David G. Collings outlines key factors which can effectively develop global talent management systems to drive sustainable performance based on his own experience with multinational organisations.
Talent management is widely recognised as a key priority of CEOs globally. For example, CEOs regularly report spending an average 20 percent of their time on talent management with most considering talent management that is too important to be left to HR alone.1 Indeed, more recent study of US CEOs identified their key priorities as talent, operating in a global marketplace, and regulation and legislation.2
Given this focus, one might expect that large multinationals have developed highly efficient and effective global talent management systems which contribute significantly to sustainable organisational performance. However, this is rarely the case. Studies regularly identify a lack of sufficient talent pipeline as a constraint on the ability to grow the organisation and deliver on strategic priorities. For example, PwC’s 2016 Annual Global CEO3 Survey found that 72% of CEOs identified availability of key skills as a major worry. Similarly, one might expect that this prioritisation of the talent agenda is reflected in highly diverse senior leadership teams with significant international experience in multinational organisation’s senior leadership teams globally. However again this is rarely the case. PwC also found that fewer than 3 in 10 incoming CEOs had international work experience. This is consistent with research in the US context over two decades ago suggesting that the situation hasn’t improved greatly over that period.
Our experience in working with multinational organisations globally has led us to conclude that one of the key constraints on the development of effective global talent strategies is a failure to develop a shared understanding of what global talent management means for the organisation concerned. This means that while the rhetoric around the importance of global talent management is pervasive and compelling senior leaders and HR teams have failed to develop a shared understanding of how to operationalise global talent management. Indeed, a study by the Boston Consulting Group reinforced the idea that talent management was one of the key priorities for the HR function looking forward but worryingly the one which they felt least prepared to deliver on.4
Based on our experience working with organisations who are working on driving the talent agenda, my colleague Kamel Mellahi at Warwick Business School and I have developed a framework which can help organisations in developing an effective global talent management strategy and delivering on the global talent agenda. I outline the key implications of this framework for global talent management below.
Global Talent Management Defined
As noted above one of the key challenges facing organisations in delivering on the global talent agenda is the failure to develop a shared understanding of what talent management means in a particular organisational context. Our framework of global talent management is based around three key processes:
1. The systematic identification of the key positions that differentially contribute to an organisation’s sustainable competitive advantage
2. The development of a talent pool of high performing and high potential incumbents to fill those roles on a global scale
3. The development of a differentiated human resource (HR) architecture to facilitate the filling of positions with the best available incumbents and to ensure their continued commitment to the organisation.
I will now outline the key implications of this framework for the design of global talent strategies.
Key Positions Before Key People
Much of the earlier thinking on talent management was influenced by the McKinsey work on the War for Talent. This report and the subsequent book identified an innate focus on talent from the top to the bottom of the organisation as a key differentiator between high performing organisations and their lower performing counterparts. Central to the perspective was a focus on identifying the highest performing employees in the organisation – the A players. Approaches such as forced performance distributions, pioneered by Jack Welch at GE, were premised on continually improving performance with an aim of loading the organisation full of A players and managing C players – the weakest performers – out of the organisation. However, those organisations that place too much focus on hiring stars often fail to invest enough in thinking about how this talent can be strategically deployed within the organisation.
Our approach, argues that strategically A players are not required in all positions in organisations.5 In fact, there are many positions where A players have limited potential to generate value and hence they become an under-exploited or wasted resource. We advocate the identification of critical positions within the global organisation which have the greatest potential to generate value as key. These roles are defined by their centrality to the organisational strategy and by significant variation in performance or output between an average performer and a top performer in the role. So for example a corporate function such as marketing in a multinational may have a limited impact on the multinational’s overall performance. In contract variations in sales managers at a subsidiary located in a subsidiary located in the multinational’s fasting growing market may have significant potential to impact on the performance of the firm as a whole.
This approach contrasts to traditional approaches of ranking jobs which tended to emphasise the inputs required to do a job, such as qualifications or experience, to determine which were more important. Our approach emphasises a focus on the potential to generate value and differentiate performance – in effect output – to rank jobs. Such critical roles tend to account for approximately 20 percent of roles in organisations.
The key implications for global talent management include a requirement to identify the critical roles within the organisation on a global scale. Further it reinforced the idea that strategically it is inefficient to load all positions within the organisations with A players. The reality is that by doing so the organisation will greatly increase its cost base and the result will be a sense of under-employment and frustration amongst those high performers who are in non-critical roles. The second element of our model brings the talent to the fore in considering the role of high performers and talent pools on the multinational’s performance.
The Talent Pool
Fundamental to a talent pool strategy is approaching a multinational’s talent pipeline similar to how it approaches its supply chain.6 This means developing a strategy around mitigating talent risks around both the type of talent required in the organisation moving forward and also the number of talent required in different parts of the multinational’s global organisation. In large multinationals it is the norm to have multiple talent pools. Such talent pools can focus on leadership talent or technical talent and more developed talent systems recognise the distinctive focus of technical talent pools.
