The business strategy of talent management

The business strategy of talent management In todays world when the global economy is striving to recover and re-stabilise the growth, many of the organisations are hit by a major crisis in the area of talent management. In an attempt to save them from being subjected to huge debts and liquidation, many of the organisations made quick moves in removing their employees on a large scale from the rolls during the peak of recession. There were no set criteria for terminating many of them. In some cases, certain employees were terminated for the reason that they were too costly for the organisation to maintain them in rolls. Many of those organisations hardly recalled the great work those employees had done, in contributing to the success of those organisations in the past before recession was hit. At least few among those organisations decided to forget the fact that those highly paid employees are the master architects in their organisations. Had they been retained, those organisations might have recovered from recession much qu icker. This is where the talent management would play its role to strategically retain the highly potential and key employees, recruit new competitive talents and remove those employees who were adding no value to their organisations. Talent management would be the key business strategy in such a scenario. INTRODUCTION Talent management has been a prevalent concept in the administration of organisations since many decades. However, in the recent past this concept has changed its dimension from being merely observed from the point of recruitment, to an array of areas like organizational capability, business success, individual development, performance enhancement, succession planning, leadership accountability and more. It has developed as a business strategy in todays highly competitive world. In many organisations Talent management has become the top priority for the management and HR today. According to Chartered Institute of Personnel and Development (CIPD), the forces driving Talent management are the external issues and internal demands which include but are not limited to highly aggressive global markets, demographic trends, shortage of skills, corporate governance and business strategy(CIPD, 2010). Every industry needs to recruit and retain the right kind of people with the right set of skil ls. This is where each organisation should strategise their approach on talent management in line with the industry in order to ensure that their employees are delivering the best performance. Organisations want to ensure the value for money by evaluating the talent invested by the work-force and managing their talent pool consistently. Lawler states that, for a talent management system to be effective, the fit between the employee and the employer has to be right, and mere recruitment and introduction of highly qualified people to the organisation alone does not add much value (Lawler .E.E ,2008). Many of the huge multinational companies feel the need to advance their talent mix rapidly and more effectively as they do realise the need to take their organisation a step further ahead along with the continuously changing business environment around them. DEFINTION In simple terms Talent Management is getting the right people with the right skills into the right jobs. CIPD defines talent management as the systematic attraction, identification, development, engagement/ retention and deployment of those individuals who are of particular value to an organisation, either in view of their high potential for the future or because they are fulfilling business/operation-critical roles (CIPD,2010). It is also told that talent management should begin with the identification of key positions that delivers sustainable competitive advantage to the organisation. This way there has to be more differentiation in the roles within an organisation which would create an exceptional impact by those individuals who would deliver sustainable competitive advantage to an organisation against the average backups. These people are important for the successful continuity of the organisation. A highly efficient HR structure has to be in place to fill in the key positions w ith these highly talented key people. Once these steps are taken, appropriate HR policies should be deployed to ensure that the individuals who hold the key positions in an organisation are supported with key HR policies for them to deliver results successfully (Human Resource Management Review, 2009). TALENT MANAGEMENT: EFFECTIVE STRATEGIES If an organisation has a strong talent management plan, which is aligned parallel to their business strategy, then there are higher chances that they would achieve their business success. Talent management and business strategies of an organisation can further be strengthened together through several small but regular events that happen in an organisation, laying attention on talent enhancement and through constant interaction of senior leaders with the employees. This way, management could keep the employees informed of where they are heading towards as an organisation, how they want the organisation to stage their performance and finally what the organisation expects from the employees, to take their firm to success. Talent reviews are conducted in depth while organisations use strategic workforce planning. They also re-position talent to different levels to achieve future needs, try to come up with a mix of the available internal talent pool along with the new hires from the external talent pool. They always make a deliberate attempt to retain the critical talent the organisation possesses and at the same they ensure that business strategy is on same page with the human capital strategy. Talent management strategies should be aligned to the strategic business objectives with the support from the management, co-ordination between departments, through the resources made available to the employees, performance review mechanisms and a common platform to share (The Conference