Industry Practices Future Trends And Research Agenda Management Essay

Industry Practices Future Trends And Research Agenda Management Essay

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This paper provides a theoretical model of the process which will lead to development of talent management practices in organizations. The purpose of this paper is to: (1) Introduce the reader to the emerging HRM trend Talent Management including the traditional practices and the current conceptualizations; (2) highlight the importance and the challenges in Talent Management practices including a case study about organizations using Talent Management; (3) guidelines for developing Talent Management model to suit an organization based on a common frame of reference and (4) a call to action for education and management, including benefits of fostering Talent Management Practices in organizations.

Key Words: Talent, Talent Management, Human Resource Management, Recruitment and Attrition rate

INTRODUCTION

Talent Management can be defined "The systematic attraction, identification, development, retention and deployment of those individuals with high potential who are of particular value to an organization" (From Talent Management: Understanding the dimensions, CIPD 2006)

According to Derek Stockley, Talent Management is "A conscious, deliberate approach undertaken to attract, develop and retain people with the aptitude and abilities to meet current and future organizational needs. Talent management involves individual and organizational development in response to a changing and complex operating environment. It includes the creation and maintenance of a supportive, people oriented organization culture."

For any organization to succeed, the people play the most crucial role. Hence it is of strategic importance that right people should be placed in the right positions. This will not only tap maximum talent of the employees but will also lead to more productivity, higher job-satisfaction, organizational citizenship, decreased absenteeism and loyal employees. This in turn will make a room for strong organizational culture.

Unlike other HR activities, talent management is essentially a strategic decision which calls for top management involvement. Talent management is the upcoming trend in the HRM Practices. It has gained significant importance because of the increasing attrition rates around the world.

Talent Management is of particular importance from India's perspective. If we look at India's attrition rate statistics, the companies in India need to take a lot of initiatives to reduce employee turnover. This is because India is the hotspot for outsourcing and off-shoring of business processes and such high attrition rates can affect the credibility of the workforce.

Talent management entails understanding an employee's inherent skills and abilities, personality traits, emotional intelligence quotient and then match it with a suitable job profile. This implies that the company should develop and establish on better job analysis methods. A wrong job-fit will otherwise lead to Re-hiring and Re-training which is a time consuming and a costly affair.

REASONS FOR GROWING IMPORTANCE OF TALENT MANAGEMENT

Globalization:  It is no more difficult for qualified professionals to find high-pay jobs as the whole world is open for finding employment. Also with the growth of industrialization, there is a very high demand for young and talented workers.

Increased Competition:  organizations cannot afford to lag behind in any avenue as it can have adverse effects to the degree of shutting down of business. This has necessitated the need for consistently good performance on the side of organizations which requires hiring and retention of talented employees in every field.

Radical Development in Technology: It is not enough to hire people who are qualified, it is more important to hire people who are ready to learn and are willing to acquire knowledge.  This is because the technologies today are developing so fast that employees need to be trained continuously to keep them updated.

THE CHALLENGE

There are two challenges of talent management. First is to find new people and second is to retain the present workforce. Each of the challenges has to be addressed if an organization wishes to achieve its long term goals.

The First Challenge - How and Where to find new talent

The increasing volumes of business requires for massive hiring. However, the dilemma is how and where to find the best talent which is not only fit for the job description but also adjusts to the organization's culture and working environment. There is a shortage of skilled human resource that can be employed. The reason being:

Demographic Constraints:  This is a common factor which would account for drastic changes in the growth of developed countries like USA, Japan, China, Germany and France. A large chunk of the working population in these countries is nearing the retirement age. China which is expected to beat USA in GDP growth in less than 10 years is also facing this problem. By 2030, China's working population will reach retirement age.

Current Practices of Education System:  The education system focuses mainly on increasing theoretical knowledge. It is seldom realized that theoretical knowledge does not help much when qualified students actually work in the industry. This is because they are found to be ill-equipped to practically apply the knowledge. Also, it is not only the technical knowledge which is sufficient to be successful at the work place. It is equally important to develop interpersonal skills and team spirit which is found to be lacking even in students qualified from the most prominent Universities.

Cost Factor: Human capital continues to be the single largest investment a company makes. Companies need to make better, more informed decisions across the entire human capital spectrum. Recruiting new employees is becoming increasingly difficult and expensive as the HRM department has to sort out thousands of applications for a handful of jobs.

The Second Challenge - Retain the existing Talent

There is an increasing trend of switching jobs and companies during the initial 5-6 years of working in the industry. The young and ambitious professionals hop jobs for higher pay packages and also to experience working with different organizations.

