War for talent: time to re-armor

War for talent:
time to re-armor
RaymakersvdBruggen
Author:
Annick Beekmans
[email protected]
LinkedIn:
nl.linkedin.com/in/annickbeekmans/
Introduction
In the process of globalization organizations
have started to participate in an increasingly
dynamic and complex environment. In this
expansion strategy-, financial systems-,
production operations- and marketing
departments have taken global approaches,
but the human resource management (HRM)
department has generally lacked behind
(Suutari, 2003). Even though increasingly
research is conducted in the area of
International Human Resource Management
(IHRM), the process of globalization still
troubles the mind of HR professionals as ‘the
competition for global managers is going to get
tougher as time goes on’ (Suutari, Tornikoski, &
Mäkelä, 2012). In order to develop a pool of
internationally competent managers with
global mindsets the function of Global Talent
Management (GTM) is appearing in
internationally operating companies.
The trend of IHRM has gone through
several phases. First, the focus was mainly on
the functional side of internationalization in
which personnel was expatriated mainly to
facilitate in knowledge sharing in international
diversification. As such, expatriation was used
in terms of organizational development and
coordinated primarily by the global mobility
department. Since the 1990s the focus of
international assignments shifted towards a
personal development perspective, and the HR
department of talent development got more
involved (Mullaney, 2012). As technological
and global developments went alongside
assignments took an increasingly short-term
shape. This development was mainly pushed by
high expatriation costs and pulled by
communication technologies (Brookfield
Global Relocation Services, 2013). The shortterm assignments also provide opportunities
for a steep learning curve in the development
of a global mindset and international
management skills. Concluding, international
work experience is increasingly thought of as a
basic requirement to reach high-level
management (Brookfield Global Relocation
Services, 2013).
Global talent management includes all
organizational activities for the purpose of
attracting, selecting, developing, and retaining
the best employees in the most strategic roles
(those roles necessary to achieve organizational
strategic priorities) on a global scale. Global
talent management takes into account the
differences in both organizations’ global
strategic priorities as well as the differences
across national contexts for how talent should
be managed in the countries where they
operate.
(Scullion, Collings & Caligiuri, 2010: p106)
In line with this development
international consultancy firms are using
expatriation more and more. Also, they
research diverse areas of expatriation and
advise their clients on these issues. Within this
area a distinction is to be made between issues
on global talent management and global
mobility. The premier includes issues such as
the attraction, selection, development, and
retention of human capital on a global level,
whereas the latter includes practical issues,
such as tax compliance, legislation, and
compensation and benefits. In this essay the
focus will be on talent management, assessing
how the labor market is effected by the process
of globalization. To address this subject three
areas of research will be discussed. First, the
pressures of globalization on the labor market
will be reviewed. Second, the organizational
response to these pressures will be addressed.
Lastly, the subject of global talent management
will address how organizations respond to the
new market needs and pressures. Within GTM
the
subjects
attraction,
selection,
development, and retention of human
resources are reviewed respectively.
Globalization on the labor market
During the 1990s, firms were confronted with
a threatening structural shortage in high skilled
employees leading to “the war on talent”
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(Schuler, Jackson & Tarique, 2011; Kim &
McLean, 2012). During this period three
exogenous drivers emerged according to
Tarique and Schuler, which made the war for
talent go global: globalization, demographics
and a demand-supply gap (2010). In the
process of globalization, world trade has
expanded due to large wage differentials. This
in turn leads to increasing FDI between
developed and developing countries. Alongside
this development competition among firms is
intensifying and multifaceted, the potential
distribution market is expanding, and so is the
potential labor market (Schuler et al., 2011).
Demographics are differing strongly
between the developed-, emerging-, and least
developed countries. Whereas the developed
world is coping with a retiring baby-boom
generation, the emerging market population is
expanding and getting younger. Those
demographic variations need to be considered
by multinationals to identify and target their
sourcing-, as well as their customer-markets.
(Schuler et al., 2011; Kim & McLean, 2012).
In the labor market Schuler et al. (2011)
explain the forecast of a demand-supply gap in
knowledge workers with high motivation and
sufficient soft skills. They argue that due to the
economic crisis this gap is currently less
apparent. However, once the economic
situation will make a positive turnaround the
gap might restrain economic recovery. As such
it is important that firms strategically
anticipate to this labor-supply gap.
