Lecture 1: Talent in a Globalizing World

This lecture intends to establish the context required to appreciate the nature of people development and its contemporary importance in organizational and national settings.

Note; People Development is also known as HRD in some texts.

People development or HRD involves procedures and processes that purposely seek to provide learning activities to enhance the skills, knowledge and capabilities of people, teams and the organization so that there is a change in action to achieve the desired outcomes (see Bratton & Gold, Ch.10)

Context

The world of work and organizations is constantly evolving and as a consequence the ways in which organizations develop their people are also changing.

This evolution has occurred as organizations have changed in size, purpose, structure,

philosophy, work design, technology and relationships.

At the macro-level, people development has to be considered in the context of the broad paradigm shift to post-fordism, informational economy, enterprise culture & competitiveness, organizational restructuring, deregulation, labour

market flexibility etc (read Price, Ch.2 for the wider context)

Furthermore, people development has been examined in the context of learning and here the practice and purpose of training and developing people have grown in importance and scope.

The change in strategic pressures (briefly discussed later) for organizations have led to developments in training and learning technology, role of external consultants, new perspectives on knowledge and learning & an emphasis on individual responsibility for learning.

There have been two major shifts in the way learning and people development is managed & delivered;

- from training to learning – moving away from ‘instructor based’ activity to self-learning as a process

- from HRM to SHRM – making the strategic link between people development and achievement of organizational goals

The availability of more efficient and effective alternatives (e-learning, distance learning, individualized learning, coaching & mentoring, workplace learning) means organizations can plan for competitive advantage.

It should be noted that learning & development also involves creating an educated and skilled workforce for the effective functioning of the economy, the competitiveness and wealth of the nation.

It is predicted that the future will see a world of work based on skills (or talent) than organizations.

One key related area which has underpinned the shift to learning is the growing role of stakeholders in the process.

Stakeholders have varying degrees of power and influence, hold varying roles & values, use different approaches, have different aims and learning experiences.

The position of stakeholders has to be examined in a contextual and cultural sense where not only practices differ but also expectations.

Stakeholders are varied and they adopt or represent contesting viewpoints. Stakeholders can be employers, unions, employees, customers, institutions (local & international), the State, consultants, HR specialists, professional organizations, investors etc

The professional organizations (in HR – CIPD) are especially influential as they establish new parameters and approaches (see Beardwell & Clayton, P. 308-309)

In the past decade, investors have come to value an organization’s ability to attract and retain top talent in that sector or industry.

What is Changing?

Changing concepts of work and talent Global movements of talent and labour Changing concepts of space and time Commonality of problems and issues Convergence of business systems, marketing,

advertising and use of symbols, tourism, lifestyles Emergence of corporate –business cultures Global social movements Dominance of MNCs and governance institutions Rise of the flexible firm and atypical labour

The Search for Talent in a Globalizing World: Environmental Influences

- increasing competitiveness (hypercompetition)- globalisation of production & markets & power

shift to the customer- the diffusion of the informational or knowledge

economy- sustained advantage through talent(competitive

advantage)

It could be argued there is a shift for conceptual, higher level concerns such as human capital and corporate culture.

In this sense, treating employees as valued or ‘intellectual assets’ and coupling this with appropriate reward systems are used to maximise utilization of resources.

There is a focus then on the attitudes, beliefs and commitment of employees to achieve behavioural consistency.

In this context, HRD becomes strategic and proactive as recognizing & developing skills and knowledge is imperative to sustaining competitive advantage.

Guest (1987) advocates the following principles;

- integration of relevant employment into strategies and goals of firm

- high employee commitment to practices & goals- high quality staff & internal practices to achieve

high quality products & services

- flexibility in structure, employee functions & job content so as to be responsive to change

Other attempts to make the link between HR and business strategy usually emphasise the qualities required for advantage to be sustained;

- internal resources must add value to the firm’s activities

- they must be rare and preferably unique

- competitors should have difficulty in copying them

- they must be unable to be replaced by technology

The above criteria arise from human resources in the form of skills, experience and expertise (Storey, 1995 – see Price, P.158)

The concern for HRD does not arise from an altruistic concern for staff welfare but from a realistic appreciation of the long-term contribution toward business.

This aspect of ‘soft HRM” is linked with learning and development as an investment in human capital.

General Structural Issues in Delivery of PD Strategies

Commitment is lacking and uneven

Aggregate expenditures by business on training are inadequate (leading firms invest more – GE(4.6% of payroll)

Poaching is a disincentive for investment in training

Accounting rules which treat it as an ‘expense’ and not ‘investment’

However, in recent years, ideas & practices related to PD have moved beyond a narrow conception of training.

