In a recent international survey, it was found that the developing nations contributed about 88% of revenue increase in global firms. Some reputed bodies are now making a prediction that about 70% of worlds’ growth is expected from emerging markets. Developing countries are trying to hold both consumers and employees. Let us discuss the example of China. Because of foreign growth, China which had about 8 companies in 2003 in the global Fortune 500, now has about 88 companies.
A Chinese telecommunications company having employee strength of more than 70,000 employees has 45% of the employees working in countries other than China. Similarly, Indian IT giants like TCS and Infosys also have a huge number of their workforce working outside India. The reason this becomes important is that the employees of a particular company are vulnerable to getting poached by competitors in not just the local but in the global market especially these employees who are working in locations outside the parent country location.
It would be interesting to share a case study about an employee at a large Indian IT giant. The software engineer who is a star performer was moved from India to US for few years and later to Australia. The employee who was moved along with his family liked the Australian environment so much that he decided to settle there for good.
His wife went on to study further in their set-up and prepared herself for a profile of a pre-school special educator. The company chooses to allow him to work from Australia and gave him projects accordingly so that he would not quit and join a competitor there. Now it is more than ten years that he is still with the same Indian IT firm and operates from Australia.
Age as a Demographic Variable:
It is interesting to discuss the role of age as a demographic variable that impacts workforce productivity and output. By 2020, the average age of India’s population would be about 29, the average age of China would be 35 and the average age of Japan’s population would be 39. The developed nations would have majority of middle aged population and because of this all developed nations would make the developing nations as their hub of economic activities.
All developed nations would penetrate the Asian market not just for selling their products and services but for also buying youthful manpower. In a way, globalization has already led the entire world in becoming a local village and it is going to get even more interconnected in the days ahead.
Pipelines for Future Leaders:
The third factor that impacts talent management at a global level is comparatively a less popularly known factor. Business organizations are not doing enough to develop their pipelines of future leaders. One major finding in this regard was a report by Price Waterhouse Coopers (PWC). In a PWC survey in 2014, CEOs of 68 countries were surveyed. An astonishing 63% of them stated that they were deeply concerned about the future availability of key skills at all levels in their organizations.
Copyrighted research by the Boston Consulting Group says that 56% of executives acknowledge serious gaps in their ability to fill senior managerial roles in coming years. Another study by a HBS Professor Boris Groysberg explored the theme and obtained similar insights in 2013. The surveys amongst the participants of the executive programme found those executives’ perceptions towards the way talent is managed in organizations are not very positive.
These surveyed executives felt that their organizations are not doing too well in attracting and developing talent. To quote another recent study, 823 leaders participated in a survey out of which only 22% said that they have positively prepared the organizations with pipelines for the future and 19% said that they do not experience much difficulty in attracting competent potential recruits.
In quite a few business organizations in developed nations, about 50% of organizational leaders are likely to retire in the next few months and most of them do not have a successor groomed to take over the position. As Groysberg puts it, “Companies may not be feeling pain today, but in five or 10 years, as people retire or move on, where will the next generation of leaders come from?”
When we look at each of the above 3 macro level factors that impact talent management, the war for talent is justifiable. The speed of globalization, demographic dynamics with age as the differentiator and the unpreparedness of companies for creating pipelines of future leaders creates a daunting task for organizations from a managing talent perspective.
What will now separate the extraordinary from the ordinary is the ability and effort of organizations to attract, hire, develop, engage and retain employees the resource that gives you the competitive edge over others. Any amount of money spent or innovative machinery that can be bought will be futile without skilled workforce optimally using these resources well.
There are different perspectives about succession planning but almost all of them hold a common root. Some consider it as a process of planning for succession of choosing the next senior team. For other groups, it is an adequate pool of proper talents for in-house recruitment. Some succession planning is a “future-proofed” strategy that enables the organization to grow and perform in the future successfully.
In these three different explanations, a unique basis can be found, which is; “have the right people in the right jobs at the right time”.
Investment in human capital requires careful planning. Under the talent management umbrella, succession planning is an important organizational business strategy to develop and retain talent.
Organizational culture has a substantial effect on whether talent management activities will succeed and contribute to improving results. It is the central to an organization’s ability to manage its knowledge more effectively. There are three components of organization culture i.e. vision and goals, trust and the social networks. The organization culture contributes to the individual’s level to commitment and motivation in the organization.
Training and Development:
Training is a key retention factor for the talented employees in any organization at any age. Training programs available to all employees correlate with a 70% increase in employee retention rates whereas career development is the accumulation and cultivation of skills and knowledge that enable a professional to advance or grow in the field of his or her choice. Offering a higher salary is not the only important factor motivating talented employees working with an organization but other kinds of motivation such as career path, career development, and open communication are important factors as well. As long as employees feel that they are learning and growing, they will be less inclined to leave. On the other hand, once employees feel they are no longer growing, they begin to look externally for new job opportunities. Coaching is also one aspect of career development that can motivate the talented employees effectively. The result of coaching, high performer is less likely to leave an organization and leaders become more engaged and motivated.