Critically evaluate the development issues that arise for managing talent. Evaluate the appropriateness of different development interventions for talented employees. Introduction: Talent management is defined as the strategies and practices needed to identify, develop, attract and retain skilled workers of value to an organisation. (Rands 2009). It can be described as a holistic approach to the strategic management of the organisation’s employees. Organisations need to view their people as investments which add value to the company and not as costs which take from the bottom line.
Having a talent management system in the organisation is crucial to growing the value of that human capital. If we analyse the critical factors for organisational survival and growth today, we will see that they have evolved from land, capital and equipment to creativity, innovation and problem solving. The focus has switched from fixed assets to people and their skills. “In our knowledge based economy, value is the product of knowledge and information. Companies have to bet on people, not technologies, or factories and certainly not capital (Martin, Moldoveanu, 2003).
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Despite this and the fact that the CEOs of many major corporations are stressing that talent is their most important resource, organisations are finding talent management to be a very intricate and complex issue, and many are struggling in their attempts to properly implement talent management programmes. As the world lies deep in recession and HR faces greater challenges than ever before, opportunities still exist for organisations to excel through proper employee development strategies.
In this essay we will look at why talent management is so important, what issues arise as organisations try to implement a talent management system and finally we will look at the different development processes used when developing talented employees. Importance of Talent Management: In a global survey of more than 9,000 executives, the concern about the short supply of talented workers was ranked as the most significant managerial challenge ahead and the resulting cost of these people as the most likely constraint to company growth (Mckinsey, 2005).
The number of people aged between 35 and 44, which is the age group most likely to fill vacated senior leadership positions, is now estimated to be falling by as much as 15% or more in the majority of developed countries (Hewitt, 2006). In 2006, baby boomers will be officially entering their sixties and as such preparing to retire. We are bombarded with statistics predicting the consequences of this demographic phenomenon, including: “The US Bureau of Labor Statistics estimates that their exit from the workforce will contribute to a labor shortage of 10 million qualified workers by 2010” (Schooley et al, 2005).
The U. S. Department of Education states that “60% of all new jobs in the 21st century will require skills that are possessed by only 20% of the current workforce” (Wall, Aijala, 2004). Historically, companies have relied far more heavily on recruiting rather than cultivating talent. At the height of the “Internet Boom,” Deloitte found that larger organisations were spending an average of up to 12 times as much on recruitment as they were on training their own existing employees.
Talent management if properly implemented is a source of competitive advantage, it helps to create a positive work environment which ultimately leads to greater workforce productivity. Organisations now accept they have got to be more proactive in how they nurture and retain the right talent, if they wish to remain competitive into the next decade and beyond. They realise that they cannot continue to rely on expensive recruiting solutions to backfill every internal vacancy. They are moving to more holistic talent management strategies that will hopefully save them time and money, provide long-term benefits and reduce their exposure to risk.
Essentially companies must strive to reach a better balance between recruitment and development. A well planned and executed talent management system has numerous benefits not only for the organisation but also for its employees. •Employees who view their company’s talent management practices favourably, tend to be more confident about the organisation’s future. •They have greater opportunites to achieve to reach their own career and life goals. •Employees are more engaged and feel greater job satisfaction. •They understand the value of their contribution to the organisation’s goals. They have more favourable views of the management team and develop a great sense of pride in where they work. •They believe that their work performance is evaluated fairly and they experience strong feelings of personal achievement. Development Issues: There are a number of development issues associated with talent management. At the top end of an organisation, the ability to make strategic decisions, react quickly to situations of ambiguity and keep the company focused during periods of intense pressure and change, is seen as crucial.
At a time when the need for talented leaders and management is increasing rapidly, big companies are finding it increasingly difficult to attract the right kind of people. Even if the best talent can be recruited, retaining them is proving to be an even more difficult challenge again. Holding on to their top talent requires more than just financial incentives. Despite record bonuses, the Financial Times reported in June 2006 that 17% of City workers planned to change jobs after receiving their bonuses, while another 28% were undecided.
The drifting away from the traditional psychological contract that provides for job security and a mutual employment relationship, towards one where individuals are responsible for their own “employability” by controlling their own development and career progression, has meant that the balance of power has shifted towards talented employeees. Talented employees now have the luxury of picking and choosing from employers who can offer them the right mixture of benefits, “such as work life balance; an effective diversity policy; or a context where talented people have a strong voice in the organisation” (Berger, 2004).
