INTRODUCTION:

Since a group of McKinsey consultants coined the phrase the War for Talent in 1997 (see Michaels et al., 2001; Axelrod et al., 2002), the topic of talent management has received a remarkable degree of practitioner and academic interest. This relatively recent emphasis on talent management represents a paradigm shift from more traditional human resource related sources of competitive advantage literature such as those that focus on organizational elites, including upper echelon literature (Hambrick and Mason, 1984; Miller, Burke and Glick, 1998), and strategic human resource management (SHRM) (Huselid et al., 1997; Schuler, 1989; Wright and McMahon, 1992) towards the management of talent specifically suited to today’s dynamic competitive environment. While the context may have shifted significantly since the latter part of the last century, the notion of talent management remains important. Arguably the challenge of maximising the competitive advantage of an organisation’s human capital is even more significant in the recessionary climate of the latter part of the opening decade of the twenty first century.

We define strategic talent management as activities and processes that involve the systematic identification of key positions which differentially contribute to the organization’s sustainable competitive advantage, the development of a talent pool of high potential and high performing incumbents to fill these roles, and the development of a differentiated human resource architecture to facilitate filling these positions with competent incumbents and to ensure their continued commitment to the organization. In this regard, it is important to note that key positions are not necessarily restricted to the top management team (TMT) but also include key positions at levels lower than the TMT and may vary between operating units and indeed over time. The issue of talent management is thus of interest to a wide range of stakeholders beyond human resource (HR) academics and professionals.

“It is nearly unanimous that HR can and should add more value to corporations. The best way to do this is by being a business partner—by directly improving the performance of the business. This can be accomplished by effective talent management, helping with change management, influencing strategy and a host of other value-added activities that impact effectiveness.”¹

In a competitive marketplace, talent management is a primary driver for organizational success. Broadly defined, talent management is the implementation of integrated strategies or systems designed to increase workplace productivity by developing improved processes for attracting, developing, retaining and utilizing people with the required skills and aptitude to meet current and future business needs.²

A recent study shows that 85% of HR executives state that the “single greatest challenge in workforce management is creating or maintaining their companies’ ability to compete for talent.”³ Without question effective talent management provides one of the most critical points of strategic leverage today. Offering enormous business value, talent management is complex and continually evolving. Influenced by external factors such as the economy, global expansion and mergers and acquisitions, critical success factors for effective talent management include alignment with strategic goals, active CEO participation and HR management. Over time, common themes around talent management are emerging, such as the role of line leaders in the development of talent . Overall, the main recurring themes are CEO involvement, culture, management, processes and accountability.⁴ Research shows that organizations increasingly focus on talent management. Moving from reactive to proactive, companies are working hard to harness talent. Yet different companies may not define talent the same way. The belief in talent and its impact on the bottom line are at the heart of talent management. To be effective, the talent mindset must be embedded throughout the organization, starting with the CEO. Going beyond succession planning for top leadership positions, companies that value talent have a deep appreciation for the contribution of individuals at all levels, now and for the future. In essence, talent is the vehicle to move the organization where it wants to be.

WHAT IS TALENT MANAGEMENT?

A cursory review of the talent management literature reveals a degree of debate as to the conceptual boundaries of the topic. Indeed, Aston and Morton (2005: 30) noted that there “...isn’t a single consistent or concise definition” of talent management. notwithstanding this criticism, Lewis and Heckman (2006) identified three key streams of thought around the concept of talent management. First, those who merely substitute the label talent management for human resource management. Studies in this tradition often limit their focus to particular HR practices such as recruitment, leadership development, succession planning and the like. The contribution of this literature is relatively limited beyond the strategic HR literature, as it largely amounts to a rebranding of HRM. A second strand of literature emphasises the development of talent pools focusing on “projecting employee/staffing needs and managing the progression of employees through positions” (Lewis and Heckman, 2006: 140). Studies in this tradition typically build on earlier research in the manpower planning or succession planning literatures. While adopting a relatively narrow focus, studies in this tradition at least provide a degree of differentiation as to what talent management is vis-à-vis HRM. The third stream focuses on the management of talented people. This literature argues that all roles within the organisation should be filled with “A performers”, referred to as “topgrading” (Smart, 1999) and emphasises the management of “C players”, or consistently poor performers, out of the organisation (Michaels, Hadfield-Jones and Axelrod, 2001). While the third approach is highly influential, we recognise limitations to this approach and argue it is neither desirable nor appropriate to fill all positions within the organisation with top performers. Equally, if the talent management system is applied to all of an organisation’s employees (i.e. including poor performers as well as top performing employees), it is difficult to differentiate talent management from conventional human resource management In addition to the above three streams of thought about talent management, we recognise and add an emerging fourth stream which emphasises the identification of key positions which have the potential to differentially impact the competitive advantage of the firm (Boudreau and Ramstad, 2005; Hulesid et al., 2005). The starting point here is identification of key positions rather than talented individuals per sae.

