Management of the “skills inventory” in times of major change

Abstract

Times of major change can pose extra-ordinary challenges to any organisation. Case studies investigating how companies had faced the challenges of a major change in the previous four or five years, and especially how they attempted to prepare their managers for their new roles, revealed that many were ill-equipped to face the task. One particular result suggested that firms that had relied only on their existing management team and/or on internal promotions had not fared as well as those for whom circumstances permitted the recruitment of new managers to key posts. This observation seems to run counter to the management dictum that firms should always endeavour to hold onto their experienced staff. A simple system dynamics model of a firm's “skills inventory” sheds light on this apparent paradox. The model indicates that in times of stability or slow/incremental change, retaining existing staff is indeed very important. However, in times of major change, as the obsolescence rate of the firm's existing skill base increases rapidly, importing critical skills with new recruits may be the only realistic way of boosting the skill-base to the necessary levels. This situation is likely to have important competitiveness consequences for firms with traditionally low staff attrition rates, where growth is not creating new post opportunities, or in areas where the external recruitment market offers only limited access to new appointees with advanced skills. Copyright © 2001 John Wiley & Sons, Ltd.