Board, 2010). Different departments have to adopt different strategies which suit their functioning within an organisation. FEATURES OF TALENT MANAGEMENT STRATEGY According to CIPD, following are the key features of talent management strategy. i. Aligned to Corporate Strategy Talent management strategy should always be closely aligned to corporate strategy. It is necessary to take into consideration both internal and external factors while a talent strategy is designed. As mentioned earlier talent management strategy varies from industry to industry. Hence, the HR management team should have a clear picture of the strategic analysis from the business perspective to create a talent management strategy that suits its industry. ii. Narrow and Broad Approaches Some organisations decide to focus on developing talent according to the current situation and need. In such cases it can be noticed that the attention is laid only on certain departments or specific positions or some particular processes and projects. On the other hand there are certain organisations which prefer to take a holistic approach to talent management where in they try to spread the focus on the entire workforce in an organisation. There is nothing right or wrong about either of these approaches. It just matters on which approach suits their organisation the best for the time being. However, it is imperative to ensure that fairness and consistency are the key ingredients of all talent management processes. To enable the organisation to draw talent from all the possible sources, talent management processes should be highly diverse. iii. Involving the right people 1. Human Resources Team HR team provides the basic structure and design to develop the pathway to talent management strategy that would encompass the requirements of an organisation. An HR team can play an active role in this process only by directly coordinating with all the other groups involved in this design. 2. Senior Management Team The key senior managers and directors in an organisation have a major role in this process, as they represent all the functions, departments and aspects of an organisation. They work closely with the HR team to set the direction to the talent management strategy. 3. Line Managers Line managers also play crucial roles in almost every phase of this process, as they are immediately responsible for the management of performance and identification, development and retention of talents within their teams. Emphasis has to be laid to convince the line managers to view talent as a corporate resource and not just as a local resource limited only to a particular frame. 4. Employees They are the participants and they play a major role in this process. It is their talent which is managed through this process. Hence, it is vital to seek for their feedback in designing the developmental process. Their feedbacks are of great value for the talent managers and organisation to continue, improve or if required re-design the organisations talent management strategy. ROLES OF SENIOR MANAGEMENT AND HR The management of talent within an organisation should ideally start from the senior management level. A good amount of their time and focus has to be spent on talent management. The emphasis they give on talent management varies from industry to industry. According to Lawler, senior managers need to focus 30-50 percent of their time on talent management, and may be even more would be essential if the organisation is a professional service firm (Lawler .E.E, 2008). The adequate planning they carry out on human capital allows the senior management to assess the impact, the qualified talent available in their organisation make on business strategies, performance and success. In todays highly competitive environment, business leaders can no longer have a notion that, it is the responsibility of the Human Resources Department alone to assess, filter, encourage and retain the talent in an organisation. Senior leaders need to stay focused continually on bringing in and retaining the talent which would lead the organisation to the success in the midst of constant changes in the market. Management and the human resources department of an organisation should have transparent discussions in terms of human capital to have a clear understanding of organisations direction. Such discussions enable them to gauge the depth of the qualified talent pool available in their organisation and what their requirements might be in the future (The Conference Board, 2010). MANAGING TALENT ON DEMAND Peter Cappelli through his book Talent on demand presented the four principles of managing talent on demand. According to Cappelli, Talent management has some failures. The mismatch between people (supply) and skills (demand) is one among them. This literally means that there is a very huge pool of employees on one side, because of which there is recruitment, layoffs and restructuring happening. On the other side there is very limited talent and skills available that could hardly fit into the need. This mismatch is posing a big threat to the organisations. Cappelli suggested a new approach which has a clear goal in place as the first step. This approach describes the goal of talent management as a pathway which leads the organisation to achieve their objectives, which is the business success. Achievement of objectives is made possible through the recognition, quick response and resolution of the problems that organisations face. These problems mainly arise through the rapid change in the markets and the highly aggressive global environment. In response to these rapid changes, organisations make quick changes in operations, strategies and structures. These decisions are not always made with a clear strategy in place. However, a delay in response in taking a decision might prove it quite costly too. As mentioned earlier major risks in talent management are 1) the mismatch between the employees (supply) and skills (demand) and 2) cost of losing organisations investment in talents, when an employee cannot