Six Principles of Effective Global Talent Management

In the lofty quest of discovering the “best” practices in recruiting, developing, engaging, and retaining the right people, a group of researchers from top business schools (INSEAD, Cornell, Cambridge, and Tilburg) has embarked on a comprehensive study involving  33 multinationals headquartered in 11 countries. I’d like to share their insightful, breakthrough findings were published in the winter issue of the MIT Sloan Management Review.

The findings indicated that competitive advantage in talent management did not just come from identifying key activities (e.g., recruiting, training). Rather, these researchers formulated six core principles the top-performing companies subscribed to that are in alignment with their core strategy and guiding culture. The fact of the matter is best practices are only “best” given in the context for which they were designed.

Two Views of Talent

The Differentiated Approach:

  • A plethora of companies placed heavy emphasis on high-potential employees. Much of the resources such as recognition, developmental opportunities and incentives were primarily reserved for “A Players” while fewer resources were allocated to “B Players” and “C Players” were aggressively weeded out who did not meet performance expectations and little potential. (This approach has been popularized by GE’s “vitality curve” which assesses the employee’s performance and promotability by ranking the employees into a 20-70-10 bucket.

The Inclusive Approach:

  • Some companies preferred a more inclusive approach to address the needs of employees at all levels of the organization. At Shell, they focus making it possible for any individual to maximize their strengths. Under the inclusive approach, the tactics are used for different groups’ assessment of how to best leverage the value that each group of employees can bring to the company.

Throughout the research it shows that the two philosophies are not mutually exclusive. In fact, dependent on the specific talent pool, there will usually be different career paths and development strategies. This hybrid approach encourages differentiation.

Principle 1: Alignment with Strategy

First and foremost, talent management starts with corporate strategy. The key question one must ask is  “With the overarching strategy, what type of talent do we need?” The researchers talk about their experience interviewing GE whose growth strategy is based on five pillars: technological leadership, services acceleration, enduring customer relationships, resource allocation and globalization. In order to achieve this, CEO Jeffrey Immelt understood that it was critical placing the right person on the right seat on the right bus. Through the annual organizational and individual review process, they thoroughly reviewed the business’s engineering pipeline, the organizational structure of its engineering function and an evaluation of the potential of engineering talent. The insight from the review emerged an underrepresentation of senior managers. This galvanized the company to move more engineers into the GE’s senior executive band.

Principle 2: Internal Consistency

Talent management practices cannot operate in isolation. Internal consistency means that its practices must fit in with each other. The studies show that if an organization invests significantly on high potential individuals, it should at the same time emphasize employee retention, competitive compensation and career management. These alignments will have a synergy effect.

Principle 3: Cultural Embeddedness

A major source of sustainable competitive edge originates from the company’s culture. By making conscious efforts integrating the core values and business principles into talent management processes such as hiring methods, leadership development activities, performance management systems, and compensation and benefits programs. Some companies who have traditionally focused on job-related skills and experience to find the right people are including cultural fit as key selection criteria. By assessing the candidates personality and values’ compatibility of corporate culture will help predict performance and retention. They say that skills are better and easier to develop than personality traits, attitudes, and values.

IKEA, the Sweden-based furniture retailer, for example, selects applicants using tools that focus on values and cultural fit. Its standard questionnaire downplays skills, experience or academic credentials and instead explores the job applicants’ values and beliefs, which become the basis for screening, interviewing, and training and development. Later, when employees apply internally for leadership positions, the main focus is once again on values in an effort to ensure consistency. IBM likewise subscribes to a strong values-based approach to HR. Not only does IBM hire and promote based on values; it regularly engages employees to ensure that employee values are consistent throughout the company. It does this through “ValuesJam”11 sessions and regular employee health index surveys. The jam sessions provide time to debate and consider the fundamentals of the values in an effort to make sure that they are not perceived as being imposed from the top.

 

Rather than selecting employees for attitude and culture fit, a more common approach to promoting the core values of an organization come from secondary socialization and training. Samsung Electronics has specially geared its training program to provide employees worldwide with background on the company’s philosophy, values, and management principles.

 

Principle 4: Management Involvement

Talent management needs to go beyond the ownership from HR, but by managers in all levels including the CEO. The various talent management process including recruitment, succession planning, and leadership development ought to be a strategic imperative. P&G’s former CEO A.G. Lafley claims that he used to spend one-third to one-half of his time developing talent. He was convinced that “nothing I do will have a more enduring impact on P&G’s long-term success than helping to develop other leaders.” However, in most companies, this is rare to find. In fact one company from a U.S. Fortune 200 company lamented that “creating  a true sense of ownership among the senior leaders regarding their roles as “chief talent officer”; recognizing that having the right people in critical leadership roles is not an HR thing or responsibility, but rather, it is a business imperative and must be truly owned by the leaders of the respective businesses/ functions…Creating this type of mindset around leadership and talent is the biggest challenge I face.

One of the most powerful tools companies use to develop leaders is to involve line managers. This means getting them to play a key role in the recruitment of talent and then making them accountable for developing the skills and knowledge of their employees.

Principle 5: Balance of Global and Local Needs

Companies operating in multiple countries need to respond to both local demands while having an overarching, coherent HR strategy. A company’s decision about how much local control to allow depends party on the industry. For example, consumer products need to be more attuned to the local taste than pharmaceuticals or software. The studies indicate that many companies are moving toward greater integration and global standards while simultaneously continuing to experience pressure to adapt and make decisions at local levels.

Principle 6: Employer Branding Through Differentiation

To attract top talent means having a compelling value proposition for the people who wants to work for the organization. P&G for instance was in one year able to attract about 600,000 applicants worldwide where only 2,700 were hired by emphasizing opportunities for long-term careers and internal promotion. Another way companies are trying to get an edge on competitors in attracting talent is by stressing their corporate social responsibility.