HR Management Systems
Seven myths of global talent management
Dana Minbaeva a * and David G. Collings
b
a Global and Strategic HRM, Department of Strategic Management and Globalisation, Copenhagen Business School, Copenhagen, Denmark;
b Human Resource Management, DCU Business School,
Dublin City University, Dublin, Ireland
The challenges associated with managing talent on a global scale are greater than those faced by organisations operating on a domestic scale. We believe that the former relate to the fact that a number of key myths regarding talent management may undermine talent management’s contribution to multinational corporation effectiveness and retard the development of management practice in this regard. Our aim is to unpack some of those myths and offer some suggestions for advancing the practice of talent management on the basis of insights from both practice and academic thinking in this area.
Keywords: global talent management; international HRM
Introduction
After a group of McKinsey consultants proclaimed a ‘War for Talent’ in the late 1990s,
‘talent management’ became one of the most common terms in the managerial lexicon. A
simple Google search for the term returns over 24 million results. 1
Initially, the war for
talent was driven by intense competition among leading US organisations to attract key
talent, as demand for talent far exceeds its availability. This trend was exacerbated by
demographic trends in the US labour market, the most notable of which was a decline in
the number of workers aged 35 – 44, which was expected to continue through 2015
(Chambers, Foulon, Handfield-Jones, Hankin and Michaels 1998). In fact, this trend
remains evident in much of the developed world. While the demographics in key emerging
economies, such as China and India, may be more favourable, organisations in such
countries face similar challenges related to the availability of talent with the skill sets that
organisations require (Ali 2011; Cooke 2011; Doh, Tymon and Stumpf 2011; McDonnell,
Collings and Burgess 2012). Therefore, the focus is again on labour quality.
In the European context, a study conducted by the Boston Consulting Group identified
talent management as one of the five key challenges facing human resources (HR) during
the last decade (Boston Consulting Group 2007). Notably, talent management was the one
challenge that the surveyed executives felt least prepared to handle. The demographic
challenges associated with the ageing workforce were another of the top five concerns
(Collings, Scullion and Vaiman 2011b). These challenges have brought people issues to
the fore and put talent management at the top of organisational leaders’ agendas.
Organisations have invested significant efforts and resources into recruiting, developing
and retaining top talent with the potential to contribute significantly to performance (see
Tarique and Schuler 2010). However, the talent management process is difficult. As noted
above, many organisations struggle to effectively manage talent.
In this paper, we are particularly interested in talent management challenges in the
context of the multinational corporation (MNC), an activity that is broadly captured under
q 2013 Taylor & Francis
*Corresponding author. Email: dm.smg@cbs.dk
The International Journal of Human Resource Management, 2013
Vol. 24, No. 9, 1762–1776, http://dx.doi.org/10.1080/09585192.2013.777539
the rubric of ‘global talent management’ (GTM). GTM involves: (1) the systematic
identification of key positions that differentially contribute to an organisation’s sustainable
competitive advantage on a global scale, (2) the development of a talent pool of high-
potential, high-performing incumbents to fill those roles that reflect the global scope of the
MNC and (3) the development of a differentiated human resource architecture to facilitate
the filling of positions with the best available incumbents and to ensure their continued
commitment to the organisation (Mellahi and Collings 2010).
Clearly, the challenges associated with managing talent on a global scale are greater
than those faced by organisations operating on a domestic scale. For example, how can
MNCs identify, develop and utilise their top performers regardless of where those staff
members are located? What are the barriers to and enablers of top talent relocation? How
can MNCs sufficiently involve subsidiary managers in GTM decisions and actions? Are
decisions related to talent made by the corporate headquarters perceived as fair? What is
the role of corporate HR function in GTM?
We believe that the challenges associated with GTM are related to the fact that GTM
is poorly defined. Furthermore, the academic research upon which practitioners can draw
is extremely limited (for exceptions, see Scullion, Collings and Caligiuri 2010; Tarique
and Schuler 2010; Stahl et al. 2012). In addition, we contend that a number of key myths
regarding talent management have the potential to undermine talent management’s
contribution to MNC effectiveness and to retard the development of management
practice. Therefore, our aim is to unpack some of those myths and present some ideas for
advancing the practice of talent management. We rely on insights found in both practice
and academic thinking. We have also included comments from our discussions with
senior HR professionals, such as Maria Pejter, Head of Global Talent Management at
A.P. Møller-Mærsk, on the topic of GTM in MNCs.
In the ensuing sections, we outline each myth, explain why we believe the myth exists
and offer some suggestions for minimising the impact of the myth in question. We
conclude the paper by highlighting some avenues for future research on GTM that may
encourage researchers to move away from the myths to focus on the actual issues at hand.