be retained in an organisation. Cappelli states that the basic aspect of the new model is that it accepts uncertainty as an eternal element in the business world that could react and adjust to the changes. The new model is built on the techniques used in Operations Research, Supply chain management and Business forecasting. Keeping in mind uncertainty as the biggest challenge, Cappelli has formulated four principles of managing talent. (Cappelli.P, 2008). Principle 1: Make and Buy to manage demand According to Cappelli, there are two different aspects for risk. One is the unpredictable nature of the outcome of a risk and the other is the cost of the outcome. Managing risk by evaluating the costs of various outcomes is easier than trying to reduce the uncertainty. Bringing this to the context of talent management, it is possible to estimate the loss, that could be caused when an internally developed talent leaves an organization. This loss outweighs the cost of recruiting a new talent from the market. Cappelli explains that the costs of the uncertainty in this case could be dealt either by developing the internal talent (making) or by hiring talent from outside (buying). This way through the internal development and external hiring, the risks and related expenditure could be minimised. Principle 2: Reduce the uncertainty in the talent development This principle revolves around the means to minimise the uncertainty linked to the prediction of demand for talent. The business forecasting techniques are less advanced to handle these predictions in the fast changing and highly competitive environment. Predicting those positions which would be vacant in a long term and finding a people internally to fill those vacancies may not be the right approach. It is almost impossible to predict such business situations ahead. It is better to develop a larger talent pool with a wider spectrum of competencies that can fit into the new vacancies that come up, with the help of basic training and coaching. Cappelli suggests that shorter forecasts are better than longer ones as they are easier to be predicted and tackled. Hence, training a group of employees, keeping in mind a set of developments which would occur in the next couple of years may not produce the desired result as the prediction cannot be accurate. However, training a group of emplo yees for a shorter term would benefit more, as that training would be functionally specific to the current context. New trainees could also be added to the group if someone leaves. Principle 3: Earn a Return on Investments in Developing Employees The recovery of investments in talent is tough, when the need for their skills over a longer period of time is not predictable. It can also happen so, that the employee acquires numerous skills from an organisation and leaves them abruptly. According to Cappelli, it is wiser to recruit smaller groups of employees for a shorter period of time than recruiting a larger group as it is easier to forecast the need for talent required for a shorter period. Getting the employees share the costs also is a means to recover the investments. Employees could be given options to take up talent development programs voluntarily, which they could attend after their regular work hours. This skill enhancement would benefit the employees and the organisation and at the same time would save the regular working hours of the organisation as well. Yet another approach to develop employees, concentrates more on the benefits, the organisation would gain than the cost factor, through the contributions received from the employees by getting them onboard quicker. Principle 4: Balance Employee Interests by Using an Internal Market Earlier employees were not given the option to choose their career decisions within an organisation. This approach lead organisations to trouble as the talented employees left them and found opportunities in other organisations with ease. To retain their employees, many organisations have introduced the approach of internal job boards which provides flexibility to an employee to change jobs internally. With the introduction of internal job boards, employers have left the concept of career planning for their employees. The drawback noticed in this approach is that the employer doesnt possess much control over their internal talent (Cappelli, 2008). Cappellis concept of talent management focuses on the objectives of the organisation. It has a unique way of managing the risks posed by talents that has risen from the unpredictable nature of the business demand and high volatility of the competitive global markets. This approach of talent management throws light upon the ways to recover the investments made on employees and also the importance of internal job movement which retains the talents within the organisation itself. CONCLUSION As seen throughout the essay, talent management has been always regarded as a strategic element in the functioning of an organisation. In the earlier days it was viewed more from the perspective of recruitment, and HR was the only team involved in talent management. However, this trend has changed over years and talent management is open to a wider spectrum of people today, positioned at the different levels of the hierarchy and multiple areas of an organisation which includes the key senior management, line managers and the participants apart from the HR. Further looking into the latest trends and approaches which are introduced in the talent management strategy, it is absolutely evident that Talent Management has evolved as a business strategy over years and it is no longer considered as an approach to HR that will help companies implement business strategy. Every talent management strategy discussed in the modern context relates directly to the growth of an organisation in a highl y competitive world. Today, Human capital is considered to be the most valuable asset of an organisation which controls its growth. In such a scenario there is no wonder that Talent management has evolved as a strong business strategy.