DRIVERS FOR TALENT MANAGEMENT

To gain competitive advantage, the demand for human capital drives talent management. Talent management strategies focus on five primary areas: attracting, selecting, engaging, developing and retaining employees. Although pay and benefits initially attract employees, top-tier leadership organizations focus on retaining and developing talent (see Figure 2) Workforce trends drive talent management strategies. Factors such as an increasingly global and virtual workforce, different generations working together, longer life expectancies and an empowered and autonomous workforce have forever changed the workplace. Due to demographic changes, the workforce is also increasingly diverse-—from age, gender and ethnicity to lifestyles, migration patterns and cultural norms. Organizations are already taking advantage of these workplace trends. Talent management is also driven by the anticipated skills shortage in the coming years. While not all organizations, industries and professions will experience a lack of skills, organizations are already competing for talent. Finally, key business strategies also drive talent management. For example, with the growing need for global technical expertise, Ford Motor Company links competency development to its organizational strategic goals. Corporate branding, a key organizational strategy, is another business strategy that drives talent management. Increasingly, firms are linking their brand to employees and corporate behavior. At JPMorgan Chase, for example, the concept of leadership for all employees is part of its corporate branding: “One Firm, One Team, Be a Leader.”

FACTORS IMPACTING THE WAR FOR TALENT

Although it is beyond the scope of this article to review all of the inﬂuences on the global “talent war,” this section brieﬂy reviews four signiﬁcant factors affecting the quantity, quality and characteristics of talent: (i) global demographic and economic trends; (ii) increasing mobility of people and organizations; (iii) transformational changes to business environments, skills and cultures; and (iv) growing levels of workforce diversity.

Global demographic and economic trends

Increasing longevity, declining birthrates, and the disproportionate size of the post-war baby boom generation are large demographic forces driving an unprecedented shift in the age distribution of the general population, and with it, the labor pool supply (Potter, 2009). With higher levels of sanitation and healthcare, people born today can expect to live between 65 and 80 years in most countries, compared to an average age of 18. In addition to demographic changes, globalization, with increasing economic integration across nations, profoundly impacts labor supply and the talent war. Geographic-based economic barriers are falling as national governments remove legal and regulatory hurdles to international interaction; capital markets are vast and global; and rapid advances in digital technology have slashed the cost of communications and computing (Bryan and Fraser, 1999). The International Labor Ofﬁce (2008) reports that labor markets across the world, including those in the poorest regions, are more integrated and stronger today. Labor market integration is driven by foreign direct investment (FDI) — currently at its highest level

Increasing mobility

Globalization changes the mobility of people across permeable geographic and cultural boundaries (Baruch et al., 2006). Global labor competition and border mobility are possible with lower immigration and emigration barriers, and with people more willing to relocate outside their home countries (Tung and Lazarova, 2007). Inter-country and regional economic and demographic differences also stimulate labor ﬂows such as comparative gaps in real wage rates and differences in labor-force age proﬁles (Pritchett, 2006). Migration ﬂows are sometimes labeled “brain drain” since high-skilled workers have larger emigration rates (5.5% versus 0.9% for low-skilled and 1.6% for medium-skilled) and these rates are accelerating far faster for the high-skilled group than for the rest (Economist, October, 2010). However, reverse migration trends are beginning to intensify. Many countries are luring returnee immigrants as a cadre of highly trained and qualiﬁed people with valuable Western-style managerial experience and entrepreneurial skills, while simultaneously possessing local market knowledge and access to networks in the host country (Tung and Lazarova, 2006). Supported by government policies and economic liberalization, dynamic reverse migration is converting “brain drain” into “talent ﬂow” (Carr, Inkson and Thorn, 2005).

