Talent Management in the Developing World

Adopting a Global Perspective

Joel Alemibola Elegbe

• Publisher: Routledge
• Year: 2016
• Print ISBN: 9781409418139
• eBook ISBN: 9781317046868
• Edition: 1
• Topic: Business
• Subtopic: Business generale
• Index: Business

Economic and political reforms and globalization in the developing world have led to the emergence of companies that are expanding beyond their national borders into the international arena. The transformation into multinational corporations is generally not accompanied by a change in the way they manage their talent. There is a disconnect between globalization and talent management. Yet the most effective and sustainable source of competitive advantage is talent. Talent Management in the Developing World explores how the policies, systems and procedures that have been successful within national boundaries are inadequate to meet the value propositions of completely different and diverse people working in different countries, cultures, legal and socio-economic environments. In fact they may be dysfunctional to talent management. Using the perspective of the developing world, Dr Elegbe outlines the shift in paradigm and practice that is required if organizations are to develop a sustainable talent management strategy in these countries. A global approach to talent management assures competitiveness and sustainability of success in the international environment but change will not happen until line and HR managers see its urgency and criticality. That is the endeavour of this book.

1
The Challenge of Talent Management

Talent Scarcity – The Global Scenario

No subject in the past 15 years has received as much attention in the human resource management literature as ‘talent management’. There is a cavalcade of literature produced by eminent scholars and experts like Ulrich (1989, 1996, 2005), Pfeffer (1998), Woodruffe (1999), Barner (2000), Michaels, Handfield-Jones and Axelrod (2001), Pucik (1996, 2005,) Sullivan (2004a), Meisinger (2009), Berger and Berger (2004), Rothwell (2005), Lawler III (2008) and Cappelli (2008) on what organizations should do to attract, hire and retain talent. Based on his wealth of experience, Welch in his book, Winning (2005), has also written about the practical approach to hiring, developing and retaining great people. All the literature recognizes that talent provides companies with a competitive advantage, and it shares a common concern not only that talent is scarce, but also that most companies are not doing enough to manage and retain what they have. As the greatest source of competitive advantage for any organization, (Pfeffer, 1998), human resources deserve the attention and time of managers more than any other organizational resource or asset. This chapter attempts to define the scope of the war for talent, explains what talent and talent management actually mean and identifies the cause of the talent scarcity, particularly in Africa despite its high rate of unemployment. Finally, it provides a synopsis of the subsequent chapters in the book.

The concern about the scarcity of talent is almost universal. In 2005 the Aberdeen Group and Human Capital Institute carried out a research survey which covered ‘170 human capital management professionals and executives’ who are members of the Aberdeen Group and Human Capital Institute’s global online communities (2005: 11), as well as executives in human capital management in North America. According to the survey’s findings, 57 per cent of companies cited the inability to both get the talent needed and address talent requirements over the next five years as their top overall challenge. In addition, 79 per cent of the companies stated that their chief concern was continuity in executive leadership for the future, while 61 per cent were concerned about the potential cost of disruptive succession from one leader to another. The study also revealed that 71 per cent and 65 per cent of organizations had formal retention plans for executive and mid-level management staff respectively, but 60 per cent of respondents viewed their retention programme as ‘haphazard at best, and heavily reliant on paper files and manual efforts’ (Aberdeen Group and Human Capital Institute, 2005: 5–7). Another survey conducted in 2005 of human resources executives from 40 countries around the world revealed that virtually all the executives indicated that they had ‘an insufficient pipeline of high potential employees to fill strategic management roles’ (Ready and Conger, 2005: 69).

Barner (2000: 337) cited a study conducted by Elizabeth Chambers and Associates, which found that only 10 per cent of the 6,000 respondents reported an ability to retain the large majority of their high performers. Clearly, the number one people-related issue is the retention of high performers. Dychtwald, Erickson and Morison (2006) noted that there were too few young workforce entrants to replace the labour, skills and talent of baby-boomer retirees. The loss of skills and experience threatens the performance of many corporations.

Workspan, a magazine of WorldatWork, corroborated this view by stating that finding talent during the years ahead would continue to be difficult particularly in highly specialized areas such as finance and accounting. It noted that a worldwide survey conducted by Deloitte with the Economic Intelligence Unit revealed that 67 per cent of respondents from the Asia-Pacific region claimed that the current supply of finance talent was either limited or inadequate. This view was supported in the same survey by 54 per cent of CFOs from Eastern Europe, 53 per cent from Asia-Pacific, 52 per cent from Western Europe and 47 per cent from North America (News Notes, 2007: 11). The challenge is global and has been compounded by the fact that companies are currently facing the departure of the baby boomers from the workforce. High rates of turnover attest to the challenge in retaining talent in various occupations.