The myths
Myth 1: Talent management is not an HR responsibility
Much of the academic work on talent management has argued in favour of ‘putting talent
management issues on top management’s agenda’ (Schuler, Jackson and Tarique 2010).
As Murray Dalziel, Group Managing Director of Hay Group, explains: ‘These issues
aren’t HR issues anymore. They are line management issues. There’s been a profound
shift’. A survey of CEOs in the European context finds that most CEOs feel that talent
management is ‘too important to be left to HR alone’ (Economist Intelligence Unit 2006).
Furthermore, the majority of those CEOs surveyed report that they spend more than 20%
of their time on these issues. Former Senior Vice President of General Electric (GE), Bill
Conaty, argues that the first principle of mastering talent management is ensuring the
support of an enlightened leadership team, starting with the CEO, as ‘the enlightened CEO
recognizes that his top priority for the future is building and deploying the talent that will
get it there’ (Conaty and Charan 2010, p. 18).
Although we do not doubt the critical roles played by the CEO and other senior leaders
in setting the tone for talent management within the organisation, we argue that corporate
HR should retain a central role in the operationalisation of GTM. Talent management
initiatives should be aligned and integrated with other HRM systems, policies and
The International Journal of Human Resource Management 1763
practices implemented in different units of MNCs. Together with the HR systems, we
suggest that GTM practices can contribute to strategy implementation across MNCs.
Maria Pejter, from A.P. Møller-Maersk, comments: ‘Yes, GTM is the critical business
process, but it is governed by HR and it resides with HR. Can HR run it alone? No. As any
other critical business process, it should be anchored in strategy and owned by senior
management, much like the budgeting processes are owned by senior management, but
governed by the accounting function’.
The challenge for HR is convincing organisational leadership of its capability to
manage global talent. As noted above, several consultancy reports indicate that HR
departments often have little capability to manage talent (Boston Consulting Group 2008,
2009). In essence, top leaders question the ability of HR to accommodate the strategic
importance of talent management, while the HR departments themselves believe that they
lack the competencies needed to effectively address the GTM challenge (Schuler, Jackson
and Tarique 2011).
How can HR departments convince top management that they are capable of managing
talent on a global scale? First and foremost, GTM must be linked to the global business
strategy or the global strategic intent of the firm. GTM should then be understood as a
strategic business process – one of several interrelated business processes that link global
strategy and edge global performance (Becker and Huselid 2006). A ‘business process’
refers to the way in which the competitive potential of a firm’s resources and capabilities
are realised (Ray, Barney and Muhanna 2004). Such a process has significant, firm-specific
dimensions and results in ‘strategic implementation effectiveness’. Given its firm
specificity, which implies both effectiveness and difficulty of imitation, a business process
may result in a sustained competitive advantage.
As a strategic business process, GTM should be manifested in the HR architecture (core
and differentiated) that, when implemented, aims to change employees’ behaviour and, in
turn, affect the effectiveness of a GTM programme’s implementation (see Figure 1).
Although a core HR architecture consists of best practices that have ‘equal value in all
strategic business processes’, a differentiated HR architecture is ‘structured to provide the
unique human requirements of a specific business process’ – GTM in this case (Becker and
Huselid 2006, p. 906). In other words, GTM must be linked to the core and differentiated
architectures of HRM systems that aim to support and develop the knowledge, skills and
competencies needed for those employees included in GTM programmes (in the case of
differentiated architectures) or the whole organisation (in the case of core architectures). In
such a system, the selected group of employees are included in the GTM pool and managed
Global business strategy
Strategic business process
HR system to support
GTM
Human capital
attributes needed
Differentiated HR architecture
Core HR architecture
Desired individual behavior
Strategic implementation
effectiveness Global
performance
HR system Human capital
attributes
Strategic employee behavior
GTM GTM
Figure 1. Differentiating the HR architecture contingent on strategic business processes. Source: Adapted from Becker and Huselid (2006).
D. Minbaeva and D.G. Collings1764
on a differentiated basis, while other employees remain outside the talent system. However,
there must be enough fluidity within the system to enable emerging talent to gain entry to
the differentiated architecture and those who perform poorly to be removed from the
differentiated architecture.
Conquering myth 1: In MNCs, GTM is the joint responsibility of top management and corporate HR, as it is owned by management but governed by HR through the differentiated HR architecture.
Myth 2. It is all about people
Central to much of the early thinking about talent management was the idea that talented
people were critical to organisational performance and success (Michaels, Handfield-
Jones and Axelrod 2001; Pfeffer 2001). However, organisations that place too much
emphasis on attracting the ‘best’ may fail to think strategically about how that talent can
best be deployed in the origination (Pfeffer 2001; Gladwell 2002).