Transformational changes to business environments, skills and cultures

The move from product-based to knowledge-based economies is a fundamental business transformation impacting the global war for talent. Worldwide, the service sector provides 42.7% of jobs compared to agriculture (34.9%) and industry (22.4%) and in developed economies the service sector is even larger; for instance, representing 71.5% of all EU jobs (ILO, 2008). Service economies shift investment towards intangible and human assets. Among human assets, high-value decision makers are growing in number and importance, making companies much more dependent on their people, particularly on their top talent (Pink, 2001). Companies are hiring more workers for more complex occupations requiring higher cognitive ability. They are also organizing themselves to hire, retain and raise the productivity of their most valuable knowledge workers.

Diversity

Companies operate in an increasingly globalized environment and must manage widely dissimilar employee populations, markets, cultures and modes of work. While cultural issues and conﬂicts are challenging for multinational organizations, migration and the globalization of customers, suppliers and investors brings diversity into domestic companies. The level of ethnic, cultural, generational and gender diversity of individuals working within a single organization and indeed, within a single ofﬁce, is increasing. In addition to greater cultural and national diversity, organizations are faced with wider generational diversity. Individuals born in the same time period share a common history that creates common experiences and may inﬂuence the attitudes, behaviors, and

work styles of generational “peer personalities” (Conger, 1998; Strauss and Howe, 1991). The demographic trends described earlier mean that in many workplaces, three, and sometimes four, generations are working together— from ‘Veterans’ and ‘Baby Boomers’ to Generations ‘X’ and ‘Y’. Generations with very different values and expectations sit side-by-side and often, younger employees

manage older, more experienced people. This cross-generational workforce can be a source of conﬂict or a source of learning, productivity, and innovation for organizations (Smola and Sutton, 2002).

REASSESSING THE “WAR FOR TALENT”

Taken together, all of the factors discussed above form a rapidly changing, incredibly complex and diverse global environment for companies to attempt to attract, develop, motivate and retain talent. Assessing these trends, executives and consultants see a global war for talent persisting into the foreseeable future. However, recent research shows that the nearly single-minded focus on individuals that is endemic to companies' strategies for ﬁghting the talent war often backﬁres and reduces, rather than enhances individuals, teams, and organizations: “The best evidence indicates that natural talent is overrated, especially for sustaining organizational performance” (Pfeffer and Sutton, 2006: 86)., “the war for talent” rests on three critical assumptions: individual ability is largely ﬁxed and invariant —there are better and worse people; people can be reliably sorted on their abilities and competence; and organizational performance is, in many instances, the simple aggregation of individual performances. What matters is what individuals do, not the context or the system in which they do it (Pfeffer and Sutton, 2006: 90).

OWNERSHIP OF TALENT MANAGEMENT

Supported by the CEO and the board of directors, talent management is headed by human resources, usually the head of the HR organization (e.g., vice president of HR, chief human resource officer). While responsibility for talent management is shared throughout the organization—from the CEO to the line manager—the role of HR is to identify and deploy optimal strategies to engage employees by driving satisfaction, loyalty and retention. Commitment to talent management requires HR to be a strategic business partner. A 2011 study on global human capital found that chief HR officers (CHROs), as “chief talent architects,” played a central role as strategic business advisors by leveraging human capital to improve organizational performance and workforce effectiveness. Based on CEO priorities, the top seven CHRO initiatives were organization transformation, people development, talent management, HR transformation, leadership development, recruitment initiatives and rewards. Moving talent management initiatives forward, however, requires organizational buy-in. That is, all levels of management must be on board with the importance of talent management strategies. When the board is involved, the value of talent management is apparent and has high visibility. Yet to be successful, the value must be understood throughout the organization. In high-performing companies, for example, senior management also is responsible for the success of talent management. At the same time, for talent management initiatives to be effective, organizations need formal processes, with many people involved and with strong links between leadership and talent to translate into specific organizational value-based behaviors. Ownership of talent management is also reflected in dedicated resources. A formal budget for talent management initiatives, for example, is evidence of organizational commitment. Further, it is important that HR educate top management on the link between the talent management cycle and the cost of turnover. For example, an employee’s decision to stay or leave is related to career possibilities in the company as well as how he or she can become better prepared to move to other opportunities. To keep a valued employee, the easy answer is not merely compensation. Employee loyalty tends to be more directed to his or her professional skills rather than to the organization Thus, to best attract, engage, develop and retain talent, those who have responsibility.