According to Axelrod, Handfield-Jones and Welsh (2001: 1) of McKinsey, a study of 4,500 senior managers and corporate officers revealed that 89 per cent of those surveyed thought it was more difficult now than in the past to attract talented people, and 90 per cent thought it was more difficult to retain those hired. A survey conducted by Howard, Scott and Bruce (2007: 1) revealed that competition for talent had increased since 2005, and that 79 per cent of the survey respondents expected it to heat up even more in 2007. It said the war for talent was hot and getting hotter. The same report showed that the toughest competition was for executives followed by mid-level managers and professionals. The Newsline of WorldatWork (2008a) noted that 86 per cent of British organizations were finding it difficult to fill their vacancies despite the economic slowdown.

The demographics, especially in the United States, reveal a compelling reason why organizations must strive to retain their good people. According to Lebovits (2005), the US Bureau of Labor Statistics estimated that, by 2010, the United States would have a shortage of 10,033,000 workers. Cadrain (2008: 23) noted that the Bureau of Labor Statistics had indicated that, in 2005, one in four US workers was over 50 years old, but, by 2012, it would be nearly one in three. The situation might be further complicated by the fact that with the growing economies in Asia – India and China in particular – large numbers of immigrants may be returning to their homelands where salaries are becoming very competitive and the cost of living is comparatively lower than in the United States. The attraction to their countries is further reinforced by the natural desire to return to their cultural roots and contribute to the development of their homelands.

Unlike other writers and commentators on the war for talent, who are concerned about shortages of local talent within a particular country or region, Sullivan (2004b) is concerned about a truly global talent war. He calls it ‘Worldwide War II’ for talent. Sullivan believes that instead of fighting for talent primarily within the home country, firms will in future fight to attract and retain the very best in every region around the globe. Global competition is increasing because firms are becoming larger due to mergers and acquisitions. As firms expand their operations into foreign countries they naturally seek and hire experienced people working in other firms. Telberg (2007) also notes that all businesses which operate on a global scale face a talent shortage and that a survey of 32,000 employees across 26 countries, conducted by Manpower, found that the shortage in professional talent was undermining opportunities for growth worldwide.

Certain conclusions may be drawn from this literature review on talent scarcity. First, there is a high demand for, but a low supply of, talent in the labour market. In the information age there is an exponential demand for knowledge workers. Second, all organizations are seeking the same kind of talent very aggressively, and are employing a variety of strategies to attract and hire, or even poach, great people from competitors. Organizations must therefore develop counterstrategies for dealing not only with external ‘pull factors’ which attract organizations’ talent, but also with internal ‘push factors’ that tend to make talent leave for other organizations.

Third, the war for talent is becoming global and is no longer localized in individual countries. Managing talent is a challenge to all organizations in the context of globalization irrespective of the country. As will be demonstrated later, many poor African countries have lost some of their highly skilled professionals to the United States, Canada, France, the United Kingdom, Australia and the Gulf States. Fourth, it is fatal to assume that the recruitment drivers that enable an organization to attract and hire talent will also enable it to engage and retain the talent. Recruitment drivers are very different from the drivers that keep employees motivated, committed and highly engaged in an organization. Finally, talent management is a business imperative. It is a process and not a product; a journey and not a destination. It is strategic, dynamic and must be driven by top management but owned by all levels of management. It must be holistic and inclusive in the sense of encompassing all functions and levels of the organizational hierarchy.

What Constitutes Talent?

In 1960 an unknown athlete by name Abebe Bikila, a corporal in the Ethiopian army, lined up barefooted for the marathon at the Olympic Games in Rome. His co-contestants must have giggled at the African athlete and apparently regarded him as a jester to think he could compete in the race barefooted. Abebe Bikila amazingly won the race in 2 hours 15 minutes 16 seconds, breaking the world record at that time. The secret of his success was that he had a talent in athletics. Four years later, Bikila won gold again at the Olympic marathon in Tokyo.

Talent has been defined in different ways. It generally refers to mental power, a natural endowment, an aptitude, ability, a natural capacity or a special gift. What is common to all these definitions is that talent is not acquired but inborn, and a person either has it or does not. Someone who has a talent – for example, in music, dancing, acting or sport – stands above the rest of the population in the sphere of his talent. The possession of a talent alone does not make the possessor great; it is the development and utilization of the talent that makes them achieve extraordinary results. It is thus argued that those who have talents are under a moral obligation to develop and use their special gifts for their own benefit and that of their society.

