Many organizations in the last twenty years have faced the problem of expertly managing human resources who are valuable to achieve their strategic goals. This research paper focuses on the challenges and complications that these companies face in the global and highly competitive environment regarding employee skill, shortage and competencies. As a result of these complications, many organizations have started to operate their human resources on a global scale knowing that it is the only way to maintain a competitive advantage in the current global business environment. This paper highlights the struggles and drivers to the challenges of ‘global talent management’.
Acronyms and Abbreviations
GTM Global Talent Management
HR Human Resource
MBO Management by Objectives
GTCs Global Talent Challenges
US United States
EU European Union
EVPs Employee value propositions
UK United Kingdom
A research study into the Key Challenges in Global Talent Management
Table of Contents Page
Acronyms and Abbreviations 2
1.1 Introduction 4
1.2 Definition of Global Talent Management 4
2. Major Challenges in Global Talent Management
2.1 Skill Shortages 6
2.2 Changing Demographic Trends
2.3 Managing the Workforce in Cross-Cultural Environment 6
2.4 Changing Mindset of Employees Towards Their Work 9
3. Policies and Practices To Deal With Global Talent Challenges
3.1 Improve HR planning And Effectiveness 10
3.2 Talent Positioning And Management 11
3.3 Attracting Talent 11
3.4 Retaining Talent 12
3.5 Reducing and Removing Talent 12
3.6 Training and Developing Talent 13
3.7 Performance Appraisal 13
3.8 Compensation 14
4.1 HR Importance of this Research 15
4.2 Concluding Analysis 16
5. References 17
Chapter 1 – Introduction
In the current business environment, organizations are continuously competing against each other to capture new markets, products and services. This is the only way they can remain competitive and sustain their growth in the global market. During the last decade, businesses have come to realize that managing and competing for human workforce are just as important as competing for financial and material resources. The companies that are most effectively handling their talent and realizing their labours’ potential are being very successful on the global scale as argued by Caligiuri, Lepak and Bonache (2010).
Carell, Elbert and Hatfield (2000) mentioned that the real problem in today’s workplace is not competing in international market, but rather in creating a ‘global mindset’ in managers, employees and HR practitioners. HR specialists face complications in creating an institution where employees are capable of exchanging ideas, knowledge and processes across borders and who can work in a multi-cultural environment.
The most important topic in ‘global talent management’ has been the shortages of skills and the effects this has on the organizations in different countries. This problem has been prevalent not only in times of economic boom but also in times of global crisis. Another important fact is that many companies face strong rivalry for the skills worldwide and face extensive challenges in attracting, engaging, promoting and retaining employees as noted by Tarique and Schuler (2010).
1.2 Definition of Global Talent Management
The definition of Global Talent Management varies from organization to organization. Some of the famous ones are:
‘ ‘Global Talent Management is the standard human resource department practices and functions; and in the international context the term global talent management is used interchangeably with international human resource management.’ (Collings and Mellahi, 2009, p. 305)
‘ ‘A subset of IHRM activities (systematically linked IHRM policies and policies) to attract, develop, retain, and mobilize individuals with high levels of current and potential human capital consistent for the strategic directions of the multinational enterprise to serve the objectives of multiple stakeholders’ (Tarique & Schuler, 2010, p. 124)
Figure 1: The Global Talent Management Wheel
Figure 1 highlights the Global Talent Management Practices and the guiding principles behind them. It also emphasizes on the relationship between them.
Chapter 2 ‘ Major Challenges in Global Talent Management
The primary challenges that business institutions run into while governing the global workforce are skill shortages, globalization, managing the workforce in cross-cultural environment, changing demographics and changing mindset of employees towards their work as implied by Tarique and Schuler (2012).
2.1 Skill Shortages
According to the Manpower Group study (2015), countries like Japan, India and Brazil are finding it very difficult to hire skilled workers. About 38 percent of business owners are being unable to hire the suitable candidates for different positions. This has resulted in scarcity of talented employees becoming a truly global problem and it has affected many multi-national companies in different parts of the world.
Many solutions have been proposed to tackle this problem. Some of them are strategic planning of talent groups, hiring employees globally, hiring female groups and older generations, and provide different training and learning programs to increase the skill level of employees as recommended by the World Economic Forum (2011).
