“The traditional HR paradigm defines HR contribution as supporting organisation goals through aligned HR services, policies, practices, and programs”, (Bodreau, et al., 2005). Typically, this HR paradigm is combined with the traditional definition of organisations success. The result is an emphasis on reducing risks of costly legal actions in HR process such as reducing cost per hire, time taken for training, HR staff per employee and the client satisfaction with HR practices. The best example is measuring return on investment of HR programmes, such as showing that improved sales knowledge which are offset by training costs, leads to increase in sales. “The traditional HR paradigm of service delivery is also typically how HR connects to sustainability”, (Bodreau, et al., 2005). For example, the ILO declaration urges the elimination of child labor, employment discrimination and promotion of free association and collective bargaining. “The UN Global Compact adds that companies should protect internationally proclaimed human rights abuses”, (Bodreau, et al., 2005). HR programs such as performance management, selection and training can reflect upon respect for collective association rights and reward not only economic performance, but also community involvement. HR can measure sustainability-related knowledge, behaviors and motivations, and employee health and safety. Such measures are often reported in corporate sustainability or social responsibility while reporting to the investors. “While this is important, but the HR paradigm is still traditional-applying sustainability to the policies, practices and activities within the HR function”, (Bodreau, et al., 2005).
“HR has struggled to define what it means to be ‘strategic’. The answer can be discovered not only in benchmarking HR organisations, but also in benchmarking the evolution of more mature strategic functions such as finance and marketing”, (Bodreau, et al., 1997, 2003). The decisions on marketing focuses on decisions about customers and the finance decisions focuses on money and cash flows, so a decision on talent should enhance decisions about talent, both within and outside the HR function. The finance decisions are not always generally made by the finance department, the decisions are made by managers across the organisations. These finance decisions is different from accounting but accounting still remains as a critical professional practice. “Today’s HR is similar to accounting. It is and will remain a critical and important professional practice”, (Bodreau, et al., 2005). Yet, we still lack a well developed decision science for talent. It is increasingly important to enhance talent decisions, including structures, behaviors, capability, learning, collaboration and shared culture. “In several companies, we have labeled it talent ship, because it focuses on decisions that improve the stewardship of the hidden and apparent talents of employees”, (Bodreau, et al., 2005).
Any decision science will involve one element i.e. the logic, which connects decisions about the resource to organisations success. In finance though the formula for return on investment produces a number but it is important to know what factors are relevant to financial decisions. Similarly, a talent decision science requires showing factors those are relevant to make talent decisions.
Boudreau and Ramstad created a model, the HC BRidge Decision frame work, which outlines the logical connections supporting talent ship. The HC BRidge framework is based on 3 anchor points – efficiency, effectiveness and impact-that are common to all business decision sciences (see Figure-1).
The efficiency anchor point focuses on the resources that are used to deliver HR practices. Typical indicators of efficiency would be cost-per-hire and time to fill vacancies. When applied to sustainability, efficiency would focus on resources used to bring HR practices in to compliance that reflects upon community environment and social goals.
The effectiveness focuses on the HR policies and practices that affect the talent pools and organisation structures to which they are directed. Effectiveness also refers to the outcomes of HR policies and practices on human capacity and the resulting aligned actions of the target talent pools.
Impact illustrates the fundamental differences revealed by a focus on talent decisions, beyond simply HR service delivery. Impact asks, “How do differences in the quality or availability of different talent pools affect strategic success?” Impact can deliver surprising results by using the traditional financial definition for success. HR investments, which had been relatively ignored can make a bigger difference in the talent pool affecting product development and thus offering improvement opportunity.
A review of the talent management literature reveals that their is a degree of debate as to the conceptual boundaries of the topic. Aston and Morton (2005: 30) noted that there “…isn’t a single consistent or concise definition” of talent management. “Lewis and Heckman (2006)identified three key streams of thought around the concept of talent management. First, those who merely substitute the label talent management for human resource management. A second strand of literature emphasises the development of talent pools focusing on “projecting employee/staffing needs and managing the progression of employees through positions”(Lewis & Heckman, 2006: 140). The third stream focuses on the management of talented people”, (Collings, et al., 2009).
Studies in the first part, which merely substitutes the label talent management for human resource management, limit their focus to few particular HR practices like recruitment, leadership development and succession planning. The contribution of this particular literature is limited beyond the strategic HR literature, as this relates largely to a rebranding of Human Resource Management.