In this regard, a growing body of literature on strategic talent management calls for the
consideration of strategic positions as a key point of departure for talent management
systems. This approach follows more general calls for greater differentiation among roles
within organisations and a greater focus on strategic jobs (Becker and Huselid 2006),
particularly those organisational roles that can create an above average impact (Boudreau
and Ramstad 2007). This is especially relevant for GTM in MNCs, where the differences
between strategic and non-strategic jobs are highly reflective of their respective impacts
(above average versus marginal) on the MNC’s overall global performance. For example,
a corporate function, such as marketing, may be important but not in terms of its impact on
the MNC’s overall performance. In contrast, variations in the performance of sales
managers in a subsidiary located in an MNC’s fastest-growing market may significantly
affect the global performance of the entire MNC, as there is potential for greater
differentials in performance between an average-performing and a high-performing
incumbent in this role.
We argue that the focus of GTM should switch from evaluating the importance of jobs
based on the inputs required to handle those jobs (such as qualification or experience) to
evaluating the importance of jobs based on the potential outputs from the job combined
with the potential for differential performance within the job’s role. In line with Huselid,
Beatty and Becker (2005), we argue that the focus of the differentiated architecture should
be on the human-capital attributes required for resourcing A-level positions, which are
strategic positions (see Figure 1). These positions: (1) relate to company strategy and have a
direct impact on the effectiveness of strategic implementation, (2) exhibit high variability
in the quality of the work carried out by the people who occupy them and (3) require unique,
firm-specific know-how, tacit knowledge and industry experience that cannot be easily
found in the external labour market (Huselid et al. 2005; Evans, Pucik and Bjorkman 2011).
As Huselid et al. (2005) note, even for jobs that are strategically important, regulation
and standardised training or professional qualification mean that performance in a role may
be relatively standardised. For such jobs, the potential for differentiation is limited. Some
roles allow little room for individuals to excel beyond a predefined performance level.
Take, for example, an airline pilot. Although an airline cannot function without a team of
pilots who possess the skills and capabilities necessary to fly their fleet of aircraft, as long as
these pilots meet a minimum prescribed set of performance criteria, their potential to
deliver added value to the airline is limited. Their performance is highly prescribed by
training, procedures and restrictions from air traffic controllers and other authorities. Pilots
The International Journal of Human Resource Management 1765
generally do not have the autonomy to alter routes, arrive earlier than their prescribed slot
or otherwise attempt to improve service for customers or save costs for the airline. In
contrast, members of the cabin crew can widely vary in their interactions with passengers,
and the level of service they provide is not as tightly prescribed. By going the extra mile for
passengers, they can significantly improve customer satisfaction and enhance the levels of
return business the airline receives (see, for example, Boudreau and Jesuthasan 2011,
pp. 34 – 39). Thus, the relative impact of the group of pilot employees will be minimal,
while the potential value added by high-performing members of the cabin crew can be far
more significant. An equally significant role in airlines might be held by those people who
negotiate landing rights in different countries (Evans, Pucik and Bjorkman 2010). In
addition to outstanding firm- and industry-specific know-how, their position requires local
tacit knowledge and extensive experience in the local market. Variability in their
performance has a much greater impact on the company’s overall success.
Conquering myth 2: When MNCs design GTM systems, strategic positions should be taken as a key point of departure. Such positions should (1) relate to global strategy and have a direct impact on strategic implementation effectiveness, (2) exhibit high-performance variability in terms of the quality of the work carried out by the people who occupy them and (3) require unique firm- and industry-specific know-how, local tacit knowledge and experience in the given market.
Myth 3. All positions should be filled by ‘A players’
Closely linked to the preceding myth is the opinion pervasive in the literature that all
positions should be filled with star employees or ‘A players’, and that ‘C players’
(consistently poor performers) should be managed out of the organisation (Michaels et al.
2001). In this regard, talent is viewed rather generically as an unqualified positive resource
for the organisation regardless of how it is deployed (Lewis and Heckman 2006). This
approach calls for talent to be managed on the basis of performance, with a resultant
emphasis on forced performance distribution. Forced performance distributions, or ‘rank
and yank’ systems, became pervasive after they were pioneered by Jack Welch at GE. In
such systems, only a set percentage of employees (perhaps 20%) can be identified as top
talent, while the largest cohort (perhaps 70%) of employees makes up the core group of
average performers. A residual group (perhaps 10%) of low performers is targeted for
development or termination. This approach results in the pursuit of ‘topgrading’, or the
filling of all positions with star performers (Smart 2005).
