Strategic Thinking Can Be Applied Management Essay

The change in the world is happening at breath taking speed causing the global market to become highly complex and dynamic. Creating a new organizations perspective where talent is important to everyone. (Janice Caplan, The value of talent 01).

For many Multi National Enterprises (MNE) the International Human Resources Management (IHRM) can set the difference between the MNE survival and extinction (Randall s. Schuler, Pawan S. Budhwar and Gary W. Florkowski 2002). For the survival of an organisation a future strategy should be set, it has been identified by a panel of experts in the US that one of the most important issues for future management research is strategic thinking (Zahra and O’Neill 1998). Strategic thinking definition is a way of solving problems by combining rational and convergent approach with creative and divergent thought processes (Ingrid Bonn 2005). The same author also states that strategic thinking is a crucial event preceding the process of decision-making and can provide a key to understanding organisational change phenomena in a business environment that is highly complex, ambiguous and competitive, ultimately leading to a better organisational performance and survival. Therefore it is important for the organization to understand the affectivity of strategic thinking and its implications. Individual strategic thinking is influenced by the organization’s structure (Ingrid Bonn 2005), as a result it is crucial for the HRM to be aware of the value of strategic thinking and to develop ways to encourage staff to start thinking strategically as an everyday approach. Simultaneously the HRM has to align their strategy with the overall business strategy, analyze the internal and external environment by developing a clear understanding of SWOT (Strength Weakness Opportunities and Threats), assessing talented employees, break down business needs, identifying main HR issues that are needed in achieving business needs. This is followed by identifying those HR strategies that add value to the business

“…Globalization is a dramatic socio-economic break. It poses new tasks, particularly for the strategic management. It is a synonym for the integration of national economies into a shared global economy with intensive transnational trade-offs regarding goods and services, capital, knowledge, and people as well as the often-cited “War for Talents”” .( Dr. Tiemo kacht, Erik Bethkenhagen Globalization and Demographic Change-A New Age For Human Resource Management)

Therefore a key point for achieving the international and national strategy of an organization is to effectively manage the talented employees involved, which is defined as Global Talent Management (GTM) (Schuler R. Foundation paper).

A study on a Japanese MNC with subsidiaries in the USA, regarding the relation between the organizations main strategy and HRM strategy in the subsidiaries, concluded that the more the HRM strategy fits the business strategy the higher the performance, as a result they gained competitive advantage.( Allan Bird and Schon Beechler Journal of International Business Studies,1995)

“Talent consists of those individuals who can make a difference to organizational performance either through their immediate contribution or, in the longer-term, by demonstrating the highest levels of potential”

“Talent management is the systematic attraction, identification, development, engagement, retention and deployment of those individuals who are of particular value to an organization, either in view of their ‘high potential’ for the future or because they are fulfilling business/operation-critical roles” (CIPD 2012)

“Talent is an individual with special competencies. In a business context these competencies are of strategic importance to the organisation. The absence of these competencies would pose an actual situation of crisis for the organisation. Furthermore, they are hard to copy for other organisations and can rarely be developed here and now.” (DEA, 2009)

Researches highlight the importance having talent management decision making as part of their strategic thinking in order to implement the global strategies of an organization. (Scullion, 1994; Scullion and Brewster, 2001; Cohn et al., 2005; Ready and Conger, 2007;Stahlet al. , 2007; Bjo¨ rkman and Lervik, 2007; Farndale et al. , 2010-cited by Vlad Vaiman, Hugh Scullion, David Collings, (2012),”Talent management decision making)

Deloitt research in talent management states that in today’s highly competitive world Global Talent Management stand out to be the most important factor in achieving a High Performance Work System (HPWS). It has been identified by many academics that talent management is a key in the economic growth of a Multi-National Company (MNC), and the key for their future competitive advantage. (Collings, McDonnell, & Scullion, 2009; Guthridge & Komm, 2008, McKinsey “War for Talent”) cited by Sehoon Kim and Gary N. McLean. By perceiving talented employees as the drive for an organisation’s competitive advantage (How to Motivate and Retain Knowledge Workers in Organizations: A Review of the Literature Karen Carleton, Bill Pollock “People Are Everything”). As GTM embedding throughout the infrastructure of an organization plays a great role in achieving its global strategic goals, by successfully filling strategic positions with capable talented employees. (Vlad Vaiman, Hugh Scullion, David Collings, (2012),”Talent management decision making”).

A case study of a single US Multi-National Company with subsidiaries in Germany and Ireland was conducted between 2005-2009 to study the factors and process involved in transmitting talent management across the subsidiaries. It was found that it is important for the IHRM to implement talent management in their HR strategy and to diffuse it internationally. (Ralf Burbach, Tony Royle, (2010),”Talent on demand?: Talent management in the German and Irish subsidiaries of a US multinational corporation”, Personnel Review, Vol. 39 Iss: 4 pp. 414 – 431). Another study on the progress of HRM in Korea about the diffusion of global talent management through different learning processes. (Self-fulfilling processes at a global level: The evolution of human resource management practices in Korea, 1987-2007)

“A recent report by the Boston Consulting Group highlighted talent management as one of five key challenges facing the HR profession in the European context and, interestingly, that it was also one of the areas which the function was least competent in (Boston Consulting Group, 2007).”

