15

TALENT MANAGEMENT

Our assets walk out of the door each evening. We have to make sure that they come back the next morning.

 

—Narayan Murthy

This oft repeated quote by the founder of Infosys, Narayan Murthy, is reminiscent of a book Atlas Shrugged by Ayn Rand. The book explores a dystopian society where leading innovators, ranging from industrialists to artists, refuse to be exploited by society and go on a strike. These most productive citizens of the society, led by the mysterious John Galt, progressively disappear. Galt describes the strike as ‘stopping the motor of the world’ by withdrawing the ‘minds’ that drive society's growth and productivity. In their efforts, these people ‘of the mind’ hope to demonstrate that a world in which the individual is not free to create is doomed. Does it strike a chord? Can the same situation occur in an organization? Of course it can! Any organization which does not let, and in fact not help its people be their best is doomed. Employees might not go on strike, but they definitely do have the option to leave. And therein lies the importance of Talent Management.

15.1 TALENT MANAGEMENT DEFINED

Over the years, the nature of GDP in India and across the world has seen a significant shift towards services. What does this actually mean for the management profession? This question can be easily answered if you look at how services revenue gets generated. Service of any kind (be it the customer care executive who gives you the information when you call your bank, or the Guest Relations Executive at the Hotel where you have organized a conference who ensures that your event goes like clockwork) is all generated through people. You may rightly argue that another couple of intangibles which play a big role in this revenue generation is a process and a technology. But needless to argue, no process or technology is any good without the right talent managing them. And why speak of just managing—the right people can create the right design, the right processes and adopt the right technology to propel any organization in the desired direction. And this is where the raison deter of this chapter lies.

Over the last few decades, human resources have, therefore, developed a strategic importance. While earlier it was enough to have the right person in the right job, now there are many more variables an HR Manager would like to have control on. The HR manager would like to have the right person at the right place at the right time for the optimum time and at the right price. On the one hand, while human resources have developed heightened value as a factor of production the softer parts to this resource such as temperament, knowledge, relationship-building skills, competence make it increasingly complex to manage it in a strictly scientific manner.

On a lighter note, finding a method in this entire madness is what talent management is all about. On a serious note, organizations have now realized that people could be that crucial differentiating edge for them in the increasingly competitive marketplace. Increasingly, all organizations are terming their people strategy as Talent Management to differentiate it from the hackneyed methods of handling the essential processes of Human Resources Development.

 

Talent is the ‘identifiable ability that is perceived to add immediate or future value to any prescribed activity, discipline or entrepreneur’ (Maurice). Talent Management can, therefore, be defined as the conscious and deliberate attempt to attract, engage, develop and retain people with the aptitude and ability to meet current and future organizational need. It could also be defined as ‘the process by which talent is sought, developed and directed to achieve business goals’ (CIPD 2006).

 

15.2 SETTING THE CONTEXT

While talent management fast develops as a hot topic of discussion for all HR managers, it continues to be perceived and understood as a fuzzy combination of some esoteric elements of the HR system which if managed right would make things work. Many models have been propounded by management gurus and large consultancy firms. The paradox lies in the fact that there is no single model which has been proven to be the right model for all organizations. This is not difficult to understand given the fact that every organization is different from the other. Some of these differences are easily notable such as size, product and geography, but there are many other variables such as culture, ambition and leadership which are not. Rather than spending time, understanding these different models, a better idea instead would be to develop a clear understanding of the dynamics of the business, how they have changed as far as the people dimension is concerned. This understanding when juxtaposed with the business vision would give the correct answer to what the talent strategy of an organization should be. And you have to remember there are no standard answers and by now, you are familiar that one size shall not fit all.

 

15.2.1 The Search for Talent Is Going Global

A brief look at the talent pool in different parts of the world is different. The baby boomers in the developed world (USA, Europe and Japan) are now retiring. These retirees are taking with them valuable experience knowledge and leaving big gaps in the workforce. In these countries corporate recruiters are beginning to look outside their own markets to fill the skills gap. As per a survey ‘People for growth: The talent challenge in emerging markets, a report from the Economist Intelligence Unit’ conducted by ‘Economist’, many recruiters, particularly in the pharmaceuticals, information technology (IT) and engineering sectors, judging by their survey results—will increasingly tap developing countries for talent. Labour mobility has grown to such an extent now that it is fair to say that talent has become globalized for today and it is not difficult for an Indian company to source the appropriate talent they require from China, Brazil or Europe and vice versa.

While the Western World faces a shortage, India is witnessing a steady brain gain since the last few years. A survey published in 2008 showed that graduates from India's most prestigious universities, the IITs (Indian institutes of technology), increasingly see India as the best place in the world to base themselves. Until about five years ago, large numbers of these elite graduates abandoned their country at the first opportunity to take up well-paid jobs or to continue their education in the USA and Europe. More and more Indian techies, scientists, doctors are homeward bound even now, giving up high-paying jobs abroad and joining R&D units, hospitals, government institutions or even their alma mater here.

Another significant factor affecting the worldwide talent pool is the contribution of the emerging markets which are producing a surplus of young talent. In fact, the emerging countries produce twice the number of university-educated professionals than the developed world. However, they are not proving to be the easy answer to the worldwide talent deficit. Recruiters who hire from these emerging markets (which also include India) point out a huge variation in the capability of these candidates, whether it is engineering or general-management skills. Poor English skills, lack of experience of working in a team, and being proactive are also some of the other softer issues which are a hitch in proving the suitability of these candidates to the profiles and roles available.

