The War for Talent - Essay Example

?THE WAR FOR TALENT HAS FOCUSED ON THE COMPETITION FOR LABOUR AND THE SHORTAGES EXPERIENCED BY ORGANIZATIONS AT A TIME OF ECONOMIC GROWTH. CRITICALLYEXPLORE HOW ORGANIZATIONS CAN MANAGE TALENT WHEN ECONOMIC GROWTH SLOWS by Author’s Name Name of the Class Name of the Professor Name of the School City, State 19 November 2013 Abstract The contemporary global economy requires companies to keep investing in human capital. This is because there is a continuous war for talent all over the world. There is need for organisations to amend the approaches they apply to manage talent and properly harness it, especially when economic growth slows. This paper discusses the causes of the war for talent and highlights a number of techniques that organisations can implement in order to properly manage talent, especially during times of slow economic growth such as the ones experienced in the past few decades. Table of Contents 1.Introduction 4 2.The War for Talent 5 3.Factors affecting the War for Talent 6 4.Talent Management during Economic Downturns 7 4.1 Recruitment and Selection 8 4.2 Training and Development 9 4.3 Talent Retention 10 5.Conclusion 11 1. Introduction The war for talent has been as a result of an expanding global economy. This is because it has led to increased competition for talent around the globe. During times of slow economic growth or unusual economic crisis, management of talent remains a critical issue for organisations. This is because during such times, companies stand to lose valuable talents among their employees, if not careful. In order to succeed in the competitive global marketplace, organisations need to manage talent. Lockwood defines talent management as the application of systems created to improve productivity in the workplace or unified approaches by establishing better methods for inviting, cultivating, maintaining and deploying individuals with the essential skills and abilities to fulfil present and forthcoming business needs (2006). It is a fact that the greatest challenge companies’ face in managing their work force is developing and retaining talent. Just like the rest of the world, talent management is constantly progressing. Different other factors also come into play in the effort to manage talent within organisations. These include partnerships, global development, and the economy that is constantly changing (Lockwood, 2006). At the centre of talent management is the belief that talent begins from the bottom of organisations and is present in individuals at all levels, and therefore everyone ought to be considered. The war for talent is influenced by factors such as increased movement of people across the globe, irreversible changes to cultures, skills and business environments, economic and demographic trends across the globe, and diversity, which all lead to competition for labour and labour shortages in organisations. To counter this, especially during times of slow economic growth, organisations focus on recruiting top talent, training and developing talent, and retaining good employees as discussed in this paper. 2. The War for Talent The term ‘The War for Talent’ was created by McKinsey & Company in 1997. During the time that this term came to being, many organisations had been experiencing the phenomenon associated with it, but they could not fully express it. According to Michaels, Handfield-Jones and Axelrod, “the economy was burning white hot in the late 1990s and companies were scrambling to hire and retain the people they needed” (2001, p. 1). During this time, organisations were offering substantial bonuses for those who signed contracts with them, highly qualifies employees were being headhunted before they even settled in their new jobs and majority of them were asking for salary increments barely three months after joining organisations (Michaels, Handfield-Jones and Axelrod, 2001). Companies experienced shortages for qualified employees to fill crucial positions, while those that were esteemed with such talents, such as consulting firms and investment banks were losing talented employees to new business start-ups that offered them better incentives to entice them (Michaels, Handfield-Jones and Axelrod, 2001). Michaels, Handfield-Jones and Axelrod allude that “it was easy to see the war for talent raging in the recruiting and retention frenzy of the late 1990’s” (2001, p. 1). This was followed by the worldwide economic recession and everyone thought that the war for talent had ended. However, the war for talent has not ended; it still persists and may do so even in coming decades. According to Michaels, Handfield-Jones and Axelrod, “talent is now a critical driver of corporate performance and a company’s ability to attract, develop and retain talent will be a major competitive advantage far into the future” (2001, p. 2). The war for talent if inflamed by three principal forces; these include “the irreversible shift from the industrial age to the Information Age, the intensifying demand for high-calibre managerial talent”, as well as the increasing inclination of individuals to move from one organisation to the other (Michaels, Handfield-Jones and Axelrod, 2001, p. 3). This is because with the information age, organisations rely more on knowledge workers, such as software developers since they poses the right talent. As this happens, the responsibilities of managers continue to become more complex and this requires organisations to hire managers with exceptional competence or with substantial managerial talent, since they are well suited to handle the challenges that come along. Additionally, talented individuals have realised that they can reap a lot of benefits by switching between companies. Due to the fact that the three principal forces will not diminish, the war for talent will characterise the business scene for decades to come. 3. Factors affecting the War for Talent Today, the amount, quality and attributes of talent are affected by a number of factors. These include increased movement of people across the globe, irreversible changes to cultures, skills and business environments, economic and demographic trends across the globe, and diversity. Increased movement of people across the globe: This has been as a result of globalisation, which has led to competition in the global labour market. Barriers to immigration and emigration have been minimised to promote business across the globe. This has in turn increased the mobility of people across national borders as they look for better employment opportunities outside their nations of origin. Highly skilled workers have high emigration rates and this has led to an aspect known as ‘brain drain’ as some nations are left with less skilled workers among their populations (Beechler and Woodward, 2009). Irreversible changes to cultures, skills and business environments: In recent years, the economy has moved from being product-based to being knowledge-based (Beechler and Woodward, 2009). The shift to a knowledge-based economy among other changes has made companies more reliable to employees with high cognitive abilities and these are quite rare hence have to be outsources from all over the world. Economic and demographic trends across the globe: Today, the distribution of age in the population is different compared to the past. Birth rates have decreased and people tend to live longer lading to a higher population of aged people in most nations. Older people remain on jobs for a longer time and since most of them have no new talent, there is a tendency for organisations to scramble for the fresh talent in the scant younger generation. The diminishing economic barriers are also leading to a war for talent as foreign companies create demand for new skills and jobs (economic and demographic trends across the globe). Diversity: The environment in which companies operate is