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What Is Talent Management?

Paper Type: Free Essay Subject: Management
Wordcount: 5442 words Published: 9th Jan 2018

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Chapter 1

Introduction

Background of the study

There has been a paradigm shift in the business environment across the world which has led to a growing demand of more efficient and phenomenal results from the scheduled operations and routine activities. This applies primarily to the field of human resource management which stands accountable for the acquisition, development, utilization and retention of the human capital. The present, as is evident, is immensely competitive, be it in terms of sourcing activities, investor relations, technological advancement or simply the workforce. The human resource managers are now faced with the double-edged sword of identifying, selecting and nurturing potential talent and also to formulate and implement pertinent strategies that can effectively contribute towards the achievement of organizational objectives. Hence, the biggest challenge that comes across the human resource panels is to get a hold of limited and thinning pool of skilled accessible candidates to replace important employees when they leave, hugely emphasizing the difficulty to attract, develop, motivate and retain the best employees in an organization.

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Authors, academicians and business experts alike maintain different views and opinions regarding the meaning of “talent”. Talent can be anything that predisposes an individual to success in a position or organization (Jason Lauritsen, 2010). The author further supports this view by stressing that talent is situational. A person can be advantageous because of his natural ability in one scenario but not necessarily in others. This means that in order to be successful that person has to be placed in a right role within an organization so that his abilities and capacities can manifest as talent to drive the success of the business.

Another view maintains that talent can allegedly be a potential trait, a symptom of inherent ability, a foreshadowing of future greatness, or a way of describing an individual’s early achievements or performance merits (Downey Greg, 2009). Whilst at the same time paradoxically, talent can be understood as the reason why some experts are more capable than others; unlike a concept like jeito, (a Brazilian term for knack), talent is more often than not generally very much task specific or specialized, even while a talented person is believed to be often quite versatile. Talent is specifically opposed to hard work or determination, implying that skill is primarily a mix of natural talent and hard work, in various proportions and quantum. Likely, talent is very much an idea or a skill that some people learn faster, more effortlessly, and with greater effect. In certain ways, talent can be thought of as a multiplier, enabling a person to achieve more out of formative experiences and activities.

Keeping such ideas in mind, in the business purview, “talent management” is the process of matching capabilities with commitments (Donald H Taylor, 2007). This describes the aim of the entire talent management process. It underscores that talent management rather than being aimed at an individual focuses on the entire organization so as to ensure that the firm is able to achieve its set targets for both, the present and the future. The encompassed assumption here is that capability is based on an organization’s sole source of value and competitive advantage in a developed economy: its human capital.

“Talent management” comprises identifying a person’s innate skills, traits, individuality and fitting him into the right work profile; every individual possesses unique talent that matches an exacting job profile and any other position will lead to discomfort (Salma Aliakabar, 2004). It therefore falls under the Management, specifically the HR Division, to situate candidates with discretion and prudence simply because a wrong fit can result in additional hiring, re-training and all such wasteful activities.

“Talent management” is a complex assortment of associated HR processes that delivers an easy elementary benefit for any business (SHRM, 2009). Talent Management can be easily considered to be advantageous and important to both the organization and the workforce. The organization gains from:

  • improved productivity and potential;
  • an enhanced association between a person’s efforts and business goals;
  • commitment of esteemed workforce;
  • reduced employee turnover rate;
  • Better bench strength and an improved fit between individual’s work and skills.

Employees gain from:

  • Enhanced motivation and dedication;
  • career growth;
  • increased awareness about and involvement in company’s goals;
  • Continued inspiration and job satisfaction.

Analyst research has established that companies employing talent management strategies and solutions display superior performance than their direct competitors and the market in broad (SHRM Survey, 2009). About 83% of the large enterprises view integrated talent management as mission critical and upto 73% of HR professionals believe that talent management impacts the financial performance positively (Softscape Global HR Survey, 2009). As per the Talent Pulse Survey, (2005) about 1,400 HR professionals worldwide believed the attraction and retention of high-caliber employees as the most critical issue. These issues were further underscored by the fact that 54% of the respondents agree that talent issues have an influence on overall productivity and that there is a clear linkage between talent management and industry performance. HRVote, Human Resources magazine’s online voting forum reported that 44% of the respondents implied talent management and succession planning was a considerable challenge. According to an IDC study U.S. HR BPO 2005 Vendor Analysis: The Evolving Landscape, 37% of U.S. HR outsourcing expenses in 2004 was on HR and talent management services.

