The global economy

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INTRODUCTION:

The present global economy has not only created a complex but dynamic environment as well and the firms need to learn how to compete effectively and efficiently in order to achieve viable growth. But one of the greatest obstacles for the success of an organization is due to shortage of workforces with needed enthusiasm and competencies. The main reason why workforces have received an extensive discussion is that:

  • The workforces around the world have expanded both in value and number.
  • The development of economies and business has created the need for larger workforces.
  • The reward level of these workforces varies considerably across countries.

And for the firm to achieve a global competitive advantage to its peer, they must manage these workforces effectively. And to overcome this obstacle the firms must need to ensure that they have the right people with the needed qualities at the right time and in right location. In this essay I would be explaining the importance of talent management.

WHAT IS TALENT MANAGEMENT?

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There is no proper definition of talent management as each organization thinks differently. To some organization it is about managing the highly talented individuals having specialized skills which helps the organization to withstand the market and for the others it is about managing the talent i.e. all people have talent and it should be identified and then to train them as per the requirement of the organization. Most of the talent management decisions are done based on core competency of an organization and the skills required for the particular position. Thus talent management is basically a recruitment of people both internally as well as externally, developing them in line with the organization's current business goals, and then promoting and retaining those people for the future business goals. These all functional aspects are done by human resource department who work in line with the company's business goals.

HISTORY OF TALENT MANAGEMENT PRACTICE IN U.S AND ITS CONSEQUENCES:

The internal talent management practice could be well traced back in the companies during 1950's where the employees having talents were trained to become the successors. It was of great success at that time as the business was quite stable and predictable. Later in 1970, the business had failed to predict the economic downturn which occurred in that decade and it led to collapse of internal talent management. This led to the pipeline of talents which created problem for the corporate as there was excess supply of managers with no lay off policies. The steep recession in the early 1980 led to the massive layoffs of white collar people and it eliminated many practices such as training of staffs and no new recruitment in order to reduce cost. But still there were some companies which managed the same practice as of 1950's and thus they became some kind of talent school.

In the early 1990, outside hiring became a success as the economy continued to grow. Initially the organization recruited from the pool of laid off talents but later on they recruited talents from their competitors. The employers, watching their talents leaving their organization, backed further away from the investment in development. In the late 1990's U.S. had longest economic expansion which absorbed all the available talents through outside hiring. The companies at that time realized that they were losing the experienced employees at the same rate as they were recruiting the people thus creating a 'talent for war' and also the outside hiring of individuals were too expensive. These newcomers also blocked the internal promotions which worsened the retention problems. Thus the companies started to adopt the policies of 1950 in their Human Resource Management practices and the workforces were given training to increase their efficiency levels. Thus one can see that there is a continuous fluctuation going on in the practice of talent management.

ROLE OF TALENT MANAGEMENT IN CURRENT ECONOMIC CONDITIONS:

In the current economic downturn most of the organizations around the world have taken tough decisions in terms of managing their talent. Most of the companies has slashed jobs, reduced training and development budget on their staff and have put talent management programmers on hold or have cancelled which has led to the frustration of the employees. The HR professionals are put under pressure by the companies to cut cost. Even the demographics are considered to be an important for success of an organization and are also the main driver for talent management challenge. Nearly 70 million ‘baby boomers' are expected to retire in U.S. in the next 15 years and only 40 million workforce are expected to enter in the same period, thus creating a shortage of workers. (Adecco, 2008). This has resulted the talent management practices an urgent business strategy and first on HR agenda.

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But the companies who are thinking of bright future prospects have taken a positive approach towards their business and also managing their talents in thepresent economic downturn. The companies which have implemented well controlled talent management programs have not only helped the company to overcome short term business challenges but it has relocated the company to a long term success and growth. A recent survey conducted by Bersin & Associates have shown that the organizations which have implemented talent management programs have achieved a 60% higher return as compared to the organization that have not implemented it. Thus the organizations have felt the importance of effective talent management processes and have focused more on retaining their highly skilled people and reviewing their systems to ensure that they have maximum return on investment.

There is an important requirement of ‘knowledge workers', in an organization, having specialized skills which are developed through extensive education and training. These workers have created a significant impact on the success of the company. (Jackson, Hitt and DeNisi, 2003). As most of the organizations require continuous innovation in products to satisfy the needs of the customer. These can be done only through the workforces of the company. This shows that how the talent management practice is crucial to success. Even most of the multinational organizations have felt the need of these workforces and for these they are moving to other countries to recruit and hire talent people. They always look out to enter into new markets as quickly as possible before their competitor does as this helps them to hire the best talent at best prices which helps the organization to remain competitive in this global environment.

The talent management programs are vital for an organization as it brings a greater long term benefits as compared to short term benefits. Thus the organization needs to have a long term mindset which is crucial in period of economic instability as it brings benefits to the organization than cutting cost in the short term.

IMPLICATIONS OF TALENT MANAGEMENT:

As per Cappelli, the large corporations especially in U.S. talent management practices have become ‘dysfunctional' leading to the failure of its practices. The main two reasons for its failures are firstly the surpluses of employees during downturn leading to layoffs and reshuffle and secondly the lack of adequate talent resulting in talent crisis.

The talent management practices in U.S. were done in two ways that were equally ineffective and fruitless. The most regular practice done by the U.S. companies is that whenever they require a new talent or any employee leaves the job, they relied on outside hiring to fulfill the gap of talent. This is because most of the companies do nothing nor make any plans to combat the crisis of talent.

The second approach which is commonly used among older companies is that they relied on multifaceted and authoritative models of 1950 for forecasting and succession planning.