There is an emphasis on a holistic view – integration of work and learning (viewed by leading firms as the only strategy to cope with change

Strategy and People Development

In most formulations of HRM – employee development & learning form pivotal components.

The investment in the skills of employees serves as a ‘litmus test’ for meaning change (Ashton & Felstead in Bratton & Gold, P.318)

Of the bundle of HR practices required for a high performance strategy, PD has a pivotal role in the integration of practices to create an internal labour market with links to structure & strategy

The emphasis on teams in business strategy in turn warrants emphasis on ‘learning’ (next lecture)

With integration with business strategy in mind, there is a focus on recruiting staff for the long-term and the involvement of line managers in PD.

At another level, McGoldrick & Stewart (in Bratton & Gold P.319), identify ‘leadership’ as a key

variable in linking strategy, culture & commitment of employees.

The ILO model of ‘high-performance’ working also supports the ‘leadership’ view which would provide ‘vision’ & ‘sense of momentum’ and ‘direction’.

However, the results are mixed in practice & PD takes lower priority to marketing & financial matters (Bratton & Gold, P.321)

Forming PD Strategies

Identifying the relationship between PD and business strategy is simpler in theory than it is in practice. Frequently, PD is a matter of rhetoric. Torrington & Hall (in Price, P.161) categorise firms into five groups on their approach to PD;

1. no focus on PD in terms of strategy – mainly small firms

2. firms in which there is growing awareness of role of PD & its purpose is to match firm strategy so as to have a ‘fit’ in terms of employee numbers, skills etc

3. firms in which relationship becomes two way – some ideas are initiated by HR managers & there is some debate about the implications of PD strategies

4. firms where the PD strategy is accepted & people are seen as vital for competitive advantage. Strategies are coherent & comprehensive

5. firms where human capital becomes the driving force in the development of strategy – great emphasis on skills and competences

Where firms are genuine in their concern for their people, PD focuses on certain strategic sub-goals or second-order strategies (in Purcell’s terminology – see Price.P.162);

- resourcing for suitable people

- planning the redeployment of staff (or dismissal – depending on national context. The EU will be different from the US)

- determining the cultural characteristics relevant to a firm’s business objectives

- implementation would require planning for socialization, performance assessment, development & change programs to realise that culture

- developing key skills for new products or equipment – includes consideration for external-internal resourcing, training, formal education & job rotation.

As discussed earlier (see P.4) – Guest (in Price.P.162), advocates a circular relationship between high levels of commitment with high quality output to flexibility to strategic integration.

It could be argued that PD strategies are derived from overall business objectives in the same manner as investment or marketing strategies. But the difference lies in the notion of commitment.

Conventional management views advocate that employees accept and believe in a firm’s goals. And this is operationalised by the mission statement which communicates the goals.

To minimize the risk of such a statement being banal, conventional logic dictates that it is linked with some performance measures (performance management is a topic by itself)

The mission statement is also linked with ‘first order’ strategies (long-term focus, range of activities,markets, products) which has implications for PD – job security, career expectations, industrial relations etc

In this respect, Japanese firms have traditionally been successful in linking PD with business strategies with an emphasis on ‘people

principles’ – ranging from selection to flexibility to teamwork to single status (‘first class citizens’)

Evaluating Strategy and Action

The last part of this lecture briefly looks at the complications of translating strategy into action.It is sufficient for our purpose to summarise the key areas;

- the surface neatness of strategy hides complex organizational realities related to conflict, power, resources etc.

- in practice there are unintended elements surfacing – emergent strategies (Mintzberg)

- difficulty in integrating business strategy with PD owing to the diversity of processes, levels & styles – e.g., providing corporate HR strategies which can be reconciled with different needs of individual SBUs.

- Not all societies emphasise the ‘rational’ school of strategy formulation. There is also more diffuse, emergent or evolutionary methods in business planning.

- In some contexts, there is an absence of written business strategies esp. in smaller firms

- The ‘qualitative’ nature of HR & PD issues which contrasts with the quantitative nature of business plans.

References

1. Price, A (2001) Human Resource Management in a Business Context, Thompson Learning2. Bratton, J & Gold, J (2003), Human Resource Management: Theory and Practice, 3rd Edition, Palgrave3. Beardwell, J & Claydon, T (2007) Human Resource Management: A Contemporary Approach, 5th Edition, FT Prentice Hall.

Baldev S. Sidhu 2008