The major challenge facing HRM in emerging markets is a) lack of talented employees, b) constant moving of talents and c) employees changing attitude towards work, these challenges are identified as Global Talent Challenges (GTC)(A STUDY OF RETENTION MANAGEMENT IN INDIAN HOSPITALITY INDUSTRY: A PRACTICAL VIEWPOINT * Dr. Kalyan Laghane, Dean, Management Science, Aurangabad. ** Prof. Pooja Deshmukh, Associate Professor, MIMR, Aurangabad, Randall S. Schulera,b ,* , Susan E. Jacksona, Ibraiz Tarique.)

McKinsey discussed the importance of GTM and stressed on making it part of the organization’s strategic thinking by installing it in the mind-set of all members starting from the top management. At Porcter&Gamble, for instance, strategy for competitive advantage starts by having the top management (Chief Executive Officer, Vice Chairs, Presidents and Functional Officers) part of the recruiting, training team and coaching junior managers, resulting in creating a strong talent pipeline in the organization. (P&G Website), In 2005 Hay Group “Top 20 Companies for Leaders” P&G ranked at number one followed by major MNCs such as IBM, PepsiCo and Johnson&Johnson.( Stahl, Günter and Björkman, Ingmar and Farndale, Elaine and Morris, Shad S. and Paauwe, Jaap and Stiles, Philip and Trevor, Jonathan and Wright, Patrick (2012) Six principles of effective global talent management)

When discussing GTC the dynamic of the MNC context is of great importance (Schuler et al) , accordingly there are important environmental factors driving the way MNC responds to GTCs: “(a) globalization, (b) changing demographics, (c) demand for workers with needed competencies and motivation, and (d) the supply of those needed competencies and motivation” (Beechler and Woodward, 2009]cited by Schuler P.507). With the above factors adding more complexity to the business environment it is a direct challenge for HRM and senior management to contantly understand and asses theses forces to effectively initiate a strategic GTM by creating strategies that recruit motivate and maintain talents as an ongoing and continuous approach. (Global Talent Mangement:R.Schuler Matthew Guthridge, Asmus B. Komm, and Emily Lawson Making talent a strategic priority)

A study of Indian pharmaceutical organizations, suggested that the business strategy is lacking the emphasis on talent management and the HRM strategy of recruitment and developing talents is not well established in term of deploying and developing talented employees. (EMBRYONIC ISSUE OF TALENT MANAGEMENT IN INDIAN PHARMACEUTICALS INDUSTRY Alok K Mathur and Anita Mathur)

Regarding talent management topics such as employment branding, high potential identification, and succession planning and leadership development.

Talent management encompasses a broad spectrum of initiatives designed to attract prospective employees to an organization, develop workforce capabilities, gain employee engagement and commitment, increase retention of high-performing individuals and build a plan for future succession. Talent management is critically important to companies operating in the Middle East because of the Substantial opportunities and challenges these organizations face today. With the challenge of attracting (Banking in India: An Analytical Study on Trends and Progress Dr. Pallavi Singh)

PepsiCo was ranked number 7 by Chief Executive Magazine list of “Best Companies for Leaders 2012”, based on the high level of involvement by the CEO in leadership development and talent pipeline in terms of senior management positions filled internally (Chief Executive Magazine)

Diversity strategy and Inclusion Strategy (recruiting women in emerging market BRIC therefore gaining competitive advantage)

One of the strategic priorities of Coca-Cola is the recruitment of highly talented employees, and training and developing them for future leadership roles in the organization.

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Fig. 1. Framework for global talent challenges and global talent management initiatives.

Challenges:

Lack of Talent

One of the main challenges facing HRM when organizations are operating on a global scale is the lack of managerial talents and professional talents, resulting in MNCs competing for the same talent pool market.(Tarique and Schuler 2010). A 2011 study by Manpower Group and Boston Consulting Group and World Economic Forum suggested that lack of talent is a global problem facing employees, with countries such as Japan, Brazil and India on top of the list. (Global Talent Management Literature Review Ibraiz Tarique Randall Schuler-SHRM Foundation shaping the future of HR). Talent shortage is mostly prevalent in emerging market, where the quantity of skilled candidates available does not meet the demand for global organizations.( Exploring talent management in India: The neglected role of intrinsic rewards-Walter G. Tymon Jr.,Stephen A. Stumpf,Jonathan P. Doh)