Several taxing workforce problems confront HR, counting:

  • Increased competition for skilled personnel.
  • Imminent retirement of the “baby boomer” generation workers.
  • Reduced levels of employee commitment.
  • Realization of the high cost of the employee turnover.
  • Onerous demands of managing global human capital.
  • Necessity of succession planning.
  • Outsourcing and off shoring practices.

This necessitates novel thinking and a new charge to achieve success in an industry. These elements, coupled with the requirement to align workers directly with business goals, compel HR to progress from policy formation, cost diminution, process competence and risk management to lashing a fresh talent frame of mind in the organization. Therefore, talent management is an ongoing process that provides the optimal personnel for a particular business. Under this role, HR performs as the strategic enabler and a catalyst of talent management processes that empower the managers and workforce whilst developing business value.

Taleo’s graphical representation stresses upon the mandate of talent management to be responsive to the organizational goals and accordingly be the driving force behind the business performance. Herein, talent management is denoted as a circular and not a linear, module of activities.

In the present scenario, workforce expenditure is the prevalent category of pay out for most organizations. Automation and analysis of the recruitment and hiring processes of a firm delivers the abrupt labor force visibility and insights that are needed to notably perk up the bottom line. Performance management contributes towards the ongoing processes and activities to sustain a vast workforce. The future prospect of talent management is encompassed in the solutions planned from the scratch to provide for the business-centric operations on an integrated talent management platform. Decisions about talent management figure the competencies that companies have and their eventual achievement and from the perception of people, such decisions establish the path and pace of careers.

In India currently, it may be difficult to visualize the crisis of possessing too much talent, but the first slump in the financial system, or even in a fragment of the economy will make things stand apart. Such mismatches are most definitely included in the primary problems that organizations and many large employers face. Over the precedent generation, companies specifically, seem to have jumped from surpluses of talent to shortfalls to surpluses and back to such a cycle. The challenge evident in front of the employers is to follow much more strongly the requirements for talent to evade both the shortfalls and oversupplies.

Talent management is not an end in itself. It is not about fostering the growth of employees or charting succession plans. Neither is it about gaining definite benchmarks like a four percent employee turnover rate, having the most qualified and skilled personnel, or any such strategic outcome. The objective of talent management is the quite more general but valuable task of serving the business achieve its general objectives. And in the business world, that objective is to be profitable; be it in the short run or the long. What we need to attend to going onward is to ensure how to craft investments in growth affordable and fraction of that challenge embodies employee retention, making it probable to at least retain workers long enough to recover the training investments made in them.

Problem Statement

“Intense competition in the emerging Indian IT market has made talent retention and its management a challenge and therefore, questions the role of strategic talent management in being able to address such issues and being effective in an organization’s overall effectiveness.”

Talent Management has gained its fair share of fame in being effective in attracting, retaining and managing talented individuals. The Indian IT industry is marked with the following:

The increased globalization has fuelled the growth as well as competition of the IT industry in India which is characterized by issues of talent retention.

In spite of rising demand for talent, talent management has not yet completely arrived in India, making it all the more crucial in the current chaotic times and its effectiveness in the Indian scenario.

Development of talent pools remains to be a sore issue with the HR professionals employed in the Indian IT sector.

To summarize the above headings, the issue is the talent retention of skilled individuals in the Indian IT industry that leads to increased costs to an organization. The HR professionals have to engage in brainstorming activities in order to unearth ways to attract, retain and manage talents which are considered to be the biggest asset of a company today. Also, the talent management practices and their implementation in the Indian IT industry context have been far from satisfactory and add to the woes of a highly competitive market. Moreover, maintenance of talent pools so as to support succession planning and measures to integrate talent retention, employee commitment and employee involvement all stress the need to address the issue of talent management with a strategic bend.

Aims and Objectives of the Study

The aim of the study is to understand the importance of talent management in the current corporate scenario by collecting relevant information and enabling a better understanding of the strategic HR processes that a company can employ in order to manage and retain its key people.

Aim

“To understand the impaxt of a good talent management program on an organization’s overall effectiveness, particularly in the case of Indian IT industry, in order to enable it to manage and retain its key resources; and gaining an understanding of the talent retention and employee involvement functions.”

