Reinventing Talent Management

Principles and Practices for the New World of Work

Edward E Lawler

• Publisher: Berrett-Koehler Publishers
• Year: 2017
• ISBN:
  9781523082520
• Topic: Business
• Subtopic: Project Management
• Index: Business

In this book, preeminent organizational scholar Edward Lawler identifies a comprehensive and integrated set of talent management practices that fit today's rapidly evolving workplace.The world of work has changed dramatically, says Lawler. Organizations now operate in a global environment. New technologies continue to disrupt how, when, and where work is done and should be managed. The workforce is becoming more diverse. Sustainability has joined profitability as a key business goal. All of this has dramatically accelerated the pace of change, making recruiting the best talent—not simply filling positions—an overriding concern. But too many organizations still use a job-based, bureaucratic talent management approach that doesn't take into account how the world has changed. Indeed, a recent study showed that from 1995 to 2016, there was no significant change in the way HR spends its time.Lawler says that talent management has to be reinvented. It needs to be closely linked to the organization's overall strategy. Recruitment and talent management should be driven by the skills and competencies the organization needs for long-term growth. This means talent management requires agile systems that can respond quickly to changing conditions and that take a more individualized approach to evaluating and rewarding performance. And everything talent management does has to be based on evidence, not tradition. Lawler looks at attracting, selecting, developing, rewarding, managing, and organizing talent through this new lens. In today's world, organizations have to constantly reinvent themselves—and talent management must do the same.

1
THE CHANGING WORLD OF WORK, WORKERS, AND ORGANIZATIONS

Work, workers, and organizations are changing in significant ways, and at an ever increasing rate, and there is every reason to believe that both the degree and the rate of change will continue to increase. Most of these changes have significant and profound implications for how talent should be managed.

Simply stated, many of the old principles and practices concerning what makes for good talent management are obsolete as a result of the changing nature of work, workers, and organizations. What used to be good or best practice—or at least good enough practice—with respect to how people are recruited, selected, trained, developed, rewarded, and evaluated simply does not fit today’s workforce and workplaces. These strategies, practices, and policies have become increasingly obsolete, and virtually every activity that organizations engage in with respect to how human capital is managed needs to be changed to become a best practice in this new world of work. This includes many of today’s best reward, selection, and development practices.

So far the talent management principles and practices of most organizations have not changed significantly in response to this new world of work. They still follow a job-based bureaucratic model, focusing on job descriptions, equating fairness with sameness and seniority, and are managed by human resources (HR) functions that are not changing as fast as the world of work is. This has resulted in numerous books and articles that are critical of HR, some of which suggest “blowing it up.”

Table 1.1 Percentage of current time spent on various HR roles in the United States

Source: Edward E. Lawler III and John W. Boudreau, Global Trends in Human Resource
Management: A Twenty-Year Analysis (Stanford, CA: Stanford University Press, 2015). Results from 2016 are new, and were not included in the 2015 book.
Note: ^{1,2,3,4,5,6.7,8} Significant differences between years (p ≤ .05).

There is considerable evidence that the HR functions in most organizations are not strategy driven and are not changing as fast as they need to. Table 1.1 presents data from my global survey of large corporations. The survey, which is done every three years, measures the views of senior HR executives on talent management and their organizations’ practices. It is the only study that has measured change in HR practices on a global basis. The results show that between 1995 and 2016 there were no significant changes in how HR spent its time. In every country studied HR has spent and continues to spend most of its time on record keeping and providing administrative services.

The good news is that the major changes that have and will occur in the world of work are identifiable and will likely to continue to be. As a result, it is possible to make fairly definitive statements as to what the world of work will be like in the future. This in turn means that it is possible to specify what organizations should do with respect to talent management to be effective moving forward.

Talent management should become increasingly strategy driven, skills based, performance focused, agile, segmented, and evidence based. Before specifying in detail what talent management should look like, it is important to identify recent key changes in the world of work and why they demand new approaches to talent management.

GLOBAL AND COMPETITIVE ORGANIZATIONS

Organizations now increasingly operate in global business, social, and political environments because the products, services, and customers of most large corporations are multinational. Many industries are dominated by major competitors that are global in their operations; they produce products that are created on a global basis and targeted at global markets. This is true for the energy, automotive, and information technology industries, and for major services such as finance, consulting, and advertising.

Yes, there are still many businesses that are local, but they represent a decreasing percentage of the total business that is done in such places as China, the European Union, and the United States. Even those organizations that do not operate globally are significantly affected by the organizations that do; they compete for labor with them, and often find themselves doing business with and at times competing with global organizations.

One interesting example of the growth of globalization in the last twenty years is provided by food service and package delivery companies, both of which continue to “go global” at a rapid rate. McDonalds and Starbucks are prime examples of U.S. national food service organizations whose reach has become global in a relatively short period of time. FedEx and UPS have both gone global with their delivery operations. Information technology concerns such as Google and Microsoft have also gone global and in turn made it possible to connect organizations’ worldwide operations.

