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VUCA: the New Normal for Talent Management and Workforce Planning

Posted By Dr. John Sullivan On January 16, 2012 @ 5:13 am In Advice and How-Tos | 17 Comments

[1]If you are among the many strategic leaders frustrated with your inability to anticipate and handle the volatility and the speed of change in the talent management environment, you should take a few minutes to understand VUCA [2]. VUCA best describes the volatile and chaotic business, economic, and physical environment that we all now face. Unless you have had your head in the sand, you must have noticed the chaotic business and economic conditions under which we currently operate. In fact, the last decade was so chaotic that in its cover story, Time magazine labeled it “the decade from hell.”

Many in talent management have been hoping that this chaos is a short-term phenomenon, but it is a permanent condition that we must all learn how to manage under.

Because they were designed for more predictable times, almost all current HR, talent management, and workforce planning processes fail to perform in this chaotic environment. In a VUCA environment, there are more changes, a faster rate of change, and the size of the changes are so impactful that they must be labeled as “disruptive.” So the question for talent leadership becomes, “how do you effectively hire, develop, place, and retain [3] individuals and leaders in the volatile environment where literally everything changes in months rather than years?”

V.U.C.A. (pronounced voo – ka) is an acronym for an environment that is dominated by:

Volatility – where things change fast but not in a predictable trend or repeatable pattern.

Uncertainty – where major “disruptive” changes occur frequently. In this environment, the past is not an accurate predictor of the future, and identifying and preparing for “what will come next” is extremely difficult.

Complexity — where there are numerous difficult-to-understand causes and mitigating factors involved in a problem.

Ambiguity – where the causes and the “who, what, where, when, how, and why” behind the things that are happening are unclear and hard to ascertain.

Talent Management Has Been Lagging in VUCA Preparation

The concept of operating in a chaotic environment is not new. Tom Peters has been talking about managing under chaos for years, and “decision-making under uncertainty” is a well-established academic field. What is new is that most economic, business, and political leaders have realized that the VUCA environment is a permanent condition.

Business executives have been preparing for the VUCA environment for years. Although most of the initial work was done by the military and in counterterrorism, VUCA planning has been part of business processes like supply chain and risk management for years. A few firms like GE, Unilever, and McDonald’s have even begun changing their leadership development model to fit the VUCA environment. But unfortunately, no one in recruiting, retention, skill development, compensation, performance management, onboarding, etc. has paid more than lip surface attention to this strategic problem. As a result, the time has come to face the fact that you can’t be strategic in talent management, HR, or recruiting unless you can manage and thrive in a VUCA environment.

Why Talent Managers and Workforce Planners Must Prepare for VUCA

Under the established 20th-century talent management model, the future was relatively predictable. As a result, firms hired, trained employees, and developed leaders in order to prepare for the “predictable” upcoming business environment. Most firms prepared their employees for the single-most likely future scenario (i.e. scenario A), which was usually a 5%-10% extrapolation from the current situation.

The more advanced firms prepared for not just the single-most-likely scenario but also for one or two alternative predictable scenarios (i.e. scenario A and B, C). But unfortunately, in a world of continuous disruption and VUCA, using this traditional model usually means that you end up hiring, training, and developing for business and talent management scenarios that will literally never occur. Planning, forecasting, and training simply cannot work if the environment that you are preparing for never appears!

A Quick Example to Illustrate Complexity and Volatility

For example, recruiting routinely plans for three distinct scenarios: no hiring, moderate hiring, and large-scale hiring. However, in a VUCA environment, talent acquisition must plan for each of those scenarios, but in addition, it must also plan for periods where the firm will do rapid hiring in some business units and regions, while simultaneously having a hiring freeze or even layoffs in other business units.

What Is Needed Is an Agile Talent Management Model

The 21st-century VUCA model that I am advocating requires talent management to have plans for handling numerous “disruptive events” that traditional narrow workforce planning simply can’t handle. Some of those disruptive events might include generational shifts that occur every six years, social media changing the way we communicate, and simultaneous talent surpluses and shortages.

One possible conclusion for talent management leaders could be that you should stop any planning process that never accurately forecasts the future. But that would be a major mistake. Instead, in a VUCA environment, talent management needs to develop an “agile model” that prepares for a wider range of options (i.e. scenario A-Z) but more importantly, it must also develop Talent Management processes/systems that can actually shift and handle any unpredicted upcoming event “just-in-time.” It might seem counterintuitive at first, but the military has proven that you make people more agile and successfully prepare them for handling unpredicted events that literally no one thought of in advance.