Although we agree that talent matters and that key talents might contribute
disproportionately more to organisational performance, we suggest that the all positions do
not require ‘A players’. As Huselid et al. (2005) astutely note, companies simply cannot
afford to have ‘A players’ in all positions. Indeed, there is a growing awareness that many
organisations overinvest in non-strategic employees and fail to invest enough in strategic
ones (Huselid et al. 2005; Boudreau and Ramstad 2007; Collings and Mellahi 2009). We
argue that resources are wasted when a star performer is in a position with little potential for
differentiation between an average and a top performer. In line with Huselid et al. (2005),
we argue for differentiation not just by performance (A, B and C players) but also by
position (strategic and non-strategic). Accordingly, we suggest that ‘A players’ should
predominantly occupy strategic positions, while their presence in non-strategic could be
smaller.
In this regard, the clear challenge for MNCs is to ensure internal equity in the global
performance management and rewards for ‘A players’ in strategic positions regardless their
D. Minbaeva and D.G. Collings1766
location. Although global companies such as Schlumberger, Novartis and Microsoft are
insistent on strict global consistency in performance evaluation and rewards, especially for
top performers, they also acknowledge the need to vary appraisal and feedback processes
according to local cultures (Evans et al. 2010). Such variation may be negatively perceived
by ‘A players’ and create retention problems for the MNC.
An even greater cultural challenge arises when dealing with ‘C players’ – those whom
the ‘topgrading’ perspective suggests should be replaced. Along this line, Evans et al.
(2010) report a remarkable story. In a speech to Japanese industrialists, Jack Welch’s
remarks on leadership were frequently interrupted by applause, but his advice on how to
deal with ‘C players’ was met with stony silence.
Conquering myth 3: MNCs’ GTM systems should focus on placing and retaining “A players” in strategic positions regardless of where they are located.
Myth 4. Talent is portable
When organisations speak of GTM, their discussions are generally premised on the
assumption that their internal talent systems and markets operate on a global, coordinated
basis. However, this myth questions the ‘G’ in GTM. Our argument is premised on two
key misunderstandings in the MNC. First, when there is a shortage of local talent,
headquarters tend to assume that they can simply transfer talent from other parts of MNCs
to fill the talent gap. This implies a second assumption – that there are few barriers to
individual mobility. Therefore, organisations often operate under the assumptions that
talent is portable and that re-locating top talent within MNCs will result in immediate
improvements in performance. However, individuals are often reluctant to relocate
internationally, as such relocations disrupt family and personal lives, and many individuals
harbour some scepticism regarding the potential career benefits of a sojourn abroad (see,
for example, Collings, Scullion and Morley 2007; Collings, Doherty, Osborn and
Luethy 2011a; Hippler 2009). The literature also indicates that it is unwise to “force”
individuals to relocate globally. For example, Feldman and Thomas (1992) find a positive
relationship between an individual’s perception of whether they are free to choose to
accept an overseas assignment and their success on that assignment. Similarly, Kramer
and Wayne (2004) find a negative relationship between a lack of free choice and an
expatriate’s adjustment to the new environment and their commitment to the foreign
subsidiary.
Indeed, even when individuals who are viewed as top talent choose to relocate
internationally, there is no guarantee that their high performance will be maintained in the
foreign context. Specifically, ample evidence indicates that technical competence is often
emphasised in selection for an international role (Harris and Brewster 1999). However,
technical competence in the home country is no guarantee of success in an international
role, where ‘softer’ skills and adaptability emerge as central to performance (Harris and
Brewster 1999). This demonstrates the importance of effective selection systems and
effective cross-cultural preparation for assignees and their families in advance of their
taking on international roles (see Collings et al. 2011a).
While research on the global context is somewhat limited, a stream of literature points
to the limited portability of performance. For example, in their analysis of the performance
of Wall Street’s top market analysts over almost a decade, Groysberg, McLean and Nohria
(2006) find that analyst performance declines when they changed employers nearly 50% of
the time. Furthermore, their performance falls by an average of 20% and it often takes up
to 5 years for their performance to return to the levels evident before the move. Based on
The International Journal of Human Resource Management 1767
this analysis, Groysberg et al. (2006) argue that only 30% of analyst performance is
determined by the individual. The other 70% is determined by resources and qualities
specific to the firm. Such resources include reputation, IT, leadership, training and team
chemistry. However, when star analysts moved with other members of their original
teams, the decline in performance was mitigated to a significant degree. Specifically,
‘when analysts who switched firms moved with teammates there was no significant effect
of performance’ (Groysberg 2010). Workers who move with teams bring many of the
relationships that enable their performance with them.