FINDING THE RIGHT PEOPLE

In the war for talent, organizational success depends on effective recruitment and retention. To accomplish this goal, HR can provide value by focusing on five key areas: ensuring organizational stability, emphasizing employer brand and reputation, developing integrated talent strategies, supporting multilevel accountability, getting involved in talent management initiatives and offering opportunities for career and personal development. the top areas in need of improvement regarding talent management practices and strategies are 1) building a deeper reservoir of successors at every level; 2) creating a culture that makes employees want to stay with the organization; 3) identifying gaps in current employee and candidate competency levels; and 4) creating policies that encourage career growth and development opportunities.24 To attract and retain talent, hiring for compatibility— the “fit” between employer and employee—is critical. In addition, companies with excellent reputations and strong brands are well positioned to attract top talent. Yahoo! Inc. exemplifies the organization that effectively links organizational culture and company values in its recruiting initiatives to determine the best candidates. Another effective recruiting strategy is tapping into specific labor pools. By assessing the organization’s areas of strength in its workplace programs and policies, HR may identify possible segments of the labor force to target.

SUCCESSION PLANNING MANAGEMENT

Investment in human capital requires careful planning. Under the talent management umbrella, succession planning and leadership development are important organizational business strategies to develop and retain talent. The responsibility for implementing succession planning varies, starting with HR and followed by senior management, the president/CEO and the chief operating officer. However, not all organizations are jumping on the bandwagon to develop succession plans; 16% do not intend to do so. The reasons vary, with companies saying more immediate needs take precedence, some companies have too small a staff size, while others have not yet considered it, and still others have no support from senior management. At the same time, organizations grapple with how to best utilize succession planning—and the corresponding leadership development initiatives—to manage, develop and retain talent. For those considering leadership development as part of their talent management agenda, it is important to 1) determine whether the parts of the program, when combined, enable the organization to be more competitive; 2) assess if the leadership development system reinforces perceptions about the company that the organization wants others to have; and 3) evaluate whether employees view the leadership programs as legitimate. For example, do they take them seriously? Do these initiatives really affect business decisions?

MEASURING BUSINESS IMPACT

Talent management metrics link human capital investment to financial performance. According to management gurus Huselid, Becker and Beatty, there are three critical challenges to successful workforce measurement and management. First, there is “the perspective challenge”—meaning, do all managers really understand how workforce behaviours and capabilities drive strategy execution? Second, there is “the metrics challenge”—that is, are the right measures of workforce success identified (e.g., workforce culture, mindset, leadership, competencies and behaviours)? The third challenge is “the execution challenge”—specifically, in order to monitor progress and communicate the strategic intent of talent management initiatives are managers motivated to use these data and do they have access and capability to do so? Talent management metrics are evolving. As organizations increasingly focus on talent management strategies, they seek ways to validate these initiatives and measure their business impact. Many firms are beginning to include talent management in their dashboards or scorecards

PRACTICAL PROBLEMS OF TALENT MANAGEMENT

What is your philosophy and strategy of Talent Management? This question to my mind is the biggest problem or challenge for most. Many tend to confuse talent management with leadership development. If the philosophy of the company is to focus on only top 100 or 300 or 500 leaders and build processes and practice around attracting, developing, engaging and managing these leaders then what about those individual contributors, middle/lower level leaders and early in career professionals who have a high impact on the company's business results and its future. Talent management in my opinion should encompass and focus on all critical and important positions and people in the organisation. Many organisation have taken the approach of defining all employees of their organisation as Talent and have developed their processes and practices accordingly. Defining the philosophy, clear objectives and scope of Talent Management strategy in any organisation is key and hence getting that right is so important. Not easy at all and hence it remains a practical problem and a challenge.

Are your processes, technology, tools and practices of Talent management simple? This is another big problem or challenge. Having simple and efficient HR processes which are enabled by a robust enterprise wide technology backbone is a dream of any CHRO and his/her organisation. There are many benefits and advantages to having the right enterprise wide HR processes and technology but there are many challenges to it.. The biggest practical challenge we face is that employees and managers find the technology very cumbersome and the dovetailing with other process isn't that robust, especially when you don't have a good enterprise wide HRIS with best in breed bolt-ons. Hence having a simple and robust talent management process and technology is very important. Having HR processes which are competency based and strongly linked with each other and are user friendly is a must. Tools and practices depend a lot on the process and technology and vice versa. It’s easier said than done and hence remains a practical problem and a challenge.

