Why HR should be STRATEGIC in managing Talent?

Published: Last Edited:

This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.

Today's businesses face increased global competition, shifting markets and unforseen events. No wonder they are finding it more difficult than ever to attract, develop, and retain the talent they need. There is a massive war among organizations to be the first to win the acquisition of scarce talent who pump growth, drive success and maintain the competitive advantage of their organizations. The increasing importance of talent has prompted most organization's leaders not only to state that "people are our most important asset", but also to take tangible strategic actions that reinforce that claim. To win the war of talent, organization have to develop systematic approaches that mange their talent effectively and efficiently beyond the traditional ways.

Traditional HRM relies on activities such as acquisition and retention, supplemented by key HRM activities in areas such as remuneration, labour relations, training, communications, as ways to develop the soft structures within organizations that function both as informal control devices and as coordinating inducers of subsidiary collaboration and competition (,,,,). According to Novicevic and Harvey (2001, p. 1260), the traditional area of technical and administrative responsibility for the human resource management function appears to be too narrow to influence the firm-level strategic decisions, lacks both formal and practical legitimacy, and isolates HR managers from major global strategic decisions. Quite many questions are worth considering: To what extent are organizations today truly implementing strategic HRM to manage talent in effective manner? How seriously is HRM taken by senior management and what role is it playing in transforming and modernizing organizations? Above all, how is HRM contributing to the strategic formulation, implementation and effectiveness of organizations today?

To answer some of the above questions, it is important to explicit the role that HRM play in applying strategic practices to improve organizational strategic success through decisions that depend on talent in addition to improving the application of organization design tools and HRM activities.

Where exactly does Strategic HR lie? First, it is important to differentiate between strategic HRM and HR strategies. As Wielmaker and Flint (2005, p. 262) insist, applying HR strategies is just one essential step toward adopting SHRM, but the two are not the same. Additionally, while SHRM rests on the platform of the hard model approach of HRM, it in fact goes far deeper into the strategic thinking of the organization.

According to Afiouni (2007, p. 124), the main fundamentals of SHRM emerged from the Resource-Based View model of management (RBV) which views that "organizational resources are applied and combined the causes that determine the attainment of a sustainable, competitive advantage, and the nature of the rents generated by the organization". In other words, the HR department, HR staff and resources, HR policies and all HR systems are internal resources that should be used to attain competitive advantages that are unique to the firm. Going far beyond implementing HR policies and practices, the view is that strategic HR is turning the firm's history, culture, and knowledge into a strategic advantage. More importantly, however, the HR function should be directly involved in the organization's strategy formulation process, not just in strategy execution and implementation.

Does HR have an effect on Talent success? According to Bingham (2008, p. 80), organizations are considering people the only sustainable competitive advantage, but not the systems, processes and technologies which became commodities. He reveals that professionals were attracted and developed through processes such as recruiting and succession planning, however, today, when the true competitive advantage is recognized, managing talent is taking on new dimensions centred on learning and development (p. 81).

Barney (2001, p. 49) argues that sustained competitive advantage accrues to firms that develop resources that are valuable, rare, and hard to imitate. He added that a firm's resources and capabilities include all of the financial, physical, human, and organizational assets which are used to develop, manufacture, and deliver products or services to its customers (p. 50). Moreover, Lepak et al., (2003, p. 693) note that companies, through their human capital, gain skills and abilities over time and develop cultures, social networks, and organizational structures that manages those skills and abilities. Many researches on the resource based view (RBV) focuses on the extent to which organizations have developed human resource-based practices or processes (Lepak and Snell, 2002, p. 521), and thus it is the dominant theory underlying strategic HRM (Wright et al., 2003, p. 25). The need for proper talent management

Due to baby boomers retirement and current massive shortage of skills and knowledge (Frank and Taylor, 2005, p. 37), organizations will experience difficult situations unless they give high attention to their human capital. Gubman, (2004, p. 118) noted that organizations may need to adopt a strategic framework for talent management to face such problems. Moreover, Tichy et al. (2001, p. 53) encourage HR departments to become strategic by understanding the business strategy of the organization and restructuring both the HR organization and practices to support it. Jackson and Schuler (2002, p. 226) explained that by outlining how the HR planning activities might be linked to organizational variables over several time horizons. If HR is to be as strategic, it must shape organizational strategy, not simply respond quickly to the implications of the strategy. Furthermore, they needs to develop a point of view regarding how talent decisions are made. According to Boudreau and Ramstad (2005, p. 21), HR must have a unique, talent-focused perspective for improving decisions, not just a process for implementing decisions.

Questions like which talent pool is critical?, and which set of practices best ensure that performance is on an optimum level?, have been left unaddressed (Lewis and Heckman, 2006, p. 150). Boudreau and Ramstad (2005, p. 16) bridge this gap by outlining a model that places the strategic management of talent resources on par with the theoretical frameworks that drive strategic decisions in other respected business functions, such as finance and marketing. They note that HR needs to develop a decision science that enhances decisions about talent resources (p. 17). Consequently, they developed "talentship" which became imbedded in talent decisions wherever they are made in the organization.