15.2.2 Lateral Recruiting

In this fast changing world, where probably more than one new product and service is introduced in the market everyday, the requirement for new skills is continuously surfacing. A decade back animation jobs were few, content building was unheard of, wind power generation was a niche industry. These new generation businesses especially those powered by the Internet and the retail revolution are continuously generating increasing requirements for new kinds of skills with the result that demand has far outstripped supply of trained professionals in these new sunrise industries. With this scenario, as the background it is not possible to hire or recruit people based on their past experience. Consequently, talent demand of these new industries is being met from the established industries. Therefore, Insurance is raiding Banking; Internet content building talent is being sourced from the publishing world. This kind of lateral recruitment is, therefore, putting unnatural pressures on a variety of industries making the problem more acute than what it was earlier.

Second, the emergence of efficient capital market in India has enabled the rise of many small and medium-sized companies that are increasingly targeting the same people sought by the big companies. These companies are able to whet the appetite for high salaries and big-sized opportunities to attract the young and the restless from the established firms and hence, make the talent shortage for bigger companies even more acute (Figure 15.1).

15.2.3 Finding and Training People with a Range of Management Skills Top Is Priority

In addition to this broad demand for talent, the demand for high-calibre managerial talent is growing. As globalization, deregulation and rapid advance in technology is changing the game in most industries, and the job of managers is becoming more challenging. Companies today need managers who can respond to these challenges. They need leaders who can transform their business and inspire their people. In addition to the increased demand from established companies for highly capable managers, start-ups have added a whole new layer of demand in this talent pool. Though a number of talented managers have always been attracted to small companies, the flood of venture capital in the mid- to late 1990s and the burst of high tech and Internet business opportunities suddenly made small companies a hot destination. Over the next two decades, companies will be competing intensely for the limited talent pool of capable managers. Short-term fluctuations in economic activity will make the talent market a little looser or tighter from time to time, but the long-term trends are clear.

 

Figure 15.1 The talent gap in India adapted from ‘Egon Zehnder International’

 

The Economist Intelligence Unit (2008) brought out a report titled ‘Talent wars: The struggle for tomorrow's workforce’. This report was based on a study which took opinions from 944 executives based on developed as well as developing markets. The survey called Competing on Talent was run in March 2008. Two questions which are pertinent to our discussion were: (1) which skills and knowledge do you think will be critical to your organization's success over the next three years? and (2) which skills and knowledge do you think will be the hardest for your organization to source over the next three years? The results given in Table 15.1 show that the skills which are most important for success of organizations are also the hardest to find. And these skills are management skills.

15.2.4 Changing Face of the Workforce

In India, today the workforce is more heterogeneous than at any time in history. The workforce today has multiple generations, culturally diverse people working together. Traditionalists, Gen X and Gen Y. each has its distinct set of work values, learning and communication styles and personal and professional motivators. Organizations that will thrive in the 21st century will develop diverse programmes and technologies that effectively motivate, reward and develop these distinct generations.

However, as time flows, Gen Y will form the larger percentage of the workforce and would prove to be harder to manage than their predecessors. This is a generation, which has been and is being shaped among other things by the Internet and technology and information overload, not to forget overzealous parents. Recruiters point out that unlike the previous generations, they will be more demanding in terms of a variety of things. They want their jobs to be more meaningful, at the same time they want flexibility, professional freedom and space to perform and grow, higher rewards and a better work–life balance. Many of them have seen their parents work all their life for the same company and then retire from there. They are not interested in killing themselves for work.

 

Table 15.1 Skills most important and most difficult to source

Skills	Which Skills and Knowledge Do You Think will be Critical to Your Organization's Success Over the Next Three Years? (Select up to 3 Skills)	Which Skills and Knowledge Do You Think will be the Hardest for your Organization to Source Over the Next Three Years? (Select up to 3 Skills)
■ Ability to deal with and manage change	68 (Rank 1)	47 (Rank 1)
■ Ability to think strategically	45 (Rank 2)	46 (Rank 2)
■ Communication and Interpersonal skills	41 (Rank 3)	26
■ Analytic and problem-solving skills	32	29 (Rank 3)
■ Ability to work with virtual teams	31	22
■ Project management skills	27	24
■ Process design and management skills	16	21
■ Industry knowledge	16	19
■ Information system skills	14	18
■ Other	3	3
■ Don't know	1	2

 

The fastest growing segment in the talent pool is that of the knowledge worker. Wikipedia defines knowledge workers in today's workforce as individuals who are valued for their ability to interpret information within a specific subject area. They will often advance the overall understanding of that subject through focused analysis, design and/or development. They use research skills to define problems and to identify alternatives. The increased skill level that these workers bring results in an equivalent expectation is that they will be rewarded (both socially and financially) in ways that recognize the increased value of their effort. For instance, expectations of remuneration are changing, from an assured salary to one that often includes performance-based bonuses and incentives and stock options as part of the package. At times, their expectations of personal recognition and larger social power far exceed compensation too.

‘Job mobility’ is another significant change in this fast-developing diverse knowledge workforce. A decade ago ‘high performers’ would change their job once or twice during their entire career. What was taboo a decade back is a statement of worth for a professional in the corporate world. What was interpreted as ‘loyalty’ is now termed stagnation. Now the average executive today will work in six to seven companies; in another 10 years this might go up.