Some of the reasons behind the increasing employee turnover are: 1) Gap between organizational goals and the personal goals of employees. 2) Working environment is another significant factor. Young and talented employees do not want to wait for opportunities to show their abilities. They also demand a certain degree of freedom in decision making. Organizations need to appreciate and promote the creative and innovative ideas to empower the employees. If an organization fails to provide such an environment, the employees will quit the organization in no time. 3) The increasing work pressure and competition has led to health problems like depression and stress.

4) Better job opportunities, scope of growth and higher salaries tempt employees to hop jobs and increase attrition. 5) Inefficient recruitment, selection and placement process resulting in low job satisfaction. 6) Poor succession planning. 7) The employees do not want to get stuck in one job, they rather want to increase their knowledge and move ahead in their career. Many part time employees want to study along with their job. The companies should take care of their personal needs and aspirations. This helps to increase the number of loyal employees but at the same time requires huge investments.

Retaining the present employees is extremely important to the organizations because; the company would have already incurred heavy costs in the form of training and development. It involves substantial amount of expenses like - hiring costs, training costs and the induction costs to replace an employee.

 On the other hand it takes some time for the new employee to adapt to the new working environment. This lowers the productivity of the employee for quite some time. Apart from causing the company a monetary loss and breaks in their day-to-day operations, attrition contributes to knowledge transfer, which is a great loss.

TASKS

RESPONSIBILITIES

JOB ANALYSIS

INHERENT SKILLS

KNOWLEDGE

DUTIES

JOB SPECIFICATION

JOB DESIGN

EMOTIONAL IQ

TALENT

MANAGEMENT

STEPS FOR EFFECTIVE TALENT MANAGEMENT

Jon analysis

There are no conventional methods and specific tools to manage talent, the catch is to spot it and Boost it.

BASIC MODEL FOR TALENT MANAGEMENT

INDUSTRTY PRACTICES IN TALENT MANAGEMENT

Talent Management has been practiced by companies in its most basic form as described below

Recruitment and Selection: This helps companies in screening and ensuring that the most suitable candidates are attracted to the organization.

Orientation: A new employee should be informed about the working-environment, new job-description, rules and regulations, opportunities and benefits, organization culture, organization history, the organization chart and all the information significant for working in the organization. A new employee should also be introduced to all the departments in the company to understand the flow of the information and product or service within the organization.

Training and Development: The organization should provide with well designed training programs to help employees learn and develop constantly.

Job Profiles: The Human Resource Management Department should develop accurate job profiles by including the crucial set of abilities or success factors for all the jobs. This may be done by using the method of proficiency ratings for the required set of skills and abilities.

Competency Models and Processes: Competencies are characteristics which drive outstanding performance in a given job, role or function. The company should develop appropriate competency model tailored for the job profiles depending upon the attributes, intricacies and challenges of the particular job along with the working culture and business policy of the organization. The company should also look into redesigning the processes and workflows in a manner that supports performance and utilizes the human capacity to maximum.

At the same time it should save on time and the cost of production.

Performance Management: Performance management is a practice which ensures that the targets are being achieved consistently and effectively in an efficient manner. Performance management can be used to assess the performance of the entire organization, separate departments like Finance, Marketing, Operations, Sales, Advertising, Research and Development, workflow and processes to engineer a product or service as well as individual and groups of employees.

Performance Management should include performance measurement and benchmarking along with feedback so that the employees know where they are lacking and can improve accordingly.

At the same time, the organization will also be able to do a gap analysis to identify the gaps between expected performance level and the actual performance level.

The company's business policy should be such that the employees are able to align and integrate personal goals with organization goals. This can lead to indicative increments in productivity and profitability for the company.

BEYOND MANAGEMENT PRACTICES

So far we have looked at only the traditional talent management practices. However, in today's world where organizations as well as individual are extremely ambitious and growth-oriented, a lot more is required apart from the conventional activities mentioned above. Some of these activities are:

Job Stretch and Mobility

The companies today have to understand the importance of difference between a career and a job. If the employees in a company feel that they are stuck in a box with frozen growth opportunities, they will surely switch to some other company where there is potential for career development and learning opportunities. It is time for companies to define jobs broadly to allow mobility across the organizational boundaries. The talented and qualified people need new and challenging tasks to expand their knowledge and sharpen their skills. The organizations should be ready to take risks in order to try new methods and solutions in an existing process or in a new one. The employees should be given freedom to a certain extent while taking decisions. Openness to change brings experience and innovation which can give a company an edge over its competitors. Only through innovative solutions can a company become a true leader in the industry. 

Individualized Consideration

Talent management is much more than just managing people. The companies now need to take a step forward to accelerate transfer of knowledge by looking at employees as individuals. To do this, the companies need to assign mentors to key employees who can guide and supervise them and share their valuable experience.