Similarly, another study examined the performance of GE executives who were hired
as CEOs of other organisations from 1989 to 2001 (Groysberg et al. 2006). This study,
which includes data on approximately 20 moves, found that hiring a former GE executive
as a CEO had a positive impact on the share price in all instances. However, very different
stories emerged thereafter. When the systems and culture of the new organisation were
similar to those of GE, the returns were positive. In contrast, when the systems and culture
of the new organisation differed from those of GE and the skill sets of the executives were
mismatched, returns were significantly negative. As Groysberg et al. (2006, p. 4) surmise,
‘when the strategic need matched the strategic experience of the hired GE executive, the
company saw annualized abnormal returns of 14.1%, while mismatched pairings saw
returns of 241.3%’. The positive impact of teams of colleagues simultaneously joining a
new organisation was also evident in this study. When three of more GE alumni joined an
organisation at the same time, the returns were more than 15% above average.
On a more general level, the importance of context is reinforced in a recent study of
cardiac surgeons performing the same surgical procedures across multiple hospitals at
roughly the same time (Huckman and Pisano 2006). This study identifies significant
performance differentials among individual surgeons working across different hospitals.
Surgeons perform better (measured in terms of risk-adjusted mortality) in hospitals where
they perform a higher number of procedures. The fact that the same talented surgeon can
perform differently in different hospitals at roughly the same time may be explained by the
surgeon’s familiarity with critical assets in the hospital, such as specific employees, team
structures and operating routines, and by the fact that surgeons with higher volumes at a
specific hospital may be able to bring their influence to bear in ensuring access to better
resources. Again, the importance of the discreet social and physical context is apparent.
As a whole, this body of work confirms the importance of the GTM context. A star’s
performance is not solely a function of individual capabilities. That performance also
relies on a range of factors and resources, some of which are clearly firm specific and
therefore lost when these employees change employers. ‘The talent myth assumes that
people make organizations smart. More often than not, it is the other way around’, writes
Malcolm Gladwell in The New Yorker. Maria Pejter agrees:
We truly believe that talent management is contextual: it matches with the business you are in and the culture of your company. Just because you are a talent in your company, does not mean that you automatically become talent elsewhere.
Conquering myth 4: When re-locating top talent within MNCs, GTM systems should strive to offer access to social and physical contexts that are similar to those from which the talent comes.
Myth 5. Talent turnover is always bad for the organisation
Ever since the war for talent was declared, a major concern among executives has been the
resolution of any issues that might push top talent to seek employment elsewhere. People
deemed ‘top talent’ have therefore been constantly promoted, moved into new jobs and
D. Minbaeva and D.G. Collings1768
trained to be globally mobile. These firms assume that it is only a matter of time before their
top-talent assets cash in on their global experience in the external labour market by joining
another organisation. Nevertheless, the reality of the twenty-first century is that employee
mobility has become – and is likely to remain – more pronounced owing to increased
globalisation, demographic shifts, changing career norms and new trends in education. As
Somaya and Williamson (2011) argue, the war for talent is over talent has won. A number
of years ago, Bill Gates argued that if the top 20 talents in Microsoft left the company, the
organisation would quickly become ‘ordinary’. However, when the top 20 eventually left
over a period of time, Microsoft sustained its performance to a large degree.
Therefore, the crucial issues for MNCs are determining when they should strive to
retain talent that is otherwise intent on leaving and when to allow that talent to leave quietly.
Experience and research suggest that managers responsible for GTM have often been
advised ‘to invest in A performers, raise the game of B performers, and . . . deal decisively
with C performers’ (Axelrod, Handfield-Jones and Michales 2002). However, this advice
may be too general. As Cappelli (2000) advises, employees who generate difficult-to-
replace value for the organisation and who are likely to be poached should be the target of
the most aggressive retention efforts. Maria Pejter of A.P. Møller-Mærsk comments:
What if your top talent, a specialist who can drill in the frozen ground, in an oil and gas company, threatens to leave and there are limited amount of specialists of this kind in the world? Indeed, if such a position is pivotal for your success, you have no other choice but pay the price of such a specialist and do whatever it takes to retain them and go to war for this talent.
If the position in question is clearly not strategic, the MNC may wish to consider
allowing talent to leave the organisation – even when an ‘A player’ is leaving. In such
cases, instead of the old ‘war’ mentality, which frames all employee turnover as a win –
lose scenario, companies should adopt a more holistic perspective by considering other
implications of employee mobility. A key contribution to our understanding of the
potential benefits of employee turnover from an organisation perspective is the relational
approach advocated by Somaya and Williamson (2011). Central to this approach is the
understanding that not all employees join competitors when they leave an organisation.
Some join what Somaya and Williamson term ‘cooperators’ – potential clients or partners.
