The purpose of this chapter is to provide this dissertation with a concise opening. It outlines the reasons for choosing this topic for research with a background study. In addition to the rationale of research, the research aims are also described, by clearly outlining the research questions. The research methodology used to achieve the research aims will be highlighted with a detailed methodological model. Finally to make it easier for the reader to understand the overview of the research, the structure of dissertation is explained.
In an interview with Fishman (1998), the McKinsey director Michaels who was a part of the McKinsey team's report titled "The War for Talent" asserts that for a company's success talent is the key factor because in the right kind of culture talented people come up with superior ideas and appropriately implement them along with developing other people.
Apparently, talent has become the most important resource. Over the next few years people who are smart, talented, sophisticated, responsive and globally shrewd will be considered as the most important corporate resource. The gap between the demand and supply for talent will soon develop when the demand for talent will go up and the supply of it will be going down (Hiltrop, 1999; Fishman, 1998). This particularly seems to be the case with the Indian Information Technology (IT) and Information Technology Enables services (ITES) sector where there is a prevailing demand for highly skilled labour to accommodate the growing demand for IT services but apparently, there is a lack of right skilled workforce. Furthermore, due to the lack of rightly skilled people, high attrition rates and rapid technological developments in the Indian IT-ITES sector, the Human Resource (HR) professionals identified talent management as the critical issue to be addressed on priority basis (Simhan, 2006; ibef, 2009; Arora et al, 2001). Since the Indian IT-ITES sector has to face the challenge of managing the talent, talent management is an important human resource practice in this industry.
The case of India
In recent years India has witnessed a boom in the economy with developments in the service industry and the IT-ITES sector are emerging as main drivers of the economy. The year 2009 was a year of transformation in the Indian IT - ITES sector. An analysis by Nasscom shows that this sector grew by 12 percent in FY 2009. Furthermore, according to a study by Springboard Research, it is estimated that the Indian IT sector will continue to be the fastest growing in the Asia-Pacific region with an annual growth rate of 18.6 percent. It is even estimated that there will be up to 7 percent increase in the total computer sale by the end of year 2010 (Nasscom, 2009; ibef, 2009).
Companies intending to offshore their IT-ITES owing to the increasing cost pressures in US and Europe prefer India. IT-ITES include a variety of services from data processing to customer support, voice operation and activities relating to market analysis and research. Thus, the foreign firms looking to consolidate their presence in India outsource to third-party service providers. The Indian IT-ITES sector comprises of service related firms, foreign and domestic firms. If the same rate of growth continues then as per the Forbes research in India there will be a potential shortfall of approximately 235,000 IT-ITES professionals and demand will out-pace the supply (Simhan, 2006; Bhatnagar, 2007, Nasscom, 2009).
Though, Indian IT sector holds a powerful position, the technological innovation, uncertain economic conditions, fierce domestic and international competition increases the demand for industry-oriented professionals with appropriate skills. The companies offering specialized high end services with higher level of technologies prefer to retain their competitive advantage. Hence these firms have to carefully manage talent. Though, there are numerous employees who have the required technical skill for the job but they lack the cultural skills to fit into an organisation. Furthermore, the firms in ITITES sector at present have a major attrition problem due to low employee engagement (Bhatnagar, 2007; Budhwar and Bhatnagar, 2009).
The aim of this research is to investigate the talent management practices of organisations in the IT-ITES sector in India and to investigate the extent to which these firms have adopted the best talent management practices identified in literature in this topic of HRM (Human Resource Management). Further, in case the finest talent management approaches are not being adopted, the researcher intends to identify the reasons for the same. In addition, there is lot of competition in IT-ITES sector as both the foreign and domestic organisations target the same talent pool. This study seeks to explore have the companies adopted more sophisticated methods in order to have the best people in the organisation. The importance of adopting finest approaches in this sector cannot be ignored, especially because there is a need to retain talented employees in a market where there is a shortage of skill a wide demand-supply gap Simhan (2006). In addition since both domestic and foreign companies target the same workforce, the labour market in this sector is extremely competitive, this has developed enthusiasm among the firms to implement the best practices in all the fields of management, to increase their performance and efficiency. Hence, to explore how talent management is implemented in a developing country India seemed to be a appropriate option (Budhwar and Bhatnagar, 2009).
The purpose of this research is threefold. First, to discover the extent to which these firms follow the finest talent management practices outlined in literature. Second, to explore the extent to which the companies have adopted innovative approaches to manage talent and have these methods been helpful in the Indian context. Third, to evaluate if the foreign companies follow more refined talent management approaches compared to domestic companies and hence consider whether we can learn from foreign firms in terms of adopting finest talent management practices in the Indian context.
The above stated questions are important particularly in the IT-ITES sector as the Nasscom (2009) estimates reveal that this sector will face acute shortage of skilled workforce and thus it will be necessary for firms to implement best practices in talent management to maintain their competitive advantage by employing high quality workforce.
The primary method for this research is interview to know the extent to which companies practice the finest and innovative talent management approaches. In order to obtain a better understanding about the current status on talent management approaches in Indian ITITES sector, the HR professionals at managerial level were interviewed. This is supported by secondary research mainly developed from journal articles that offer concepts, theories and in depth reviews, HR related publications. As Fisher (2007) asserts the information gathered using this secondary resources is analysed using primary research. The figure 1.1 demonstrates the methodological model of the research which helps in achieving the proposed research aims.
All the chapters in this dissertation are framed in accordance with research aims and objectives.
Structure of the dissertation
This outline of the research will try to provide a brief understanding to the reader on how the entire research is structured. In order to achieve the research objectives this research paper is divided into seven chapters. The chapters are as follows:
Chapter 1- Introduction
A concise introduction to the topic under study with an explanation of their specific aims and objectives are presented in this chapter. Further, with a help of a methodological model it also explains the research methodology adopted.
Chapter 2- Theoretical background and introduction on Talent Management
This research will start by presenting a theoretical background to Talent Management i.e. its definition and importance in organisations. This is followed by a comprehensive review of the best practices, innovative strategies including employer branding and usage of technology on talent management that are identified in literature.
Chapter 3: Research Questions
On the basis of the theoretical developments, this chapter explains the three research questions that the researcher wishes to explore.
