“Most answers depend on circumstances” In this exclusive interview with The Human Factor, Dr. Peter Cappelli talks about how he would get nervous with people thinking he had the answers to all management questions |
 Dr. Peter Cappelli had always thought that he would do something else for a living. He is, in fact, one of the world’s most important authorities on issues related to human capital, and his latest book, ‘Talent on Demand’ talks about why traditional talent management practices simply will not work in today’s scenario. Currently a Professor of Management at The Wharton School at the University of Pennsylvania, Dr. Cappelli is also the director of Wharton’s Center for Human Resources. He tells us more in this exclusive interview with The Human Factor.Q. How does it feel to be recognised as one of the world’s most important authorities on issues related to human capital? A. All academicians want an audience, they want people to care about what they say. I would get a little nervous having people think that I had the answers to management questions because most answers are judgement calls that depend on circumstances. However, there are right and wrong ways to think about the questions, and I do think I have something to say about that. Q. Tell us about your career and how you became an academic. A. As with a great many academics, I thought I was going to do something else for a living. I always intended to be a lawyer. In those days, we did not have good information about careers – I did not even know about fields like consulting and investment banking. I became a professor by accident: I got a scholarship to go to Oxford, but I had not finished my thesis, so I got a post-doc at MIT expecting to finish it there. And then I got caught up in the academic culture. Q. What are the key trends that emerged from your recent research on employee management? A. That project was really about employer practices regarding employee management. One insight is how much they have changed in the past decade or so; also how they tend to bundle together. Computer use tends to be a big factor in terms of driving lots of other practices. Q. What was the most memorable moment of your career? A. Towards the end of the George H.W. Bush administration and the early part of the Clinton administration, my colleagues and I ran a research centre in Washington that was deeply involved in a lot of the policy debates around issues of skill, education, and training. We did not push any particular agenda, but we did have a lot of influence in shaping the questions that were asked and how they were answered. Q. What are the upcoming trends in HR and what is your advice to HR professionals? A. In the US, there has been a trend for some time towards greater functional specialisation – becoming a compensation specialist or a benefits expert. This has turned much of the field into something like the equivalent of accountants: professionals who can easily move from company to company but who have no real impact on business decisions. They become like compliance specialists. Maybe this was the only way to play when talent was abundant, unions were weak, and there was little about employees that represented real challenges for the employers. My guess, though, is that there will be an even bigger need for people who can think strategically and who understand broader business issues. There is nothing new about this prediction, but in the US, we have by now seen lots of situations where the people heading HR have been brought in from other functions, precisely because they have those strategic skills. |
 Q. Tell us about your consulting experiences and the learnings that really stood out.A. I would say that there are two issues that are surprising. One is the extent, especially in the US, that companies are focused on the short-term. They plan but they cannot execute more than one quarter – financial concerns cause plans to change so frequently that such plans are not very useful. The second is the extent to which companies think about problems with an open mind. The good ones are open to looking at alternatives; the ones that end up making bad decisions are those that come into them with such strong assumptions about what is possible that they miss out on the good opportunities. Q. Indian labour laws are not easy to comply with, while enforcement is not very systematic. What is your recommendation in such a scenario? A. If the issue is, how to stay out of trouble, it is worth remembering that the biggest problems come not when companies violate some technical aspect of the law, but when they systematically ignore the goal of the law. When the issue is not just legal violation, it is the need the government feels to make an example of your company and then bad public relations follow. These problems rarely come up as long as companies try to do the right thing and keep that in mind as a guide for their actions. Q. In light of the current slowdown, would you say that layoffs are the solution or part of the problem itself? A. Here is a situation where what makes sense for an individual company is not necessarily good for the economy as a whole. It helps companies to cut their costs in downturns, but layoffs and wage cuts pull down the level of consumption in the overall economy, which makes it harder for the economy to recover. Q. Tell us about your latest book ‘Talent on Demand’. How can HR managers leverage the principles you have mentioned to forecast talent needs better? A. The book is about managing uncertainty in the basic task of anticipating talent and setting out a plan to meet it. It describes tools adapted from supply chain management to respond to and manage uncertainty. These tools focus on minimising expected costs. The big lesson in forecasting is to recognise that most forecasts are way off – no one anticipated the current world financial crisis, for example. So we need different tools that consider what happens when our forecasts go wrong. Q. When is your next book likely to be out? A. The next book, appropriately enough, is about India. Three Wharton colleagues and I are finishing a project begun with the National Human Resources Development Network and based on interviews with the CEOs of the 100 biggest companies in India. The idea is to outline what seems to be a distinctive approach to running companies, especially as compared to the US. We will be able to tell you more about this soon. |
