Talent Management for Organizational Competitive Advantage

Chetsada NoknoiEconomics and Business Administration Faculty, Thaksin University

140 Moo 4, Kanchanavanit Rd., Kaorupchang, Muang District, Songkhla, 90000, ThailandTel.(66)897778219, Fax.(66)74443977

cnoknoi@hotmail.com

AbstractThis article aims at presenting the importance of talent, factors affecting for success in talent

management and problems in talent management to strengthen the understanding about talent management; the important person in contributing to best performance and reinforcing the progress of organizations. Quantitative and qualitative researches were used in this study. Data were gathered from 50 companies listed in the stock exchange of Thailand. The research revealed that performance oriented culture, employee turn over, level of employee satisfaction, a pool of qualified replacement, effective investment in employee development and the system in employee selection and performance evaluation process are factors affecting in talent management. In this period, organizations need for more talent, not only in terms of numbers but also with varied and unique skills if organizations want to survive in the competitive world and have competitive advantage.Keywords: Talent, Talent Management, Competitive Advantage, Human Resource Management

IntroductionIn all resources on earth, people or humans are the most valuable and beneficial because other

resources are alive but not as intelligent as humans, while non-alive resources if humans do not bring for using they are useless (Hiranto, 1988). So, in case of developing country to all fields prosperity, it is priority to develop humans. It is the fundamental for developing country in other fields to make citizens of the country perfect and can use their intelligence solving theirs and other problems. As well as they can improve themselves and train others to adjust themselves in harmony with all environment in changeable society. In this period, the competition in business is extremely high for all levels whether country level, region level or world level. Each business organization focuses on adapting themselves to live in that situation by concentrating on competitive advantage and building a competitive organization (Porter, 1985). Many resources are used to maximize benefits in the organization for example, physical resource such as machine, instruments, facilities; financial resource such as capital, bond; and finally is human resource that is personnel or organization. At the present moment we accept that human resource is the most important in measurement and evaluation the success of organization (Becker, Huselid, Pickus & Spratt, 1997).

Definition of talent managementThe literary meaning of the word talent is one who is the important person in contributing to best

performance and reinforcing the progress of organizations. Today we are at the blink of the next global battle in the war for talent (Jackson & Schuler, 1990), and companies with a firm grasp on today’s technologies, and the best view over the horizon, are positioned to win. It is very surprising to see that how few companies develop and move their talent around the organization. They know how to recruit star performers, fire the under performers and replace the ones who have excited the organization but only few of them seem to know how to provide one of the most important factors in retaining talent which is to provide them an opportunities to achieve, move and grow within the organization. What we see is the reality that is the companies hire a star only to see them leave the organization in frustration in few months (Smart, 1999). In today’s context this question becomes very pertinent that why we need to lure people to stay in the organization by providing them the measures which are likely to increase the cost for the organization (Olsen, 2000), when more and more people are ready to join them. The opinion seems to hold some substance but when we look at the figures we find that today there is a sharp decline in the availability of talented work force in the organization (Pascal, 2004). More so it is not the matter of luring the people to

remain in the organization rather it is retaining the people who are out performers in the organization or who hold the key position in the organization so that the organizational competitiveness can be maintained. Today the war for talent has become a daunting one with the advent of knowledge driven economy there is a huge demand for talent in the organizations (Conger & Fulmer, 2003). In this process there are number of factors which play an important role in making the task much more complex.