Adding to the three exogenous drivers
Tarique and Schuler (2010) have also identified
three forces leading to GTM which are internal
to the firm. First, regiocentrism refers to the
clustering of geographical areas or industries to
improve needs targeting by customization.
Second, international strategic alliances put
pressure on IHRM to manage retention and
performance of talent within the acquired firm.
Third, dynamic competencies are increasingly
valued in a knowledge workers’ personality and
assumed to have a significant impact on
companies’ success. Dynamic competencies
are malleable over time and are believed to be
trained during international experiences
(Tarique & Schuler, 2010; Farndale, Scullion &
Sparrow, 2010). As such these six driving
forces, external and internal to the firm, have
led to the development of the discipline of
Global Talent Management.
Organizational development
In response to the developments described in
the last section companies are designing global
talent management strategies. Boston
Consulting Group researchers Friedman,
Hemerling, and Chapmann (2012) have defined
five levers that should help create global
competitive advantage through global talent
management strategies. First, a global mindset
must be embraced by the organization to reach
a multi-centered instead of a west-centered
operating model. When focusing on people
management, a global mindset and origination
of managers can reflect the organization’s
multi-cultural customer and employee base,
resulting in better cross-cultural operations
(Gartside, Yang, Sloman & Cantrell, 2014). In
this process the balance between global and
local programs should be maintained to remain
flexible in the development of human capital.
Also, when operations are located, global
talent sourcing can be localized. As such
specific talent pools can be captured more
effectively (Friedman, et al., 2012; Gartside, et
al., 2014; Pettigrew & Srinivasan, 2012).
The second lever to help create global
advantage requires global talent planning to be
elevated to the CEO’s agenda so that the talent
needs can be integrated in an organizations’
strategic plan (Friedman, et al., 2012). A survey
by Ernst & Young (2012) revealed that there is
a disconnect between global mobility
aspirations and day-to-day operations.
Another strategic issue in global talent
management is a lack of integration between
the GTM and global mobility departments.
Since not all companies have a clear GTM
agenda there are often mismatches in
expatriate selection which leads to premature
repatriation, high turnover-rates, and higher
costs (Ernst&Young, 2012).
Third, organizations should expand
their hiring horizon and do talent searches in
non-traditional pools (Friedman, et al., 2012).
For example, McKinsey (Pettigrew &
4
Srinivasan, 2012) explains an approach of a
global technology company that went to local
technology schools to find talent. Recruiting
young potentials gives a lot of opportunities for
in-house training and development. Accenture
(Gartside, et al., 2014) approaches talent
searches more through media by “deep web”
searches where talent pools are located
globally by uncovering previous work
documents, references, etc. Once a talent pool
has been located it is important to tailor
employment offers to local conditions. Also the
training and development programs should be
designed with a local focus (Friedman, et al.,
2012: p9,10; Pettigrew & Srinivasan, 2012).
After identifying the global talent the
fourth lever ‘create global leaders’ comes in.
An efficient leadership team should be created
through a combination of cross-cultural
rotations and succession planning (Friedman,
2012). Pettigrew & Srinivasan (2012) argue that
the bottleneck in the creation of leadership is
the lack of growth opportunities. While
companies identify local managers as a source
of global talent, they fail to convince them to
stay. To solve this issue companies should work
with role models, or expatriates to eliminate
the perceived glass ceiling.
Lastly, the global mindset should be
embedded in all leaders’ within an organization
by making global values locally relevant and
understandable (Friedman, 2012). To develop
such a global view long-term expatriates can be
used
to
deepen
between-market
understanding, to share expertise, and work on
global issues. However, due to increased focus
on cost reduction during the economic crisis
long-term expatriation is used less. Also the
global mobility processes are frequently too
complicated for smaller organizations
(Gartside, et al., 2014).
Global Talent Management staffing
Attraction
When dealing with global talent attraction
three major IHRM activities can be
distinguished, employee value propositions,
the attraction of talent globally, and local
recruitment (Tarique & Schuler, 2010). By
developing a strong employer reputation the
potential talent pool that is willing to work at
the
organization
increases
in
size.