15.2.5 Out-of-box Thinking Is Required

Talent Management was introduced by McKinsey (1997) in their article called ‘The war for talent’ about a decade back. Since then companies have been sensitive to the strategic importance of the concept and have also tried (though a very few can be said to have been consistent) to adopt and implement it, most of the failures largely trace their roots to the fact that the entire design and process of talent management was left in the hands of the Human Resources Department. This does not mean that the HR departments failed to do their job—what was missing was the ownership of this crucial process by Line Managers and Business Managers. In the absence of this, no initiative could be taken to its logical conclusion in true spirit. In the absence of shared ownership of the process efforts that have been put in, initiatives which have been taken do not have perspective.

Companies that take the long-term strategic view will typically ask themselves a number of far-reaching questions: Where is the company aiming to be in three, five or ten years from now? In which main markets and fields of business will it operate in future? What do the dynamics of growth and competition look like in those markets? And finally, is the talent pipeline strong enough to deliver the long-term strategy? As dynamics continue to change, executives must constantly rethink the way companies plan to attract, motivate and retain their employees different from the way their competitors are doing to stay ahead in this race for talent. This would, therefore, mean doing things differently from any other—call it Innovation or Out-of-Box Thinking.

 

15.3 OBJECTIVES OF TALENT MANAGEMENT

A talent management system should have the capability to create and continuously optimize the talent resources needed to execute business strategy—attracting engaging and developing and retaining them. Their performance should be driven in light of the strategic goals of the organization. Through innovation and continuous improvement they should be able to add value to themselves as well as the organization.

The four explicit objectives of a talent management system are:

• talent attraction
• talent engagement
• talent development
• talent retention

Table 15.2 Top drivers of attraction (ranking country-wise)

 

15.3.1 Talent Attraction: The Marketing Challenge

As per Towers Perrin Global Workforce Study (2010) the top drivers for talent in the emerging economies were very different from those in matured economies. Take a look at what the survey had to say (Table 15.2).

The study has brought out that the top drivers for attraction to the talent in India are:

• Rank I: career advancement
• Rank II: learning and development opportunities
• Rank III: challenging work

Packaging these drivers of talent attraction in a company's brand identity is the trick to building a successful Employer Brand. Employer branding is defined by Simon Barrow and Tim Ambler (1996) as ‘the package of functional, economic, psychological benefits provided by employment and identified with the employing company’.

Package of benefits offered by the company has come to be known as the ‘Employee Value Proposition (EVP)’. For any brand to become attractive it has to have an EVP. A winning EVP should have rational as well as emotive benefits. Therefore, a strong employer brand would include features to promise exciting work, great company, wealth and reward, growth and development. Contrary to yesteryears, when consultants would stress on defining and communicating ‘a’ powerful EVP now the same is being toted as being outmoded. With the workplace becoming more and more diverse multiple value propositions have to be developed and communicated to have diverse talent walk in through your doors. Read about how to develop and drive an employment brand strategy in Chapter 4 on Recruitment.

 

One obvious question which comes to mind is what about the company brand? The company brand definitely matters, but it is the employer brand that attracts the kind of employees that all employers are on the lookout for. In July 2008, Mercer Insight indicated, ‘We see companies with strong employer brands that are able to pay below the median salaries and still manage to attract and retain high quality talent.’ There are few companies that extend their company brands and merge it with the employer brand. McDonald, their catch phrase ‘I'm lovin’ It!’, appeals to both the company as well as the employer brand. McDonald, people promise affirms: ‘We're not just a hamburger company serving people, we're a people company serving hamburgers.’

Advantages of Employer Branding

A success employer brand has many benefits:

• Ability to attract the best in a talent pool.
• Ability to resist a salary hike in a competitive market—potential candidates will have other deciding factors.
• Shorter time to fill positions.
• Higher employee commitment.
• Lower employee turnover.

15.3.2 Talent Engagement

Employee engagement can be assured by taking into consideration of chiefly five factors (Figure 15.2). These are:

 

The Work Itself

The work itself can create immense job satisfaction and give reasons to the employee to stay engaged. The factors involved are interesting and challenging work, responsibility (feeling that the work is important and having control over one's resources), autonomy (freedom to act), scope to use and develop skills and abilities, the availability of resources required to carry out the work and opportunities for advancement.

Opportunities for Personal Growth

Most people want to move ahead, i.e., grow in their jobs. Learning is a satisfying and rewarding experience and makes significant contribution towards making the employee feel that the organization cares and is fair to its people. Satisfaction of growth needs depends on people finding the opportunity to be what they are best at and become what they can. The opportunity to grow and develop is a motivating factor that directly impacts on employee engagement when it is an intrinsic element of the work.

Work Environment

The work environment should be such that it not only nurtures but actually enhances the performance and potential of the employee. The various different components which contribute to work environment is the communication, employee involvement, work–life balance, working conditions and building effective work relationships.

 

Figure 15.2 Talent engagement

Leadership

Managers play a big role in engaging talent. For employees it is much more important that the line manager directly engages with them in enabling learning and managing their performance than the wider organization-driven schemes.

Opportunities to Contribute

To engage employees they need to believe that they can make a difference. Employees when given the opportunity to contribute take more active interest in the organization beyond their personal interest. A well-managed suggestion scheme in an organization is an excellent example of the same.

 

Internal Branding

Internal branding is also a potent tool to engage an employee. While the employer brand is used externally to attract talent, internal branding can be successfully used to engage and retain the employee. While the definition of the employer brand stays the same, it has to be reinforced internally in different ways.