Implementing a talent management programme in any organisation, means a huge investment of one of top management’s most precious commodities; namely time. Everyday management are provided with a whole list of issues and problems which require their attention, fighting the war for talent means the company has to focus first on grading, then selecting and recruiting the best people and this will impact the amount of time spent on dealing with all the other items that require their attention. Also talent management is a strategic exercise, not a short term one.
The goal is to provide leadership into the future and usually takes between two and five years. The company is now focussed on individuals rather than on teams or working groups. Talent management programmes can cause “companies to ignore or downplay the importance of intervening to build cultures and systems that bring out the best in everyone” (Pfeffer, 2001). Time focussed on the war for talent is time diverted from building a culture and set of management practices that will permit everyone to perform as if they were in the top 10%. Talent management focusses on the fact that there are individual ‘stars’ in the organisation.
The company then has to introduce a differentiated pay system to recognise these high performers, as pay for performance is closely associated with talent management. This type of reward system can create a lot of jealousy and envy amongst other employees in the organisation. Assumptions are made that people who perform well in one position will be able to perform equally well if promoted to another. The outcome of this approach is that all the emphasis is on the individual and not on the team. This will create significant internal competition and will not facilitate the sharing of knowledge or tranfer of best work practices. Ironically even as organizations spend millions of pounds on technologies to gather and distribute knowledge, they also do things to create a culture in which knowledge sharing is highly unlikely to occur”(Pfeffer 2001). Talent management has always emphasised that organisations identify its top 10% of employees for retention and development. The philosophy suggests that these top 10% be facilitated by financial inducements, fast tracking through the organisation and receive special coaching and mentoring. It also recommends that the bottom 10% of employees be either improved or removed.
It also implies that the other 80% of the employees be ignored. This categorisation of people assumes that traits such as talent and are not amenable to change, and people cannot improve their performance or get worse. Labeling only a few employees as stars will cause the majority to perform way below their potential, as expectation of performance is a critical factor in whether people perform above or below their natural level. ” High expectations increase performance, and low expectations decrease performance”. Labeling people also impacts the resources they eceive from the company, which will depend upon how little or how much the company expects from them. There may also be other issues associated with talent management programmes. The lack of transparency in the programme, does everyone know where they stand in the company? Restricted entry into the talent pool may mean that some talented employees never get the chance to show what they can do. Management may focus too much on the outer points of talent management (that is acquisition and retention) rather than the middle points (mentoring and development) which are more important to the employees.
Development Interventions: An integrated systemic approach to talent management is required if an organization wishes to create a sustainable pipeline of internal talent. Senior management need to take responsibility for ensuring that an effective talent management process is both implemented and supported. ‘Current leaders in the organization need to be accountable for creating a talent management culture and developing the next wave of talent for the firm’ (Harvey 2008). The process should focus on acquiring, retaining and cultivating the talent.
To meet these and many other needs, the process needs to take a unified and holistic approach and be easy to monitor and manage. “The easier it is for leaders to engage in talent management, the more likely it is to succeed“ (Carmichael 2005). Talent management must be an integral part of the business strategy for it to have any chance of succeeding. The organisation must identify key roles that will have a significant impact on the organisation’s capability to achieve their short and long term goals and ensure that they are developing talent for those roles.
Leadership requirements will vary based on the strategic needs of the organisation. The identification, development and review of the qualities needed for leadership must be linked to the overall business strategy to ensure that the bench strength is more than capable of meeting the company’s needs. The recruitment policy should have a clear focus of the types of skills and talents needed for all levels of the organisation. Garavan proposes that organisations develop talent pools, rather than identifying key individuals for future leadership roles.
The organisation’s talent pool must be assessed to see if the skills required to achieve the organisation’s goals currently exist within the organisation. If there is a shortfall, then a gap analysis must be conducted and appropriate talent management initiatives must be undertaken to address those gaps. An aggressive internal development programme should be initiated, as internal talent with potential can have a shorter learning curve than external hires The use of simulations to create artificial scenarios that resembles real life busines scenarios allows businesses to see how individuals behave and react in particular situations.