becoming increasingly globalised. In most workplaces, the workforce is diverse. This inclination for companies to hire employees from different backgrounds is also a cause of talent war. 4. Talent Management during Economic Downturns During periods of slow economic growth, the steps that organisations take determine whether they will remain competitive in future or not. Most companies reduce their talent management budget and employee rewards among other approaches, which may negatively affect their efforts to recruit and retain employees (Chartered Institute of Personnel and Development, 2009). Some of the approaches adopted by most companies include restricting pay increases, reducing and even freezing bonuses, rewarding top performing employees only, and paying employees based on their performance. Due to the fact that these approaches seem biased, they have not been effective in helping organisations manage talent during economic downturns. According to Daft, “employees give a company its primary source of competitive advantage, so even in an economic downturn, good managers make talent management a top priority” (2013, p. 382). Talents are therefore important for the success of the organization, and the degree of business effectiveness will depend on how talented and suitable its workforce is. This makes it necessary to perform exclusive and inclusive talent management to ensure that there are no biases. Acquiring or hiring human resources with the appropriate talents may be costly considering that imbalances of demand and supply of needed skills and talents in the labour market persist (Castellano, 2013). Recruitment of top talent, training and development of talent, and retaining good employees are effective methods of managing talent during periods of slow economic growth. 4.1 Recruitment and Selection Each organization understands its peak and low periods of production, from which it can take advantage of to improve talents, while aiming for high production at peak periods or during times of economic growth. Talent management may involve replacing non performing or simply talented employees with the highly talented ones, which may be less costly during the slow economic growth period, than waiting for a time of intense economic growth, when competition for the talents are costly and high. At times of slow economic growth, the HRM can take the chance to reorganize the working structures in the organization and reassigning potential talents to the vacant positions. The distribution strategy would minimize costs in the time of reduced economic growth, maintain existing and familiar workforce to organizations’ operations, and environment. Otherwise job adverts would act to attract talented individuals for hiring, resulting to the recruiting professionals identifying required talents that can be beneficial upon selection (Maloney, n.d.). The core element is making sure the right people with required talents are hired, which may cost time and more resources during periods of high production, or when economic growth is fast. 4.2 Training and Development When economic growth slows, prioritizing pressing opportunities, especially those areas established to be of critical importance (like the technical and leadership areas), and improving employees talent capabilities would act to place an organisation in a better position. Coaching methods are less costly ways of developing the skills of employees’ by observing their performance, offering feedback and corrections, as opportunities for development and transformations in teams, individuals, and organizational performance (The Conference Board, 2013). Other cheaper methods are the in house development programmes highly recommended for leadership and development of manager’s, who have a complete idea of business objectives and strategies, and what it further requires. The high potential employees may be singled out and put through short term training programs like mentorship and courses to develop their home grown talent, and give them a broader vision of the organization (Dow Jones & Company, 2013). Allowing new or inexperienced employees to engage in shadowing and on the job training would also enable them acquire best and skilful performances. Inwards and outward secondment and job rotation would enable employees to increase their proficiency, develop wide and in depth (multi-skilled) talent through performance of a higher or different role, and in diverse departments or organizations (Drew and Cooper, 2011). 4.3 Talent Retention Communication and good treatment of employees or the workforce is vital in motivating their ability and more so, increasing their satisfaction in an organization. If the managers or supervisors in the company have poor relations with the employees, the company may have turn over problems due to resignation of labour force, reducing the talent in organizations (Poskey, n.d.). Employees need to feel appreciated and respected, rather than been taken as a commodity or being overworked. Similarly, having them engaged in their performances, by providing feedbacks in their performance, directing them with fairness, and suggesting improvement would strengthen their commitment to organizations goals and values, while sharpening their skills. Different employees have different motivational factors; for example, a mother may desire flexible working conditions or child care package, while an employee with chronic conditions may desire health insurance, which means the employer can retain the talents if he provides such packages. Providing job security, work and life balance, social benefits and packages, job and positional promotions, and keeping clear employees expectation despite the slow economic growth would increase employees’ morale, job satisfaction, secure their future, eliminate fear of job misplacement, and create more opportunities to learn, develop, and maximally utilize their talents (Scott, McMullen and Royal , 2012). Payments and other incentives are the most common drives of employees’ turnover in search of better pays in other organizations. In the competitive labour market, there is a need to strike a balance in retaining the best talent and offering the employees with a better and satisfactory pay, putting into considerations the pay level of other similar talents within the organization and externally. During periods of slow economic growth in organizations, wage increase for the workforce may be impossible. However, the reward may be extended to a later period in other incentives like bonuses or in appreciation for exceptional beneficial performance. In changing times of an organization, talent retention means more than financial incentives and though money is used to motivate and retain talents, it may be used unwisely and could entirely fail to address the retention situation (Cosack, Guthridge and Lawson, 2010). 5. Conclusion There is a high probability of countering shortages of talents in organization during the time of slow economic growth. Though finances may be a constraint for the organization to effect new changes in relation to talent management, firms can use simpler and less costly methods to recruit and select suitable and qualified talents for the organization. For a company to retain talents, it will have to consider the best effective criteria suitable for organization, while enhancing motivation to its employees. Talent management is therefore a shared responsibility for the employees and managers, with the help of technological tools for the achievement of individuals and organizational goals and objectives. Appendix HRM – Human Resource Management Talents – perceived as potential skills, knowledge and abilities for performance Reference List Beechler, S. and Woodward, I. C., 2009. The Global ‘War for Talent’ [pdf] Journal of International management. 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