corporate
culture a highly mandating one or a more dynamic, autonomous one?
In recent research conducted by his firm, HfS Research, Fersht says, the latter strategy clearly correlated
with higher levels of engagement among external workers. More regimented cultures simply restrict the
room for external workers to thrive and contribute all they can.
HOLISTIC TALENT SUPPLY CHAIN MANAGEMENT 5

MOTIVATING ENGAGEMENT
In the survey, retaining and acquiring talent were respondents’ main two priorities for 2015, with increasing
employee engagement a close third. External workers tend to be clustered in operations and IT, but nearly
a fifth of respondents say their organizations used these workers throughout the enterprise. Whether or
not they work inside the organization, says Fersht, establishing that trust is critical to engaging them and
ensuring the relationship is productive, collaborative, and ultimately beneficial to both sides.
Having direct and frank conversations is the starting point for establishing more dynamic working
relationships across the extended workforce. Be honest about what the company wants and can offer, and
about projected tenure. “If you cannot promote someone or offer job security, you need to consider the
person’s personal goals and objectives to engage them effectively,” says Fersht.
Boudreau says that external workers change the nature of employee engagement—and that’s a good thing.
If you are not offering contingent workers a regular paycheck, then you have to give them something to keep
their loyalty, such as learning and development programs. These programs benefit the workers by imparting
valuable experience while benefiting the organization itself.
Similarly, some organizations see employment—whether of FTEs or of external workers—as a series of
engagements. In The Alliance: Managing Talent in the Networked Age (Harvard Business Review Press, 2014),
authors Reid Hoffman—cofounder and chairman of LinkedIn—Ben Casnocha, and Chris Yeh argue that organizations
need to invest in their employees, even if those employees may soon walk out the door. By offering
defined engagements and articulating the skills the individual will develop, the organization is able to
attract talent, keep engagement high, and welcome alumni back into the fold at some future date. Although
the book is written primarily about FTEs, its advice applies to external workers as well.
There is a “fundamental paradox” about such tours of duty, write Hoffman and his coauthors:
“Acknowledging that the employee might leave is actually the best way to build trust, and thus develop
the kind of relationship that convinces great people to stay.”
BUILDING THE FUTURE TODAY
For HR to help their organizations meet an uncertain future and thrive there, retooling is necessary, says
Chris Yeh. “Trends changing the world of work are challenging the traditional employer/employee model and
are transforming how work gets done. These include ‘tours of duty,’ task-based and project work outsourced
to freelancers found on online markets, and problem solving by online communities of competing experts
who work more for glory than for pay.”
To respond, he says, leaders need to infuse HR with tactics from other fields that will widen its vision and expand
its influence. These include risk-mitigation strategies from the supply chain, portfolio-diversification strategies
from finance, and segmentation strategies from marketing. For instance, says Yeh, instead of treating
all employees the same, there will be segmentation and differentiation, in which “employment value
propositions” may change to “personal value propositions,” as compensation packages are customized to
individuals or employee segments.
Holistic talent supply chain management is a sophisticated approach to talent sourcing and deployment
that enables companies to respond more nimbly as markets, technology, business needs, and the talent
pool change. Its motto is, in essence: Deploy the right talent from the right source in the right place at the
right time. As the HBRAS survey demonstrates, leading organizations are already there, employing multiple
sources to acquire the talent they need to drive their strategy forward and deliver business results.
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METHODOLOGY AND PARTICIPANT PROFILE
In November of 2014, Harvard Business Review Analytic Services conducted a web-based survey of 316 executives
among the HBR.org audience. The global study included respondents from North America (30%), Asia/Pacific
(36%), EMEA (24%), and Latin America (8%). More than half (55%) of respondents were C-suite and senior
management, slightly more than one-quarter (28%) were managers, and less than one-fifth (17%) were from
other grades. Half of respondents (49%) were from large organizations with 5,000 or more employees, onequarter
(25%) from organizations with 1,500–4,999 employees, and one-quarter (25%) from organizations with
500–1,499 employees. Respondents in companies with fewer than 500 employees were screened out. A broad
group of industries were represented, with 16% from healthcare/pharmaceuticals, 14% from manufacturing, 13%
from technology/telecommunications, and 13% from financial services. Respondents from all other industries
amounted to less than 7%. One-quarter of respondents (26%) work in the HR function, with one-quarter (24%)
in general management/strategic planning, one-fifth (20%) in marketing/sales/business development/customer
service, and 8% each in finance, operations/production, and IT/software engineering/knowledge management.
Respondents from other areas added up to less than 6%.
HOLISTIC TALENT SUPPLY CHAIN MANAGEMENT 7

ABOUT KELLYOCG
Talent is a strategic asset that poses unique challenges. Gaining access to the right
talent can be problematic, and supply and demand are hard to predict. Visibility
across all the different types of talent working on your company’s behalf—not just
full-time employees—is imperative, but merely quantifying non full-time talent is no
longer enough. Competitive advantage lies in understanding where the different types
of talent come from, how to attract and engage them, and—most importantly—how
to design a roadmap for incorporating talent into a company’s business processes,
decisions, and planning. Talent Supply Chain Management, also referred to as
holistic talent management, is a framework that can help companies fully leverage
talent across all categories: full-time employees, temporary employees, freelancers,
independent contractors, and service providers, as well as alternate sources of
workers like retirees, alumni, and online talent communities.
KellyOCG is the leading global advisor of talent supply chain strategies that enable
companies to achieve their business goals by aligning talent strategy to business
strategy. If you want to learn more, visit www.kellyocg.com/tscm or contact us at
tscm@kellyocg.com.
8 HARVARD BUSINESS REVIEW ANALYTIC SERVICES

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