Organizations should revise their employee
value proposition framework frequently in
order to respond to labor trends. To address
the other two IHRM activities of local and
global attraction effectively, it is important to
design an employer reputation strategy that
attracts individuals who are aiming at an
international career, as well as domestically
focused talent.
In the first case Tarique and Schuler
(2010) argue that the focus should be on
attracting the best people at all times, instead
of a person-position match approach. By
attracting employees that are aiming at an
international career the high number of
premature repatriations (11% at some
companies) can be reduced, especially on the
increasing amount of emerging market
assignments (Ernst&Young, 2012). However,
Schuler et al. (2011) argue that local attraction
can also be meaningful when one recognizes
the multiple facets of talent. As such, talent
attraction should be tailored to the function
level and region to prevent the overlooking of
certain talent pools. (Cerdin & Brewster, 2014).
A last means of attracting talent are
mergers and acquisitions and recruitment of
rivals. Both are however very costly processes
with the latter possibly leading to salary
inflation (Ernst&Young, 2012).
Concluding, the searching scope should
be on the vital many without distinguishing in
specific functions or locations, but an optimal
attraction strategy needs local adjustments.
Selection
During the selection of potential global
managers one should take into account
predictors on expatriation willingness and
performance. It is important to be aware of
their willingness to prevent early repatriation
and failed assignments. Several traits and skills
have been related to expatriation willingness
and performance. Research by Mol (2007)
found several predictors of willingness to
expatriate. Variance was explained primarily by
bio data like number of friends abroad,
language ability, and foreign living experience.
5
The predicting ability of expatriate specific
variables like cultural flexibility, cultural
sensitivity and tolerance for ambiguity were
also supported. Core self-evaluations and the
five factor dimensions also explained variance
in willingness to expatriate. The big five factors
extraversion,
emotional
stability,
agreeableness, and conscientiousness also
have predictive validity on expatriate
performance. Other performance predictors
were cultural sensitivity and local language
ability (Mol, 2007).
Development
With the increasing the importance of HRD
(human resource development) expatriation is
increasingly used to develop global
management skills (Kim & McLean, 2012). In
cross-cultural training programs four elements
are generally included: awareness of cultural
differences, a focus on ways attitudes are
shaped, factual information on cultures, and
cross-cultural skills like language, nonverbal
communication, cultural stress management,
and adjustment skills.
Apart
from
cross-cultural
understanding and skills Marquardt, Berger
and Loan (2004) researched the development
of global competencies amongst global talent
and distinguished six competencies that global
employees should obtain. First of all,
employees with a high cognitive ability tend to
reach a global mindset faster due to their
higher cultural self-awareness (1). Other
competences include global perspectives (2),
tolerance for ambiguity and differences (3),
and cultural flexibility (4). The two
competences language (5), and strong
communication skills (6) relate more to
practical global skills. There are different ways
argued to enhance these skills through training
and development programs. Some scholars
believe the focus should be on practical skills,
because the selected employee already obtains
cognitive skills to deal with cross-cultural
situations and can elaborate this skill on-thejob. Other scholars argue that previous to an
international assignment the employee should
go through an acculturation program to
familiarize with the cultural milieu (Kim &
McLean, 2012).
Which developmental program is
chosen depends on the purpose of the
expatriate assignment. Organizations that use
expatriation in order to enlarge commitment
and retention of talented employees are more
likely to focus on skill development. Some
organizations however assign employees that
can benefit most from an international
assignment and try to get employees out of
their comfort zone to develop themselves in
areas they otherwise would not (Tarique &
Schuler, 2010). In this case an acculturation
preparation might be more appropriate and
coordination is more intensive due to the larger
company risk.
The alignment of strategy and process
is crucial to effective talent management. The
internal pipeline of talent management and the
necessary skills and capabilities together with
future talent planning is only handled well in
respectively 27% and 20% of the companies
(Ernst&Young, 2012). Concluding, a lot of
knowledge, skills, and abilities have been
proven to correlate with expatriation.