In the second part, by adopting a narrow focus, the literature builds on earlier research in manpower planning or succession planning. Studies in this tradition, at least provides a degree of differentiation as to what talent management is vis-à-vis HRM.
In the third part, literature argues that all roles within the organisation should be filled with “A performers”, referred to as “top grading” (Smart, 1999) and emphasises the management of “C players”, or consistently poor performers, out of the organisation (Michaels et al., 2001).
“While the third approach is highly influential, we recognise limitations to this approach and argue it is neither desirable nor appropriate to fill all positions within the organisation with top performers. Equally, if the talent management system is applied to all of an organisation’s employees (i.e. including poor performers as well as top performing employees), it is difficult to differentiate talent management from conventional human resource management”, (Collings, et al., 2009).
In addition to the above three streams, (Boudreau and Ramstad, 2005) and(Huselid et al., 2005) identified a fourth stream that emphasises on the identification of key positions that had the potential to impact the competitive advantage of the firm. The starting point here is to identify the key positions rather than talented individuals.
“Therefore, as noted above, we view an organisational talent management as activities and processes that involve the systematic identification of key positions which differentially contribute to the organisation’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 organisation”, (Collings, et al., 2009).
Over all we can say Talent Management is getting the right people in the right jobs at the right time.
Talent is also defined as “ Talent is seen in individual terms comprising ‘a sharp strategic mind, leadership ability, emotional maturity, communication skills, the ability to attract and inspire other talented people, entrepreneurial instincts, functional skills and the ability to deliver results’ ( Michaels et al., 2001, p. X)”, (Martin et al., 2009).
Approaches towards Talent Management
Talent management requires a new mind set among business leaders mainly because talent being so mission critical in today’s world should not be left alone only to HR departments, instead the organisation’s board of directors should directly support and make talent as a core element of the work (See Table-1).
Table-1, The new talent mindset.
Old HR mindset
New talent mindset
|The vague leadership and HR rhetoric of ‘people being our most important asset’||A deeply held conviction that talented people produce better organisational performance.|
|The responsibility for people management lies with HR.||The responsibility for managers to do all they can to strengthen the talent pool.|
|Small-scale and infrequent programmes for succession planning and training managers in acquiring and nurturing people.||Talent management as a central component of the business and part of the ongoing role of senior leaders.|
|Managers have to work with the people they inherit.||Managers constantly taking active and bold steps to attract and develop their talent pool and actively manage low performers.|
Source: Adapted from Handfield-jones et al., 2001
The organisations to become top performers should not only follow new talent mindset but also they should implement the three main elements of a talent management approach. (See Table-2)
- Disciplined talent management, by developing managers and matching them with the right jobs also rigorous and continuous assessment of employees.
- Creative recruitment and retention of employees through refined and meaningful employee value propositions.
- Executive development, using coaching and mentoring.
Table-2, Three elements of a talent management approach.
Signs of progress
Signs of achievement
Disciplined talent management
|A focus only on obvious successors in succession planning exercises||Some discussion of incumbents performance||Clear identification of A, B and C performers in each talent pool|
|Lists of high potential people, but little action||Consultation of list when vacancies occur||Written action plans for each high potential’s development and retention|
|Belief that there are no poor performers||Admit that there are likely to be some, but avoid doing much about it||Act decisively on poor performance by improving or replacing them|
|Hold no one accountable for talent management except for HR||Evaluate managers on how well they manage their staff||Hold leaders directly accountable for developing their talent pool|
|Creative recruitment and retention|
|Empty rhetoric about being a good employer to work for||Think about EVP’s for each type of talent||Understand the strengths and weakness of the EVP’s for each type of talent and plan to strengthen them|
|Hire only at entry levels and grow only from internal hires||Occasionally bring in senior or specialist people from outside||Recruit a steady flow of talent at all levels|
|Go to the same sources for recruiting talent||Experiment with new sources, but look for similar backgrounds||Creatively tap new pools of talent, looking for essential capabilities|
|Have high and consistent attrition rates among managers||Analyse attrition data by department and type||Know the attrition rates of A, B and C performers and understand why they are leaving, performing or underperforming|
Thoughtful executive development
|Leave the job assignments of managers to the manager who hires them||Suggest some candidates from the high potential list or job posting systems||Involve leadership teams on every assignment decision, seeking to optimise these across the company|
|Recruit most qualified candidate with no discussion of development||Stretch people, but not in the context of any development plan||Thoughtfully consider the development needs of each assignment and the development needs of each candidate|
|Assume that the best way to develop people is by throwing them in at the deep end||Provide formal feedback through appraisal once a year||Embed candidate feedback and coaching into the routines of the organisation and the jobs of leaders|
|Invest in training driven by top-down assessments of candidates and then only in response to immediate needs, threats or crisis.||Offer regular but basic programmes for management development and leadership, usually off-the-job||Offer integrated management/leadership learning programmes for each transition point of managerial careers|
Source: Adapted from Handfield-jones, WWW.handfieldjones.com/diagnose/index.html (28 February 2006)
Another similar approach to talent management is found in the four categories of employees that make up a ‘talent value chain’ (Rosen and Wilson, 2005; Zingheim, 2005). This approach can also be referred to as segmenting the employees within the organisation. The segments are as follows:
- The Super keepers: They are that 3-5% of employees who consistently demonstrate superior performance in ways that reflect the core values of organisation and also help others to do so.