Chapter 4- Research methodology
The research methodology used for collecting the data and its limitations is described in this chapter. In order to gain a in-depth understanding of the respondents attitudes and point of view. The data collected will be analysed in next chapter.
Chapter 5- Data analysis
The findings of the research are analysed and discussed in detail here. These findings attempt to give answers to the research questions developed by the researcher
Chapter 6- Conclusion and recommendations
In this chapter besides the managerial implications resulting from the study the conclusions drawn from the research are presented and recommendations for future research.
Theoretical Review on Talent Management
This chapter confers a general overview of talent management and theoretical review on the talent management practices. During an initial research in the area of talent management the researcher have found stimulating literature which was useful in understanding the arguments within the scope of the subject. A review of the concerned literature has been carried out based on various journals, articles and presented below. The researcher noticed that literature on talent management had a practitioner influence and the academic ones.
Overview of Talent Management
In the next few sections the origin, concepts, the origin, evolution and definitions of talent management are presented to have a good idea about the topic under research.
Every organisation seeks to hire people they believe to be highly skilled and most suitable for their organisation. In this respect the idea of having rightly skilled employees is not a new observable fact. Nevertheless, the research commissioned on the global "war for talent" by McKinsey in the year 1997 (Fishman, 1998) to evaluate the measures implemented by companies to employ the best performers concluded that for talented people the firms were aggressively competing against each other. Here the most essential factor to be observed was the belief of the business leaders that by employing the best talent a business can gain competitive advantage. The primary challenge was to manage the so called 'talent' effectively. After this research work was published there has been a tremendous growth in academic interest of the subject on adopting talent management strategies. The notion of talent management has evolved over years and has now intensified into a critical decision-making and functional organisational development issue (Beechler and Woodward, 2009). Perhaps, talent management seems to be rising with excellent focus on identifying, sourcing, motivating, developing and retaining the people that has a strategic impact on the business (Collings and Mellahi, 2009).
Talent Management v/s Human Resource (HR) Approach
The meaning of talent management has always been a debatable subject. The literature on talent management discloses a lack of transparency with regard to the meaning and scope of talent management. This is because talent management means differently to different people. Some authors believe talent management is just a new language for existing HR activities where as others emphasise the strategic importance of talent management (Huselid 1995; Tichy et al, 1982; Jackson and Schuler, 1990; Chuai et.al, 2008; Stainton, 2005). HR is concerned about developing competency in the firm. However, since competencies become out dated over time, there is a need to develop them. It can actually be dangerous for firms working in a dynamic industry. Nevertheless, in case of talent management the focus is on developing capacities by the enhancing the individual's potential. When there is a comparison of the functional areas, talent management and HR cover areas of people management (Chuai et.al, 2008). Authors like (Huselid, 1995; Tichy et al, 1982) claims that the act human resource management (HRM) is an essential process that involves getting the right people to match the available job and this increases productivity. HRM deals with activities of attracting, selecting, developing and retaining individuals to accomplish the organisational goals as well as the individual's personal goals. This is similar to various authors notion on talent management. For example, (Jackson and Schuler, 1990; Chuai et.al, 2008) emphasise that talent management is an ongoing process of acquiring, developing, and retaining talented employees followed by internally developing and retaining. On similar lines Stainton (2005) views it as an activity of ensuring the right job to be given to the right person to facilitate highest performance. The author further added that managing talent assures the supply of rightly skilled whenever there is a requirement. This illustrates that HRM and talent management share areas in common.
On the contrary, despite the above similarities, the importance of superior talent which is considered to be a primary source of competitive advantage for organisations cannot be ignored. (Chambers, et al 1998 cited in Fishman, 1998) recommends that every business which is determined to make optimum use of its superior talent must encourage a talent mindset throughout the organisation. The authors make it clear that talent management is a part of the senior management team and asserts that in the process of inculcating talent mindset in a firm the involvement of CEO is essential. Furthermore, the research commissioned by (Ashton and Morton, 2005) highlights talent management cannot be successful if we look at it from merely a HR perspective. Talent management is absolutely different from HRM as the former differentiates the employees by paying attention to different demands of people who are high performers of utmost importance to business. Though HRM considers employees as the main source of competitive advantage it treats each employee in the same way. While (Gladwell, 2002 cited in Beechler and Woodward, 2009; Lewis and Heckman, 2006) takes a different perspective stating the need of segmenting the high performers else the managers might equally treat all his employees without considering their performance and capability. Such an act might add to the costs of the company. For instance, by training people who might not necessarily need it. This is even discussed by (Chambers, et al, 1998 cited in Lewis and Heckman, 2006) who points out that organisations divides their talent and accordingly customises the policies of the firm. He further adds no company can do everything to all the workers. The Maslow's theory of need points out that every individual's needs vary according to their potential and performance (Huczynski and Buchanan, 2007). Thus the means of managing these individuals should also differ by deploying the business resources towards key employees and chosen leaders.
The above discussion about TM and HRM principles and practice reveals that it is inappropriate to conclude that TM is same as HR activities or completely new concept. TM has emerged and evolved under certain contexts and enhancing the existing practices emphasising the needs of the business from its workforce to attain its current and future business requirements.
Evolution of Talent Management
Over the years talent management has evolved with sophisticated and extra responsibilities. Bersin, 2006 demonstrates how talent management has evolves from the 1970 to the current age. Initially the personal department was concerned with the people management. The main job of this department centred on for hiring people and accordingly paying them. Later in the 1990s firms started realising that HR was a broad topic and was more important than just hiring and paying people thus there was an emergence of strategic HR. The role of HR was now about hiring, developing and helping the business to achieve the goals of the business through these people. The HR department played the role of a business partner and accordingly supported the business. Meanwhile there was the emergence of talent management (Fishman, 1998) which concentrates on acquiring efficient and skilled employees with the help of proficiency based hiring process rather than selecting candidates by sorting their resume. The focus is now on developing sustainable talent pipeline, identifying the gap between the demand and supply for talent; identify suitable individuals and successors to fill the vital positions of the organisation (Bersin, 2006; Davis et al 2007; Budhwar and Bhatnagar, 2009). The following figure by shows the evolution of talent management.