When these employees leave, they take their human capital with them. However, if their
departure is managed effectively, they may retain their social capital with former work
colleagues. The key for organisations is to carefully monitor turnover in terms of
performance levels, difficulty of replacement and destination employer (competitor versus
cooperator). If employees leave to join a cooperator, there may be significant merit in
maintaining relationships with those employees. For example, a number of major
consulting firms make major investments in alumni networks with the express aim of
maintaining links and building potential working relationships with the new firms.
Conquering myth 5: In MNCs, the key is to develop a more nuanced understanding of employee turnover. Attrition levels should be monitored in terms of the quality and roles of departing employees, and their destination organisations should also be carefully monitored. As the effect of an employee’s departure on turnover may not be negative, expensive retention efforts may be misguided. Instead, investments should focus on maintaining positive relationships with departing employees, as those relationships may benefit the MNE in the future.
Myth 6. There is a clear line of sight between GTM and organisational performance
The measurement of the return on investment associated with HR interventions has been
the ‘holy grail’ of HR practitioners and consultants for a number of decades (see Fitz-Enz
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2009). Like many HR processes, the challenge for GTM is that it can easily become a
‘cost’ if senior executives do not have a line of sight of the link between investment in the
programme and the return on this investment. Some recent analyses by consultancy
companies, such as Ernst and Young, suggest that organisations that align talent
management with business strategy achieve an ROI that is 20% higher over 5 years than
competitors who do not. However, establishing the cause and effect in this performance
link is exceptionally difficult because the distance between the actual investment in
an individual HR practice and organisational effectiveness is significant. This distance
is likely to be even greater in the MNC context, where the nuances and volatility of the
global business context come to the fore. An additional challenge is the fact that HR often
fails to understand – let alone articulate – the value of the GTM function (Fitz-Enz 2010).
In recent years, contributors such as Boudreau, Cappelli and Fitz-Enz have suggested a
number of techniques to enable HR managers to better articulate the contribution of
investments in talent management to organisational performance. For example, Cappelli
(2008, pp. 10 – 11) points to key similarities between talent management and supply chain
management in managing talent management for better performance. He argues that these
two types of management largely involve similar steps – forecasting product demand
equates with forecasting talent needs; estimating the cheapest, fastest ways to make products
is the equivalent of developing talent; deciding which aspects of the process to outsource
equates with external hiring; and ensuring timely delivery relates to planning for succession.
Fundamentally, these techniques hinge on enhancing the analysis, communication and
decision making handled by HR professionals through the utilisation of proven business
tools. As Davenport, Harris and Shapiro (2010, p. 54) argue ‘if you want better performance
from your top employees – who are perhaps your greatest assist and your largest expense –
you’ll do well to favor analytics over your gut instincts’. Furthermore, the deployment of
these tools should enhance communication between HR leaders and other organisational
stakeholders, as they reframe HR issues in language and frameworks with which other
stakeholders are comfortable (Boudreau 2010, p. 11), and they create a clear line of sight
between investment in talent systems and organisational performance.
In addition, Davenport et al. (2010) call for the use of data analytics to ensure top
talent’s productivity, engagement and retention. However, they also caution organisations
against the mistakes commonly made when utilising talent analytics. These include the use
of analytics as an excuse to treat employees like interchangeable widgets; overdependence
on a small number of metrics to evaluate performance; the putting of employees’ learning
at risk in order to play the system; the use of inappropriate metrics or the maintenance of
metrics that do not match ongoing business requirements; a failure to adopt metrics and
analyses to changes in organisational priorities; the use of talent metrics solely for lower
level employees; and a focus on aspects of performance that are easier to quantify.
Nevertheless, creating a line of sight between investments in talent management and
corporate performance is undoubtedly a key challenge for the HR function. This challenge
is even greater in MNCs. On the other hand, the MNC context stresses the importance of
going beyond the numbers provided by HR analytics to include qualitative measures of
return on talent (ROT). Insights from recent developments in the organisational justice
perspective (see Shao, Rupp, Skarlicki and Jones 2013, for a meta-analytic review)
indicate that the perceptions of those not included in talent management programmes of
how fairly are they treated at work may serve as an indicator of how well talent
management programmes are organised, communicated and implemented across the
MNC. As Shao et al. (2013) confirm, such perceptions are affected by such factors as
national cultural differences. Although doing so is fraught with difficulty, making positive
D. Minbaeva and D.G. Collings1770
strides on this front may well enable the HR and talent functions to position themselves
more centrally in the MNC’s network.
In MNCs, a well-designed ROT measure might include a measure of whether the key
talents exhibit behaviours that reinforce the values that are central to the organisation’s
core values and mission. More than ever before, top managers articulate, nurture and
utilise values to achieve desired organisational goals. In that regard, top managers rely on
global talents that live the corporate values and bring those values to every corner of the
MNC. Accordingly, an increasing number of MNCs assess talent ‘not only according to
what they achieve but also on how they reflect or exemplify shared values’ (Stahl et al.