- The Keepers: They are 25-30% of the organisation who exceed both performance expectations and in the demonstration of core competencies.
- The Solid citizens: They consist of 65% of employees who meet normal expectations of the job and sometimes they exercise leadership in some situations.
- The Misfits: The 3-5% of people who continuously underperform and does not meet the requirements of job skills.
After identifying the segments we have to follow a process called as Talent Management process (TM process) (see Figure-2)
Source: L.A. Berger and Associates Ltd. A handbook of talent management 2004
Competency models helps organisations avoid business problems and thus enhance their business. We shall see this by looking at each and every available model.
Daniel Goleman’s emotional intelligence model:
Goleman in his model uses the research of David McClelland and his colleagues at McBer and Company. He ties that with modern theories of brain functioning that shows how these characteristics work and why they are important. He also shows that because these characteristics are tied to the brain, people are capable of developing and learning these characteristics.
Goleman proposes that emotional intelligence is shown in four areas: self-awareness, social awareness, self-management and relationship management (see Figure-3).
Aspects of emotional intelligence.
Source: Goleman, Daniel, Working with Emotional Intelligence, Bantam Books, 1998
Building Models for Job Families:
Finding the right project management competencies for a financial service company would had been the upmost priority but it will not solve the whole issue. There is another approach to competencies that is especially useful when looking at specific functions. This involves finding the right set of skills that people should have in order to perform a job (see Figure-4).
After following through this process as shown in Figure-4, a company should be able to find the right talent for the job and thus can improve its returns on that particular project. The top managment should play a very important role in implementing this kind of model for executing specific tasks.
Building Models of Leadership: Using the Management Team
There are three connected methods management groups can use to build a model for competencies that they agree should drive leadership or key roles in their company (see Figure-5).
Figure-4 illustrates that firstly managers can use a list of characters and come to a consensus that which of these in the list is most necessary for company’s success. If they had to choose only a limited number of people, they have to decide, which of these differentiate the best performers from average performers, they should also make a point on devastating impact they would create if not considered for the job.
Secondly, management team can decide upon the key requirement for the role and make a matrix and map out critical competencies and later decide upon which individual can fulfill their accountabilities in really super ways. Alternatively, a management group could agree upon key accountability for the role, answer the question, “what attributes, characteristics, skills or competencies will enable the person in the role to perform this accountability in an outstanding manner?” This list of attributes will describe someone who is displaying that competence in an outstanding way.
Thirdly, the group of managers should think concretely about whom they see as top performers and then keep a image of them in their mind. They then take some others who are typical performers but not below average and form their picture in their mind. Then chart out the differences that top performers create in accordance with typical performers. See what makes them outstanding? What motivates them? The managers should not only focus on results but also on what top performers are doing.
After this exercise, the management can come out with one particular key player who can satisfy all their requirements. Also this exercise is not a step by step procedure; managers can take any one it and access it accordingly.
When organisations face changes or new situations, they often tend to rigorously study their best people’s actions, their behaviors, how these best people compare with others in the organisation or with people in different companies. Behavioral benchmarking is probably the most recent evolution from the competency approaches that spurred on all the attention to this area.