Is your top management committed to Talent Management? EIU and Corporate Network survey report on talent shortage has clearly highlighted how lack of top management's commitment and seriousness towards building talent is an area of improvement. Many and most talent management strategies and initiatives need a sustained (over medium to long term) investment and commitment. Be it culture/employer brand building initiative's for attracting and engaging talent or be it investing in learning journeys of talented employees - all this requires investments and commitment. When companies and leaders are busy managing and delivering results on a quarter to quarter basis with the sole objective of pleasing the street, more often than not the investment and commitment in talent management takes a back seat and especially in a recessionary or weak economic environment leaders tend to become more short term and cost focused and look at talent management as a cost rather than investment. Isn't it? Investing in building talent and culture is a long term thing and ensuring that the top management stays committed is a practical problem and challenge.

OUTCOMES

Clearly the objective of investing in a strategic talent management system is a positive impact on critical individual or organisational level outcomes. Following, Dyer and Reeves (1995) and Boselie et al.’s (2005) distinction between financial, organisational and HR-related outcomes, we examine a range of outcomes. Such an approach resonates with Paauwe’s (2004: 67) assertion that “the yardstick of human resource outcomes is not just economic rationality”. Hence our approach recognises the key role of employees level outcomes in the strategic talent management system and the importance of ensuring their commitment and motivation to the organisation, as mediating variables between the strategic talent management system and organisational outcomes.

CONCLUSION:

Given the high level of interest in the concept of talent management over the past decade, it is somewhat paradoxical that it remains relatively poorly defined and lacking in theoretical underpinning. This review of the current body of literature suggests that from a theoretical point of view, the area of talent management is in its infancy and a significant degree of theoretical advancement is required. Our definition of strategic talent management --as activities and processes that involve the systematic identification of key positions which differentially contribute to the organization’s sustainable competitive advantage, the development of a talent pool of high potential and high performing incumbents to fill these roles, and the development of a differentiated human resource architecture to facilitate filling these positions with competent incumbents and to ensure their continued commitment to the organization-emphasises the identification of pivotal positions as the point of departure for strategic talent management systems. For an organisation to fully exploit the potential of their internal talent, they must first identify those positions within the organisation which have the potential to differentially impact on performance. It is only then that the emphasis shifts to filling those positions. In this regard we argue that the key is the development of a talent pool of high potential and high performing employees to fill these pivotal positions. Finally, we point to the requirement to support both of these stages with a differentiated HR architecture to maximise the potential for exploiting the talent pools. In closing, to sustain outstanding business results in a global economy, organizations will rethink and reinvent their approaches to talent management. Effective talent management calls for strong participatory leadership, organizational buy-in,employee engagement and workplace scorecards with talent management metrics. Companies that master talent management will be well-positioned for long-term growth in workforce performance for years to come. Rapid, complex and pervasive changes are occurring that will continue to impact labor and talent— both in terms of quality and quantity. From unrelenting global demographic and economic forces to the increasing mobility of people and organizations, the business environment is more demanding and complex. There are knowledge-driven industry transformations as well as cultural changes — within businesses and in individuals' views on career life cycles. These require higher cognitive capabilities; extensive relationship management and leadership skills; and new human resource, development and career processes. There is a much wider diversity in culture, gender, working generations and modes of employment than ever before. These can be sources of advantage to be leveraged or conﬂict to be managed. Despite today's global ﬁnancial circumstances, the capacity of organizations to attract, develop, motivate and retain talent will remain a critical strategic issue for the 21st century's knowledge economies. It will impact the ability of organizations to survive the crisis and ready themselves for eventual recovery.

REFERENCES:

Arthur, M.B. (1994) “The boundaryless career: A new perspective for organizational enquiry”, Journal of Organizational Behaviour, 15, 295-306.

Batt, R (2000) “Strategic segmentation in front-line services: Matching customers, employees and human resource systems”, International Journal of Human Resource Management, 11, 540-61.

Becker, B.E. and Huselid, M.A. (2006) “Strategic Human Resource Management: Where do we go from here?”, Journal of Management, 32, 898-925.

Dyer, L. and Reeves, T. (1995) “Human resource strategies and firm performance: what do we know, and where do we need to go?”, International Journal of Human Resource Management, 6, 657-67.

Economist Intelligence Unit (2006) The CEO's role in talent management: How top executives from ten countries are nurturing the leaders of tomorrow. London, The Economist.

Received on 20.01.2014 Modified on 29.01.2014

Asian J. Management 5(2): April-June, 2014 page 240-245