Definition of Talent Management
In the review of the existing literature on talent management there is a lack of consensus on the meaning and conceptual scope of the topic. In a study Tansley et.al (2006) noted that only 20% of respondents were aware of a formal talent management definition. Traditionally it was about being good to employees. But now talent management is about attracting, retaining talent who are valuable to the organisation or strengthening employment brand. Although there is a discrepancy in the talent management definition its importance cannot be ignored (Bhatnagar, 2007; Lewis and Heckman, 2006; Scullion, Caligiuri and Collings, 2006; McCartney, 2009). Aston and Morton (2005) in fact believed that there is no single definition of talent management. However, the review of the talent management literature is categorised into a variety of topic and combining all of these together illustrates that the focus of the topic of talent management has been shifted to a critical review from a practitioner influence (Bhatnagar, 2006; Lewis and Heckman 2006). Despite such a criticism, three chief perspectives of talent management were identified in the extant literature.
The first perspective merely believes that talent management is nothing but HRM and focuses on the HRM functional areas as recruitment, development, retention, career planning, involvement and appropriate use of talent in specific organizational context (Hilton 2000; Schaufeli and Bakker, 2005). In spite of the broad viewpoint, these authors seem to have replaced the HRM with talent management. The researcher has elaborately discussed this perspective of authors under section 3.2. Under this perspective it is evident that the study is restricted away from strategic HR. Hence, here acquiring, retaining, and developing acts as a common definition of talent management. Furthermore, the second viewpoint considers talent management equal to competence development with a focus on organisation. Here, talent management aspires to enhance the performance among the employees at all the levels. This approach is built on career planning and workforce planning (Lewis & Heckman, 2006; Ashton and Morton 2005; Walker and Lorrocco, 2002). Furthermore, in the second perspective talent management concentrates particularly on the talent pool. Here the authors believe talent management to be a process which ensures availability of rightly skilled employees in a business. This approach is similar to succession planning and the focus is more on the internal employees than the external ones. It is also called as a mindset which forces companies to gain an awareness of the current and future talent requirements, employee's talent and assess it accordingly Lewis and Heckman, 2006; Budhwar and Bhatnagar, 2009). According to Budhwar and Bhatnagar (2009:183) talent management "involves acquisition, development, and deployment of resources while anticipating and responding to a large variety of market forces". The third perspective is more rigid compared to the second perspective and lays emphasis on retaining only the best performers. Here it is argued that in an organisation should be filled with top performers and the poor performers should be terminated (Lewis and Heckman, 2006; Collings and Mellahi, 2009).
Importance of Talent Management
When a talent management strategy is implemented it will have an impact on all the units of business as it will apply to all the departments of the organisation. Davis et.al (2007) establishes that talent management will be helpful in identifying each business unit's performance excellence. The rightly skilled employees will deliver superior performance as it is easier to implement the process to accomplish a desired task. Research shows that talent management strategies develop employee engagement (HR Focus, 2006). According to Schaufeli and Bakker (2002:74) employee engagement is a "positive, fulfilling, work-related state of mind that is characterised by vigour, dedication, and absorption". Talent management strategies by developing and implementing practices of rewarding and supporting employees ensure employee engagement. With regard to employee engagement the research commissioned by Gallup published that employee engagement is vital to retention. Moreover, (Bhatnagar, 2007; Kilibarda and Fonda, 1997) highlights that retention of employees would save the business from incurring unnecessary recruitment and training costs.
Theoretical review of best practices in talent management
The classic study of American and European multinationals by Becker et. al (2004) noted that companies are putting their overall performance in danger by not managing talent effectively. Research in this area has come up with talent management practices which are being implemented by companies who are successfully managing their talent. These practices are claimed to be the best talent management practices as it ensures effective talent management. For the purpose of this research only a few finest approaches of talent management are presented.
Involvement of senior management
When research was commissioned on how companies structure themselves to manage practices associated with successful talent management it was explored that the success of talent management was determined by the degree to which CEO and talent management leaders are involved in talent related activities (Hewitt, 2008; Becker et. al 2004). Another research conducted on 240 companies by Wellions et.al (2009) also showed similar result. With the findings of the result it was evident that CEO's and HR must work together for successful talent management. With the CEO's involvement the can work on the current on talent and predict the companies talent needs for future.
Business strategy must be aligned with Talent strategy
The second best practice identified was talent management strategy should be in line with the company's corporate strategy and much proactively implementing it (Hewitt, 2008). It was observed that the type of talent an organisation needs is determined by the company's goals and strategies. Wellions et. al (2009) notes that companies might be addressing the talent challenges in their organisation but might fail to link it to its long term goals, thus emphasising the importance of aligning the corporate and talent goals.
Acquisition of Talent
With regard recruitment of talent Terpstra (1996) believes that the mode of hiring affects the performance of employees thus the author suggests that internal employees should be given preference over external resources. Moreover, if the employees are of particular value to the organisation with high potential (cipd,2009) then such employees must be developed for a future role. Further, Ronn (2007) highlights that only a well defined talent resourcing process will provide a consistent result.
The fourth best approach noted was the talent assessment process. They discovered nearly 92% the organisations surveyed use a range of methods and tools for instance, potential and performance matrixes, and talent review meetings (Becker et. al., 2004). In addition Paquet and Rogers (2008) also the act of managing performance consistently will enhance the productivity and undertake assessment, and provide employees with the coaching needed to become stronger contributors
In the study the next finest practice noted was giving HR the charge of monitoring implementation reported more success at developing high potentials. With regards to high potentials they recommended that the differences between potential, performance and readiness has to be considered and it needs mentoring and personalised development plans to build key skills to take an employee from potential to readiness.
Retention and Motivation
In terms of retention and motivation of high potential the study revealed, giving challenging assignments and provide extra perks was effective. This argument was touched upon previously by McKeown (2002) where he mentions that only some organisation recruit for retention where an employee is hired using all hiring models to the new employment contract. In order to identify potential future leaders he also suggests conducting talent reviews of employees. Apart from attractive perks and development opportunities Barnett and Hall (2001) proposes reduction in the working hours to win this war for talent. The authors mention an interesting finding from their research that 80 percent of the professionals were dissatisfied with long working hours.