The four areas where the processes need to be aligned with the employer brand are:

1. Recruitment and on boarding: The way an employee gets hired and then inducted into the organization are the first important touch points for employer branding. Processes and practices in this phase have to be carefully aligned with employer branding. For example, an organization calling itself ‘agile’ cannot have the new recruit wait for a day to get an e-mail id.
2. Performance management: The way performance is driven and recognized says a lot about the organization. What it says should agree with what the brand claims to be. For example, an organization which says it has high performance culture cannot not have a formal process for performance improvement in place.
3. Rewards and recognition: What an organization rewards and recognizes is in itself a statement about the organization. For example, an organization which says it is driven by values should not have reward and recognition around achievement only.
4. Internal communication: Branding has to be communicated by the organization, and within the organization not through ‘talk’ but by walking the talk.

15.3.3 Talent Development

Earlier it was advocated and followed that companies identify their top performers and put them in a star club. But it has been seen that such a thing ends up in a huge political exercise, especially if the organization is large with many divisions. Organizations that focus their development efforts on the high achievers, often fail to recognize the contributions of staff members who offer greater intangibles. A list of best performers is too often composed of individuals who generate revenue, thus, ignoring the work of individuals who act as a bridge between departments. There are no metrics to measure someone's value in being able to communicate with individuals across the entire organization; with passing time the popular theory which has emerged is that a talent strategy is required for the entire organization and not the privileged few. At the same time, it is not possible to send the entire organization on a similar developmental path. Therefore, what we advocate is a segmentation of the talent workforce in an organization and an approach for each segment differently. How an organization segments them shall depend on its core business and its talent strategy.

For example, in Johnson and Johnson, they have a reputation of being a long-term player, but they do not rest on their laurels for this. They build careers inside the organization, as they appreciate the role of developing talent and then effectively engaging them too. They use effective career management policy, for an effective talent management practice. They also have a fair and transparent succession planning, training and development, 360-degree feedback process and stable career growth, and they ensure that the employee can see continuous ‘care’ inside the organization. Though they are not the best pay masters, they build careers inside the organization. They have a commitment towards the employee to ensure their overall development and they continuously engage themselves in delivering their commitment. Hence, they do not have a high turnover either. Another example is that of GE. Globally,. it spends more than $1 billion on training and development of the employees to keep them gainfully engaged. They have entry level leadership programmes and experienced leadership programmes. They also identify talent through a systematic rating process. All employers are rated on a rating system of 8. The three broad programmes are: Crotonville leadership programme, the functional skill programme and the business knowledge courses.

Some inputs the organization could follow for talent development are:

• The philosophy of talent management should lay emphasis on engaging and developing talent that has a strong potential, rather than those that have a good appraisal reviews.
• Nurturing, encouraging and moulding the growth of talent will help in facilitating the employee personal growth—this needs to be a two-way process.
• An environment conducive to continuous learning and regular reviews which is measured across global benchmarks.
• Rather than just preaching the work–life balance philosophy, it should be practiced.
• Internal job postings, career and succession planning, mentoring and coaching, job shadowing, secondments, all of these act as an aid to the employee in honing their skills.
• The psychological contract between organization and employee now last only for a couple of years. Therefore, organizations must be prepared for the regular churn of employees. Job security once valued is now replaced with developing employees, hierarchy with challenge and reward with lifestyle.

It is imperative that an organization finds out how engaged its workforce is, especially its high performers. Diagnose the factors that are leading to a reduction in engagement and look for leadership's behaviours, organizational factors or manager's which may be causing this. This can be done with the help of an employee engagement survey. To learn more about how to design and implement the data obtained from the survey refer to Chapter 10. Then align your improvement efforts with the requirements of your talent strategy.

15.3.4 Retention: Keeping Up the Momentum

It is highly unlikely that an employee will leave if they have coffee with their mentor once in every two months and that about sums up retention. It is a Catch 22 situation, whether an organization should focus on potential employees/key employees or focus on all employees in the organization. If the organization does not focus on key employees, there are strong chances that there would be an increased risk of leaving.

Some inputs the organization could follow for talent retention of employees are:

• Competitive compensation strategies and good incentives.
• Motivators such as autonomy at work, prudence to utilize their skill sets and recognition, sense of pride and achievement are also important for the employee.
• Career opportunities for growth for ‘high potential employees’ and ‘star performers’ and the rest of the employees.
• Aspiration management for ‘high potential employees’ and ‘star performers’.
• Flexi work initiatives such as telecommuting, flexi timings and fun at work.
• Global job rotations.
• Job enrichment.
• Mentoring and coaching.
• Leadership development.
• Step up programmes which make an employee ready to take on future roles and responsibilities.
• Organizations have to create an ambience where talent can bloom.
• Provide a clear sight of the employee's future growth prospects from their present career path.
• Organizations must place employees in the correct outfit which suits them and their career the most.
• They have to put in place systems that will help unleash the potential of their workforce.
• The conducive environment must create an emotional bonding between the organization and the employees.
• They must take effective steps to find out the issues creating a negative image in the minds of the employees.
• They have to build a reward and recognition mechanism that provides value for employees.

Amtek Auto Group have the following retention strategies: (1) strengthening their direct reportees, (2) establishing a talent standard to create benchmark for evaluation and promotion, (3) to drive a simple and probing review of talent, (4) holding managers or critical process leaders accountable for strengthening their talent pools and (5) continuous coaching and nurturing environment for their talent. They strongly believe that if they invest and nurture talent to become catalyst in the change process, the employees in turn would be grateful to the company and will not dessert them when they need them the most.