Objectives

The objectives of the study are:

  1. To gain an understanding about talent management and its relevance to the current corporate scenario
  2. To explore the importance of talent management in the organization’s overall success
  3. To study the role of strategic planning, employee retention and employee commitment in talent management
  4. To understand and evaluate the challenges faced in managing talent in the organizations today
  5. To study the role of talent management in prolonged employee satisfaction
  6. To explore the importance of talent management in the Indian IT industry and the significance of maintaining a talent pipeline for companies in the Indian IT sector
  7. To study the key drivers that lead to employee commitment crucial for a talent management system to be effective

Significance of the study (to be edited upon the completion of the study)

The implications of this research aim at exploring the relevance of talent management programs to the Indian IT indutry. It will assist the corporate in understanding the effectivess of framing such programs so as to be able to effeciently manage and retain its key players. Through implementation of talent management practices, the organizations efficiency is likely to increase, developing a proficient pool of skilled and talented employees which can be leveraged as a competitive strategy; making the corporate more competent to challenges in the industry.

The research tests an employee commitment level to his/her organization and also aims at identifying the key drivers/attributes that propel employee commitement level in an Indian IT setting. The significance of the results mark that talent management programs are not only crucial and effective, but also cost-efficient, by maintaining a consistent pool of skilled employees tehreby reducing on the hiring, training and firing costs.

In the present financial crisis effective workforce is the only difference that can make an organization carry its operations smoothly. Successful implementation of such talent management programs is of remarkable significance for the business. The research solution furthers the adoption of healthy talent management processes and its various functions to create significance for the business in achieving its ultimate goal of operational efficiency, cost control and profitability.

Limitations of the study

The study is subject to several limitations, some of which are highlighted as under:

  1. The study is confined to the specific organizations of the India IT sector. The finding of the study, therefore, cannot be generalized for the entire Indian scenario as a whole.
  2. Sample size, being small, is not completely representative of all the employees, employers and the HR people engaged in the Indian IT sector. All this might have affected the reliability of the results to some extent.
  3. Time as well as financial constraints are also one of the limitations of the study.

Organization of the paper

Chapter 2

Review of Literature

2.1 Meaning and Definition of Talent Management

According to several authors, an all-encompassing definition of talent management is difficult to pin down. Lewis and Heckman (2006) pointed out that identifying an exact meaning of talent management is complicated owing to both the confusion regarding the definition of terms used and the various deviations in assumptions made by the writers who consider the issue. Lewis and Heckman further support their view by noting that the terms succession management, talent strategy and human resource planning are more often than not used interchangeably, all of which form an integral part of talent management functions. They believe that there is no clear view existing on talent management and none at all that can be considered as sufficiently strategic.

As is evident, there are several approaches to talent management. One such approach identifies talent management with the traditional HR practices for instance recruitment, selection, training and performance management, among various other things (Cheese et al., 2008). This approach cannot be considered new as the traditional HR practices are becoming more decisive to a business’ success and hence, it is gradually getting imperative to associate such practices with the talents needed by the firms.

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Another varying approach towards talent management is firmly linked with the notion of HR planning, succession planning and strategic HR management (Rothwell & Kazanas, 2004). These authors underscore and emphasize the strategic significance of talent management, whereas others stress upon the talent pools required for the succession planning. But this literature fall short in advancing the theory or practice of HR (Lewis & Heckman, 2006).

A third approach towards talent management caps on a rather general view by identifying talent management with concerns like leadership (Barner, 2006), talent pools (Michaels et al., 2001), an individual’s potential (Smilansky, 2006), the development of talent (Fulmer & Bleak, 2008) and the attraction and retention of personnel (Rueff & Stringer, 2006).

Understandably, none of the above-mentioned approaches to talent management is able to clearly define the concept of talent management or to highlight the ways of managing talent through comprehensive understanding of HR planning and practices. The third approach fails in being persuasive owing to its lack of focus and the plethora of topics covered under one head. Moreover, all these approaches overlook the strategic significance of talent management and hence, fall short of linking it with the overall business strategy thereby limiting the potential and scope of talent management and perceiving it as another HR domain.

Another view deals with the task of talent management, “Talent Management is the recruitment, development and retention of individuals who consistently deliver superior performance.” (Tony Davis, 2007). The author further defines a talent management strategy as “a structured and corporate approach to the recruitment, retention and development of talented individuals within the organization.” The intent of a talent management strategy remains to ensure the employment of such personnel that will consistently deliver superior performance. The writer maintains that a talent management strategy is not an overtly intellectual concept as it is evident that highly skilled employees are expected to disproportionately contribute to an organization’s successful achievement of goals and hence, become an invaluable asset in the process. The author inevitably agrees that it is a challenge to manage and retain a talented workforce and hence, terms it as a strategic issue which involves its own fair share of planning and execution.

