Talent management

Talent is the only differentiator for company’s success in a global, complex, extremely competitive and dynamic environment. In the late 1990s since a group of McKinsey coined the phrase War for Talent, the topic of talent management (TM) has grown to be one of the hottest matters for management academics, practitioners and consultants as well. Research shows that 80% of a business’s profits are generated by 20% of its workforce (Branham 2005) namely ‘A’ players so what if ‘A’ players hold ‘A’ positions. Companies could prioritize on capital and technology or excellent processes, but the most crucial is to emphasize on people (Ready and Conger 2007).

Many factors contributed to writing this paper. First, it is the inimitable competitive advantages of “people” contributing to success. Second, there is a lack of consensus for the definition of talent management and its practices and the overwhelming use of the term among practitioners. The diversity of thought threatens to make TM another fad that HR professionals adopt (Ruona 2010). Third, even with overwhelming growth in the use of the term and mounting blurred in TM practices, there has been little peer-reviewed and the academic support is rather fragmented with the exception of valuable contribution provided by Boudreau & Ramstad (2005), Lewis & Heckman (2006), Cappelli (2008), Becker, Huselid, & Beatty (2009) , Collings & Mellahi (2009).

For this purpose, analyzing talent management ‘DNA’ encompasses first the definition of talent adopted by the company, the definitions and perspectives of talent management in practice heretofore. Thereafter, this paper analyses TM’s relation to global talent mobility.

What is talent?

Gaining agreement about the definition of “talent” is a vital first step in being able to manage that talent well. The word “talent” dates to antiquity and has a rich history. What is now of individual value was, thousands of years ago, money; to the Hebrews, Greek, and Romans, talent was a unit of weight when they exchanged precious metal of that weight it became a unit of monetary value (Michaels, Handfield-Jones and Axelrod 2001). Often most organizations find greater value in formulating their own talent definition. The Chartered Institution of Personnel Development “CIPD” defined talent as “it consists of those individuals who can make a difference to organizational performance either through immediate contribution or in the longer term by demonstrating the highest level of potential. Talent can be considered as a complex amalgam of employees’ skills, knowledge, cognitive ability and potential. Employees’ values and work preferences are also of major importance”(Tansley, Stewart, Turner, Lynette 2006).

Ulrich (2008) defined talent as the equation of 3Cs: Talent = Competence x Commitment x Contribution. Competence means that employees have the skills and abilities today and in the future for required business results. It also means focusing on staffing, training, promoting, retaining and out placing employees. Commitment means that employees are involved and engaged to the firm and this shows in the commitment indices, reports and productivity. Contribution means that employees find personal abundance at occupation that explains the focus on meaning and identity and other restraints that tap employees’ heart (Ulrich 2008).

Firms create competencies if they set and communicate standards and identify competencies required to deliver future work; they assess individuals and teams and assess people on how well they meet standards; they invest in talent improvement; and they follow up, track competence by using measures to track how well individuals are developing their skills and how well the organization develops its talent bench. Moreover, firms Strengthen Commitment by understanding that “commitment” means that employees are willing to give their discretionary energy to the firm’s success, which is considered as an employee value proposition – employees who dive value to their companies should get value back. Getting this value back requires employees to deliver outcomes in the right way. Knowing what commitment they are expected to make, the Employee Value Proposition (EVP) specifies what employees will get from the firm when they meet expectations. Therefore, the most satisfactory EVP provides what Ulrich called “VOI2C2E”: Vision; Opportunity; Incentives; Impact; Community; Communication; Entrepreneurship. At last, organizations strengthen contribution by identifying the relationships between the employee and the company (Ulrich and Brockbank 2005). As Ulrich (2008) argued “competence deals with the head (being able), commitment with the hands and feet (being there), and contribution with the heart (simply being)”. Creating the company’s own definition of talent ensures that it translates exactly what TM aims to achieve. Hence, talent is highly correlated with current performance and future potential; and how to keep it in the firm and not walking out the door. As the workplace is becoming diverse and mobile, talent is broadening beyond the traditional emphasis on top management team.

Where there is risk to differentiate between people and to label them as “low talent” or “talent” from political, cultural and ethical point of view, creating the organizational definition of talent is crucial for many reasons. It is to ensure explicitly and exactly what talent management is aiming to achieve, who is involved and who is excluded, to optimize the allocation of resource and development needs, to transparently evaluate and provide clarity for employees to assess themselves, and to enable companies to segment workforce accurately(Cannon and McGee 2007).

From researchers point of view, talent segments are correlated either to level of individual performance, to individual talent, or to pivotal talent positions (Michaels, Handfield-Jones and Axelrod 2001, Collings and Mellahi 2009)

Talent management

With the intensified challenges of globalization, the growth of information age, the relative shortage of talent and the propensity of employees to change companies, talent management gained more importance. What is TM and why is it important for companies nowadays?