2.2 Changing Demographic Trends
The demographic progression is constantly changing in many countries. Many surveys reveal that the population of third world and poor countries is constantly increasing and getting younger and younger, whereas the population of developed countries is declining and becoming older and older. This has resulted in the formation of many different population groups such as ‘Baby boomers, Generation X, Generation Y and millenials’. It is a constant challenge for many companies to manage workers of these different age groups. The life expectancy has increased nowadays. So, people are living longer and thus, they are retiring at an older age than before. After they retire, it is problem for HR specialists to find a replacement for these workers with the same technological and tactical know-how as pointed out by Calo (2008).
According to World Economic Forum (2011), not only are the retiring employees a problem for GTM, but also the millennial groups. These groups make up nearly 35% of workers in US and more than half the workers in Indian population. They are constantly increasing and are believed to form nearly 50% of the total workforce of the world by 2020. So, it is of utmost importance to manage the global talent consisting of millennials. Some of the attributes of these groups are:
‘ They have loyalty problems
‘ They might leave the company if they find better conditions in another company
‘ They are very keen on learning and developing personally
‘ Harmony between work and private life is very important for them
‘ Promotion opportunities within a company is very important for them
‘ They want to work for a company who value their corporate social responsibility
‘ They are attracted by the prospect of working in a foreign country, and
‘ They are somewhat comfortable working with older age groups.
One of the challenges for global talent management team is to tackle the problems related to inabilities of the millennials of the developing countries. This hugely abundant working group lacks the necessary expertise and know-how required for a particular job in today’s business environment. The reasons for this incompetence can related to many factors such as poor education, political problems in home country and inadequacy of career opportunities. This is a challenge for HR practitioners to overcome these shortcomings and improve the proficiencies of employees from the third world and poor countries as revealed by Tarique and Schuler (2012).
2.3 Managing the Workforce in Cross-Cultural Environment
When managing a global workforce, it is very important to understand cultural differences present in the organization. HR specialists should have the knowledge of cultural agility. Cultural agility is the capability to swiftly, easily, efficiently and effectively work in different countries and with people from diverse cultures. Managers and leaders working in multi-national companies should have the critical competence of cultural agility. The cultural values of a country will always have an influence on the way in which human resources policies and practices are developed and implemented in that country as stated by Caligiuri, Lepak and Bonache (2010).
This can be illustrated more in detail by the Hofstede’s cultural dimension (figure 2).
Figure 2: Hofstede’s Cultural Dimensions
Figure 2 reveals that people from different countries have different qualities and different ways of behaving. For instance, people from countries such as Mexico, Venezuela and Singapore accept the fact that power is not distributed equally within the levels of an organization, whereas, workers from Austria, Germany and New Zealand tend to have more open relationships within the levels of their organization. Similarly, employees from individualistic countries such as USA, Australia and Great Britain believe they should be primarily responsible for themselves than their superiors. But countries such as India, Pakistan and Columbia depend on their superiors for their specific tasks and feedbacks. Staffs from countries such as Japan, Belgium and Portugal do not accept uncertainty and risk. But staffs from Hong Kong, Sweden and Singapore tolerate unpredictability within their organisation. Likewise, workforce from countries such as Japan, Austria, Venezuela and Italy tend to focus more on assertive interests such as completion of task, earnings and advancement, whereas the workforce with more feminine set of values focus more on things like relationships with managers and co-workers and cooperation among members of the organization. Thus, GTM across different cultures is a very serious issue and needs to be handled very carefully.
2.4 Changing mindset of employees towards their work
The behaviour and attitude of employees are changing immensely in some countries. Previously, employees used to work in the same organization changing posts. The employer also used to provide different kinds of training and developmental programs for the employees. In exchange for that, the employees showed loyalty and maintained a level of trust with their employers. This is not the case anymore. Employees are no longer loyal. They hardly stay in the same organization for a long period of time. They are more concentrated on their own personal development than any other thing as put forward by Korkki (2011).
As noted by Gratton (2010), the working environment of companies are changing and will keep on changing and there will be even more challenges for GTM. Some of the courses of actions that are already being implemented are:
‘ Virtual media are being used more and more. People are conducting meetings using video conferences, Skype and other multi-media.
‘ Employees will have more option on employers and they will only work where they want.