Things That Talent Management Must Start Doing to Meet the VUCA Environment

Talent management leaders must prepare for disruptive problems and opportunities that cannot be predicted. Some of the action steps that you should take to prepare for complete surprises and the VUCA environment include:

  • Agile employees — Develop as a primary goal a focus on the hiring, training, and retaining of employees and managers who are agile, who thrive in a VUCA environment, and those who have the capability of acting effectively in unforeseen and unpredicted situations.
  • Agile processes – Require agility, flexibility, and a rapid change capability as an essential component in all current and new talent management processes and programs.
  • Self-obsolescence of processes — Require all talent management programs and processes to include a component that continually “self-obsoletes” its own current practices and replaces them with updated ones.
  • Training to solve unanticipated problems — training and development must create the capability to prepare employees and managers to identify and effectively handle previously unknown problems. A high volume of scenario training and simulations can make an employee more comfortable and confident when they encounter a completely new situation. With repetition, employees can eventually develop skills and their own processes for handling “brand-new” volatile and complex situations that are full of uncertainty and ambiguity.
  • Focus on innovation — Prioritize talent management so that it focuses on innovators, game-changers, and pioneers who are essential for success in a VUCA environment.
  • Rapid learning — Develop systems to increase the speed of individual and organizational learning.
  • More internal movement — Develop process to proactively speed up the movement of employees internally [4] to where they can have a greater impact.
  • Contingent labor — Use contingent labor as a significant percentage of the workforce, in order to increase your capability to meet sudden upturns, downturns, and new skill needs.
  • Rapid increase in talent — Develop the capability for rapid hiring for sudden needs through poaching, with pre-identifying talent pools and by building professional communities.
  • Rapid release of talent — Develop the capability for rapidly releasing surplus and inappropriately skilled workers.
  • Fluid job descriptions — Develop continually evolving job descriptions and hiring standards that reflect the continually changing work.
  • Outsourcing for flexibility — Use outsourcing to fill sudden needs and overflow work.
  • Competitive advantage — Develop talent management processes and programs that provide a continual competitive advantage over other talent competitors.

Things That Talent Management Must Stop Doing to Meet the VUCA Environment

Leaders must dramatically modify or stop doing the following things to prepare for a VUCA environment.

  • Stop seeking permanent solutions in talent management and HR
  • Stop relying on the past and trends as an accurate predictor of the future
  • Stop benchmarking best practices and solutions to most current problems
  • Stop assuming that long-term employee retention is possible or even desirable
  • Stop assuming that “one-size-fits-all” is a good approach to managing employees
  • Eliminate “fit” as a desirable criterion in hiring and retention
  • Stop assuming that the corporate culture and even corporate values should automatically remain fixed

You Must Also Prepare for Disruptive Changes That Can Be Predicted

Although these listed problems will likely appear unexpectedly, these dramatic changes in talent management can be anticipated, so they must be planned for.

  • A continually changing set of required employee skills and job duties and a huge gap between the needed and the available skill sets
  • A completely new set of leadership skills that will focus on agility, flexibility, and in developing a “just-in-time” solutions capability within the team
  • Dramatic fluctuations in employee turnover
  • Continually changing candidate expectations
  • Dramatic shifts in the volume and quality of applications
  • Frequent changes in offer acceptance rates
  • Continuous development of new communications and learning tools
  • Generational changes that occurs every 6 years instead of 20

Final Thoughts

The new talent management model that I am recommending is based on the assumption that for the foreseeable future, most problems and opportunities will simply not be predictable. The model however does take advantage of the fact that the skill and capability of handling completely new unforeseen situations can be developed. My challenge and question to talent management leaders is “What are you doing to ensure that every talent management process and employee can produce optimal results in a VUCA environment? The time is come to put together a planning session devoted to making the shift toward the new agile talent management model.


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URL to article: http://www.ere.net/2012/01/16/vuca-the-new-normal-for-talent-management-and-workforce-planning/

URLs in this post:

[1] Image: http://www.ere.net/wp-content/uploads/2012/01/NASA-Chaos-at-the-heart-of-Orion.jpg

[2] VUCA: http://en.wikipedia.org/wiki/Volatility,_uncertainty,_complexity_and_ambiguity

[3] retain: http://www.ere.net/tags/retention

[4] internally: http://wwww.ere.net/tags/internalmobility

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