Organizations must undergo an evaluation process to see where they stand on the following parameters in order to battle the most threatening attrition war. They must evolve a strategic thought process based on the above factors and take measures to resolve problems and create a healthy environment for employees to grow and become more involved and associated with the company.

 

15.4 TALENT MANAGEMENT FRAMEWORK

Figure 15.3 depicts the talent management framework that we propose. In a nutshell, how this model seeks to explain is as follows. Every business operates in its unique environment. Based on its vision for itself in the environment that it exists, it carves a business strategy to reach there. A key ingredient of this business strategy is its talent strategy. A talent strategy will also outline and conceptualize how the organization is going to differentiate itself in terms of its people capability in the market. This decision would in turn affect all HR processes accordingly. For these HR processes to have an optimal impact a conducive organizational culture is required. If all these components of the organizational people system are in sync, it could be safely assumed that talent management should be successful in an enterprise. Now let us look at each of these components one by one.

1. Business environment
2. Business strategy
3. Talent strategy
4. Talent culture
5. Differentiated capability
6. HR systems and processes
   1. Managing demand
   2. Performance management
   3. Leadership development

Figure 15.3 Talent management framework

15.4.1 Business Environment

Business environment consists of all those factors that have a bearing on the business. One would typically start with the classical PESTLE (political, economic, social, technological, legal and environment) framework to study the macro factors which affect businesses to build a view on the business environment. This would have to be typically followed with a closer look at the industry specifics. An old fashioned, but nonetheless effective way would be to do a SWOT analysis. This helps you find answers to all pertinent questions based on which the organization's business strategy will have to be prepared.

Trends in the external business environment will have multiple HR implications. What is going on in the economy and what is the demand of your products and services will help you identify which business units will grow, at what pace and which are the ones which may need to be scaled down or probably exited from.

What are the criteria on the basis of which the customer is buying?—is it price (value for money), quality, responsiveness, on-time delivery, relationship or convenience? Often the way to win in the market is by giving the customer what they want better than what your competitors are. Knowing your customer preferences will give you the idea as to what kind of cultural capability your organization needs to have. These will have implication on how you hire, where you hire from and what kind of behaviours would your performance management system seek to engender within the organization.

15.4.2 Business Strategy

Based on an analysis of the business environment and a keen understanding of the organization's value proposition one would be able to identify various sources of competitive advantage that the organization has. These could be one or more of a long list which includes—innovation, on-time delivery, convenience, first in market, quality, cost, relationships, mergers acquisitions and alliances, synergy, branding, distribution or service. A strategy would need you to assess how much of these competitive advantage are being realized by the organization and which are those that it has the potential to realize in the future. These would then form the elements of the strategy with which the organization would approach the market.

15.4.3 Talent Strategy

Once you have scoped your business and your assessment of the market situation and come up with your business strategy you will then want to define and articulate the talent strategy in more detail. This would be akin to identifying the cultural capability of your organization. This would mean identifying those HR practices that will have greatest influence on creating sustaining superior performance and desired culture towards attainment of the business strategy.

The talent strategy should be able to give a direction to all the employee processes to attain the business objective. But let us first understand what talent strategy means. When you juxtapose your organizational vision, organizational value proposition and the talent environment, you would be able to identify areas of competitive advantage that your organization has in the given talent landscape. What it means is that an analysis of the talent landscape will give you a clear idea of what it takes to attract and retain the talent that you need to attain your business objectives. The prescription of what it takes might be a long list of items which may include career development, financial incentives, rotation to other businesses and regions, flexible working conditions, fast track planning, learning and development opportunities, reputation as a good employer. Needless to say that for an organization it is not possible to do all of it (in fact some of these may together actually work at cross purposes or might be financially not feasible). Talent strategy is all about picking up those 20 per cent attributes which might lead to an 80 per cent achievement of objectives.

 

For example, a BPO might want to retain its agents, and it might find out that all its competitors are paying their people much more than them. However, the constraint it may have that with its current financial condition might not permit it to change its compensation benchmarks drastically. The choice can then be to pay the best and retain nearly all its people or pay at the 95th percentile and implement best practices in the market to retain them as best as possible or stick to paying what it is and think of starting to hire absolute freshers and train them to be the best and keep a steady supply going. None of them could be termed to be right or wrong because strategy is all about making the right choices that you may deliver optimum value to your organization through your people processes.

A talent strategy views workforce as a portfolio of human resource assets that are differentiated based on an assessment of each employee's current and potential contribution to an organization. This strategy makes investments in employees with whom it believes will best help it achieve competitive excellence in the future. Most organizations’ talent strategy contains the following three directives:

1. Cultivate the superkeeper.
2. Retain key positions backups.
3. Appropriately allocate training, rewards, education, assignment and development.

Cultivate the Superkeeper

This directive involves identification, selection, development and retention of Superkeepers. They are relatively a very small group in the organization around 3 per cent who have by way of work established superior accomplishments; they also serve as an inspiration to others to attain superior accomplishments. Their loss severely restrains the growth of the organization, as they have a mighty impact on the current and future of the organization.

Retain Key Positions Backups

This directive refers to the identification and development of high quality replacements for a small number of key positions for current and future success of the organization. If the gaps are not filled on immediate basis for these key positions, it can be detrimental for the company. Those that fill in the gaps should have exceeded performance expectations and should also be role models for other employees.