Depending on the HRD strategy of an
organization individuals with global talent, or
individuals in need of a larger learning curve
are selected and should be prepared
accordingly. Tarique and Schuler (2010)
mention that the development of a global
mindset and cross-cultural skills is an integral
part of the culture of organizations that excel
in talent management. For other companies
however, the alignment of strategy, selection,
and preparation should be structured and
coordinated as this is still a weak point in talent
management. In this area much can be won on
HR analytics to gain organizational support and
increase the strategic function of the human
resource department. Related to expatriation
HR analytics are faring extremely low, with the
return on investment (ROI) of expatriation only
measured by 7% of the questioned companies
in the Brookfield Global Relocation Survey
(2014).
Concluding, there are six competencies
that global employees should obtain. The HR
development strategy that is used to develop
these competences should be aligned with the
purposes of expatriation. It is important those
6
HR practices are aligned with the overall firm
strategy. To manage this however, HR should
position itself stronger in the strategic field. In
GTM this could be done by calculating the ROI.
A business-focused theoretical model of
measuring expatriate ROI has been developed
by McNulty and Tharenou (2004). The
implementation of HR analytics should also
provide a clearer HR strategy by goal setting.
Retention
After all the effort put into the development of
global talent the next challenge is to retain the
talent inside the company. An important issue
after an international assignment in the light of
development is the repatriation process, which
is generally lacking behind on the other facets
in the expatriation process. Adding to this
problem is the general lack of career planning
after repatriation, as it happens often that
there is no suitable job available when the
employee returns (Bolino, 2007). When going
on expatriation the general idea is that it will
help in ones’ career advancement, the
opposite is however more often true. This
results in a frustrating process of repatriation
in which the internationally developed
competences are undervalued by the
employer. Due to the decrease in autonomy
and responsibility the employee gets
demotivated and feels underemployed (Bolino,
2007; Bossard & Peterson, 2005; Suutari,
Tornikoski & Mäkelä, 2012). Ernst&Young and
other accountancy firms are dealing with
expatriate turnover rates between 15 and 20
percent (Schuler et al., 2011). In a survey by
Ernst&Young the importance of culturally
dependent incentives is mentioned as a
potential solution for retention. In the survey
only 17% of the participants strongly agree that
business strategies are well aligned with an
individuals’
performance
objectives.
Companies should realize that what might
galvanize employees in one culture can turn
them off elsewhere, emphasizing the
importance
of
cultural
alignment
(Ernst&Young, 2012).
Successful retention strategy after
repatriation in the light of global talent
management is still an under exposed area of
research. Much is to win here by aligning
strategy with HR to create essential career
development plans and incentive systems to
improve the return on investment of human
capital.
Conclusion
The war for talent has gone increasingly global.
The
external
drivers,
globalization,
demographics, and a demand supply gap have
increased industry pressures. Simultaneously
the internal developments of regiocentrism,
international alliances, and a focus on dynamic
individual competences have expanded
organizational perspectives to a global level.
Under these pressures the function of global
talent management emerged trying to attract,
select, develop, and retain young potentials on
a global level.
In the development of the GTM field
there are some continuous issues of influence.
First, there has to be a stable bridge between
local and global processes to ensure the
presence of global opportunities while tailoring
systems to local levels. Second, cost reduction
pressures stimulate to look for new
opportunities
other
than
long-term
expatriation. As such, global virtual team work
and flexpatriation (global commuters) are
emerging means to global management
development. Third, the willingness to
expatriate is unstable with currently less
employees from developed markets willing to
go abroad. At the same time the emerging
markets are in search of talent and trying hard
to retain their local potentials. A fourth issue is
the lack of HR analytics which results in less
support and recognition of strategic
importance of GTM. By measuring return on
investment of global development programs
their efficiency can be improved by uncovering
bottlenecks
and
opportunities.
Fifth,
organizations have to become aware of the
type of global mindsets they want to develop
and how they want to reach these goals. The
most obvious threat of global talent
management is the issue of turnover intentions
and talent loss. This area is still underexposed
and gives a lot of space for improvement within
GTM.
7
With the development on emerging
markets, and an improving economic situation
the war on talent is going to get tougher. As
such the global talent management
department needs to re-armor, by exploring
non-traditional talent pools. It needs to
redefine its angle of attack to capture and
retain its talent. And finally the global talent
management department needs to find allies
within the strategic and global mobility
departments to win the war on talent.
Author:
Annick Beekmans
RaymakersvdBruggen
[email protected]
LinkedIn: nl.linkedin.com/in/annickbeekmans/
8
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