Why Talentship is needed? The HR function creates tangible value in organizations by focusing primarily on delivery of HR practices, which alone do not address the increasing importance of talent markets and decisions to today's competitive challenges (Boudreau & Ramstad, 2005, p. 19). Therefore, cognitive frameworks that support these practices and create strategic vision should be adopted to achieve future success. Frank and Taylor (2004, p. 36) propose that such a framework would facilitate detecting, measuring and enhancing the competencies through a decision science for talent.

Boudreau and Ramstad (2005, p. 22) have added significantly to the talent discussion by outlining the dynamics in which talent is linked to strategy. Their approach opens the possibility of developing rigid talent-strategy models. When business leaders understand that talent investments can open strategic opportunities, the Human Resources function will finally have its "seat at the table" (Boudreau and Ramstad, 2005, 23). If HR function goes beyond its traditional role, then the new decision science must not only articulate the talent-strategy connection, it must also guide the deployment of HR practices and investments, and articulate their effect on global competitiveness.

Talentship showed that considering effectiveness without regard for impact can lead to poor talent decisions. For example, training programs that improve the performance of a high value talent pool, rather than a pivotal talent pool, will have a weak impact if the improved performance does not increase the efficiency of executing of the strategy (Tyler, 2007, p. 8).

The Implications

As one of the HR missions is to develop staffing procedures that ensure that the right talent is recruited in the right place at the right time, they also need to develop policies and incentives that engage employees in the business (Calo, 2008, p. 411). According to Bhattacharya et al. (2008, p. 39) employees are looking for opportunities that support their personal growth by expressing their own sense of responsibility and learning new skills. Thus, the HR should match employees' skills and competencies with the organizations' requirements and needs (Frank and Taylor, 2008, p. 40). This would be by giving them more spaces to unleash their capabilities and potentials, and involve them in planning and implementing processes that lead to achieving success. Consequently, a long-term commitment and satisfaction and a high level of motivation would be resulted.

When the HR develops talent programs, they should ensure that their processes are aligned with the organizations strategies to show a high degree of transparency and involvement (Garrow and Hirsh, 2008, p.398). These programs should include processes such as workforce planning, performance management, training and development, up-to-date competency frameworks, reward and recognition, promotion and deployment processes, succession planning and diversity management.

HR should be strategic by educating leaders on the benefits of managing talent strategically. Engage them in discussions about the future of their organizations in three to five years, including its talent requirements. Involve top leaders in developing key employees through a "leaders as teachers" model (Bingham, 2008, p. 83). The ability to anticipate talent requirements and quickly meet them is likely to be the key performance advantage for decades to come. By taking action to manage talent strategically and holistically, organizations can move closer to fully leveraging every key asset.

The implications of our framework are reflected in three general observations: (1) The need for greater depth, detail and sophistication in connecting talent to global sustainable strategic advantage; (2) Identifying pivotal talent pools should precede the development of HRM practices and measurements, not follow it; and (3) Effectively understanding, measuring, comparing and enhancing the "mental models" that leaders use to make talent decisions will be increasingly important to organizational success.

Traditional leader development focuses on competencies such communication, change catalyst and building bonds (Corace, 2001; Day, 2001; Hollenbeck, 2001; McCauley, Moxley, & Van Velsor, 1998). Leaders must undoubtedly understand how to communicate and build commitment, but it is equally important to understand what to communicate, and to communicate why. Thus, the frameworks used to make talent decisions should be logical and clear enough to communicate those decisions to the larger organization.

HRM leaders must strive to develop, communicate and use a more robust decision framework that explicitly links talent to strategic success, if we hope to analyze, understand and enhance the "mind matrix" (Engle, et al., 2001) that underlies key strategic decisions.

Traditional HRM asks the question, "Are our programs having an effect on the talent they target?" Decision-based HRM would ask, "Are our investments aimed at the talent areas that are most critical to the strategic success of the organization?" This question should be asked before designing organizations or implementing HRM practices, rather than the typical approach, where talent pool impact is addressed only as part of HRM evaluation, after a practice is already in place (Boudreau & Ramstad, in press, a; 2002).


The role of SHRM has shown strong impact on the process of formulation and implementation of effective organizational processes. The transformation from traditional HRM to SHRM is an inevitable issue that should be considered in the current era. The HR should be given the opportunity to play a strategic role in drawing success for organizations, as it is responsible for critical tasks that need to be supported by all functions within the organization.

Talent management is a critical issue that should be under the responsibility of all functions in organizations, but not the HR solely. The HR role is to develop the strategic practices, teach leaders how to implement them effectively and provide constant support to ensure that talent is retained and developed appropriately.

The strong effective link between SHRM and Talent Management should be maintained and enforced constantly to be able to manage the human capital in ways that gain competitive advantage and sustainability for organizations. Therefore, strategic HRM approaches are the key success elements for any organization that seek long-term power and sustainability.