The importance of talent and talent managementDemography plays an important role in the availability of talent. The recent advance in medical

sciences has significantly contributed to human longevity (Creelman, 2004). Today, we find the one fifth of the American population is above the age of 60. In 25 years time this number will increase to a quarter of the population. Germany is worse affected by it. Roughly, a quarter of Germans are now old and in 25 years a third of them will be old. The case with Japan is very similar to that of Germany. China is better off with a tenth of its population now and a fifth of its population in 25 years being old (Cohn, Khurana, & Reeves, 2007). USA is already facing a shortage of skilled professionals. This will further accentuate. In the next 10 to 15 years, professional workforce shortage in the USA will peak to 15 million (Cheloha & Swain, 2005). Europe will see a shortfall of a million professionals in information technology alone. Germany is already facing a shortfall of about 200,000 engineers (Ashton & Morton, 2005). China is estimated to need upwards of 1.4 million management graduates. Japan, Australia, Malaysia, Singapore and Thailand are forecasting large shortages of professional talent. This shortage will last at least till the middle of this century. By that time, technology would have advanced to make it possible to rely less and less on people (Pegels, 1981; Stahlman & Lewis, 1994; Wild & Schneeweiss, 1993). Quality people are no longer available in plenty, easily replaceable and relatively inexpensive. The gene pool for leadership people is not vast. We have to grapple with the paradoxical scarcity among the apparent plenty of qualified job seekers. Here in lies the key to creating competitive advantage through talent management (Byham, 2001; Chowanec & Newstrom, 1991; Heinen & O'Neill, 2004; Hilton, 2000; Mercer, 2005; Olsen, 2000).

We have entered a new age – the knowledge age. The relationship between people and business in the industrial and knowledge age is fundamentally different. Today the workforce does not want a stable career rather they want a career which can provide them the opportunities which in past one would have waited for (Rothwell, 1994). This attitude of the young professionals has unleashed a war for talent around the globe. The review of literature reveals that in order to achieve competitive advantage it is necessary that the organization adopt a proactive talent management system and should have a systematic way of accomplishing the activities (Frank & Taylor, 2004; Vicere, 2005). Thus talent management today has become a necessity and the organizations who do not adopt a proactive talent management strategy will find it difficult to sustain organizational competitive advantage.

Today we see that the trend world over is that the salaries are going up so is the attrition rate today the highest attrition rate has been recorded in UK which is as high as 18.3% an increase of 2.6% over the previous year (CIPD, 2006), Philippines follows closely at 18.1% followed by Taiwan and China with an attrition rate of 17.7% and 14.4% respectively. The knowledge age demands that the way of thinking must change i.e. there must be a conceptual revolution (Axelrod, Handfield-Jones, & Michaels, 2002; Michaels, Handfield-Jones, & Axelrod, 2001). A revolution is not a party, where everything is handled with precision and elegance. A revolution creates a new order on the ruins of the old (Lermusiaux, 2005). It destroys the obsolete and the dying to give birth to the energetic and the living. Acquisition, reorganization, downsizing and job cuts are the hallmark of the upheavals of the knowledge age. Today capital is mobile and cheap because it is global (Redford, 2005). People, especially competent people, are becoming rare because of the same reason. Globalization has opened new vistas for them. There was a time when people were regarded as an item that increased costs (Kesler, 2002; Pascal, 2004). Today, every additional person, with effective skills and competencies, means additional profit. In the industrial era the companies hired hands. Obviously hands have limited productive potential. Thus there is a qualitative difference in the field of human resource management between the industrial age and knowledge age. In industrial age human resource was one of the numerous functions amongst manifold operations. In knowledge age, human resource is at the heart of business. Every successful business leader in the knowledge age is a successful human resource manager.

These imperatives point out that the organizations can no longer be complacent with their human resources or else they will perish in this competitive age.

Goal of talent management systemBefore entering into the basic framework of talent management it is necessary to discuss the

findings of the research done to understand what is the goal of talent management system? This research focused on three outcomes:

1. The identification, selection, development and retention of out performers in the organization who are normally a small group of people who have shown outstanding results and have motivated others to aim for higher accomplishments and they personify the core competency and values of the organization. Their absence from the organization affects the organizational efficiency as they are closely linked to the present and future performances.

2. Managing the human inventory for the key positions is very important as this affair can prove highly disruptive, costly and distracting to the organization.