As per Andrés Hatum (2010), “Talent Management is a strategic activity aligned with the firm’s business strategy that aims to attract, develop and retain talented employees at each level of the organization.” Therefore, the talent management process is linked to an organization’s business and strategic-planning processes. This approach emphasizes upon the most important aspect of talent management: the employees. The author further aligns talent management with the resource-based theory of the business which maintains that sustainable competitive advantage is in possession of the companies that nurtures resources that are valuable, rare and difficult to imitate. Talent Management is but a tool to generate and maintain such resources through its human capital. With such a view, the author has conveniently delineated the focus of talent management on the talent at the organizational level and not at the individual employee level. This definition therefore clearly defines how talent management can be used to develop an organization’s talent structure by attracting, developing and training people. Such a talent structure can most definitely be the source of a sustainable competitive advantage in the current scenario.

Talent Management is “a holistic approach to optimizing human capital, which enables an organization to drive short- and long-term results by building culture, engagement, capability, and capacity through integrated talent acquisition, development, and deployment processes that are aligned to business goals.”, (ASTD Research, 2009). The view focuses upon the consequences of employing talent management practices in the immediate as well as the distant future. Also, it supports talent management as being able to result in building and organizational culture that encompasses the essence of the work environment of a company. The definition also stresses upon the ability of employing talent management to enhance both the capacity and capability of individuals by appropriately matching them with the right job profile suiting their personalities. Furthermore, all such modules pertaining to talent management are to be designed keeping in view the ultimate goals of an organization thereby aligning it with the entire business strategy.

Derek Stockley, (2011) defines talent management as, “A conscious, deliberate approach undertaken to attract, develop and retain people with the aptitude and abilities to meet current and future organizational needs.” He further states that “Talent management involves individual and organizational development in response to a changing and complex operating environment. It includes the creation and maintenance of a supportive, people oriented organization culture.” Derek aptly emphasizes upon the dynamic role of talent management in an ever-changing business atmosphere. The view aims at the function of talent management that leads to the development of healthy organizational culture within a business that considers the involvement of employees at a more active level. This view besides being consistent with others also, adds a new dimension to the scope of talent management thereby widening the applicability and functionality of the same.

Another view maintains that “Talent Management is an oxymoron” (Davies & Kourdi, 2010). The authors hold that linking talent to ‘management’, a term that best describes planning, organizing, leading, directing, facilitating, and controlling a business; is absurd as talent is believed its own special ability and personal capacity for achievement. According to the writers, talent management was used first in early 1990s by an IT software firm that wanted to market a new employee database, hence, the view that talent management can be best believed to work with data and not with human capital and their potential.

There are clearly several opinionated ideas of different authors on talent management. Whilst some associate it with the routine HR activity and processes and consider it as an extension to the faculty of human resource planning, others define such role as meager to the scope of talent management. They believe that limiting talent management to a specific domain is very much being unassuming and therefore, a proper sense is manifested in the term only when it is viewed as being appreciably strategically skewed. Under this dimension, the role of talent management can be considered as being fruitful in the present and the immediate future and both in the short-run and the long-run as well.

2.2 Importance of Talent Management in organizational success

“Talent Management has become the lifeblood of organizations. It is often seen as a primary reason for organizational success and failure and the key source of competitive advantage.” (Silzer & Dowell, 2010). The authors mutually agree that the business environment since the 1990s has been witness to several groundbreaking changes such as falling trade barriers and globalization of businesses worldwide. Such an expansion has led to increased demand for global talent which is needed to support these initiatives (Sloan, Hazucha & Van Katwyk, 2003). This has further resulted in immense competition for the talent on a global scale (Michaels et al., 2001). Therefore, the ever-increasing demand for talent globally along with the widening scarcity of exceptional talent has made the organization realize both the importance and benefit of talent management practices.

According to Ringo et al., (2008) as companies seek to overcome challenges coupled with globalization, changing workforce demographics and the emergence of new business models, they are looking forward to their employees as the critical source of differentiation in the market. The authors firmly believe in talent management practices and consent that investment in the same leads to an organization outperforming its peers. They also found through their research that high performing firms are more likely to invest in the talent management processes. They maintain that all organizations put into practice some form of talent management, without it they would be not capable to function. But at the same time, those that invest in an integrated set of talent management capabilities closely associated with their business strategy have a leg up against the competition. “No organization in today’s economic climate can afford to invest in talent management practices without a demonstrable and significant return on investment” (Ringo et al., (2008).

