Managing talent comes to executive fore

by 13 May 2008

Managing talent is the most critical HR challenge worldwide and will remain at or near the top of executive agendas in every region and industry for the foreseeable future, according to a recent global study from The Boston Consulting Group.

The study of 4741 executives across 83 countries and markets found that nearly half of executives expect their companies to source talent globally by 2015, compared with just a fifth of companies that did so in 2007.

Similarly, executives across the Pacific Region said that the inability to attract talented employees could be the biggest limitation on Australia’s economic growth.

“Local competition for talent is already tight, and executives expect increasing global competition for talent. Against this backdrop, attracting and retaining talent emerged as the predominant theme in the survey and throughout the interviews,” the report said.

There are a number of lessons for both executives and HR in the face of a talent-strapped market, says Andrew Dyer, global leader of Boston Consulting Group’s organisation practice.

“People costs are greater than any other source of costs,” he said. Yet, he said, the strategies developed by executives often took a cost perspective when it came to people rather than a value perspective.

“There are discussions about productivity and there are discussions about cost. Taking this to the next level, the discussion should be about how you can take your people and build new skills and capabilities in them and then make sure they are in the right places to execute on your strategy,” Dyer said.

“You need to make sure they have the skills [and determine] whether they’re embedded in the line and managing frontline talent or managing key activities which are undertaken centrally.”

Dyer believes that if people are the largest cost within business, it is imperative to align business leaders, the enterprise leader and the HR team. “This alignment can make the difference between ordinary performance and extraordinary performance in a business,”he said. “This also places new expectations on HR.”

However, he warned that when talent and leadership skills were scarce, businesses could not rely on just HR to be responsible for how people were engaged and performing. “It needs to be a line management function. Arguably, people issues are something that most leaders should spend at least 50 per cent of their time on.”

HRs future challenges

Rather than having a big HR department that controls everything, Dyer said, HR’s ability to bring skills to line managers will be critical to the future success of organisations. “Part of all of this is learning to define standards; learning to cultivate and develop and transfer some of their HR skills into line executives.”

At the same time, HR needs to oversee basic transactional activities, according to Dyer, such as managing the employee skills database and payroll, ensuring that performance management systems are working appropriately and working out remuneration structures.

These duties may reside centrally or with the HR department, and he said that HR could expect tension as it was stretched between more traditional work and skilling up line managers. “The long and the short of it is, it will get more complex,” he said.

“If we look at the globalisation of many Australian enterprises and the forces which we are subject to, competitive success over the next decade is going to require a materially larger commitment to building skills and capabilities in people and building leadership skills and capabilities inside organisations.

“A lot of HR people are focused on getting enough people in the door and doing the basics with them. We would argue that there’s a whole lot of affiliation, personal development, fit with the organisations goals, objectives and values that are going to require a lot more effort and a lot more focus,” Dyer said.

How Australia compares

Dyer says the Australian marketplace has some unique challenges and, as a result, Australian HR professionals have a number of unique strengths.

“I would argue that Australian HR professionals are very good at managing multiple groups of labour and talent in organisations. We’re managing a very big part-time workforce, and we manage contract workforces as well as full-time workforces.”

HR is also increasingly learning to manage workforces which are on the other side of the world, or owned by someone else but contracted through an outsourcing arrangement. As such, Dyer said that many Australian HR professionals are also skilled at managing pools of labour with disparate social and economic backgrounds.

“This is different to Europe, which has more stability with older style industries and a larger blue-collar workforce relative to the professional workforce,” he said.

“I would argue that some of their HR professionals there are very good at coming up with creative solutions to transfer knowledge between older workers and newer workers, or extending the time horizons of all the workers to remain inside organisations.”

Within the US and very large global businesses, Dyer said, HR has tremendous skills in building the skills of leaders who can lead virtually in a 24/7 environment and understand the forces at work that shape the success of a business.

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