Freedom

hiring talented people is not enough. If they do not fit with the organization's working culture, it can be a futile exercise. The working environment makes a substantial difference to the productivity and efficiency of employees. The workplace should give freedom to employees for exploring their passions. This will encourage people to learn more and come up with innovative ideas.

Google is a nirvana for the best and brightest technical talent in the world. The company's commitment to human capital is strong and was a core principle expressed in its now famous IPO filing in 2004. Staff are given huge amounts of freedom to determine when, where, how and on what they work. Each is allowed to spend 20% of their time each week working on personally initiated projects.

Diversity of Talents and Personalities

The organizations are now realizing the value of workforce diversity but very few leaders know how to take advantage of this assortment of working styles, cultures, skills and abilities that people bring along to the workplace.

Horizontal Growth Paths

Growth for an employee today means much more than promotions and higher pay packages. The way technologies are developing and becoming obsolete every day, it is not possible to survive in the industry without continuously learning new trends and updating oneself with the future technologies. The activities of different departments in an organization are now integrated. This calls for horizontal growth that allow employees and managers to stretch and expand their skill set within and beyond their disciplines. Companies like IBM, Texas Instruments and Intel have instituted technical mastery programs to allow individual contributors and specialists to develop their knowledge and learning and to be paid and recognized for it. This means talent can advance based on the learning speed instead of having to change jobs or getting promoted. 

Succession Planning

It is a process for identifying and developing internal personnel with the potential to fill the chief positions in the organization. Succession planning ensures that experienced and capable employees are prepared to fill these positions and perform responsibly whenever needed by the organization. By means of succession planning process, an organization is able to retain talented employees as they develop a sense of loyalty and organizational citizenship because of the time, attention, and training costs that are being invested in them by the company.

OBJECTIVES OF SUCCESSION PLANNING

To equip employees to undertake key positions in future

To enhance talent and long-term growth

To improve individual and group capabilities and overall performance

To build employee commitment and hence ensure better retention

To fulfill the needs and aspirations of employees for sustainable growth in career

To provide support to employees throughout their serving term

To combat the difficulties and overhead expenses of external recruitment of employees

To concentrate on development of leaders and improved knowledge sharing

To provides effective tracking and monitoring employee competency levels to fill the gaps

To mitigate risk, frictionless business flow and increase employee morale

To make effective succession plans, an organization must identify its long term goals and at the same time understand the needs and aspirations needs of the employees. It should be ensured that all the key employees understand their career paths and the roles they are expected to assume in future. This is important as filling the key positions externally is expensive and difficult. A crucial requirement for this is to retain key employees and reduce the employee turnover. Succession planning can expedite the transformation of proficient and competent employees from individual contributors to future managers and leaders.

Workforce Need Analysis

This can be carried out by making surveys to find out the priorities of the employees so that training programs can be developed in synchronization with the employee needs.

Employee Satisfaction Surveys

Employee satisfaction surveys help the companies to quantify and understand the employees' aptitudes, expectations, suggestions and recommendations, motivation level, and job-satisfaction. This can greatly help in reducing employee turnover.

OPPORTUNITIES AND BENEFITS

Improved recruitment process

Right fit between employees and jobs

Reduction in Attrition Rate

Reduction in expenses on re-hiring and re-training

Higher productivity and improved performance of employees

Increase in Job Satisfaction

Greater feelings of personal accomplishments in employees

Increased commitment and loyalty of employees

Improvement in Workforce Confidence Index

Highly motivated workforce

Stronger organization culture

Organizational citizenship

Development of future managers and leaders

Extra edge over competitorsTALENT MANAGEMENT METRICS

The organizations practicing Talent Management should monitor and measure the performance of their Talent Management program to assess its effectiveness. Some of the metrics which can help an organization to check the success of their talent management program are: Turnover rates, Average length of employment, Recruiting statistics (average time to hire, placement ratios, average length of stay for new hires, etc.), Aggregated performance evaluation scores, Employee Satisfaction Index, Workforce Confidence Index to assesses employee perceptions of the abilities of the organization as a whole. Unlike the employee satisfaction index, which measures each individual's opinion of their specific job, this metric provides insight into the reputation of the organization among its workforce. Ratio of External Hires to Internal Promotions - When high-level positions open up, companies should be able to find candidates internally before turning to external searches.

The talent management metrics will vary greatly from one organization to another, depending upon the business policy and long term goals. Also, comparing the progress against other organizations in the same industry can provide a better measure of how effectively an organization is managing talent.

SCOPE OF TALENT MANAGEMENT IN INDIA

India is facing the problem of high attrition rates in all the industrial sectors. The attrition rates are highest in the service industry as compared to the manufacturing industry. The major reason for such high rates is that the service industry is people-oriented. The attrition rate in India in different sectors has been as high as 44% in the financial service sector, 30% in the Telecommunication Services Sector, 27% in the IT and ITES Sector and 50% in the BPO Sector.