Appropriately Allocate Training, Rewards, Education, Assignment and Development

Organizations nowadays make heavy investments in the above, the return on most of these investments will definitely reap the benefits only in the long run. The employee groups for investments can be classified on the basis of the performance ratings, their competencies, leadership capabilities and other areas that could deem relevant. Those that are outstanding, superior, standard and developing (levels of evaluation of performance rating), based on these levels, the organizations could make investments in employees. (Table 15.3).

 

15.4.4 Talent Culture

Companies continuously seek to audit their Talent Culture to check if its cultural environment is enabling then to maximize the contribution of its workforce. A talent culture is made up of the values, beliefs, behaviours and environment required to attract, engage and retain committed and competent employees.

 

Table 15.3 Different strokes for different folks—differential treatment of employees

 

Companies that embrace a talent culture and feature it as a key element of their corporate strategy consistently outperform companies that do not. A study done by McKinsey (2008) reveals that though talent management has reached the C-suite it has yet to become a part of its DNA. A talent culture has to lead from the top and can be achieved and sustained only if it is hardwired into a company's processes. It is an old adage that people do not leave their organizations, they leave their managers and, therefore, much of the employee turnover in organizations today results from frustration with poor managerial skills, a perceived lack of advancement opportunities and the overall culture of the workplace. An organization's culture should aspire to affirm and reward critical talent of the organization.

An article ‘Making Talent a Strategic Priority in the McKinsey Quarterly 2008 Number’ identified seven obstacles to good talent management. This seven obstacles, if overcome, can produce the right talent culture in an organization. The list, sorted in the decreasing order of importance, is as follows:

1. Senior managers do not spend enough high-quality time on talent management.
2. Organization is ‘siloed’ and does not encourage constructive collaboration, sharing of resources.
3. Line managers are not sufficiently committed to the development of people's capabilities and careers.
4. Line managers are unwilling to differentiate their people as top, average and underperformers.
5. CEOs senior leaders are not sufficiently involved in shaping talent management strategy.
6. Senior leaders do not align talent management strategy with business strategy.
7. Line managers do not address underperformance effectively, even when chronic.

The talent culture in an organization has two-fold responsibilities. The first is to build an environment in which talent is cared for and nurtured. The second is to identify what it wishes to drive in as working culture in the organization.

The importance of talent should show not only be in its processes, but also in the exhibited behaviours of the senior management. For example, a CEO who follows their skip level meeting calendar diligently and shows evidence of valuing it the way it should be by taking the opportunity every time to either collect information, share their perspective, coach and mentor people will be successful in engendering a culture where talent is valued.

Defining a culture for the organization means articulating not only values that should define the culture, but also the accompanying behaviour, which would reinforce the values. For example, Motorola identified that it will have ‘high-performance accountability’, ‘fast innovation and execution’ and ‘passionate collaboration’ define its organizational culture. They have articulated how performance accountability shall manifest in people's behaviour: people actively debate alternatives, express complete buy-in to decisions made and execute flawlessly. Optionalism is not an option.

15.4.5 Differentiated Capability/Competency Management

Talent management can only take place successfully if an organization understands the capabilities it needs to ensure that it can deliver its strategy, understands how best these can be identified and, where gaps exist, how they can be closed. Any organization needs a wide variety of talents to succeed, not just those associated with leadership at the top, and the challenge for professionals in the field is to think through how to define these and how to develop them in those who already work for them as well as who may join in the future (Bones 2006).

An organization has to continuously question itself if it has the skills, knowledge and abilities required for competitive advantage. Today in a service-based technology-enabled economy, where scale no longer confers automatic advantage, capabilities are the assets which companies create and sustain value with. And talking of skills is not the sum total of all individual skills. Here, capability of the organization is the collective ability of an organization to execute competition consistently and face new challenges like a mature organization. This would be through a cross-functional body of knowledge, processes and tools that distinguish a company in its competitive space.

PCMM is a people capability standard and the highest level in this standard is Level 5. This is how the PCMM standard defines a capable and mature organization at Level 5—‘The workforce capability of Maturity Level 5 organizations is continually improving. This improvement occurs through both incremental advances in existing workforce practices and adoption of innovative practices and technologies that may have a dramatic impact. The culture created in an organization routinely working at the optimizing level is one in which everyone strives to improve their own capability and contribute to improvements in the performance of their workgroup, unit and the organization. Workforce practices are honed to support a culture of performance excellence.’

Another important tool which is generic in concept but can be designed and customized by organizations to their specific requirement is a competency framework. By adopting and applying a consistent competency framework across their organization, employers can ensure that among other things the entire organization speaks the same language to talk about ability and this does away with most of the painful subjectivity of language. This would also aid organizations in recruiting suitable candidates in line with their talent strategy in a structured manner as well as increase retention through structured performance management and career development planning.

15.4.6 HR Systems and Processes

Many organizations are reengineering key HR processes and seeking to increase alignment of HR strategy in building an environment of talent culture. HR technologies become the integrated engine for advancing the broader needs of the business, supporting far more than basic transactions, and advancing the HR and business agenda for future talent.

Key survey findings for Towers Watson 2010 include:

• Organizations have discovered and focused on the value of talent management systems to an unprecedented degree.
• The importance of HR technology as a must-have in managing the business is reflected in technology spending—which not only held its ground during the economic downturn but has increased for 2010.
• Not only were a great number of HR service delivery initiatives undertaken by organizations in the last 18 months, but they also (finally) delivered the desired results, often not just meeting but also exceeding expectations.