In addition to the above approaches Budhwar and Bhatnagar (2009) suggests competency framework for talent management where people who fit for the organisation are recruited with a positive employment brand. It also conveys the need of rewarding the potential employees and having a HRIS (Human Resource Information System) in place. This relationship will be then mediated by psychological contract. However I feel since this framework is conceptual it can be used in my research. Berger (2004) came up with a talent management model called TalentReservoir to provide structure to implement practices which will lead to potential employees contributing to organisational performance through designing and building a solution, capture the solution is software then implement it. He even emphasises that involvement of CEO is a must in managing talent.
The following model shows how the finest talent management approaches leads to an overall organisations performance.
Adapted from Bhatnagar and Budhwar (2009)
With a talent management strategy in place these days companies choose talent management technology and solutions in accordance with the company's needs. In the past decade rapid evolution of IT and the arrival of the Internet in particular, has an impact on the process of recruiting and retaining talent (Harris, 2000). Berger (2004) states it is high time organisations realign their approach on talent management and explore the role played by technology in attracting and retaining talent. The rapid growth of the internet and an increasing use of talent management tools and software are increasing to measure employee's performance and using software solutions to integrate talent management practices in an organisation. He suggests organisations to deploy and understand technologies to address future labour market conditions and remain competitive. Moreover, he even emphasises that technology can be used to gather data as long as the human interaction is not ignored.
To sum up after reading the literature it seems as though talent management is a complex process which needs further research. From the literature it is evident that an organisation must design a talent management strategy keeping in mind the organisational needs. Moreover, the study by Budhwar and Bhatnagar (2004) clearly shows the importance of talent management and formed a conceptual model they were successful in identifying the core practices required for a successful talent management approach in an organisation.
Innovative ways to manage talent.
Despite the advantages of traditional practices, companies have begun using the company image and various other innovative approaches with regards to their talent strategies. In a highly sophisticated market place where businesses are eager to acquire an individual with right competencies, there arises a need of innovative tools and techniques to overcome the shortage of key talent. Companies might create a competitive advantage by making an investment initially on developing suitable new approaches in order to replace the outdate approaches to manage talent. This is particularly suitable to the ITITES companies in India as the organisations might be able to attain a good return on investment by implementing innovative talent management strategies (Luszez and Kleiner, 2000, Taylor and Collins, 2000, Bhatnagar and Budhwar, 2009). The second research aim is thus to examine usage of these refined and innovative practices to manage talent and evaluate if these approaches have been successful in the Indian context. The ways identified in the talent management literature comprises of investing on technology by using softwares to track, measure and assess the efficiency and performance of the employees. In addition to technology employer brand was identified as a key element in managing talent making it evident that a positive employer brand is vital to acquire and retain the best talent. The real challenge is to keep the energy flowing and come up with creative and new ideas to face these circumstances where both employees and employers are in need of each other (McCartney, 2009, HR focus, 2006, Taylor and Collins, 2000).
Use of technology in Talent Management
Information technology has made its way rapidly into business in the past decade. This growth of technology has resulted in organisations managing the employee information to manage talent with the help of software tools. As Reed (2001) confides if an employee works till late in the evening might make him a hard worker but he might even be the slowest. In the current age where people are reviewed on their output than the input, technology plays a vital role in acquiring and retaining key employees. Through sophisticated data analytics, talent management strategy can be implemented easily. The tools help in tracking competency, retention, attrition and various other information needs relating to the employees and make it easier for the top management to take quick decisions with regard to its employees. In order to implement a strategic decision, talent management needs to be aligned with an integrated system of the company's information pertaining to its employees with the help of technology. In India companies like TCS, ICICI Bank, Sapient etc uses the information obtained from such softwares to take strategic decisions (Lewis and Heckman, 2006; Bhatnagar, 2007 cited in Padaki et. al, 2005). The greatest merit of technology as highlighted by Reed (2001) is that it saves time by generating quick reports. Usually in case of the software based assessment and tests there is no compulsory supervision. Moreover, the unavoidable use of computers at every organisation in place of paper and pencil for administrating, training and assessing the employees in large number raises the need of technology (Bartram et al., 1996). On the contrary Bartram (2000) even states that technology is helpful but is not free from limitations. With regard to this he comments that at times technology itself might turn to be the greatest limitation. On the other hand in terms of technology there are issues pertaining to security, confidentiality, and technical issues. As part of the second research question, the level of adoption of technology i.e softwares and tools and its merits and demerits will be investigated in the Indian context.
Every organisations corporate strategy will have a primary definition of employer branding. In general terms it is how the companies market themselves on what it has to offer the existing and potential employees (CIPD, 2009). According to Brewster, Harris and Sparrow (2003) for most of the organisations there is a link between talent management and employer branding. He noted companies are concerned about their top people and what the key roles they fit into. Hence it is not surprising that the "war for talent" and shortage of the skilled workforce has raised a need to implement marketing principles to hire potential candidates and differentiate itself from its competitors (Reed, 2001 and Lievens et al., 2002). The author McCartney (2009) declares her findings about the research conducted by CIPD (Chartered Institute of Personnel and Development) on various creative and innovative talent approaches that organisations are currently developing. The author reveals that companies are spending active time in enhancing their company profile to be an employer of preference to ensure that they can easily acquire the talent that is difficult. In another research by HR Focus (2006) it is established that to management talent employer brand is the key driver. Reed (2001:18) adds to it by stating that "employer brand creates an emotional bonding between the employer and potential employee". (Reed 2001) suggests that positive messages about the company, employee engagement, campus recruitments, internships, brochures, sponsoring television quiz shows, charity work can be useful to strengthen the employer branding. It seems organisations are spending time in strengthening their relationships with local talent and be a preferred employer so that they are in a strong position to acquire talent which is difficult to find. In a recent research it was found that employer branding is important for talent management and it was identified as the key driver for employer branding. However, in India organisations do not follow employer branding intentionally (Shukla and Bhattacharya, 2007 cited in Budhwar and Bhatnagar 2009).Giving the example of Sasken, Infosys, Wipro and TCS the authors state that they just built a productive workplace. As the ITITES companies as engaged in the war for talent individuals this approach might play a vital role in helping firms to acquire and retain high quality talent. However, Iles (2001) stresses that it is important for an organisation to ensure that that they do not convey wrong information with an intention to just attract employees might greater disillusionment later result in high turnover.