There are two key inputs to the design of talent pools. The first is an understanding of critical roles on a global scale. Clearly such an analysis should inform the understandings of the talent focus within talent pools and as noted above these can often be technical as well as leadership roles. Secondly, effectively designed talent pools should be informed by the multinational’s growth plans. We encourage the organisations we work with to include talent questions into their scenario planning around organisational strategy. So for example, in planning for the projected future scale of the organisation, geographic expansion or contraction and product or service focus are the implications for talent given adequate consideration. Specifically, what are the implications on the knowledge, skills and abilities likely to be required, what are the implications for headcount, and what are the implications for the geographic location of talent.
a global scale.
By considering these inputs organisations can design talent pools to meet the future leadership and technical capabilities required. From a leadership perspective it is likely that multinationals will plan for senior leadership talent on a global scale. To be considered effective one would expect the talent pool to comprise of high performing and high potential incumbents who reflect the global footprint of the multinational operations. The multinational should then focus on developing the members of this talent pool in the wider global context of the organisation in an effort to increase their global management capabilities and their understanding of leading on the global scale. The premise is that when a senior leadership role becomes open in the multinational the successor will be selected from this talent pool based on the requirements at that point in time. This is a much more fluid approach to leadership succession that the traditional notion of names on an organisational chart. The latter is suited to a relatively stable environment and indeed organisations such as GE were known to have succession plans 30 years deep in the past. Clearly in the current dynamic environment such a static approach is likely to be ineffective.
While such senior leadership talent pools are likely to operate on a global basis, it is quite likely that lower to mid-level leadership talent pools may operate on a regional or national basis. The are are a number of key challenges to the operation of such talent pools however. These include the fact that talent is not always mobile. Indeed, organisations regularly report the challenge of persuading individuals to take on international roles in light of dual career or family issues combined with the fact that global assignments are generally not as financially lucrative as they have been historically. Further it is well documented that individuals often face significant challenges in transitioning into work roles in new cultures.
Differentiating your HR Architecture
The final consideration in the design of global talent systems is targeting the HR system for these talent appropriately. To return to the example of international assignees surfaced above, research consistently indicated that up to 20 percent of international assignees leave their organisation within a year of returning from an international role, with a further 20 percent leaving within year two of returning. One key explanation for this is that organisations have generally been slow in integrating global mobility programmes with talent management. Hence international assignments are rarely aligned with career plans for the individual concerned. This means that for many, the end of an international assignment leads to a frustrating holding pattern from a careers point of view.
More broadly, the differentiating HR in light of global talent programmes is about prioritising investment from an HR perspective into those roles and the individuals in the talent pool who are delivering the greatest impact for the organisation. One way of thinking about this is if an organisation has an extra 10 percent to invest in development, does it spread the investment evenly or disproportionately in those individuals and roles? Our framework advocates the latter. Key in designing effective HR systems from a talent perspective is understanding the priorities for those individuals. Research would suggest that factors such as doing meaningful work, involvement in high profile projects and assignments with exposure to senior leadership, investment in their development, and control over work life balance all emerge as examples of priorities in this regard.
While global talent management is clearly a priority for the C-suite and HR leaders alike, the evidence suggests that many multinational organisations struggle to manage global talent effectively. Our research points to a poor understanding of how global talent management in defined and operationalised is a key barrier in this regard. We have demonstrated how beginning by beginning with an understanding of critical roles is a key platform for managing global talent effectively. Thereafter the development of global talent pools is a key step in managing the global talent pipeline and mitigating the key risks that might emerge in global talent management. Finally, we advocate a differentiated approach to managing talent with a disproportionate investment in those roles which are predicted to generate the greatest sustainable value for the organisation. Clearly there are a number of challenges which organisations need to navigate in managing the complexity of global talent. However, our experience in working with organisations suggests that developing a shared understanding of how global talent management is defined and operationalised provides the basis to advance the global talent agenda.[/ms-protect-content]
About the Author
David Collings is Professor of HRM at Dublin City University Business School. In 2014 and 2015, he was named as one of the most influential thinkers in the field of HR by HR Magazine. He researches and consults widely in the fields of talent management and global mobility.
1. Economist Intelligence Unit 2006. The CEO’s role in talent management: How top executives from ten countries are nurturing the leaders of tomorrow. London, The Economist.
2. Boris Groysberg and Katherine Connolly (2015) The three things CEOs worry about the most. Harvard Business Review, available at https://hbr.org/2015/03/the-3-things-ceos-worry-about-the-most
3. PwC (2016) Annual Global CEO Survey 2016. London, PwC.
4. BCG (2013) The future of HR in Europe: Key challenges through 2015. London, BCG.
5. See also John Boudreau and Peter Ramstad (2007) Beyond HR: The new science of human capital. Harvard Business Press; Brian Becker, Mark Huselid & Dick Beatty (2009). The differentiated workforce: Transforming talent into strategic impact. Harvard Business Press
6. Peter Cappelli (2008) Talent on Demand, Harvard Business Press.