Talent management systems that heighten visibility—enable managers to see people, workforce trends, and employees to see training opportunities and career ladders, create a visible culture conducive for growth. In this way, HR becomes the strategic enabler of talent management processes that empower managers and employees while creating business value.

Managing Demand for Talent

Once upon a time getting human resources (as talent was then called) meant hiring people, and at that time when an employee joined they grew with the organization seldom left and often retired from the same organization. Times have changed now and organizations are fast developing into closely held virtual organizations with contractors, outsourced staff, freelancers all working together, creating value for the organization. Hence, the whole act of organizing talent for an organization can be looked at in a totally new way now. Dave Ulrich and Wayne Brockbank (2005) have propounded six options to manage what they call the ‘flow of people’ (Figure 15.4):

• buying talent
• building talent
• borrowing talent
• bouncing talent
• binding talent
• boosting talent

Buying Talent

It refers to good old ‘Staffing.’ This includes three subprocesses, i.e., sourcing (expanding the talent pool), selection and induction. Sourcing in the new world does not just mean identifying the catchment pool of talent, but often creating the pool of talent from where selection can be done. Take the example of a medical transcription firm which helps an entrepreneur start a training institute in the hinterlands of Maharashtra to create the pool from which the organization could later hire. The entrepreneur is able to attract students with a promise of a fee discount for good performance (read ‘job offer’) because the organization gives them a consultancy fee for every hire that it makes through the institute.

Selection has also to be aligned with your talent strategy. This would mean that your talent strategy should be able to identify the kind of people who would be the best for you. While good companies respond to the requirement of talent in the form of ‘filling positions’ great companies are always looking out for good talent to ‘get them on board’.

Induction or Social Orientation is very important to be taken seriously to ensure that the worker hits the ground running and precious time of the organization is saved in making the employee productive as soon as possible.

 

Figure 15.4 Managing demand for talent

Building Talent

This includes the archaic, but cannot be done without the training piece of the jigsaw. However, besides the traditional form of training, there are a host of other initiatives which can be opportunities to learn. Development can take the form of assignments in new industry, geography and function in operational roles as well as shadow roles. This builds perspective, ability to cope with change, knowledge and a strong performance bias in the employee. Mentoring and coaching as a structured disciplined intervention might benefit both mentors and employees. Apart from the obvious benefits to the employee the mentors get experience of coaching, guiding and managing people.

Borrowing Talent

This is a shift in mindset from the days when only hiring full time would make someone work for you. Now, there are a host of options which one could exercise to get that talent which one needs. One can form strategic alliance with partners with whom one can collaborate and work out a win–win proposition in sharing resources. In this connected world it might be at times prudent to have a freelancer or a consultant work for you virtually on a paid basis to save you time and infrastructural resources. Where the work required to be delivered is not core to your organization then outsourcing might be a good option. In short, look for options beyond the full-time employment model to choose what suits your business. All this is recommended only if it agrees with the other realities of the business. Today, nearly 30 per cent of the world's workforce are contract, not necessarily due to a ‘jobless economic recovery’ but because they can not be bought (hired), because the hiring organization has seasonal talent needs, or their workforce planning and talent management people discover they cannot build or buy talent quickly enough to fill a critical talent gap.

Bouncing Talent

It refers to the always painful act of separation. While a good leader would find this painful they would go ahead with doing it, but not without reflecting onto what went wrong because what went wrong can be a big lesson to avoid what could have been worst. Bouncing talent might be required to be done because of business reasons or because of performance problems.

Binding Talent and Boosting Talent

This refers to proactively introducing and building practices which engage employees to the organization through a variety of interventions.

Performance Management

A robust performance management system shall ascertain superior performers and recognize them, diagnose performance problems and have an approach to solve them. Hence, it has to be successful in binding and boosting good performers and bouncing the not so good ones. However, there are a few things beyond the subject of performance management which need to be discussed in light of the talent strategy of organizations.

An inevitable part of a performance evaluation is feedback and coaching. Good feedback and coaching raises everyone's benchmarks not only the high fliers. Unfortunately, not many managers know how to deal with it. While evaluating in the face of measurable objectives is always an easy ride, the second half of the job is more often than not done.

Every organization has its share of stars and those who are not fairing badly, but then are not going great guns too. If these not so great performers are in the leadership slots then you can be sure that you would have a problem finding high performing leaders for your high performers. As you go up the organizational hierarchy it becomes more imperative that leaders lead by example and for an organization which wants to make its commitment to performance has to give importance to its people.

The drivers of performance management have a deep impact on the culture of an organization. What the performance management system of an organization chooses to recognize and reward is an expression by the organization as to what it values. Therefore, the talent strategy of the organization should guide the designers of the performance management system to structure it in a way which reinforces identified behaviour from people.

Leadership Development

Talent management is a lot more about potential appraisal and management than mere performance management. Check with those who have had very steep trajectories in their career and they will very often attribute their rise to a job before they expected it. Putting people in jobs before they are declared ready is an unfortunately less used but most effective way for leadership development. Development Credit Bank (DCB) is just doing that. It has introduced a programme called Leadership Excellent through Accelerated Programme (LEAP). The principle is to identify employees with high potential (those who are showing leadership in their current jobs) and put them through a structured learning programme where they are challenged to do jobs outside their area of expertise in a supportive environment. After successful completion of the programme the best (approximately 20 per cent) of them are promoted to the next level.

