Two Lessons on Talent Management from the Coffee Industry in Indonesia

Last Friday, Harian KOMPAS published an article about the increase in coffee bean prices in Indonesia. Indonesia is the #4 coffee-producing country in the world, just behind Brazil, Vietnam, and Colombia. At the time of writing, the price had reached a historical peak, tripling its normal value.

This price surge is caused by several factors related to supply demand, including reduced coffee production in Asia and Central America due to climate change. An earlier report from the Climate Institute predicts coffee production will be cut in half by 2050 due to climate change, which is quite worrying.

Another possible cause is the decrease in Brazil and Vietnam's coffee production, as coffee fields were converted into residential areas. From the demand side, the International Coffee Organization (ICO)'s 2024 report forecasts that global coffee demand will keep increasing by 2-2,5% per year. With a decreasing supply and increasing demand, it is no wonder that the price is increasing.

However, despite the price increase, the benefits for Indonesian coffee farmers remain suboptimal, according to the KOMPAS article. Considering the crucial timing and the potential economic benefit for Indonesia, President Jokowi is urging an increase in productivity to 8-9 tonnes per hectare (currently at 1-2 tonnes).

As a regular coffee enjoyer and someone who works in HR, I found some parallels between the challenges in the coffee industry and talent management practices in organizations.

Here are two key lessons I observed:

Lesson 1: Identify Existing Coffee Plants' Productivity

Old coffee plants are often left unattended in Indonesian plantations, leading to minimal harvests. Data from the Ministry of Agriculture reports that many Indonesian coffee plants are well beyond their productive period. The plants that were productive in the past may no longer yield high outputs now, while also consuming resources that could support more productive plants.

Similarly, in organizations, underperforming employees can hinder overall growth. Just as coffee plantations have limited land, companies have limited resources. If underperforming employees occupy these resources, the organization's growth can be severely restricted.

While age is a primary productivity indicator for coffee plants, obviously it is not the same for humans. Coffee plants can't just decide on their own that they want to upskill themselves. Humans can think for themselves and make decisions on their own. Therefore, a "willingness to grow, change, and adapt" can instead serve as a key indicator for employee productivity.

This McKinsey article mentions that companies that effectively manage their talent will see a significant increase in productivity and performance. Organizations should aspire to create an environment where employees are encouraged and supported to reach their full potential.

Lesson 2: The Importance of Investing in High-Potential Coffee Variety

In the article, it’s noted that Indonesian farmers are not using enough high-quality seeds. Procuring seeds with high production potential, pest resistance, and climate adaptability is seen as too challenging.

The situation is quite similar to the organizational challenge of finding and retaining top talent. Acquiring good talent is already difficult, as written in this McKinsey article. Once acquired, just like those coffee plants, it requires extra effort to nurture and maintain. Business leaders must put in extra work to rejuvenate their workforce with new talent and ensure there is enough space for growth.

Many business leaders, like local coffee farmers, might think, "If the existing ones are still doing what they're supposed to do, why bother with the extra effort?" However, the long-term benefits of investing in high-potential talent are significant and cannot be ignored, just like what's happening in the Indonesian coffee market right now.

Conclusion

The complex challenges faced by the coffee industry in Indonesia is an interesting study that offers valuable insights applicable to other areas, such as talent management. While this post does not cover the topic comprehensively, the two simple key lessons observed here can be applied to various organizations. By reflecting on these lessons, organizations can better achieve their goals.

I hope you find these insights as intriguing and useful as I do.