TM is a relatively new concept emerging only in late 1990’s, derived from the phrase “The War for Talent” coined by McKinsey to highlight problems that organizations had in attracting and retaining talented people.

Although many authors argued, there is nothing new about the various approaches of talent management- attraction, retention, motivation and engagement, development, and succession planning. The previous initiatives are integrated together to create a more coherent whole that consists a means for the development and implementation of coordinated and sustaining approaches that help organizations to acquire the talented people it requests now and in the future (Armstrong 2006).

Knowing the complexity of defining TM because of the complex responsibility operating within the strategic human resource task, the Chartered Institution of Personnel Development (CIPD) affirms that TM is “the systematic attraction, identification, development, engagement, retention and deployment of those individuals with high potential who are of particular value to an organization”. CIPD adds that TM is “a dynamic process that has to be continuously reviewed to ensure that organizational requirements are still being met in the light of changing business priorities” (Tansley, et al. 2006). Ultimately, organizational success is the most effective evaluation of TM. This CIPD definition includes explicitly the term systematic that show the continuous task and potential related to future performance. Nevertheless, it also embeds the term particular value that can be about anything.

Although writings fell short for being linked to peer-reviewed and researched based findings, practitioners in the field of Human Resource Management (HRM) are now mainly in the business of TM. Gurus in HRM declared that “today TM has become a powerful strategic force within organizations in general and HR in particular as businesses, schools, universities, hospitals, governmental agencies plan and prepare to meet their talents needs of the future” (Storey, Wright and Ulrich 2009). Managing talent means that steps are relentlessly taken to ensure that employees are competent, committed and contributing. TM process and practices should be in conformity and aligned with building individual and organizational capability that enhances teamwork (Storey, Wright and Ulrich 2009). Lewis and Heckman (2006) revealed that there is “a disturbing lack of clarity regarding the definition, scope and overall goals of TM”. A CIPD survey found 51% of surveyed HR professionals and in charge of TM activities, only 20% of them operated with a formal definition of talent and talent management (Tansley, et al. 2006). Moreover, as Ashton and Morton (2005) declared clearly, there is no single and concise definition of TM; hence, this paper will analyze TM perspectives to date.

Some organizations adopt an inclusive approach to TM creating a ‘whole workforce’ approach to engagement and talent development (Tansley, et al. 2006). Therefore, at one extreme, TM can encompass the whole of HRM for the whole of the workforce, which is not very useful when trying to narrow down what is meant by TM (Garrow and Hirsh 2008). In the War For Talent book for instance the authors emphasized identifying the top 10 percent not only for hiring but for retaining and nurturing once inside the company where this will implicitly suggest ignoring everyone else (Pfeffer 2001). In more details, there is more than one kind of inclusivity. At the other extreme, organizations execute a more exclusive focus on segmenting talent according to needs. Exclusive strategies concentrate exclusively on an elite high potential few or on pivotal positions, rather than the inclusive ‘whole workforce’ approach.

The literature could mostly illustrate four research strains, the first three streams recognized by Lewis and Heckman (2006), who suggest that TM should target and focus on employees with high-value added skills who are difficult to replace, then Collings and Mellahi (2009) added the fourth stream that emphasises on talent positions first then talent pools appropriate for these positions.

Talent management substitutes Human Recourses Management (inclusive)

TM is conceptualized in terms of typical human resource department practices and functions (e.g. transition of personnel management to HRM) (Lewis and Heckman 2006). It renames HRM and reshapes HRD while restricting their focus on some of the HR practices like recruiting, leadership development and succession planning (Heinen and O’Neill 2004 , Cohn, Khurana and Reeves 2005). Researchers of this stream have an extensive view of TM that can be distinguished from traditional HRM by being strategic and future-oriented; it is relatively close to thoughts of the strategic human resource management literature (Collings and Mellahi 2009).

Talent management generic (inclusive)

TM is treated as a generic entity disregarding the organization boundaries or precise positions. Within this perspective, two views of talent stemmed. A first approach is considering talent as valuable good. Organizations seek to attract and develop high performers and reward them regardless their position. In this point of view advocates either classify employees according to their performance levels as “A”, “B”, or “C” as to be top, competent and low performers and taking action to “C’ players (Michaels, Handfield-Jones and Axelrod 2001), or “top grading” the organization by only recruiting the “A” players (Smart 1999). The second approach of generic talent emerged from both the humanistic perspective where the role of a strong HR function is required to guide everyone to high performance (Buckingham and Vosburgh 2001) and demographic perspective which makes talent more of value (Lewis and Heckman 2006). This approach can be problematic because it is not preferable to fill all positions with “A” players. In this viewpoint, there is no difference between TM and HRM practices (Collings and Mellahi 2009).

