Human capital flow has never been so fluid. By the time you hire one person, another puts in his papers. Even as Indian companies seek to protect their people from international poachers, they are themselves looking abroad to fill senior-level vacancies.
As the human capital landscape across the world changes rapidly, Tim Ringo, the global leader of IBM's human capital management practice, believes organisations that have integrated, end-to-end talent management strategies, processes and technology will have lower attrition rates of top talent. Excerpts from an interview with Amit Ranjan Rai.
India and China are no longer just low-cost centres: the range and level of expertise and skills their workforces provide transcend pure cost advantages. Under the circumstances, how do you see the human capital landscape changing?
Yes, India and China are now a destination for talent from all over the world. This is a fairly recent development and demonstrates a transition and maturation of the human capital market in both these countries. This trend is driven by a tight talent market in these economies, which requires importing of skilled talent to meet the demand, particularly at senior levels.
In a few recent surveys I have seen, 40-45 per cent of major Indian companies are looking to other parts of the world for senior management talent. A few years ago, this demand could be filled mostly within the country.
The trend of importing senior level talent from other parts of the world will be a positive development for India and China, as this represents a great learning opportunity: some of the best, brightest and most experienced people are coming here for new challenges.
So, we are looking at a situation where Indian companies will compete not only with each other but also companies in, say, Hong Kong and Japan, for not just Indian but global talent.
Yes. In fact, this is already the reality. If the statistics are right, the Indian market for highly skilled talent is beginning to overheat. This creates a situation where too much time and focus gets placed on recruitment and compensation to get people in the door, and too little time gets focused on developing and positioning that talent for success once on board.
This leads to a situation where newcomers quickly become disillusioned as they see little opportunity for development and career advancement.
This issue also exists in the West, but not to the extent that it does in India at the moment, due to highly fluid and scarce pool of talent.
Attrition remains a major issue across sectors. Isn't it still about the money?
Some statistics I have seen in India show attrition on average across all industries is 25-30 per cent, with the BPO and ITES areas experiencing levels of upwards of 45 per cent. This is significantly higher than in Western economies at the moment. Now, some of this can be put down to a rapidly-growing economy and a vast number of opportunities for those with the right skills.
However, I would say that most of this is down to the overemphasis on recruitment and compensation and an underemphasis on the other elements of talent management, namely performance management, learning and career development of top talent.
In most surveys, you will see that money tends to be third or fourth on the list of importance for highly skilled individuals, and that career development/advancement, learning, and clear objective and metrics, tend to be first, second or third. So, this begs the question, is too much focus on recruitment and compensation missing the point, and causing high attrition rates?
I would argue this is the case. Given that the data shows a focus on recruiting, Indian firm appear not to be fully delivering on the important factors that keep people in an organisation. This could be a leading cause of attrition in our experience.
Despite firms increasingly investing in programmes aimed at retaining talent, the results don't seem satisfactory.
Yes. Globally, there is an increase in investment in these areas to support development of talent and key workforces. This is a positive trend, and demonstrates that rather than just saying "people are our most important asset", leaders of high-performing companies are now recognising there is a significant return on investment for creating high-performing workforces.
However, having said this, IBM has a point of view (and client experience), that all too often, investment in "talent management" tends to be ad-hoc and in silos, rather as an integrated strategy for end-to-end development of top talent and managing key workforces. This leads to unnecessary cost and operational inefficiencies, and a sub-optimisation of alignment to strategy and productivity of key workforces and top talent.
For the employee, the experience is frustrating and disjointed in that their personal metrics are misaligned to the organisation's objectives, the training they receive is not relevant to their career and day-to-day work, and they are not deployed to the right job, right place at the right time, not allowing top talent to make a difference to the organisation or their careers. In our experience, both in IBM and with our clients, this situation is the leading cause of attrition.
Tell us more about the "integrated strategy for end-to-end development".
Taking a strategic view of talent management is a competitive advantage. This strategy understands that high-performing workforces are key to innovation and growth. We have seen that organisations that have integrated, end-to-end talent management strategies, processes and technology are more agile, more innovative and have lower attrition rates of top talent than those that do not.
These organisations have a significant competitive advantage as they are able to create an integrated talent management lifecycle to recruit and retain the right people; develop and deploy top talent and key workforces rapidly, based on changes in the business environment; and create a learning and collaboration culture.
Having these talent management processes integrated and focused on the business strategy creates a situation where people are clear on their metrics and how they contribute to the overall strategy. The training they receive is relevant to their career development and their day-to-day jobs. This strategy gets the best people in the right place and time, working together effectively -- therefore, a more engaged, satisfied and productive workforce.
Usually, the HR division is not aware of exactly what an employee does. It executes programmes from above, which consequently fail to deliver.
This situation hamstrings HR from the start and is, in many ways, unfair on HR leaders, as they are set up -- unintentionally -- to fail. Without direct ownership of talent management at the CEO/COO level, it is virtually impossible for HR to drive implementation of effective talent management strategies.
The ultimate ownership of talent management should sit with the CEO, as does all other critical functions of business -- why should a critical resource (people) be any different from, say, finance or marketing? To do this, many HR heads are looking to outsource the administrative back office of HR, so that they can focus on the emerging role of HR as strategic enabler and facilitator of talent management.
What is the role of HR in mergers and acquisitions?
There is a knee-jerk reaction in the human capital services industry that in all cases, the two companies being merged must merge their workforces, cultures and so on. I am not so sure -- I think it needs to examined on a case-to-case basis.
If the value of the merger is being driven partially by synergies of leadership and key workforces between the two companies, then it is hoped that someone took the time to understand the feasibility of this when quantifying the value of the merged company. I have never seen an instance of this, and I think all too often, this is not analysed and leads to very problematic mergers.
In other cases, you see a merged company that is trying to standardise the leadership and key workforces. In many cases, this is really not required. The cost of doing this is, at times, too high for the benefit achieved. So the lesson learned here is that organizations that are merging need to analyse the synergies (or lack of) in the top talent and key workforces or they risk hugely under-optimising the value of the new merged organisation.
The criticality of innovations to economic success is undisputed. How can innovations be best nurtured in companies? This is a great question. It is in many cases forgotten that, in the end, it is people that create and deliver innovation in an organisation, not great technology or new processes ... and unless people are measured/insented, developed and deployed in a manner that enables and supports them in creating new products or new ways of doing things, it will not happen.
Additionally, if people do not see their leaders taking calculated risks and rewarding trying new things, this also inhibits innovation. Leaders walking the walk and talking the talk on innovation is critical.
Many companies these days are also investing in programmes to develop effective leadership. Do you see a link between such programmes and leadership actually improving?
Again, this is an area where a lot of good money is being thrown after bad. Leadership is critical to innovation and growth, however, most companies tend to be very ad-hoc and siloed in how they develop leadership, echoing the disjointed approach with their top talent and key workforces.
Most leadership development programmes focus around training, and put less focus on some of the other areas of the integrated talent management lifecycle, such as recruitment, performance management, and so on.