One of the most important features of the global business environment is the ability it provides to internationally source the production and delivery of products and services. Information technology has made it possible to globally source talent for software development as well as phone sales and customer service. Many of the most obvious examples of this global sourcing are in the manufacturing sector: many products are partly or completely produced in countries that have low labor costs and, in some cases, easy access to natural resources that aid low-cost production. As a result, an increasing number of organizations now face global competitors rather than just local ones. This is true of both service organizations and manufacturing organizations.

A major factor that has led to the highly competitive, rapidly changing global business environment that exists today is the availability of financial capital. There is—particularly in developed countries—an increasing amount of venture capital available; as a result, individuals and organizations who wish to create new businesses or grow existing ones can access the financial backing they need relatively easily. There is no reason to believe that in the foreseeable future this supply of capital will decrease; the best prediction is that there will be an ever greater number of start-ups on a worldwide basis in decades to come and, as a result, the business environment will become increasingly competitive.

Strongly supporting the argument that more competitors will be created is the reality that more technology will be available to create new businesses. What happened in the case of information technology—with smartphones, personal computers, and tablets replacing typewriters, telephones, adding machines, and mainframe computers, and with social media creating new businesses—is likely to happen in other areas.

The globalization of business makes talent a global resource, and that raises many talent management issues. Organizations increasingly can and need to go where the “right” talent is available for the best price to be competitive. They need not only to source talent globally to be competitive but also to make good strategic decisions about how they manage talent coming from different national cultures. One clear implication of this is that an increasing number of organizations will need to manage talent effectively on a global basis, dealing with governments and other cultures—and the complexities they create—with respect to all talent management issues.

Perhaps the greatest impact the global business environment will have will be on the need for organizations to consistently improve their performance. What is good enough today will not be good enough tomorrow. This point was captured in the quality literature decades ago by the argument for continuous improvement, and it is even truer today. In fact, not just continuous improvement but dramatic improvement is often needed—not just in quality but in speed, cost, and innovation.

TECHNOLOGY IS A MAJOR DISRUPTOR

Technology—particularly in the form of information technology and intelligent computing—will increasingly be a major disruptive force when it comes to how, when, and where work is done and how it should be managed. Many previously repetitive, tedious tasks have been taken over by technology, and virtually all organization communication has changed dramatically as a result of such advancements. They will continue to have a major impact on when, where, and how work is done as well as what work is done. Already many individuals can and do work anywhere, at any time and, in many cases, with anyone.

There is also little doubt that we are just at the beginning of the information technology revolution. What people do, and when, where, and how they do it, is going to change dramatically and continuously over the next decades. How their performance is monitored and measured is also sure to change.

Organizations are increasingly going to need to be able to quickly change what they do and how, when, where, and how well they do it, as well as deciding who will be responsible for doing it. And they will need to change as technology makes certain products and services obsolete as well as the means of producing them. Just as no one sits at a typewriter today and prepares letters, in the future it is very unlikely that people will sit at a personal computer and send e-mails. It is inevitable that, increasingly, manufacturing tasks will be done by smart machines and by companies that globally distribute production based not just on labor costs but also on the quality and nature of the workforce, infrastructure, and technology in other countries.

Technology is driving and enabling the economy and organizations to use an increasing number of part-time and freelance crowdsourced workers who do work that has traditionally been done by full-time employees. The app economy is upon us, and it creates the opportunity for organizations to use various types of employment relationships that are flexible, adaptable, and can be driven by their changing needs for both skilled and unskilled workers.

Technology is impacting where and how work is done, and we are just at the beginning of this revolution. People will increasingly have the ability and all the tools needed to do many kinds of work and to connect with others around the clock and year round—virtually anywhere in the world. A key issue is how organizations develop a workforce, and how they coordinate and evaluate the performance of individuals who are not necessarily colocated but can communicate quickly and easily with each other.

Advances in computer hardware, algorithms, and data analytics will increase the work that machines do and migrate many kinds of work from individuals to technology-based operations. Intelligent computers are now capable of learning, playing complex games, responding to customers, and performing complex medical diagnoses and even some surgeries. This is an area where the rate of change is likely to accelerate as digital assistants are able to provide an increasing number of services in response to voice commands and IBM Watson–type computer systems are developed. In addition, the Internet is creating a world in which machines can connect and perform in ways that once required humans. Three-dimensional printing is changing manufacturing, and virtual reality is changing entertainment.