Talent management the custodian of the old succession planning focuses on talent pools (exclusive):

It ensures the adequate flow of people in the organization and that is central to projecting employees and staffing needs and managing the growth of these employees into positions where the focus is mainly internal (Boudreau and Ramstad 2005). This perspective which concentrates on the job flow of employees within an organization, is also known as ”succession or human resource planning” (Conger and Fulmer 2003) focusing on internal labour market eventually on internal mobility of employees (Lewis and Heckman 2006).

Talent management focus on “A” positions filled with ‘A’ players (exclusive)

Collings and Mellahi (2009) recently added a fourth perspective. They argue that, in contrast to strategic human resource management that generally focuses on all employees within the organization, “strategic TM focuses on those incumbents who are included in the organization’s pivotal talent pool and who occupy, or are being developed to occupy pivotal talent positions”. Collings and Mellahi (2009) emphasized the identification of key positions that can differentially contribute in sustainable competitive advantage of the organization (Huselid, Beatty and Becker 2005, Whirlpool 2007, Garrow and Hirsh 2008, Becker, Huselid and Beatty 2009). Here the approach improves the theoretical development to differentiate TM as a decision science (Boudreau and Ramstad 2005) and the traditional HR plans and strategies, and the starting point will be the position rather than talented individuals per se (Collings and Mellahi 2009, Whirlpool 2007). This complies with Cheese (2008) who is certain about what he called “old paradigm” to find the best and brightest and give them “free rein” that has proved organizations’ failure.

At last, most of the different definitions revealed by the analysts and the areas of focus demonstrated that TM is not just about HR and is based on the notion of talent mindset. Collings and Mellahi (2009) end up with a clear definition and paving the road of TM:

Strategic TM includes activities and processes that involve the systematic identification of key positions which differentially contribute to the organization’s sustainable competitive advantage, the development of a talent pool of high potential and high performing incumbents to fill these roles, and the development of a differentiated human resource architecture to facilitate filling these positions with competent incumbents and to ensure their continued commitment to the organization (Collings and Mellahi 2009).

When going globally this definition becomes:

Global TM includes all organizational activities for the purpose of attracting, selecting, developing, and retaining the best employees in the most strategic roles (those roles necessary to achieve organizational strategic priorities) on a global scale. Global talent management takes into account the differences in both organizations’ global strategic priorities as well as the differences across national contexts for how talent should be managed in the countries where they operate (Mellahi and Collings 2010).

Key position or pivotal roles are not concise to only senior jobs or executives; they are often revised to delivering business strategic goals. Thus, to position the right employees in the right place and at the right time requires careful analysis of knowledge workers, readiness to move to different culture, individual circumstances and the impact of cross-country and cross-cultural differences in talent development (Tarique and Schuler 2010).

Global talent management is gaining attention from academicians but the main problem persists that there is no consensus around the definition and the mechanism of the concept. Global talent management needs to differentiate itself from international talent management (Scullion, Collings and Caligiuri 2010) as well as the need for consent and agreement upon its meaning, mechanism and theoretical perspectives. Notwithstanding, global talent management requests several international human resource activities (Tarique and Schuler 2010) but needs to be studied as its own right (Scullion, Collings and Caligiuri 2010).

Eventually, TM strategy focuses on three types of questions. The first type: what part of the organization must be better served by taking persistent approach to developing talented jobholders; the second type is about where to find good people from inside or outside for the purpose of pivotal roles; and the third type is about what development outcomes the organization seeks to accomplish (Garrow and Hirsh 2008). It is important to bear in mind the importance of aligning TM strategy with the business strategy and to nurture a transparent culture in order to carefully acknowledge, promote, and consequently retain talent If honesty and transparency in identifying and developing talent is highly required in TM, it is extremely essential in the global context. In principle, individuals in the different talent pools are conscious of their presence their, although it varies among companies and among unit levels in the companies (Makela and Ingmar Bjorkman 2010).

Global talent Mobility

Not only jobs are being exported and outsourced, the supply factor, around the global market but also professional employees are turning more mobile too (Farndale, Scullion and Sparrow 2010). Global talent mobility is correlated with more advanced approach of TM, namely the global management of talent that is fraught with many challenges (Mellahi and Collings 2010). Global mobility advocates a careful attention for HR development, in particular in multinational corporations (MNCs). When talking about global talent; this refers to many factors.

First, there is a growing recognition of the contribution of globally competent talent in organization’s success and to remain competitive where talent is needed in different locations of the global business (Ready and Conger 2007). Research shows that 12 % of the senior mangers in MNCs operating in emerging markets cannot be replaced by managers from the host country natives (Li and Scullion 2010).