2012, p. 29).
Conquering myth 6: In MNCs, an ROT measure should combine quantitative and qualitative measures, subjective employee perceptions, and objective indicators of talent performance.
Myth 7. Talent decisions are ‘fair’
An assumption often pervades organisations that talent decisions are fair, as they are based
on performance management systems that have been developed at great expense in order
to ensure consistency. In reality, however, talent decisions are frequently based on
incomplete information. Often, talent management fails because top managers do not
always have accurate information or enough time to collect and analyse information.
Furthermore, they have limited cognitive capabilities to make a judgement using all
pertinent information. The situation is even more complicated in MNCs, as there are at
least three types of distance – structural, geographical and social – that limit managers to
‘good-enough’ decisions rather than ideal ones. Structural distance is related to the fact
that subsidiaries have a self-serving interest in retaining their best talent, even though that
talent may be underutilised. Bjorkman, Barner-Rasmussen and Li (2004) argue that an
agent – principle relationship arises because of the potential asymmetry between the goals
and objectives of headquarters and those of the subsidiary. Similarly, there are many
reasons why talent markets operate as silos, and why local managers may not be
incentivised to highlight their star employees on corporate talent markets and thereby risk
losing the contribution of such talent at the subsidiary level.
Consistent with bounded rationality, Melahi and Collings (2010) argue that social and
geographical distances turn subsidiaries into blind spots and limit the ability of decision
makers at headquarters to tap into global talent. Talent located in the centre is more visible
to and more valued by key corporate decision makers than talent located in the subsidiary.
In this regard, social distance limits the opportunities available to talent located outside
corporate headquarters to become acquainted with the top managers who make GTM
decisions. Moreover, the executive suites of MNCs are dominated by parent-country
nationals (Adler and Bartholomew 1992). There may, therefore, be significant cultural
barriers between those who make decisions and ‘global’ talent.
Similarly, the idea that global talent systems are efficient in identifying high
performers and facilitating their transfer around MNCs is often unfounded. For example,
Mäkela, Bjorkman and Ehrnooth (2010) argue that a decision to include an employee in a
corporate talent pool is the result of a two-stage decision process. This process involves,
first, experience-based (on-line) performance appraisal evaluations and, second, the use of
those evaluations as an input in the largely cognition-based (off-line) managerial decision-
making process for selecting talent. Mäkela et al. (2010) argue that inclusion in the talent
pool is not only determined by apparently objective performance appraisal evaluations but
also by a number of subjective factors that affect decision making in the second stage of
The International Journal of Human Resource Management 1771
the process. In relation to the performance evaluation process, Mellahi and Collings
(2010) point to differences in how managers and employees from different cultures
approach performance appraisal. These differences significantly limit the comparability of
performance ratings. Despite the well-known limitations of the subjectivity of
performance appraisals, performance ratings may be based on some objective assessment
of performance. In a western context, such ratings may be inflated to minimise the risk of
losing face among subordinates. Thus, supposedly comparable performance scores may
not be comparable in reality. Central to this second stage are the cultural and institutional
distances between the locations of potential talents and decision makers at corporate
headquarters (see Mellahi and Collings 2010); homophily between the individual and the
decision makers; and the network position of the person in question.
Conquering myth 7: In MNCs, it is important to recognise the limitations of systems and processes aimed at standardising ratings of performance and potential across the global organisation. In reality, there are significant barriers to such standardisation. Organisations must ensure that talent decisions are based on a number of different inputs, such as performance reviews, 360 degree feedback, assessment and development centres, and other culturally appropriate inputs. These should be combined with talent discussion forums in which senior leaders assess talent in a more qualitative way.
Conclusions and implications
Although GTM may have entered the mainstream practitioner context in the last decade, it
remains a significant challenge for organisations. A key limitation in this regard has been
the lack of significant progress in academic research in terms of providing coherent and
integrated guidance for managerial practice. Therefore, GTM practice is often premised
on a number of misguided myths. In this paper, we identify seven such myths. Our
consideration of these myths is in line with recent calls for the development of evidence-
based HR (EBHR), as ‘faulty practices and decision making abound in HR’ (Rousseau and
Barends 2011, p. 221). Central to the notion of EBHR is the call for the inclusion of critical
thinkers in the GTM function. The following of fads and fashions, and the uncritical
adoption of ‘best practices’ must take a back seat to critical reflection and the evaluation of
tools and techniques to advance the GTM agenda. Such critical thinking involves ‘actively
exploring alternatives, seeking understanding and testing assumptions about the
effectiveness of one’s own professional decisions and activities’ (Rousseau and Barends
2011, p. 221). In part, we hope this paper begins to address this agenda by highlighting
some of the myths that perpetuate current GTM practices.