Talent Management: The gap between theory and practice
Research commissioned in the past on talent management practices shows that there have been discrepancies between the literature on talent management and its practice. In these studies conducted by (Guthridge, Komm and Lawson, 2006; hbr, 2008) major discrepancies between what was suggested in literature to what was being practiced were identified. Numerous common weaknesses in Talent management process in practice were highlighted, some of which are listed below
- There was no obvious link between the business goals and the talent management goals.
- There is no forecasting done with regard to the need for human capital. An immediate labour requirement leads to external hiring thus wasting the in house talent.
- Lack of development opportunities and challenging jobs
In line with these findings, Cunningham (2007) notes that business might find it easy to acquire talent from outside the business rather than developing the existing talent, but this attempt might be a failure especially if the incoming person is unable to adjust to the culture of the business. (Davies et al., 2008) stresses the need for more precision in approaches to manage talent and states the company will face significant increase in employee turnover which is costly and disruptive.
Thus, after having a general over view of talent management, depending on the review of literature on the best and innovative practices in talent management, the following chapters will make an effort to produce proof on the practices followed in the Indian IT-ITES sector. Further, it even intends to evaluate the extent to which there is an adoption of these practices by these firms.
Research Propositions and Questions
On the basis of the overview on talent management and theoretical review on the finest talent management practices presented Chapter 2, the following three research questions have been derived.
In order to be able to attract, identify, develop, engage and retain individuals who are of particular value to an organisation in a extremely competitive Indian labour market which has problems of an increasing demand-supply gap, inadequate suitability of manpower and skills shortages, it is necessary for IT-ITES firms to implement best practices in the areas of talent management. Nevertheless, no evidence is available in this area to verify if firms have actually adopted these practices. This has encouraged the researcher to study the degree to which the IT-ITES firms in India have adopted these talent management practices identified in the western context. The literature review revealed certain finest practices in talent management procedures. Hence, the first research question (RQ) is derived as follows:
Research Question 1: To what extent have IT-ITES firms in India adopted best practices in Talent management identified in literature?
The review of the literature shows that firms are increasingly engaged in a war for talent in an extremely aggressive and sophisticated marketplace with their competitors hiring individuals who are particularly valuable to the company and retain them. The traditional approach no longer seems to be sufficient for companies to compete for the talented individuals (Taylor and Collins, 2000). This predominantly holds true in the Indian IT sector for both the foreign and domestic companies which are in constant competition with each other in this competitive labour market to get the best talent. With this arises the need of some innovative methods for managing talent. Therefore the second research question is:
RQ 2: To explore the extent to which foreign companies have adopted innovative approaches to talent management and have these methods have been helpful in the Indian context.
In addition, if innovative and new methods are not being implemented by the firms, the researcher will try to identify the underlying reasons for the same.
For the purpose of this research the target sample comprises of both foreign and domestic firms in the IT-ITES sector. Lawler et. al (1995) in their work on HRM observes that when compared to domestic firms, the HRM practices of foreign companies are more structured. Moreover at the foreign firms the approaches to management might differ and the employment methods are relatively more rationalised than the domestic firms. In accordance with this the researcher attempts to find out if there are any differences in the degree of adopting the best practices in managing talent between the foreign and domestic firms and thus reflect on whether we can learn lessons from foreign firms in terms of adopting of best practices in the Indian context. The third research question that emanates from this proposition is:
RQ 3: Do foreign IT-ITES firms follow more sophisticated talent management practices than the domestic IT-ITES firms?
The following chapters intend to provide answers to these three research questions which are a resultant of the theoretical developments in talent management.
This chapter will explain the methods adopted for the purpose of this research with tools like interview to answer the research questions identified in the chapter 3. In addition, the research strategy, the techniques and approaches adopted to collect data, sample size and the method of analysis is discussed.
There are many different view points about what research is all about. In simple terms, research is said to be a systematic investigation of facts of any topic or academic facts (concise oxford dictionary, 1999). However, Anderson (2004) argues that such a definition considers scientific enquiries and relate to physical world. Further, Anderson (2004, p.6) defines research in relation to a management as "finding out things in a systematic way in order to increase knowledge about people and processes involved in the management of work in organisations". This definition reflects how appropriate information help management in effective decision making. Thus, the unanswered question constitutes to a research topic or dissertation. The unexplored facts to be investigated in organised manner act as the aims of the research and to satisfy this information need, an appropriate methodology and suitable tools for data collection and analysis has to be chosen.
This research is mainly focused on the talent management approaches in the Indian IT-ITES sector. The ITITES sector it is quite new industry in India because ITITES companies in India has come into being only in the mid 1990's, and so there is no much research done on this area. In line with this (Anderson 2009; Creswell, 1994) suggests that using the qualitative approach may be more suitable in order to generate and analyse data if a subject is new with less existing literature. Under an exploratory study, emphasising the role of the researcher Anderson (2009) suggests that the researcher is more of an explorer who intends to find out what is happening and there is an attempt to assess the phenomenon in a new light. In addition, the research is carried out from an interpretivist perspective where the researcher is more concerned about accessing and understanding individual's perceptions about the talent management practices. Thus this enquiry required to be supported by more qualitative approach focusing on obtaining new insights in current situations Thus, in order to investigate in depth the nature and origin of people's opinion, the researcher adopts a qualitative and exploratory research method (Anderson, 2009; Cooper and Schindler, 2001; Creswell, 1994). The following figure displays the nature of the qualitative research.
For the purpose of this research, to gather information face to face and telephonic interviews was conducted with the HR professionals in the Indian ITITES sector across India. In those cases where respondents were located in distant cities across India and face to face interviews could not be carried out telephonic interviews were conducted. Thus, by collecting data from literature and the findings of the result, the three research objectives were addressed.
In order to achieve the research objectives the primary research technique adopted was interviews and secondary research for the literature review.
The interviews were conducted on the basis of a set of pre determined questions. There was a variation in order these questions were asked as there was a need of amending the questions depending on the flow of the conversation. This is advantageous as it gives the researcher the flexibility to add or omit questions depending on the activities existing in the organization. Thus make it easier for the researcher to give importance to 'why' instead of 'how' and 'what'.
