ManagingGlobal

Talentalent management emerged in the late 1990s when McKinsey & Company coined

the term a ‘war for talent’ and reported that “the market for talent is the most competitive it’s been in decades”. The late 1990s was a time when there was a demand for talented employees that far surpassed supply, thereby creating a global talent shortage. The creation of talent management as an approach can therefore be related to a context of economic buoyancy and a competitive labour market.

Unfortunately the economic landscape of the late 1990s bears little resemblance to the current situation in the UK and across much of the world. As the UK continues to experience prolonged recession and

Management Focus | Autumn 2012 17 16 Management Focus | Autumn 2012

Dr Emma ParryPrincipal Research Fellow

Managing global talent

Trelatively high unemployment, can we really expect organisations’ needs for talent management to be the same as they were twenty years ago? In reality, the recent financial crisis has led to increased volatility and uncertainty. A CIPD report in 2009 found that around 95% of organisations had frozen or decreased their HR budget and around a quarter (26%) had been forced to change their approach to talent management or cut their talent management budget (24%).

The economy is not the only aspect of the talent context which is changing. Today’s context presents a number of challenges for employers. Since the 1990s a new business context has emerged characterised particularly by macro-environmental changes such as

economic difficulties, increased global

linkages, information technology growth,

knowledge-based competition and political

uncertainty. There have been changes in

the way firms are organised including an

increase in agile and virtual organisational

structures; and demographic changes, such

as an ageing workforce.

Macro-economically, we see that the

global economic map is changing through

the rise of the BRIC countries and the

nature of work shifting to knowledge-

intensive industries. Another long

“Competition for talent has moved from within countries to across countries.”

term trend is the general increase in

globalisation through the expansion of

world trade, giving the ability to reach

customers around the world and the

global labour market. In the UK alone,

net immigration in the year up to June

2011 was 250,000 people, including the

increased mobility from Eastern European

countries, up from 5,000 in 2009 to

40,000 in 2010.

The increased need for companies to

operate across national borders means

that the role played by globally competent

managers is increasingly critical and

competition for talent has moved from

within countries to across countries. The

shortage of global managerial talent can

lead to constraints in the implementation

of global strategies for multinational

corporations; which means the adoption

of effective global talent management

approaches is increasingly important.

Changing workforce demographics have

become a particularly pressing problem

with regard to identifying, locating and

managing talent. In particular, the ageing

workforce means that employers are

being forced to consider how their talent

management practices address the needs

of different age groups, particularly those

who are among the oldest and youngest in

the workforce. In the UK alone there will

be around 19 million people over 65 by

2050 (around a quarter of the population).

The result of this and changing legislation,

such as increases to the state pension age

and removal of the default retirement

age, means that the average age at which

people leave the workforce is rising.

The forthcoming retirement of a large

segment of the workforce (the ‘Baby

Boomers’) means that organisations

will need to set up systems to address

the transfer of knowledge from these

older workers before their retirement.

The common strategy of relying on

recruitment to replace the knowledge lost

through turnover will become increasingly

ineffective so organisations need to

create systems whereby knowledge

can be transferred down through the

organisation.

Advances in technology have brought significant changes to the way that people work, play and communicate. Over the past 20 years, the internet has revolutionised both the workplace and home environment by providing easy access to information and connections between people regardless of where they are in the world. The internet itself has evolved from a platform that provides information to users (Web1.0) to one that promotes two-way communication, collaboration and interaction (Web2.0) through the use of social media tools such as blogs, wikis and social networking sites. The way that people access the internet has also changed with the development of wireless and more recently mobile technology. It is essential for employers to consider the growth of information and communication technology, the resulting changes in the ways that people communicate, the expectations of employees and the implications of these for talent management.

The expectations of employees are also changing. Fifty years ago, careers were viewed as simple, linear structures with an individual typically working their way up the hierarchy within only one or two organisations. This meant that the psychological contract - the implicit mutual obligations perceived between an employee and employer - could be conceived mainly as the employer’s provision of a stable ‘job for life’ in return for the employee’s loyalty and hard work. Over the past twenty years, this situation has changed to one where frequent organisational restructuring has led to a decline in job security. Workers have been forced to move in and out of several organisations during their careers so their willingness to be loyal to an employer is reduced. This in turn has led to changes in the psychological contract to a short-term ‘transactional’ contract that focuses

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Managing global talent

“Organisations that maintain the talent management processes that were appropriate 15 years ago will find that these become increasingly ineffective.”

on economic rewards and low employee commitment. This has a profound effect on the nature of talent management because systems that focus on lifelong careers are now out of date. Despite the fact that organisations are becoming flatter and the opportunities for linear career progression fewer, employees still need to feel that they can develop their careers within an organisation so employers need to facilitate lateral as well as vertical job moves and allow people to shape their own career paths.

Considering the changes in the context of managing global talent and the resulting impact on organisations and employees, we can indeed question the relevance of talent management as it was conceived in the late 1990s. Employers need to consider the external environment and develop agile talent management systems that address this changing context.

Organisations that maintain the talent management processes that were appropriate 15 years ago will find that these become increasingly ineffective as they do not account for changes in the nature and expectations of the workforce or in the external environment in which the organisation is operating. Organisations therefore need to review their talent management systems in light of these changes in order to ensure that they have the talent that they require and maintain the competitive advantage that this brings.

For further information please contact the author at emma.parry@cranfield.ac.uk

Cranfield offers a 2 day course, ‘The Management of Global Talent’, for individuals responsible for strategic management of global talent. More details are available at www.som.cranfield.ac.uk

MF