Competency models used in any of these approaches are fundamental underpinnings of human resource systems. Organisations have different styles for describing their recruiting methods, training requirements, or criteria’s for promotions. Using a common competency model, company’s can create a common language through which all of these organisational initiatives can converge.
Principles of Talent Management
After knowing about Talent management and the competency models involved in talent management it is far more necessary to know the risks which are being involved in talent management. The main problem which companies faces is “How to quickly respond to the changes in a competitive environment – customer demands, innovation, regulatory factors, and quality standards – which is marked by less predictable product markets and the pressures to have a financial returns for every set of uncertainty?” The risks involved in Talent management are mainly the mismatch between people and skills and the cost of losing your talent.
Capelli’s four principles can be seen as the utilisation of HR performance management and succession planning practices within firms to overcome the above two risks mentioned. The important new contribution is the use of techniques from operations management and business forecasting to guide the choice of practices and organisational processes.
Principle 1: Make and Buy to manage risk
A deep bench of talent is expensive, companies should workout their estimates of their requirements and plan to hire from outside incase of any shortfall. Some positions may be filled easily from outside, so the companies must carefully assess about deploying their precious resources in development. For e.g. Think of situation where the supply chain fails down. We need to work out the immediate costs, the repair costs and the replacement costs. We should also answer the following questions:
- How long will it take to get new talent? The longer the talent is needed, easier to make investments in internal development payoff.
- Is there a hierarchy of skills that will enable you to learn through internal development? The more it is the easier to develop talent internally.
- How important is it to keep your culture? Especially at the senior level, outside people carry different norms and values.
- How accurate are your forecasts? Less certainty about forecasts, greater the risk and cost of internal development.
- Can you estimate mismatch costs?
- How can you estimate the demand for talent?
Principle 2: Uncertainty in Talent Demand
Uncertainty in demand is always present and smart companies find ways to adapt to it. One approach would be breaking up the development programmes in to shorter units and bringing all the functions together in a short duration say 18 month course that teaches general management skills and then send them back to their own departments to specialise. Another option would be creating talent pool that can be allocated as needs arises in the business units. The business approach would be:
- Use of models to estimate growth of talent requirements.
- Estimating the cost of hiring from outside but reducing the chances of promotion within.
- Estimate the costs of the time lag effect. Supply of labour always behind market demand.
- Design a development programme.
- Consider the problems that occur in a decentralised organisation. Should there be lots of different programmes or a corporate format? The first can be inefficient. The second costly if managers try to hide their key performers.
- Delays occur because of different time scales of different programmes. Managers end up waiting for specific development opportunities.
Principle 3: Improve the Return on Investment in developing employees.
The main problem is that employees want to acquire both firm specific but also general industrial and occupational skills. If the organisation is able to retain its employees then this is not a problem but in today’s market scenario company’s are seeking experienced people. One way to improve the payoff is to get employees to share in the cost of development that is asking them to volunteer on assignments. Another approach is to maintaining relationship with former employees, hoping that they might return back someday thus bringing back the investment and the skills. Third approach would be on reducing costs by mixing organisational and occupational learning with development, this would involve:
- Identify competencies associated with successful managers and identify assignments that will require their use.
- Learning from peers and colleagues.
- Training before hiring and then ‘promote and coach’.
- Involving people in project work.
- Encourage working outside the organisation.
- Share the costs and connect development with retention.
- Try to ensure that you promote the right person on ‘economic ground’.
Principle 4: Preserve the investment by balancing Employee-Employer Interests.
The main reason good employees leave an organisation is that they find better opportunities elsewhere. This makes talent development a perishable commodity. The key to preserving the investments made in developing efforts is by creating a balance in the interests of employees and employer by having them share in advancement decisions. Also to manage an internal market following things can be considered.
- Empowering employees to bid for jobs.
- Developing IT systems to match competencies with job requirements.
- Producing up to date information on what skills the company now requires in various job
- Identifying competencies for specific career paths.