Second, employers shift the competition from country level to regional and more to global level (Scullion, Collings and Caligiuri 2010, Farndale, Scullion and Sparrow 2010). Third, shortages in managing talent internationally especially leadership talent have been an important limitation to implementing global strategies successfully (Cohn, Khurana and Reeves 2005). At last, the exponential growth of emerging markets urges the demand of significant managerial talent with specific skills and potential, who can operate in different economic, cultural and distant markets (Scullion, Collings and Caligiuri 2010).

Rotating talented people into various roles and functions will give them the chance to round out their competencies and skills and be ready for general management. It is important to track global manager performance regarding his extra-cultural openness and adaptability, family situation, motivation, and his local (host country) and contextual knowledge that impede his decision making and threaten his performance in that market. For this reason, Li and Scullion (2010) propose a theoretical framework from a knowledge-based perspective to develop ‘expatriates’ local competence in emerging markets.

Talent development includes mobility between business units domestically and abroad. It is essential that job shifts and production structure be fundamentally aligned because developing large pool of talent could lead to oversupply and the developed cadre would simply have no place to go. Therefore, mobility into upward movements will be limited (Nalbantian and Guzzo 2008). Mobility is an advantage considering that consistently growing and developing employees would result a large leadership bench that first has become an expensive inventory who can walk out of door because they do not wait sitting on the bench then employees’ motivation to reach higher positions would diminish (Cappelli 2008). Hence, lateral moves with new and challenging tasks in different country, contribute to retain those overachievers who lead the company to a sustained competitive advantage.

Despite the fact that high potential workers have an expectation that they could be often faced with new challenges, some skills are compatible with new environment and other are more difficult. Five types of human capital shape the mobility or “portability” of employees and they range from most portable to least, which means those skills that fit with the new company or not. (1) The general management, those related to skills, traits and knowledge required for management are more likely to fit in the new position. (2) The strategic ones, those related to growth and specific experience, (3) the industry specific skills that fit in one industry but do not in another one. (4) The relationship skills namely the interpersonal relationships within the organization; those could be hard to adapt and are significantly different from one country to another. At last, (5) there are the company specific skills that are specific to knowledge of the organization’s rules and procedures (Groysberg, Sant and Abrahams 2008). Consequently, companies have to ponder the kind of mobility to be performed and for whom, then the size of talent mobility (Nalbantian and Guzzo 2008). Besides, managers should not only focus whether performance in the new role is portable but rather on how much performance is portable and in which position it fits (Groysberg, Sant and Abrahams 2008).

Mobility as a leadership development strategy contains several disadvantages. It disrupts and weakens accountability because workers may leave before their decisions play out. In addition, employees who are not in the cycle of mobility and development may suffer of the routine and may feel demoralized especially when they stick to jobs too long. Global mobility is expensive; it deals with international assignments. It helps people chasing new experiences perhaps in favour of other strategic and operational aims (Nalbantian and Guzzo 2008). Mentoring and coaching are wise means to support global mobile talent. It is essential for managers who are performing globally to nurture managerial ties and relationship with the new environment in order to enhance acquiring and sharing knowledge. Li and Scullion (2010) suggest that strategies for managing global talent that are based on conventional local competence development tend not to succeed in the context of emerging markets.

Recently, several international business management scholars identified that MNCs earned advantage over domestic firms for simple reason that they acquire a global diverse talent pool that increases the opportunity to learn new skills and improves innovation abilities (Mellahi and Collings 2010, Tarique and Schuler 2010).

Conclusion

Talent management has been into debate for more than a decade and practitioners and scholars have long argued about the concept. We categorized talent management approaches into two main categories, inclusive and exclusive. Lewis and Hackman (2006) suggest that TM should focus on employees with high-value added skills, those who are difficult to substitute. Two inclusive perspectives are first, the rebranding of the human resource management and the second focuses on the management of talented people and aims to fill all the roles in a company with ‘A’ performers or top grading the roles; in these two perspectives talent management is not differentiated from HRM (Lewis and Heckman 2006). Two exclusive approaches where the first is an extension of succession planning and leadership development with the emphasis on talent pools, the second differentiates TM as a function in charge to identify pivotal talent positions and backup with the pivotal talent pools indeed. Cappelli (2008) advocates a flexible balancing of internal development and external hiring, Scullion and Collings (2006) discuss the need for bringing together global and local talent and cultural and gender diversity, and Tarique, Schuler, and Gong (2006) examine the fit between personal characteristics and the requirements of various jobs. There is obviously a need for further research, not only to set up a clear and consensual definition of talent management and its positioning within the theoretical body of human resource management but also to demonstrate the value of talent management through empirical studies in order to build up its scientific validity and its managerial relevance.

Acknowledgements

Many thanks go first for the Doctoral School in Grenoble Ecole de Management and for the 11th International Conference on Human Resource Development Research and Practice across Europe committees. We thank Dr Dave Ulrich and Dr David Collings as well as for their great support.