Secondary research was developed mainly from journal articles that offer concepts, theories and in depth reviews. The information from reading the secondary sources about talent management was analysed further using the primary research for qualitative approach as a part of the pre-coded approach as suggested by Fisher (2007).
According to Fisher (2007) there are three fundamental stages to construct a questionnaire. They are as to identify the questions, to formulate the final questionnaire and to word the questions. The questions are framed with help of literature review (chapter 2). The literature review was focused to achieve the objectives and to formulate the interview questions more easily. All questions are framed with a deliberate effort to directly hit the objectives. The chosen wordings for questions are used with an additional care are taken to avoid hypothetical, leading questions, arrogant questions, double questions and uncertainty. A comprehensive set of questions were formulated for the interviews in such a way that they provide entire illustration of the talent management practices of the firms under research. The following figure describes the process involved in framing the research questions.
The questions for interview were classified under the following broad headings to facilitate an understanding and compare the Talent Management aspects identified in literature i.e. competency frameworks, talent management strategies, assessment techniques evaluation of the training effectiveness, and use of innovative talent management strategies.
The sample in a qualitative research provides mainly explanations of particular mindset and behavior than quantifying the degree of coverage in the population. According to various researchers (Fisher, 2007; Anderson, 20009; Bigham, 2008) and the National Centre for Social Research (2002), for qualitative samples the sample size is not required to be as large as the samples in a survey. They emphasise that it is neither desired nor required. However, it is definitely important that the sample in qualitative research is selected deliberately to cover the diversity and range present in the target sample. In this research the sample comprises of ten large size ITITES companies based in India which includes five foreign and five domestic companies.
A proper combination of five local private companies and five foreign companies was chosen in order to enable an investigation into their talent management approaches and a comparison of the same between the local and foreign businesses. The sample is focused on large size firms in terms of the number of employees i.e. the average company size is 4000 employees and all the firms under study employ a minimum at least 1000 employees each. The five foreign companies under research are Sapient, IBM , Dell Inc., Seimens and Capgemini and the domestic private companies were are Godrej-Infotech, HCL Technologies, Nipuna Services Ltd and, Company Y*. The designation of the interviewees ranged from senior executives to managers to heads of recruiting or human resources in their respective firms. An overview of the companies and the interviewees is presented in Table 4.1.
Profile of the IT-ITES companies and interviewees under study
In order to collect data the first step was to get in touch with human resources or HR and talent management departments of some IT-ITES firms. The priority of the researcher's priority was to get appointments with either Talent management Heads or the HR heads. However, in some firms they did not have a separate department to manage talent management department but the talent management activities were looked after by the senior HR managers and the people development teams. Moreover, in few companies the HR Heads were extremely hard pressed for time and so the managers or senior executives were chosen to be interviewed.
A pilot test was conducted prior to sending the final questions to the potential respondents to ensure that the participant would not face any issues in understanding the question (Bigham 2008; Saunders et al., 2003) contends the need of a pilot study which enables assessment of the questions and helps the researcher to know if the interview questions designed are valid will successfully meet the research objectives with reliable information. The pilot study was done with Senior Executives from the Talent and HRM team via electronic mail and online discussion forum. This was followed by making some amendments in the questions to achieve relevant information in the research area. For a sample of the interview questions refer Appendix 1. Further, before the interview the list of the interview questions was sent to the interviewees by e-mail to give the interviewee some time to reflect on the questions. A cover letter was attached stating the purpose of the research and that it is a part of the researcher's coursework and highlighted that the research is not done on behalf of Nottingham Business School. Interviews began with reiterating the questions which were emailed to the interviewees prior to the interview. During the process of the interview, responses were written down and were not recorded because of the interviewees' were reluctant to have their policies on record. The interviews lasted from 25 to 45 minutes. Further, interviewees requested for their HR policies to not be explicitly mentioned against their company name names and two firms requested complete confidentiality (Company X and Company Y).
Limitations of the Research
This research is primarily based on interviewing the HR executives. So the problem of bias could be the possible limitation of this research method. Bigham (2008) states interview is highly subjective. The author conveys the possibility where respondents might be tempted to give an answer that will please me or to show themselves in a good light. Moreover, the researcher may be inclined to find out answers that support predetermined notions which might not be deliberate. This might but happen due to the respondent's ignorance about certain corporate practices or the inability to reveal information due to legal constraints.
Furthermore, Gray (2004) mentions that an interviewer might unconsciously tend to seek for answers which support their preconceived notion. In this regard, Bigham (2008) says though such bias cannot be avoided completely but it is helpful there is awareness and constant self-control is maintained by interviewer. Hence, the researcher avoided unwanted interference during the interview. In addition, when required the researcher repeated interviewee's statements to avoid researcher bias and misunderstanding and ensure accuracy assuring both the interviewee and researcher that the respondent's opinion was being understood without any bias.
This chapter exhibits the analyses of the results from the interviews conducted with the Mangers and Executives from ten ITITES companies across India. The analysis and investigation attempts to explore the common research questions identified in the previous chapters. The research objectives are (i) The degree of adoption of best practices in managing talent. (ii) The extent of usage of innovative talent management strategies (iii) Difference in talent management practices if any between the foreign firms and domestic firms.
For the sake of this study, the five domestic companies have been coded A1, A2, A3, A4, A5 and the five foreign companies are coded B1, B2, B3, B4, B5. All the ten organisations were found to have a formal talent management policy. Further, with an exception of A2, all respondents stated that their business goals are aligned with their talent management goals. Nevertheless, A2 "since we are a new business we recruit candidates externally but in a long run we intend to develop our highly skilled employees for future key roles" This shows that the company have their talent strategy aligned with organisational goals.
With the intention of exploring research question 1, sub-sections under section 5.1 are discussed and then present the findings for Research Question. 1. On whether ITITES companies in India are meeting best practices in talent management identified in literature.
Talent management approaches
The approaches identified in the literature as best practices are analysed below to gain an understanding on the level of adopting the approaches.
