In his new book, Talent on Demand, Peter Cappelli attempts to address an issue that I would hope all companies are thinking about today: how to manage the unpredictable demand for talent.

Unlike other books on talent management, this book uses terms and examples that CEOs and CFOs can understand. Instead of just talking about turnover, productivity and other HR metrics, Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, talks in terms of making money: “And making money requires that you understand the costs as well as the benefits associated with your talent management choices,” he says.

The gist of Cappelli’s book is that most companies are relying on outdated and ineffective strategies to develop their internal talent, while being way too dependent on outside hiring.

For example, many companies still use a development model for employees that assumes they will be with them for their entire careers. Under what Cappelli calls the “Organization Man” model, companies train employees to learn the skills that are specific to their business needs, with the understanding that those employees will grow with the company.

But the reality today is that companies can’t predict what their talent needs are going to be 10 years from now, and even if they could, it’s not likely that their employees will stay with them for that long.

Most employers have realized that and thus have become overly dependent on outside hiring, which has its own set of challenges.

Cappelli argues that employers should instead adopt “on-demand talent management,” which means developing employees according to competencies that could be valuable no matter where the business is in 10 years.

He advocates on-the-job training, but cautions companies against rotational assignments, because too often good talent ends up waiting on the sidelines for their rotation to come up, and nothing is more frustrating to an employee than waiting. Other ways that companies can get the most bang from their buck in on-demand training are:

• Peer training, where employees can volunteer to mentor others.
• Outside training, where organizations lend employees to outside charities or even to clients (as consulting company Mercer does) to learn from those experiences.
• Cost-shared training, where employees are asked to foot some of the bill for their outside training. One way to do this is through training wages, where employers pay employees less while they are in a training program. Another way is through tuition assistance programs, or having them go through training before they take on a job.

All of Cappelli’s points are pretty interesting, and companies should take many of them seriously.

But the real problem today with companies is that they too often give lip service to employee development, but fail to follow through. I can’t count how many times a week I hear companies say how much they value their people, that they’re the No. 1 asset, etc. But when the going gets tough, those same people are the first to get the boot.

Since we seem to be heading into a recession, I wonder whether companies will embrace Cappelli’s ideas on developing talent, or will just resort to the old ways of mass layoffs, with the hope that they will be able to find the talent again when the market picks up. What do you think?