15.5 FUTURE TRENDS IN TALENT DEVELOPMENT

Patterns of employment will never be the same again. Smaller cities and towns will change to attract talented workforce. Multinationals, larger organizations and larger companies also turn their focus to this aspect. Employees in future will aspire greater amount of autonomy and flexibility in their work. Higher flexibility means that employees would spend less time at office, but, be far more productive. Following are some of the trends which are emerging in the area of talent management:

 

Trend #1:	Using job experiences, coaching and mentoring to cultivate the potential in managers (McKinsey 2001).
Trend #2:	Strengthening one's talent pool by investing in A players, developing B players and acting decisively on C players. (McKinsey 2001).
Trend #3:	We can expect to see a more marked rise in the adoption of social recruitment, using the likes of Facebook and Twitter during 2012 onwards, companies would pursue more cost-effective way of attracting and retaining talent.
Trend #4:	Succession planning will be the future key to many organizations, as the market improves, it could happen that those who have ‘stayed put’ with the organization, will now contemplate on hunting for jobs.
Trend #5:	Employees prefer to move to a private sector organization compared to a public sector. Moreover, the public sector is becoming even more competitive and the benefits are not as good as they once were.
Trend #6:	In response to talent scarcity companies will continue to pursue creative strategies to acquire top talent such as flexi workforce, contract employees, retirees, part-time employees and house wives. Companies such as the Tata group have already commenced the concept of ‘Second Career’. The workforce will grow increasingly culturally diverse, global, virtual and connected.
Trend #7:	Companies with highly engaged employees outperform companies with neutrally or negatively engaged employees. More and more companies will opt for employer branding initiatives and participate in best practices surveys.
Trend #8:	According to a recent towers watson (2010) study, creating a sustainable rewards, and ‘talent model’, companies are focused on creating globally consistent talent and rewards strategies in order to improve efficiency and alignment while reducing costs and risks. Global consistency will require companies to identify talent programmes and review the critical talent pools mobility, evaluate competencies and define a global performance and rewards process. At the same time, companies must remain locally flexible in order to stay competitive and compliant in each region.
Trend #9:	Hiring will happen, but in cautious approach; in fact, many organizations are failing to return to full-time employees due to the high cost of benefits. Therefore, organizations will hire temporary workers to fill voids in short-term projects. Further many organizations will operate on a project basis to help manage costs and control budgets, without compromising on productivity. Focus on end results will be monitored closely.
Trend #10:	Lehman Brothers, Satyam and many others have ruined not only the organization brand, but also the careers of thousands of employees. Business Ethics is the nexus of an organization's culture and value. There will be an increase in employee background checks and hiring of corporate ethics officers to maintain compliance.

 

15.6 BECOMING AN EMPLOYER OF CHOICE

Getting voted or selected as a best employer is proof of the fact that an organization has good talent management practices in place. Studying the framework of the survey and its constituents can give a fair idea about what it takes to get there. One such survey is the ‘Great Places to Work’ survey. Let us take a look at it.

A great place to work is ‘a place where employees trust the people they work for, have pride in what they do, and enjoy the people they work with’. This is the crux of what gets measured in the survey. The survey measures the quality of the three, interconnected relationships that exist there:

• The relationship between employees and management.
• The relationship between employees and their jobs/company.
• The relationship between employees and other employees.

The dimensions which get measured are:

1. Credibility
   • Open and accessible communication
   • Competence in coordinating human resources
   • Integrity in carrying out vision with consistency
2. Respect
   • Supporting professional development and showing appreciation
   • Collaboration with employees on important and relevant decisions
   • Caring for employees as human beings with personal lives
3. Fairness
   • Equity: balanced treatment for all employees in terms of rewards
   • Impartiality: absence of favouritism in recruitment and promotions
   • Justice: lack of discrimination and process for any kind of appeal
4. Pride
   • In personal job and individual contributions
   • In work produced by one's team or work group
   • In the organization's products and standing in the community
5. Camaraderie
   • Ability to be oneself
   • Socially friendly and welcoming atmosphere
   • Sense of ‘family’ or ‘team’.

1. The CEO's role in talent management—How top executives from 10 countries are nurturing the leaders of tomorrow accessed on 1 January 2010 at http://www.ddiworld.com/pdf/eiu_ddi_talentmanagement_executivesummary_es.pdf
2. An article on 50 years of Leadership Development in the Tata Group with the Tata Administrative Services, accessed on 1 January 2010 at http://www.tata.com/careers/articles/inside.aspx?artid=qz8j1wqs3TU=

1. Why is talent management considered important in today's scenario? Can you highlight this with reference to two Indian companies operating in your country?
2. What should be the objectives of a talent management system?
3. Explain the talent management framework with relevant examples.
4. How would you attract, engage and retain talented employees?
5. What are the trends in talent management in India?

1. Individual exercise: What are the biggest challenges companies face in managing talent. Focus the discussion with reference to any three industries. How could the company overcome the challenges?
2. Group exercise: Design a talent management programme for a specific industry. Divide the class into equal groups and give one industry to each group.
3. What measures and processes a company can put into place to measure the effectiveness of a talent strategy?
4. Group exercise: Employees need to visit three to four companies and do a comparative study of the talent management—practices using the talent management questionnaire given in the Field Guide.
5. Individual exercise: Visit the Web site http://www.greatplacetowork.in/ and review what all it takes to make a company to feature in this study.

 

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http://www.ddiworld.com/pdf/EIU_GlobalStudy_TalentManagement_ddi.pdf, accessed on 1 January 2010.

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