The challenge for organizations is to find the optimal balance between human-and machine-controlled operations and decision making. It is unclear how the new technologies will affect the total number of jobs that exist, but one clear outcome is that there will be fewer and fewer simple repetitive tasks, less human monitoring needed, and less supervision performed by managers. Another result will be that an increasing number of employees in complex organizations will be “knowledge workers” of one kind or another. Others will be talent that will be asked to work anywhere, at any time, on complex assignments that involve developing new technology and programming it. And more and more knowledge work will be done by computers as they develop more analytic and decision-making capabilities.

The best estimates tell us that organizations are just at the beginning of the disruption caused by changes in how, where, when, and with whom people work. Technology is moving rapidly in terms of the capability it has to solve problems, process data, learn, manufacture products, monitor activities, and connect people. Global organizations are likely to be leaders in the use of technology to increase their effectiveness in the areas of cost control, product design, production, marketing, sales, and internal operations. In order to do this they will need to be leaders in changing how they manage talent.

WORKFORCE DIVERSITY

In most organizations, many changes in the composition of the workforce have already taken place. These organizations’ workforces are much more diverse than they were just ten years ago, and there are many reasons to believe that we will see continued growth in their diversity; this is particularly true in developed countries that have laws against discrimination based on age, race, sexual orientation, gender, or gender identity. The growing emphasis in technical and management education on the inclusion of minorities and women is another major contributor to workforce diversity. The age range of the workforce is going to go up, the gender balance is going to shift, and the workforce is going to include more transgender and ethnic minority people. Overall, most organizations will have increasingly diverse workforces with respect to every important characteristic of human beings.

Different age groups think about careers, and the features of organizations, in different ways. This seems to be a product of not only aging and maturation but also of the reality that people from different generations have different experiences at any given age. As a result, they look at work differently at any given point in time. Every new generation is likely to think, act, and look at work and careers differently when compared to how previous generations did when they were that age, because the world is in a constant process of change.

Organizations are just beginning to feel the full impact of age discrimination legislation and increases in life expectancy. These factors are leading more individuals to continue working into their seventies and eighties, and to a workforce that has more age diversity. This is likely to become even more common as health care delivery systems improve and people have longer life expectancies—particularly in lessdeveloped countries as their health care systems improve. Another contributor to longer work careers is likely to be the need to earn enough money to “afford” retirement.

Organizations can no longer assume that they are dealing with a homogeneous group when it comes to the many features of individuals that are age related. They need to be able to manage and organize adults of virtually all ages.

Overall, organizations must be able to manage individuals that differ in age, gender, race, sexual orientation, and national origin. As a result, there will be very few organization and talent management issues for which there is an effective “one size fits all” approach.

SUSTAINABLE PERFORMANCE

The demand that organizations perform well has expanded over the last several decades in the sense that it is not enough for them to improve solely in terms of the quality of the products and services they produce and their financial performance. They are increasingly being asked to perform better in how they impact the environment, the society in which they operate, and their employees.

The social movement that demands that organizations perform better in the social and environmental areas has gained considerable momentum in the past decade and will continue to do so. It has resulted in new laws involving pollution and how employees are treated. Not surprisingly, it is putting the greatest amount of pressure on organizations in developed countries. They are under pressure to change the way they operate and to change the way their suppliers and subsidiaries in developing countries operate and do business when it comes to their impact on the environment and how they treat their talent.

As the world becomes more conscious of the importance of sustainable corporate performance, there is little doubt that corporations will increasingly be held accountable for their global impact on the environment, their employees, and the societies in which they operate. The demand that corporations meet what are often called triple-bottom-line standards and report on their performance is growing. As of yet this is certainly not being undertaken by a majority of the corporations in either the developed or the developing world, but there is significant movement in this direction.

Prime examples of organizations moving toward triple-bottom-line performance accountability are Google, Starbucks, and Unilever; they are ahead of the curve and showing some positive results. The more successful they are, the more pressure there will be on other corporations to follow their lead and perform well in all the areas of corporate sustainability.

ACCELERATING CHANGE

The changes discussed thus far in globalization, diversity, technology, and sustainability point to a very strong and important point: the rate of change is likely to continue to be rapid and increasingly disruptive with respect to traditional models of how organizations are designed and how they manage their talent. Most of our models of talent management and organization design assume a stance toward change that is episodic—that is, they argue for an analysis of the situation, an implementation of changes that are needed, and a period of stability until the next period of change needs to occur.

It is now well established that the traditional change model is no longer appropriate because it operates too slowly. What is needed instead is a continuous change approach in which organizations are agile and capable of constantly changing the ways in which they operate. They cannot rely on periods of stability during which they can perfect recent changes and plan for the next ones. Rather, they need to be constantly experimenting and changing what they do and how they operate in order to respond quickly to the rapidly changing environments they face. To do this they must have talent management practices that support experimentation, agility, and change.

TALENT IS CRITICAL

For decades, many chief executive officers (CEOs) and senior executives have said that talent is their organization’s most important asset. In fact, this may not hav...