The business environment is changing, more and more companies are going global. Corporate desicions should be rapid in order to prevent the competitors to take desicions. The search for talent is going to be a never ending process. With too many people in the higher management retiring in a very short period of time, HR department has a challenging job in filling these positions and thus keeping their companies competitive in this challenging environment. We have seen the traditional HR policies and the present HR policies, which emphasises more on talent ship. Company’s have various competency models for identifying talents and methods for retaining them. Capelli’s four principles also help Company’s to overcome the risks in talent management. With so much of available resources to the HR department and the constant management support in Talent management, in this process of talent hunt, are they neglecting the existing employees who are at the junior management level? The new policies in HR which emphasises on the Right man at the Right job at the right time will bring in more criticisms at the junior management level. In this present situation the company’s are willing to invest more on junior management as the investment cost is very less when compared to the costs on higher management. The companies are looking to fill in the best talented people at this junior level. They train the junior management to become the future leaders, in this process if they do not find any one fitting in to the job position, there are more chances for that individual to be thrown out of the company. The chances to be thrown out are more for a existing employee. So what next to that individual? Will the company promise him a job; will they give him any benefits? If no, then how are they going to solve this issue, it just cannot be neglected. This is major challenge for the HR department in the coming years. Though Talent management helps companies to produce the best resources, the company should also learn to develop a resource which is not the best and make it best, as there is prediction in lack of resources for the future.
Arthur, 1994M.B. Arthur, The boundary less career: A new perspective for organizational enquiry,Journal of Organizational Behaviour15(1994), pp. 295-306.
Arthur and Rousseau, 1996In: M.B. Arthur and D.M. Rousseau, Editors,The boundary less career, Oxford University Press, Oxford (1996).
Arthur et al., 2005M.B. Arthur, S.N. Khapova and C.P.M. Wilderom, “Career success in a boundary less world,Journal of Organizational Behavior26(2005), pp. 177-202. Aston and Morton, 2005C. Aston and L. Morton, Managing talent for competitive advantage,Strategic HR Review4(5) (2005), pp. 28-31.
Axelrod et al., 2002B. Axelrod, H. Handfield-Jones and E. Michaels, A new game plan for C players,Harvard Business Review, January(2002), pp. 81-88.
Baterman and Organ, 1983T.S. Baterman and D.W. Organ, “Job satisfaction and the good soldier: The relationship between affect and employee citizenship,Academy of Management Journal26(1983), pp. 578-595.
Batt, 2000R. Batt, Strategic segmentation in front-line services: Matching customers, employees and human resource systems,International Journal of Human Resource Management11(2000), pp. 540-561.
Batt, 2002R. Batt, Managing customer services: Human resource practices, quit rates, and sales growth,Academy of Management Journal45(2002), pp. 587-597.
Becker, & Gerhart, (1996)B. Becker and B. Gerhart, ‘The impact of human resource management on organizational performance: Progress and prospects’,Academy of Management Journal39(4) (1996), pp. 779-801.
Becker and Haunschild, 2003K.H. Becker and A. Haunschild, The impact of boundaryless careers on organizational decision making: An analysis from the perspective of Luhmann’s theory of social systems,International Journal of Human Resource Management14(2003), pp. 713-727.
Becker and Huselid, 2006B.E. Becker and M.A. Huselid, “Strategic human resource management: Where do we go from here?,Journal of Management32(2006), pp. 898-925.
Blumberg and Pringle, 1982M. Blumberg and C.D. Pringle, “The missing opportunity in organizational research: Some implications for a theory of work performance,Academy of Management Review7(1982), pp. 560-569.
Boselie et al., 2005P. Boselie, G. Dietz and C. Boon, “Commonalities and contradictions in HRM and performance research,Human Resource Management Journal15(2005), pp. 67-94.
Boston Consulting Group, 2007Boston Consulting Group, The future of HR: Key challenges through 2015, Boston Consulting Group, Dusseldorf (2007).
Boudreau, J. W., & Ramstad, P. M. (1997). Measuring intellectual capital: Learning from financial history. Human Resource Management, 36, 343-356.
Boudreau, J. W., & Ramstad, P. M. (2003). Strategic HRM measurement in the 21st century:
From justifying HR to strategic talent leadership. In M. Goldsmith, R. P. Gandossy, & M. S.
Efron (Eds.), HRM in the 21st century (pp.79-90). New York: Wiley.
Boudreau, J. W. (2004). Organizational behavior, strategy, performance and design in Management Science. Management Science, 50, 1463-1476.
Boudreau, J. W., & Ramstad, P. M. (2004a). Talent ship and the evolution of human resource
Management: From “professional practices” to “strategi