‘ Flexible hours will be an integral part of job to keep employees happy
‘ Employees will look for jobs that are far from their home country
‘ Employees will want to work for more than one organization, and
‘ Employees will make the full use of the technological advancements.
These changes in employee working behaviour will adversely affect the relationship between the company and the workers. This will result in an even difficult situation for HR to fascinate, retain and maintain global workforce.
Chapter 3 ‘ Policies and Practices to deal with Global Talent Challenges
Multinational companies can adopt certain HR practices and policies to tackle the major issues of GTM. The first step the companies need to take is to follow those HR policies and methods which are coherent with the objectives and GTM situation of the company. When these policies are followed, then only the company will be able to achieve competitive advantage in the global market as stated by Beechler and Woodward (2009). Some of the specialized approaches to HR policies and practices that the companies should follow are:
‘ Improve HR planning and effectiveness
‘ Talent positioning and management
‘ Attracting Talent
‘ Retaining Talent
‘ Reducing and removing Talent
‘ Training and developing Talent
‘ Performance appraisal
3.1 Improve HR planning and effectiveness
One of the first things organizations need to do is to improve HR planning and effectiveness. They need to be more traditional in their thinking, but they also need to consider the fact that traditional ways are not necessarily the best ways considering the changing global environment. So, they might need to make some modifications along the way. Activities like estimating the total number of workers required in a certain business location, taking into account the retiring employees and finding replacement for them and making sure the HR practices are parallel with the goals and objectives of the organisation are part of the HR planning process as suggested by Cappelli (2008).
3.2 Talent Positioning and Management
There are many things to consider before positioning talents in different parts of the world and making talent management decisions. They must acknowledge things like taxes, government stability, culture, customers, producers, suppliers and many other factors as explained by Timmons (2010). Companies have been continuously spreading around the world. Multinational firms like Microsoft and Coca-Cola are opening their subsidiaries in countries like India. India is a highly cultural country with huge supply of labour. Firms planning to move to a country like this should make talent management strategies. They should be able to develop plans which will attract new employees and retain those employees in the long term. They should also keep in mind that if in the long term, the supply of labour is decreasing in a particular country, whether they should relocate or provide training and development programs to the existing ones as suggested by McGregor and Hamm (2008).
Outsourcing is another popular method among firms nowadays. They move most of their production to a completely different country. Apple has done this very successfully. Apple has hired hundreds of Foxconn’s workers to develop its products in China as mentioned by Barboza (2010).
According to Schuler, Jackson and Tarique (2012), some of the important points that organizations need to consider when doing talent positioning are:
‘ The main reasons behind relocating and outsourcing the products
‘ The rules and regulations, country stability, cultural differences, employee rights and availability of skilled labour in the relocating country
‘ What is better and what are the possibilities for Joint ventures and mergers and acquisitions’? It is necessary to adapt our HR policies and practices and manage the workforce according to the need and culture of the country that we are relocating to.
3.3 Attracting Talent
In the current business situation, it is very hard for organisations to find employees with the right qualities and attributes to do the right jobs. This applies for both national and international organisations. For any organisation, whether it be top management staff or low skilled workers, both are very essential if they want to stay competitive in the Global market as argued by Becker, Huselid and Beatty (2009). Therefore, companies need to constantly keep on attracting talent. For this, they need to develop different approaches to attract different kinds of potential employees. These approaches are called ’employee value propositions’. For instance, the multinational grocery, Tesco uses different tactics to attract different kinds of employees. They have separate EVPs for students straight out of school, people looking for part-time jobs and students who just graduated and are looking for full-time jobs. These EVPs are based on what the company will be most competent at and what will attract the most number of employees as mentioned by Guthridge, Komm and Lawson (2008).