A problem with these definitions is that there is an assumption that people who have talent will perform exceptionally in all situations. But this is not true of any human being. Talent cannot be meaningfully understood without reference to its relationship with the environment or context of the individual. Talent is specific to situations. That implies that no matter how talented an individual may be, he or she may never be successful or effective if the environment is not conducive or appropriate for the utilization of the talent. Talent has to be socially defined because it can only be understood to exist through behaviour. Barab and Plucker (2002) noted that the existence of a talent is manifested through behaviours that are consistent with ways that are socio-culturally defined and endorsed.

Every talent is relevant to a given situation or role. While a musical talent will be most appropriate to an orchestra, it may not be suitable for an IT function. An artistic talent may be most useful in architecture or sculpture but completely irrelevant to an accounting function. Every role has a corresponding talent. The incumbent of a role who has the pertinent talent makes a great employee or leader while those who do not have it make, at best, average leaders. Nurses who have empathy make better nurses than those who do not possess that talent. No individual can be a great soldier or firefighter without the talent of courage. Talent is therefore of no value if it is not matched with an appropriate role. The challenge which executives face in selecting candidates for positions or preparing their successors for future leadership roles is to determine the talents that are appropriate to the roles.

There is no universal definition of talent that is applicable in all organizations. In general, those who are regarded as ‘talent’ provide a firm with a competitive advantage. It is their abilities, skills and commitment that determine the long-term success of their organizations. However, organizations recognize the fact that every employee cannot be a talent. Talent is sometimes used as if it is synonymous with hot or scarce skills. In other instances, it refers to leadership capability and yet in others it connotes knowledge workers. Despite the variety of definitions, a common denominator is that individuals who have talent have technical capability and leadership ‘potential’ to contribute significantly to the effectiveness of their organizations.

The Towers Perrin survey (2006) considered the following groups to be ‘talent’:

• senior leadership

• mid-level employees with leadership potential

• key contributors or technical experts

• entry-level employees with leadership potential.

These groups are estimated to constitute about 15 per cent of the total workforce. We operationally define talent to mean individuals who have skills, competencies and abilities to make an impact on organizational effectiveness now and in the future through their contribution, performance and high level of potential. Talent is not required for its own sake. It is a business imperative; hence classical economists refer to human resources (labour) as a factor of production.

Talent Management

Talent management means different things to different organizations. To some, it refers to the process an organization adopts for managing those with scarce or hot skills or recognized as having exceptional technical or managerial abilities. Yet others define it in terms of how they manage all their human resources irrespective of the worth, status and capabilities of each individual employee. Following a survey of 518 people and subsequent review by a panel of experts, the American Society for Training and Development in collaboration with the Institute for Corporate Productivity adopted the following definition:

… a holistic approach to optimizing human capital which enables an organization to drive short and long-term results by building culture, engagement, capability, and capacity through integrated talent acquisition, development, and deployment processes that are aligned to business goals. (Cited in Paradise, 2009: 68)

Talent management is therefore not merely a process of managing physical human bodies or disparate human resource management processes and systems, but rather an integrated and comprehensive approach to managing the abilities, competencies, skills, needs, concerns, careers, fears and expectations of the people that an organization values and needs to make it great and highly effective. Successful talent management is driven by a ‘talent mindset’ in which every manager in a firm regards talent management as their business and not the sole responsibility of the HR department. Whatever the conception of talent management by the various organizations, in general it is a process by which an organization hires, engages and develops its most valuable resource. It consists of various interrelated components that are shown diagrammatically in Figure 1.1 as an integrated system.

Figure 1.1 Talent management system

The Etiology of the Talent War

While companies all over the world may express concern about the war for talent, it is important to note that the causes of talent scarcity in the developed and industrialized countries are not the same as those in the developing countries of Africa. According to Dychtwald, Erickson and Morison (2006: 4) three major factors are responsible for the growing shortage of talent in the United States, Europe and Australia. First, the baby boomers, born between 1946 and 1964, are reaching the traditional retirement age, and this is culminating in a ‘massive exodus of skills, experience, customer relations, and knowledge’. A second factor is what the authors refer to as ‘longevity boom’. Life expectancy is higher now than it was in 1900 when, at birth, life expectancy in the United States was 47 years. With good healthcare and quality of life practices, this has increased significantly to almost 80 years. Nevertheless, despite their longevity, there is a point at which people are no longer as productive as organizations may require.