The involvement of CEO
The involvement of CEO in for implementing talent management strategy in an organisation is identified as a best practice in chapter two. It is found to be an important factor for a talent management strategy is heighted in the literature to be a strategic practice (Wellions, Smith and Erker, 2009; Becker, Fineman and Freedman, 2004). The involvement of the CEO also points out that there is a talent management strategy in place. It has also been found that having a talent management strategy in place will improve the performance of employees delivering superior results. When asked how often do the CEO's and HR have a discussion on talent managing activities all the respondents replied on yearly basis for the reviews.
Linking talent management goals to your business goals
In the literature it was indentified that not only having a talent management strategy in place is important but it should be aligned with the business goals (Hewitt, 2008; Wellions et.al, 2009). When asked the respondents if they find it difficult to link the talent management goals to business goals. The respondents stated that since the CEO is involved it becomes easier to align the talent and business goals
Respondent B3 gave a isolated response that "if the business requires then we do it . Respondent A3- "our business is driven through people so we ensure the strategy is aligned", Respondent B2- ", the combined decision the HR and Business leaders take ensure that decisions made link to the corporate goals"
B5 and emphasised that they believe that business is driven by people and so linking the talent goals are difficult. All the other respondents found it challenging to align their talent goals to the long term corporate goals.
Though one of the respondent's response was not helpful. The rest of the responses reveal that if the CEO get involved in the activity of talent management strategy then the goals are often linked with business goals.
Six companies said they give more importance to internal resources to any position that is available in the organisation but they even stated that in terms of quality of the skill requirements internal recruiting was not being of much help. But they agreed that it increases the employee morale and enhances employee's commitment (Bernardin, 2003) to the organisation. This will further decrease the attrition rate which is quite high in the Indian IT ITES sector (Bhatnagar, 2007).
On the contrary B5, A5, B4, A4 said they do not go for internal talent for high profiles as couple of job roles are very critical and needs talent from outside the organisation. Overall almost all firms were found to give preference to encourage employees and give growth to them which was identified as one of the best practices in recruiting literature. Another innovative practice to attract and acquire talent by innovative ways (Budhwar and Bhatnagar, 2007 and Reed, 2001) identified in the literature in discussed in the later part under innovative practices of managing talent.
The next best approach identified in the literature is the talent assessment process and development. Research proves that organisations use a range of methods companies that implemented more of these steps ensured successful talent management (Budhwar and Bhatnagar, 2009, Bhatnagar, 2007). It was revealed that only five organisations had tools to assess the skills. However, all the firms had development programs in place for their employees.
However, respondents A1, A3, B3, B4said that that they have many management programmes and development opportunities, higher educations schemes in place for the overall development of the employees. Further, they added they have internal database system which keeps track of employee's performance. But no attempt is made to compare the performance of the individuals deliberately. The isolated was by A2 which felt that there was no need of assessing the employees.
To retain the high potential challenging projects and extra benefits or perks was proved to be effective in the literature (Bhatnagar, 2007; Becker et.al). With regard to retention schemes in the organisation every respondents had retention plans. In line with this A1, A3, A4, B1, B2, B4,B5 said they had retention plans which where flexible in nature and were amended according to the market condition. The table shoes the retentions plans that the firms had as a part of their strategy.
Retention schemes of the ITITES firms
The above table reflects that all the companies had decent retention plans to ensure retention. But it is evident that both foreign and domestic firms had challenging assignments and career growth as a common retention plan. With regard to extra perks domestic companies were more willing to pay to retain talent. However, only A3, and B1 said they provide flexi working hours.
Innovative talent management strategies
This section illustrates and discusses the results for proposition 2 which intends to answer the second research question i.e. the extent to which new and innovative methods of talent management by IT-ITES firms in India. In general it was observed that most of the firms had introduced some or the other innovative strategies to support their recruitment and selection processes.
The innovative strategies included giving flexibility to job rotation within the company (firms B2, B3, B5, A3, A4). Respondent B3 said "we provide flexibility to our employees to move ahead in their career by allowing them to go for department change. This motivates the employee". Moreover this was found to be a good way of retaining employees who were looking for challenging roles in their jobs at the competitors company. Other companies (A1, A2, B1) adopted employment development and entered into contract with these schools to encourage the highly skilled and provided them higher education at top Indian business schools. A3 and B4 stated their there is no any new strategy thy have come up with. However these strategies keep changing and updating according to the business needs. For instance, A3 said "at our organisation talent management is a on going process, it keep changing to suit the employee, business and current market need." In addition to the above stated companies strategies, other innovative talent management strategies such as the use of technology n the form of softwares and employer branding identified in the literature were discussed with the respondents in depth with the respondents. The findings are presented in the following sections.
Use of Talent Management Softwares:
Among the ten companies, 100 percent (10 counts) of respondent companies reported using technology extensively for assessing and maintain the performance track record of all the employees. It was also noted that (B1, B2, B3, A2, A4,A5) used in house softwares where as the remaining firms purchased softwares from the market. The respondents using in-house softwares felt that it resulted in the advantage of keeping the cost lower. Respondent A1 mentioned that "for a large company like ours technology makes in easier to keep track of the employees across the organisation". With regard to the benefits all the respondents felt it saved their time. Respondent B2 said "no was no space for human error" thus giving a reliable output.
When asked about the drawbacks of technology, most respondents it fell it was disadvantageous, except respondent B3 who felt that if there is some technical error with the software gets corrupted then the entire data is erased. Even A3 pointed out that to get accustomed to the technology one needs a training and lot to time. Overall, the respondents felt that technology was a important tool for managing talent, though its only drawbacks in the Indian context were the fear of technical error and requirement of well trained specialised staff. This observation shows that the use of softwares is done by both foreign and domestic firms equally.
Employers considered having a good employer brand to be vital all the companies under research. Respondent B1 said "brand is nothing but reputation of the company and every individual would want to work for a reputable company". Similarly the respondents from both the foreign and domestic firms considered employer brand essential in Indian market as there is a gap between demand and supply for skilled employees and both the foreign and domestic firms compete for talent. Respondent A1 point out "brand is important to attract the right talent".
It was also noted companies had a separate department like the communications or public relations units to develop their brand except one B4 who said "we do not have a separate department for branding". The common branding initiatives are via advertising, campus branding, charity work etc.