3.4 Retaining Talent
Retaining talent is very crucial for the successful management of a global team in any company. A number of factors may contribute to the high turnover rates in companies. Some of them are low working conditions, lack of empowerment and engagement of employees, long working hours, low pay and lack of growth in jobs. Companies are losing lots of money due to high turnover rates. According to Guthridge and Komm (2008), some of successful talent retention programs are:
a) The people at the top should make an effort to make the lower level staffs part of the company by including them in the different programs such as decision making
b) Hiring talent from all over the world
c) Keeping a close eye on the labour markets
d) Make diversity an integral part of the company
e) Explain the importance of retaining talent to the line-managers
f) Managers of departments where there is low turnover rate should be remunerated for their work
g) Hiring a very effective and efficient recruiting team and evaluate their work very carefully
3.5 Reducing and Removing Talent
Due to declining economic conditions in the world, the unemployment rate is continuously increasing. Many people are losing their jobs and the new jobs created are not able to cover up for the ones that are lost. The global talent management process has been adversely affected by this situation. Hence, reducing and removing talent has become an important part of global talent management. Reducing talent involves activities like decrease in number of working hours, decrease in salary, long working hours, no flexible hours, no paid holidays, no extra bonuses and outsourcing to a cheap labour country as said by Richmond (2009). Reducing talent helps companies to reduce their costs and the employees also don’t lose their jobs.
Removing talent refers to dismissal of employees permanently. It is not an easy job relieving employees of their duties. Careful consideration needs to be taken into account while removing talent. The valuable employees who contribute to achieve strategic goals of the organization should be retained at all costs as indicated by Keogh (2008).
3.6 Training and Developing Talent
Training and Development come very handy in companies where there is lack of skilled workers. Companies which provide training and development programs are very popular among their employees and have a high level of employee retention. Companies which present their employees with growth and promotion opportunities within the organisation have a very high level of job satisfaction among their employees as suggested by Scullion and Collings (2011).
In current business environment, it is significant to have managers and employees with global mentality rather than local mentality. Thus, many Chinese companies like Huawei and Haier have started providing their managers and employees with in-depth training and development programs. These programs include going to business schools and learning more about the global environment rather than the local environment as put forward by Dietz, Orr and Xing (2008).
3.7 Performance appraisal
Performance appraisal is an important part of GTM. According to Varma, Budhwar and DeNisi (2008), Performance appraisal means evaluation of the performance of an employee and providing feedback to motivate them even more. It includes activities like indulging staffs in the assessment process, supplying them with monthly or quarterly feedbacks, including them in career development programs and motivating them to perform even better. Performance appraisal helps to promote employee-manager relationships and eventually leads to increase in employees’ loyalty and job satisfaction.
The rate at which compensation is provided to employees varies from country to country. Compensation has become an integral part in today’s business culture. Multinational organisations have to address the fact compensation packages and fringe benefits provided to employees also depends on the country where they have relocated. Nowadays, workers working for multinationals in India and China have started to ask for ‘Western-level Salaries’ as stated by Bryan (2010).
Similarly, multinationals such as Nissan and Toyota who have subsidiaries in China are facing the problems of demand for increase in compensation packages and fringe benefits to employees. This has led to many companies moving their subsidiaries to other countries such as India and Bangladesh as insisted by Bradsher and Barboza (2010).
Performance related pay is very popular in many countries. Knowing this topic well is essential for successful GTM. Nowadays, it is important to think global rather than local while remunerating employees. This implies that companies should pay employees salaries according to the general global rate, but not according to the rate that is common in subsidiary country as argued by Siegel (2008).
Figure 2 exhibits the GTM challenges and their HR solutions.
Figure 2: GTM challenges and their solutions
Chapter 4 ‘ Conclusions
4.1 HR Importance of this research
It is of utmost importance for HR practitioners to know the different drivers for GTCs, what actually are the GTCs and what policies and practices should they follow to overcome these challenges. If any company wants to be successful worldwide, then they should be well aware of points mentioned in figure 4. In addition to that it is also very essential for students studying international business to be well aware of the current problems existing in GTM.
4.2 Concluding Analysis
The biggest problem that global firms are facing today is related to global talent management. The major obstacles that HR specialists face while managing global workforce are skill shortages, globalization, changing demographic trends, managing the global workforce in cross-cultural environment and changing mindset of employees towards their work. HR department should develop many policies and practices to remove the obstacles of Global talent challenges. Some of the policies that they can use are creating EVPs to appeal to new employees and holding on to existing employees. This will benefit the companies in the long run.
The business environment is continuously changing. The GTCs of 10 years ago are no more in existence now. This means that policies and procedures need to be modified every now and then to manage the global talent successfully. Moreover, this is the duty of HR practitioners to study the ever-changing drivers of GTM and find solutions to tackle them.
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