We suggest that significant progress in GTM research would consist of the formulation
of theories about (latent) mechanisms that can account for links among global strategy,
GTM, core and differentiated architectures; the effectiveness of the implementation of
GTM programmes; and global performance. In this regard, Figure 1 maps possible future
research directions, including the following:
. Analysing the fit between GTM as a strategic business process and the HR architecture,
. investigating how HR systems within a differentiated architecture affect the human capital attributes needed for strategic positions,
. examining the human-capital attributes needed for strategic positions and their effects on behaviour, and
. analysing the aggregation from individual behaviour to effective GTM implementation at the group and organisational levels.
D. Minbaeva and D.G. Collings1772
In this section, we further elaborate on these possible topics for future research. For
each topic, we also suggest some key research questions and empirical considerations.
1. analyzing the fit between GTM as a strategic business process and the HR
architecture.
What is the nature of intra-firm HR differentiation for GTM as a strategic
business process and what is the appropriate level of such differentiation? How do
core and differentiated HR architectures interact in supporting GTM as a strategic
business process? What should be the locus of differentiation: the job or the
employee? When approaching these questions, researchers should bear in mind
that the nature of the fit between GTM as a strategic business process and the HR
architecture is inherently multidimensional, and that it is not easily captured by
simple bivariate statements (Becker and Huselid 2006). Given the focus on
differentiation not just across but also within firms, more preference needs to be
given to experiments involving cutting-edge organisations. For large-sample
empirical surveys, one-site sampling may be preferable to ensure that the research
design can control for a number of broad contextual factors that are known to
influence the horizontal fit.
2. Investigating how HR systems within a differentiated architecture affect the
human- capital attributes needed for strategic positions.
What are the nature and the scope of the HR systems needed to ensure adequate
human-capital attributes for strategic positions? What are the differences between
intended, implemented and perceived HR practices? What factors explain such
differences? When approaching these questions, future studies should (a) use a
multi-level approach that considers relationships at both the job and individual
levels and (b) collect data from multiple sources in multiple organisations.
3. Examining the human- capital attributes needed for strategic positions and their
effects on behaviour.
What are the nature and potential interdependencies of the human capital
attributes needed for strategic positions? How do human capital attributes result in
the desired behaviour? How do other individual-level factors, such as gender, age
and national identity, matter? When approaching these questions, future research
should strive to combine perceptual and self-reported measures with more
objective indicators in order to develop more elaborate measures of human capital
attributes. The integration of traditional measures with measures obtained through
social network analysis may also be highly beneficial.
4. Analysing the aggregation from individual level behaviour to implementation
effectiveness of GTM implementation programmes at the group and organisational
levels.
How can we measure GTM effectiveness? How can firms fine-tune individual
behaviours so that they lead to positive results on the aggregate level? When approaching
these research questions, longitudinal research is highly desirable for verifying the
causality of the aggregation from the individual to the collective. Multi-level reasoning and
methods must be applied.
This paper also has some practical implications for those MNCs considering
investments in GTM. First, we suggest that MNCs start by aligning their GTM with global
strategy. They can seek to answer the following questions: What is the global strategy?
Does the MNC have a truly global strategy or multiple regional strategies? The answers to
these two questions define the MNC’s GTM.
The International Journal of Human Resource Management 1773
Second, MNCs should establish core and differentiated architectures for GTM. The
differentiated architecture will focus on pivotal positions, while the core architecture will
cover the rest of the organisation.
Third, MNCs should differentiate among the pivotal positions. To do so, they must
establish policies for dealing with A, B and C players for every pivotal position.
Finally, MNCs would find it beneficial to review the role of the corporate HR function
in GTM. In this regard, corporate HR should be responsible for (a) developing,
implementation and measuring the effects of GTM; (b) balancing global and local talent
needs; and (c) making GTM a basis for global employer branding through differentiation.
In conclusion, managing talent on a global basis is complex and challenging. These
challenges and complexities are amplified by the misguided assumptions (or myths) that
underscore many decisions related to the development of talent systems in MNCs and the
more general management of talent in ‘born globals’, international organisations and
alike. We hope that this paper will help to guide practice and theoretical work in the field
by highlighting some of these myths and proposing ways in which they can be mitigated.
Acknowledgements
We thank the participants of the Global HR Seminars on Global Talent Management organised by Copenhagen Business School and Confederation of Danish Industries in December 2010. We are especially grateful to Maria Pejter and A.P. Møller-Mærsk for inspiration and support.
Note
1. The authors undertook this search in March 2012.
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