The demand for managers in China has been identified as the major challenge facing MNCs when investing in China. (Kevin Lane and Florian Pollner-How to address China’s growing talent shortage).A large portion of the population in China lacks skills and education, and a similar situation in India with 39% of the population being illiterate (CIA-FACTBOOK 2012).As the labour cost in China and India is increasing, the countries will not be able to maintain their competitive advantage of cheap labour. In such areas it is crucial for the HRM to function as a strategic partner enhancing global talent management and the development of new leaders. (CIPD,Talent Development in the BRIC Countries 2010, and, Greg G. Wang,William JRothwell, Judy Y-Management development in China: A Policy Analysis 2009, McKinsey&Co.2008). Due to China being the highest populated country in the world cultural and political differences exist, therefore it is essential for MNCs to understand the complexity of the context and to strategically manage the differences in the culture (Greg G. Wang,William JRothwell, Judy Y-Management development in China: A Policy Analysis 2009).

With the rapid increase in dynamicity and complexity of business environments organizations are becoming more aggressive in their search for “quality and quantity” talents; which was identified by many academics as “war for talent” (Mckinsey “war for talent”, Schon Beechler Ian Woodward the Global “war for talent”). Multi-national Companies(MNC) are facing an increase in competition on talented employees especially for companies expanding in BRIC emerging market (Brazil, Russia, India and China with Indonesia added) (The role of the corporate HR function in global talent management Elaine Farndalea,,Hugh Scullionb, Paul Sparrow ).

Diversity and inclusion talent management strategy, due to the demographic forces discussed earlier, the world population is rapidly and dynamically ageing (World Economic Forum 2012), in 2050 the age population of 80 plus is expected to be 5.5 times that of 2000 and having emerging economy countries such as China, Brazil, Indonesia and India in the top six countries with the highest ageing population (United Nations). Organizations realize that older workers are important for the competitive advantage of an organization, by recognizing that as their employees age and become more mature their skills and talent develop enhancing the performance system of the organization; therefore it has been established by many MNC to strategically include talent retention in their HRM strategic plan. (Hadi Salah, Business of Aging: Wellness solutions for our aging workforce). In addition older people have a fewer chance of finding a new job, resulting in waste of talent in case of redundancy. (Demographic changes mean employers that fail to recruit, manage and develop older workers effectively will lose competitiveness-Dianah Worman). The organizations that respond best to this challenge will most likely be the most successful. (Best Practices for Tomorrow’s Global Leaders Paul R. Bernthal Richard S. Wellins 2005-2006 P.6)

For instance, BMW recognised that by 2017 the average age of employees will be shifted to 47, therefore in order to maintain their competitive advantage they have adapted a strategic way of managing older employees by physically altering the workplace towards a senior-friendly environment resulting in reduced sick leaves by 2% below the plant average. The figures also show that with the new changes BMW achieved 7% increase in their productivity/year equalling the productivity of younger production line workers. (The German car company has redesigned its factory for-and with-older workers. By Christoph H. Loch, Fabian J. Sting, Nikolaus Bauer, and Helmut Mauermann). Home Depot, having 15% of its workforce of aged 50 plus (Nancy R. Lockwood, SPHR, GPHR, M.A. Talent Management: Driver for Organizational Succes)

Countries like China and India lack talents with high-value skills

Due to globalization and the economic boom, HR management in United Arab Emirates focused rapidly on recruiting and resourcing, resulting in facing talent challenges such as depletion in the talent pipeline of female employees and the surplus in talented UAE nationals compared to the expatriates, therefore it is essential for the HRM to establish strategic role in the organization rather than their traditional administrative role, and develop talent management in the department. (CIPD-Global Talent Gazzeter2011). By proactive investigation and assessment of the situation in UAE, MNCs such as Google, Siemens and PepsiCo investing in UAE took advantage of the current decrease in female talent pipeline and applied diversity and inclusion strategy in terms of including females as part of their workforce, since more than half of university graduates in UAE are women, by attracting, motivating and retaining talented females, hence gaining competitive advantage in the region.

A contradictory question has been raised by authors whether the talent shortage is a myth. Are employers complaining about a non-existent situation, by looking for a certain age group, certain gender, certain looks, and height independent of the level of talent? (Swailes, Stephen (2011) Talent Management and the Talent of Management. In: Inaugural Professorial Lecture, 04 October 2011, The Business School, University of Huddersfield.)

On the other hand HSBC,

Nearly 40% of companies are in the intermediate stage of implementing an overall talent management strategy and more than 38% are still in the novice stage, according to research and advisory firm Bersin and Association. A full 30% of US companies have a dedicated talent management executive, up from 21% in 2008. (The Seven Tall Tales of Talent Management by Mary Kay Vona, Ed.D)

Best Practices for Tomorrow’s Global Leaders> Paul R. Bernthal > Richard S. Wellins

Talent management of western MNCs in China: Balancing global integration and local responsiveness

Evi Hartmanna, Corresponding author contact information, E-mail the corresponding author,

Edda Feiselb, 1, E-mail the corresponding author,

Holger Schober