Just the other day, I was reviewing an article from Pharmaceutical Technology on why the pharma industry is having so many issues with quality. One of the root causes identified was training/development of employees and the retention of experienced employees. So, today an article in the Wall Street Journal appears letting us know that the retention of talent at companies is a problem across US businesses.

The article is actually a brief interview with Ram Charan, a widely respected management consultant and former professor from Harvard Business School, Kellogg School of Management and Boston University. Based on the brief excerpt (I hope there was a longer interview that this was a part of), we can glean from Mr. Charan that CEO’s have focused particularly on quarterly profits and the like, and are not focusing on identifying and retaining talent. This is not surprising, as American management has never broken away from their primary focus on numbers. During a recession, then, they will focus even more intently on profits. The outcome, of course, is that steps are taken which increase the short term numbers, but fail miserably at assuring long term growth. As Deming was fond of saying, anyone can increase short term profits. Mr. Charan is concerned that as the economy recovers, good employees will be easily drawn off to other companies, as their talent goes unrecognized by their former employers.

I wanted to draw attention to one particular element that I think reflects an enormous problem in American business. Mr. Charan cautions, “The biggest risk is top management not knowing explicitly whom they depend on lower in the organization for success.” It has amazed me for years to what extent senior management in companies have no idea who does what, and who really contributes to the success of the company. Every major layoff that I’ve been around (and I’ve survived many) forces the loss of huge numbers of very valuable employees, and leaves an equally large number of people who have no idea what they are doing behind. The end result is either contract arrangements with the former employees, usually at great expense, or a slow return in numbers of employees as the company has to hire as the only solution to getting the job done.

One can only hope businesses will start listening to Mr. Charan. He says he works 365 days a year, so he’s clearly talking to a lot of them. Training and development of talent is a key element of the Deming philosophy, and thus we must understand it to be key to the transformation of American business.