These simulations can take the form of role-playing, case studies, games and in-tray exercises. These types of exercises allow the company to monitor and assess individual performance in areas such as leadership skills,problem solving, working under stress and strategic thinking. They allow the individual to experience real life business dilemmas in a controlled environment. Certain strengths and weaknesses may emerge that neither the company or the individual were aware of. These simulations can be complimented by the use of ability and personality tests.
These are used to measure the soft skills a person has and also to establish their personality traits and emotional intelligence. Talent management must become part of the business culture and one of its core business processes. Leaders must be as accountable for talent management in the organisation as they are for the financial and operation side of the business. Talent mangement can be driven into the culture of the business by integrating it with other critical processes like recruitment and selection, performance management, and compensation.
A proper communication system must be put in place to promote information sharing about the internal talent programmes. The whole process needs to be owned and championed by the senior executive team and all the leaders and managers across the organisation. Employees need to know what level they are at (e. g. A,B, C level of talent) and promote information sharing about the internal talent programme. “Identifying and nurturing talent requires organizational buy-in, particularly from senior management.
A structure to support the process needs to be tailored to fit the culture of the organization” (Training Journal 2008). Organizations that truly espouse a culture of employee engagement are continuously evaluating and assessing their talent. This may be done through the use of concepts such as 360? feedback. Identify “high-potential” employees. These must be differentiated from high performance employees. High performance employees are very good at performing their present jobs whilst high-potential employees have demonstrated measurable skills and abilities beyond their current jobs.
They have shown the ability to take on larger, more complex levels of responsibility, they aspire to rise into more senior critical positions and they show the desire to be future leaders. They are considered visionary and inspirational people. When identified these high–potentials must be informed as soon as possible of their status. They should be given special stretch assignments, job rotation and dedicated projects which will allow them to experience a wider and more complex set of problems which they encounter into the future.
They should be assigned a mentor to help them understand and learn from their experiences. Finally they must receive the support of senior management which is critical in any high-potential development programme. When asked what he thought the importance of high potential employees, Bill Gates replied”Take our twenty best people away from us and I can tell you that Microsoft would be an unimportant company. ” Summary: We have looked at how important a talent management programme is to companies today.
Companies now view people as their greatest asset and their biggest challenge is how they are going to attract and retain their star performers. To help them mitigate the oncoming talent crisis, forward looking companies are changing and adopting new and varied strategies to cultivate their existing talent. They are incorporating talent management practices such as career and succession planning that encourages their own talented employees to look in-house for future growth opportunites. Properly impemented, the talent management programme can help the organisation become an employer of choice.
We have seen that there are many development issues associated with implementing talent management programmes in an organisation. Retaining top performers is becoming increasingly difficult for companies as they are not motivated just by money and the balance of power has shifted in their favour. Focussing on star performers may also alienate and demotivate the rest of your employees. This will restrict the transfer of knowledge and also inhibit the culture of teamwork. The labelling of employees may ensure they never perform above the standard they are labelled at.
By focussing too much of their time on talent management, leaders may ignore other facets of the organisation which are equally important to the firm’s success. Finally we looked at the different development interventions that companies use to develop their internal talent. Talent management policies must be linked to the business strategies for it to effectively deliver the skills required to ensure the continuity of its management. It must be integrated into the culture of the company, and must be owned and championed by the leaders of the organisation.
Talent pools are created and they are subjected to simulations and stretch assignments to increase their experience. High- potential employees are identified and fast tracked through the organisation People are the key to success today and learning how to learn must be their key skill. Bibliography: Anonymous (2006), Record profits fuel war for talent, Financial Times, 16 June, London. Berger, D. R. (2004) The journey to organisation excellence: navigating the forces impacting talent management. In: D. R.
Berger & L. A. Berger (eds. ), The Talent Management Handbook, Ch. 3. McGraw-Hill, New York. “Capital Versus Talent: The Battle That’s Reshaping Business,” Harvard Business Review (July 2003), 36. Deloitte Research, It’s 2008: Do You Know Where Your Talent Is? Why Acquisition and Retention Strategies Don’t Work, by James H. Wall and Ainar Aijala, 2004 Forrester Research, The Retiring Workforce Is Creating A Knowledge Void In Government And Regulated Industries, by Claire Schooley with Connie Moore and Lucy Fossner, 2005.
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