A third factor in the ‘age wave’ is the ‘birth dearth’ – an unprecedented shift in the age distribution of the population. In the mid-1950s the average number of children per woman in the United States was 3.7. It has since declined significantly. Dychtwald, Erickson and Morison also noted that countries like Italy, Germany and Japan with fertility rates of 1.2, 1.3 and 1.4 respectively are now below the replacement rate of 2.1 children per woman. This situation portends an enormous implication for the size of the workforce in the future. Is this factor also applicable to African countries in view of the fact that the fertility rates in the continent are significantly different from those of Germany, the United States and Japan? For instance, the fertility rates in 2008 in the following randomly selected countries were as follows: Uganda, 6.77; Burkina Faso, 6.28; Mozambique, 5.18; Kenya, 4.56; Ghana, 3.68; Egypt, 3.05; and Botswana, 2.60. These rates are higher than the world’s overall fertility rate of 2.56 (Wikipedia, 2010a). While the developed countries have an ageing population because of extremely low fertility rates as noted above, Africa has a high fertility rate with the result that, in many African countries, young people constitute between 35 and 45 per cent of the population. By implication, a youthful population is a potential pool of talent.

A fundamental question is whether there is a scarcity of talent in Africa. This question is relevant for the following reasons. The unemployment rate in African countries is in double digits and can be as high as 30 per cent or more in some countries. Africa has a huge population, particularly of young people. Furthermore since the 1980s there has been a remarkable growth of tertiary institutions and in the number of graduates who are churned out annually in most African countries. For example, Nigeria’s first university was established in 1948 with a total student enrolment of 104 students. By 1963 there were five universities with a population of 3,646. Ten years later the country had six universities with a student population of 20,889 and by 1999 there were 39 universities with a student enrolment of 236,261 (Oni, 1999). According to Jibril and Obaje (2008: 1) the Nigerian higher education system had, as at 2008, a student enrolment of 1.4 million, and consisted of ‘92 universities, 57 polytechnics, 90 specialized colleges and monotechnics, and 72 colleges of education’. The first university in South Africa, the University of Cape Town, was established in 1892 followed by two others in 1904 and 1916 respectively. As at 2010, there are 23 universities and about 25 degree-granting institutions (Wikipedia, 2010b). Uganda has 27 universities and two degree-awarding institutions. The famous Makerere University was established in 1922, and no other university was established until the 1990s (Wikipedia, 2010c). The exponential growth of tertiary institutions is repeated throughout African countries over the last 20 years. In theory, many African countries, including Nigeria, Ghana and Kenya, should not suffer from a scarcity of talent; in reality, it is a veritable challenge in Africa.

It is the paradox in Africa that although the unemployment rate is high, organizations are complaining of shortage of talent. The African Association for Public Administration and Management (AAPAM) rightly observes that the continent has not been able to recruit and retain needed well-trained and skilled personnel due to several challenges which include, among others, poor compensation, and an uncompetitive working environment (AAPAM, 2008: 2). These factors translate into low institutional productivity and the migration of human resources. The Association concludes that institutional and human resource capacity limitations are among the most evident frailties of most African countries.

According to Gara (2007), there is a huge demand in Egypt for skilled professionals of all stripes, particularly those with technical or quantitative skills such as telecommunications engineers, information technologists, financial planners and investment bankers. Gara (2007) further observed that since the oil boom began in the Gulf region, the temptation for Egypt’s best and brightest professionals to take up more lucrative positions abroad has been strong. The exodus of highly skilled professionals to Europe and the United States is a daily occurrence in many African countries such as Nigeria, Ghana, Kenya and Ethiopia, and is largely responsible for talent scarcity.

Anekwe (2003: 1) noted that the Presidential Committee on Brain Drain in Nigeria estimated that between 1986 and 1990 Nigeria lost about 10,694 academics from tertiary institutions. In fact the total number of professionals who left p...

Table of contents

• Cover Page
• Dedication
• Title Page
• Copyright Page
• Contents
• List of Figures
• List of Tables
• Acknowledgements
• Preface
• 1 The Challenge of Talent Management
• 2 The Need for a Paradigm Shift
• 3 Strategies for Hiring Talent
• 4 A Guide to Talent Selection
• 5 Managing Employee Engagement
• 6 Getting the Best Out of Talent
• 7 The Challenge of Differentiating Talent
• 8 Succession Planning and Management
• 9 Developing Talent for Business Leadership
• 10 Making Talent Development Effective
• 11 The Role of the Human Resource Function in Globalization
• 12 Delta Steel Company – A Case Study of Talent Management
• Bibliography
• Index