Respondent B3 mentioned that their company came up with a bid to have a cup of coffee with the CEO and the entire bid money was given to charity. Another respondent A5 stated they have opened free hospitals for the poor. Respondents B1, B4, A2, A3, A4 undertook advertising and campus branding as their main initiative. B2 and A1 provided internships and conducted seminars to create awareness ITITES industry.
To sum up, it was eminent that employer branding was seen as an important attribute by both foreign and domestic companies as the labour market in India is highly competitive. Precisely the branding measures implemented by these ITITES companies were: hoardings, advertising, campus branding, creating awareness through community services and seminars. Hence both foreign and domestic firms have implemented innovative strategies. With regard to forecasting the talent management requirement it was found that all the foreign firms forecasted their future talent needs. In case of domestic only two companies took necessary steps to plan their workforce.
Thus, research question 2 to explore the extent to which foreign companies have adopted innovative approaches to talent management and have these methods have been helpful in the Indian context.
Conclusions and Recommendations
The conclusion and recommendations which are a result of discussion and analysis of the research results from the previous chapter are presented in this chapter. Here the researcher intends to present a concise summary of the major findings and conclusions in accordance to the research question derived earlier in this research.
A recap of the three main aims of this research is required before concluding. They research aimed to explore :
- The extent of adoption of best practices in talent management practices.
- Usage of innovative talent management strategies.
- Differences in talent management practices of foreign in comparison to domestic firms in any.
This research was intended to answer three research questions and in order to formulate the conclusions this section will review the major findings of the research in relation to each research question.
Research Question 1: The extent of adoption of best practices in talent management practices
This research question will be studied under broad headings i.e. talent management strategy in place, CEO's involvement, alignment of business goals to talent goals, talent acquisition, development, and retention.
The ITITES firms are effectively managing their talent when compared their approaches to manage talent to the ones identified in the literature. Even the start up company had couple of the best talent management practices in place. It was noted that irrespective of whether firms having a explicit talent strategy, separate talent management unit every company seemed to be looking forward to acquire the best talent with a intention to develop and retain them.
On the whole it can be concluded that well established firms both domestic and foreign have most of the best approaches in practice. Some companies might not feel the need of excessively make an investment on various softwares or giving additional perks to manage talent but are definitely aware of the importance of talent management.
Research Question 2: Usage of innovative recruitment and selection strategies
The ITITES companies in India have implemented innovative approaches to talent. In short, approaches like using technology, and employer brand (Taylor and Collins, 2000), partnering with educational institutes for higher education, and doing community services. Technology i.e., the softwares were considered to be an important tool to track and assess the talented employees by the respondents. Some respondents referred to in house softwares, online exams, feedback sessions, workforce planning software, people soft etc which indicates the potential use of technology. Hence, revealing an increasing trend towards adoption of technology in managing talent. Their only drawbacks in the Indian context were the fear of technical error and requirement for specialised staff. In addition it was observed that all the firms considered employer branding there both domestic and foreign firms compete for the same talent in the Indian labour market.
On the whole, it was concluded that IT-ITES companies in India have taken convenient steps to implement innovative talent management strategies. Nevertheless, a greater focus on innovation was observed in tracking employee's performance because it is easy to track the performance of numerous employees and maintain a record of the same. In addition, these companies had additional scope for deploying technology to its maximum potential in managing the talent in a firm.
Research Question 3: Differences the talent management practices of foreign in comparison to domestic firms.
Both domestic and foreign firms had similar attitude towards managing talent. Both felt it was very important to ensure that the right talent was acquired, developed and retained. Furthermore in the level of sophistication of managing and forecasting techniques adopted by the domestic and foreign firms no much difference was observed. In addition, both foreign and domestic ITITES firms in India were found to have implemented a range of innovative strategies beyond their traditional HR practices. This might be an attempt to hire the right talent as in the ITITES sector both foreign and domestic target the same talent pool. Thus increasing the need to update and come up with innovative strategies to maintain their place in the "war for talent".
To sum up, it was concluded that there was to huge difference between the foreign and domestic companies. These research results seemed to be in similar lines to the conducted by Jain et al (1998) who found that foreign firms were not more structured or formal than the domestic firms.
Another argument is that large companies might have to maintain similarity in their TM activities because of the prevailing pressure of global competition. Hence the research results seem to be supported by this argument as the companies under research are large companies operating globally.
However, the key difference observed in their approaches was with regard to training and development. Foreign companies found to have more developmental programmes and more accurate ways of assessing competence levels after training whereas, domestic firms did not validate the competence levels after training reasons being lack of time and the high costs involved.
With the lack of clarity on meaning and scope of talent management the researcher made an attempt to find out the respondents opinion on the scope and meaning of talent management. B1,B2, B3and A1 mentioned that Talent management as a completely new concept which deals now with talent people. A3 and B5 said talent management had activities concerned to human resource development and employee enhancement.
Respondent A2 and A5 seemed to believe that talent management does have traces of HR. The research noted that the organisations with a separate Talent management team were believed to be viewing talent management as a new concept.
Recommendations for Further Research
The researcher on the completion of the research identified certain areas in which future research can be commissioned to enhance knowledge in the subject. Keeping in mind the limitations of the present research, below are the recommendations for further research.
- This research of the most effective talent management practices was commissioned from a company's perspective. On the other hand, a further research can be conducted from the employee's perspective and their opinions on which approaches are likely to have positive impact on the employees in the ITITES companies.
- Under this research the firms investigated were large sizes companies. Ivancevich, (1998) cited in Siddique (2004) highlights that such firms which generally tend to have expertise HR and TM units with highly structured interactions. This enables the firms to plan and execute more effective TM practices. It is recommended that in order to understand the extent of implementation of best practices in TM future study should be conducted on small to medium size IT-ITES firms in India.
- The research was concentrated exclusively on best practices in talent management procedures. However, given the highly competitive employee conditions, corporate culture, internal career growth and compensation can have a major effect on a talented employee of firms. Hence further study could focus on examining the crucial features helpful in acquiring, and retaining talent in ITITES sector in India.
- Another exciting area for future research would be to evaluate the impact of adopting best practices in talent management on the budgetary performance in an organisation.