Organizations that are able outpace their competitors in attraction; development and retention of the best talent have a several distinct advantages: considerably lower costs, invariably higher productivity, consistently better quality, more satisfied and loyal customers, and increased financial performance (Schiemann, 2011). All such merits determine the critical path to on organization’s success thereby chalking down talent management as the key driver in the entire phenomenon. Talent management, beyond any confusion, is crucial to organizational success. It can be easily considered equally important for innovation, customer satisfaction, profitability and new product development of the company (Management Study Guide, 2011).

Talent and leadership continue to be inadequate. Fewer qualified personnel and leaders intend to join the workforce to replace aging workers who are on the verge of retirement. Moreover, talent management practices of the 20th century need to be relooked and worked upon to keep pace with the actuality of a rapidly varying 21st century business environment (ADP, 2010).

Silzer & Dowell (2010) further maintain that there are several other such factors that have contributed invariably to the growing importance of talent management in an organization:

  • There is a widely increasing demand for talented leaders and individuals with growth of the emerging markets in the developing countries.
  • There is an acute realization of shrinking pool of skilled, talented and experienced workforce, especially in USA, Europe and Japan.
  • Besides, increasing complexity of global business and the emerging requirement for talented individuals that can effectively adapt to the changing business atmosphere further advocates the role of talent management in organization success.
  • The growing need that specific organizational capabilities are needed for developing a sustainable competitive advantage in a highly competitive market and a rising call for recruitment and retention of highly skilled workers with specialized competence to build upon the future capabilities.
  • And most importantly, the increased difficulty in retention of crucial talent as a result of a shift to a self-managed professional careers where skilled personnel aggressively pursue their careers and advancement by switching over different companies and geographic boundaries.
  • Also, talent management has led to containment of internal costs of hiring, training and firing by focusing upon centralized shared services, outsourced functions and continual investment in the state-of-art HR practices of talent management that seeks internal hiring and retention.

Talent management adds up to a number of significant human resources and management inventiveness (Derek Stockley, 2011). Organizations that properly make a decision to manage their talent (i.e. human capital) embark on a strategic analysis of their contemporary HR processes. This is to make certain that a synchronized, performance oriented approach is implemented.

According to Derek Stockley (2011), most often than not, organizations adopting a talent management approach should focus on co-coordinating and incorporating, in order for it to be beneficial:

  • Recruitment – Under this the organization has to ensure that the right people are attracted to the right jobs matching their attitude and personality which will lead to “best job fit”.
  • Retention – Under which the focus lays on the development and implementation of such practices that reward and support employees.
  • Employee development – It is concerned with ensuring that incessant informal and formal learning and development continues within a firm.
  • Leadership and “high potential employee” development – This involves particular development programs for fostering the growth of existing and future leaders.
  • Performance management – This module primarily deals with specific processes that cultivate and sustain performance, including feedback and measurement mechanisms.
  • Workforce planning – The organization here undergoes planning for business and general variations, including the older workforce and current or future skills shortages.
  • Culture – This particularly deals with the development of a positive, progressive and high performance way of operating the processes and activities.

A vital step is to recognize the personnel or workers, the people and positions that are significant to the business. It is not necessary that they need be senior personnel. Many companies lost a substantial amount of organizational knowledge in the downsizing exercises during recession a couple of years ago. The impact of the loss was not realized immediately. However, with time it became apparent to many firms their mistake, when the organizations were at a loss of people with the knowledge and skills to either anticipate or solve problems that arose. Therefore, talent management processes ensure the avoidance of such blunders by recognizing and assorting talented individuals in such a format that their real potential is unleashed and the organizations stand to gain from this.

Derek further maintains that the current deliberations about skill shortages and the ageing population are also hugely forcing the organizations to focus on the talent management issue. At most of the times it becomes improbable to recruit and develop new individuals to look after the operational needs. Therefore, as a solution most of the leading firms often decide to develop and foster their own personnel, instead of making an attempt to hire highly skilled individuals. The author believes that every organization should implement talent management principles and approaches.

The varied views on the importance of talent management in the organizational success all converge on a single theme that it is critical for the successful achievement of business goal and more so, in the competitive times such as these. They clearly throw light on the advantages and benefits that a firm can accrue from the efficient implementation of talent management processes and can bolster the business as well as its corporate culture.

2.3 Role of strategic planning, employee retention and employee commitment in talent management

Strategic Planning

The talent management approach should be strategically driven in order to be successful and effective (Silzer, Israel, Dowell, 2009). It then becomes the focus of achieving the business and talent strategy. The planning of talent management has to be done strategically in

 

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