3. Classification of and investment in each individual employee based on his performance and/or potential for adding value to the organization. Poor allocation of compensation and training and development resources can lead to unwanted turnover and morale and performance problem especially amongst the out performers.

According to the research if the organization commits to competitive advantage through these three outcomes it will require carefully constructed human resource process which is linked with the core elements of human resource planning and to the strategies, policies and action plan. So how does organization effectively manage the talent? Answer to this question though seems to be very simple but as pointed out earlier managing talent does not mean that we need to utilize the talent in an optimal manner so as to bring about cost effectiveness nor it means that take up measure to ensure no employee leaves the organization. Rather it is totally a different system which focuses on the following points: develop business competencies, identify the key positions, identify the key people that are identify the outperformers in the organization, develop plan for allocating the organizational resources and develop a back up system. The systems of talent management that start from within the organization were the responsibility of the leadership of the organization. It is the responsibility of the leadership to evolve a system which not only does it help in recognizing the talent but also takes into account the other elements of the talent management process.

Research Aim and ObjectivesThe aim of the research is to examine the role of talent management in sustaining competitive

advantage. The research provides and insight into the factors which have led to the outbreak of talent famine. It also addresses the key issue that should be taken into consideration by the organizational leadership while implementing the talent management system in the organization.

To undertake primary research based on questionnaires to the managers and staff about 1) The importance of talent for an organization 2)Key issue relating to the successful talent management process 3) To evaluate and discuss the results obtained through the primary research and to compare them to the findings of the secondary research 4) To undertake secondary research (a) To define talent and talent management (b) To describe genesis of talent management (c) To find factor contributing to talent crises (d) To explore how organizations can implement talent management successfully and (e) To identify barriers and obstacles facing its implementation.

Research methodologyThe research focuses on the key issues for successful talent management implementation and the

role of organizational leadership in sustaining rather than retaining the talent based on qualitative and quantitative data. Data collection was undertaken through the use of questionnaire and face to face interviews conducted with clients of selected 50 companies based in Bangkok. For this research a descriptive research design was used and the convenient sampling technique proved to be most suited sampling technique for this research. Interviews were recruited by written or verbal invitation and an

appointment was made for an interview to proceed. Semi-structured interviews lasting between one to one and a half hours in duration were conducted. With permission, all interviews were recorded and transcribed. Consistent with data analysis techniques in qualitative research, themes were identified within each of the transcripts (Patton, 1990). A method of constant comparative analysis (Glaser & Strauss, 1967) was used to identify themes and this process continued until further themes were identified and compared with earlier themes. Similar themes were grouped together and those that differed formed new categories (Cavana, Delahaye & Sekaran, 2001). The findings of the secondary research and the information obtained through the interviews and questionnaire was further analyzed and compared. The analysis of the result was used to draw a set of conclusions and recommendations about the key issues for successful talent management implementation within the organization.

Results and discussionTalent management is a very broad concept to be covered in one single research but this research

focuses at the organizational impact of talent management implementation and factors that should be considered when implementing a talent management process in the organization. From the findings of the questionnaire and the interviews conducted during the research at the various companies it was revealed that successful talent management implementation is primarily based on better work culture, demographic issue, technological infrastructure and knowledge sharing. The importance of talent for an organization has to be communicated to the managers and staff. Although in 82% of the organizations the research showed that there was a strong agreement to the fact that a workforce having high potential, crucial knowledge and skills can successfully lead to transformation and change within the organization but it also showed that they were not aware as to how this can be effectively managed. The research revealed that 78% of the organizations do not have any idea about the key issues of talent mobility and shortage and the impact of talent migration on the organizations. The present work focuses on this key issue of awareness about the importance of talent management for the managers and staff. Similarly issues relating to the talent management process were taken up through the primary data placing more importance on its implementation.