According to a survey conducted by CiteHR to find the reasons for attrition in the companies, the compensation and job profile was found to be the major reason (53.82%) for attrition. If companies wish to recover from the economic crisis, the best solution is to retain the most talented people in the organization. India's large population is an asset and this is the reason why India's growth is faster in Service Sector as compared to Manufacturing Industries. Therefore, it is the right time for companies in India to turn towards Talent Management for a secure future.

CASE STUDY

In 2006, researchers from IBM and HCI carried out a survey on 1,900 professionals in over 1,000 public- and private-sector companies, from a range of industries, geographies and organizational sizes. Respondents were asked to score their companies in 30 specific competencies, which fell into six key practices of talent management: strategy development, attracting and retaining, motivating and developing, deploying and managing, connecting and enabling, and transforming and sustaining. It was found that the Companies which scored high in the survey were more likely to have strong financial performance, based on reported change in operating profits between 2003 and 2006.

The distinguishing factor between the companies that performed better than the others in the survey was the Organizational size. Researchers discovered that organizations with a large employee base- 10,000 to 50,000 employees-did not only manage their existing employees more efficiently, but were better equipped to plan ahead for the number of people and types of skills they will need to bring into their organization in the future.

Large companies outperformed the total sample by 4% in linking workforce-management strategy to business strategy, and by 7% in having metrics that provide input into strategic workforce planning decisions. However, it was found that the smaller companies had the benefit of being able to manage their workforce on a more intimate level. Organizations with less than 1,000 employees were 4% better than the total sample at collaboration and sharing knowledge, 6% better at promoting virtual working, and 4% better at identifying relevant skills. It was also noted that organizations which were Knowledge-intensive tended to focus on development and collaboration, while service-intensive organizations focused on employee attraction and retention. The government, education, and health care organizations lagged behind the private sector in mostly all fields of talent management.

Hence, it was concluded that the best way to invest in talent management depends greatly on the size and industry of a company. The two competencies that a majority of the best-performing companies had in common were: understanding and addressing workforce attitudes and engagement levels; and aligning employee incentives with appropriate business goals.

AN AGENDA FOR FUTURE RESEARCH ON TALENT MANAGEMENT

There is a lot of debate over the talent management's effectiveness and some managers feel that it is unnecessarily hyped. Also due to its broad definition, many organizations are finding it difficult to incorporate talent management in their human resource management practices. The metric for measuring the success of talent management are also not very clear. Since it is an emerging trend, there is not much evidence or research work to support the concept. However, it is beyond doubt that a small percentage of companies which have taken initiatives in this field are enjoying the benefits. This is because there has been a dramatic shift from a psychological contract that provided job security and a mutual employment relationship, towards one where individuals manage their own "employability" through development and career progression. This has shifted the balance of power towards talented professionals.

An organization can reap the benefits of talent management only if they understand that there is no "one size fits all" approach to talent management and organization need to continuously learn and develop talent management practices which suit them the best. There are trade-offs involved in any management practice. Hence, it is the duty of the top management as well as the HR Department to plan their strategy and gain maximum benefits out of it.

The literature review and theoretical model presented in the paper point toward several potentially fruitful directions for future research. Now we can propose an agenda for further research and investigation.

Measurement of emotional intelligence quotient and its relevance to Job Description

It is a well established fact that emotional intelligence is the new scale for measuring the performance of an employee. However, there is a lot of scope of research on what figure of emotional intelligence quotient is required for managers to decide the suitability of a person for a role in the organization.

Required set of inherent skills

Since talent is defined as the sum of a person's abilities- his or her intrinsic gifts, skills, attitude, character, judging and reasoning. It is somewhat difficult to define great managerial talent. There is no universal definition of an outstanding manager, for what is required varies from one company to another and each company must understand the talent profile that is right for it.

CONCLUSION

The industrial world is becoming highly competitive and change is the only constant factor. As globalization is increasing new technologies can be easily copied from one country to another. Hence, it is of strategic importance for an organization to develop the most crucial and non-replicable resource - the Human Resource to stay ahead in the fierce competition. The toughest task is not just finding talented people who can fit the jobs and the organizational culture but also retaining them. Organizations need to recognize that there is a great difference between tactical Human Resource Management and Strategic Talent Management. Transactional HR activities are administrative overhead whereas Talent management is an inbuilt and a continuous process that delivers the optimal workforce for business. Talent Management does not simply mean aligning the people with the organizational goals but also aligning the organization with people. In the coming years what will distinguish the high performing companies from average performing companies is not better HR Processes but the fundamental belief in the importance of talent. There is no "one size fits all" approach for Talent Management and organizations should develop their own Talent Management Model which suits them the best.