For the talent management imperatives this research identified some of the important factors which have made the job of human resource pro cumbersome. This research identified demography playing the most important role in the availability of talent in Thailand. It was revealed that public standing of a company which was the primary criterion in the past was not as important in the present scenario. Further promotions and increment which were the major source of motivation and the fear of instability do not hold any value today. The results of the survey made it clear that excitement of the challenge in a job attracts the people to the organization and democratic environment in the organization has become the source of motivation. The opportunity of continued growth was a critical factor as revealed by this paper that blinds the talent to the Thai companies.

As for reward it is the talent that dictates the term and conditions of reward for the outperformers. The collective bargaining has become obsolete in the present knowledge age and the talents rule the organizations. While the right selection and development of talent go a long way to address the issue of talent management but survey revealed that the incentives both financial and non financial were also important in helping to cope with the challenge of managing the talent. According to the survey it was revealed that respondent also showed dissatisfaction over the non fulfillment of the promises which are made at the time of recruiting them. When this question was raised to the organizational leaders they felt that as per their observation of the people who left the organization majority of them left either because either they got better opportunity or they were not satisfied due to the non fulfillment of promise made at the time of entering the organization. The successful talent management process in corporate the employee recognition programs which worked as motivators at various levels in the organizations. An open and transparent work environment goes a long way in opening communication channels at all levels giving the employees a sense of belonging and ownership in the organization. Social events organized on weekends were an excellent way to initiate informal interaction and help to build stronger teams. The high level of employee satisfaction played important role in managing the talent apart from having a pool of qualified replacement and effective investment in employee development. To cope with increasing levels of stress the companies are investing in counseling and grievance handling. Professional counseling and counseling for

career progression was found in 38 out of the 50 companies were the survey was undertaken. Fourteen companies were setting up specialized in house cell to identify and address growth needs of young and aspiring team members. The survey also revealed that 65% of the employees reported that they were encouraged to sign up for various training programs for their skill development.

The observation made it clear that in addition to the shortage of employable talent in Thailand’s leading companies are grappling with low conversation rates and high attrition levels. All the 50 companies surveyed were eager to adopt a multipronged talent management strategy. During the survey when the business leadership was asked whether it affects the organization when an employee leaves the organization then 74% of the total respondents said that certainly it affects the organization. A total of 14% of the respondents were of the opinion that it partially affects, and during the personal interview they expressed their opinion that yes it affects when he is holding a key position in the organization or when he has given exceptional performance in his area. The rest of the respondents was of the opinion that it hardly matters to them who comes in and who leaves the organization, what matters to them is the end result. When it was further inquired if the companies maintain a talent inventory with them only 42% of the respondents said that they do maintain and the rest of them said they do not do so. A total of 68% of the respondents were of the opinion that they do value the talent and they will do every possible step to keep him in the organization and 76% of the respondents use the referral system for identifying and selecting employees for their organization because they feel that through it they have better access to talented people.

The players who will have a leading edge will be those who are able to attract, retain and manage the right talent thereby focusing their energies in providing inputs to economic development of the country. With a majority of multinational organizations operating with double standards in treating the workforce especially in the developing country like Thailand, there has to be cultural sensitivity and localization with regard to the effective talent management. The secondary data available from the organizations revealed that most organizations initiative to establish brain gain has failed. The primary data supported the recommendations of the organizations effort to promote brain circulation networks that can help the organizations to cope with the talent crises.

ConclusionIt can be concluded from the research that the factors managing talent for sustenance competitive

advantage are performance oriented culture, low employee turn over, high level of employee satisfaction, a pool of qualified replacement, effective investment in employee development and the use of organizational competencies in employee selection and performance evaluation process. A proactive talent management system has become a necessity and the organizations who do not adopt it will find it difficult to sustain competitive advantage. The aggressive and sustained growth and diversification has led to the need for more talent, not only in terms of numbers but also with new varied and superior skills. The challenge of finding and retaining talent has been taken up in this paper.

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