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Talent management in practice in Australia: individualistic or strategic? An exploratory study

Janice T Jones Flinders University, Australia Marian Whitaker Flinders University, Australia Pi-Shen Seet Flinders University, Australia Jarrad Parkin Flinders University, Australia

Drawing on the results of a qualitative study involving senior human resources (HR) practitioners and executives, this paper explores the nature of talent management in Australia, including whether organisations adopt an ‘individualistic’ or ‘star’ perspective or a more systems-level, strategic perspec- tive on talent management. The results suggest that there is heterogeneity in how organisations execute talent management with a spectrum of approaches ranging from what is, in essence, a relabelling of human resource management (HRM), with a narrow functional focus; through to integrated HRM, with an exclusive individual focus; to a more organisationally focused competence development approach. We find evidence of an emphasis on the identification of key positions that can add significant competitive advantage and differentiated HR ‘architecture’ associated with a more strategic perspective in some organisations. Overall, the study finds little indication of a systems-level, strategic perspective, with most firms taking an individualistic approach to talent management.

Keywords: Australia, individualistic, strategic, systems-level, talent management

Correspondence: Dr Janice T Jones, Flinders Business School at Flinders University, GPO Box 2100, Adelaide, SA 5001, Australia; Email: [email protected]

Accepted for publication 4 February 2012.

Key points 1 There are two distinct, overarching perspectives on talent management: 1) an indi-

vidualistic level and 2) a systems-level/strategic focus. 2 Despite the acknowledged need to move towards a strategic perspective of talent

management, we find little traction in practice among Australian-based organisa- tions, with most firms stuck on an individualistic approach.

3 Even among organisations with a so-called strategic focus, the talent management strategy does not appear to be systematic and congruent, and the execution is ad hoc, unstructured and fragmented.

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Asia Pacific Journal of Human Resources (2012) 50, 399–420 doi:10.1111/j.1744-7941.2012.00036.x

Despite talent management (TM) being a subject of considerable interest among consult- ants, practitioners and academic scholars for more than a decade, in Australia, as elsewhere, little empirical evidence exists on who is considered talented (and why) (Makela, Bjorkman and Ehrnrooth 2010), and TM activities in organisations (Iles, Chuai and Preece 2010; Lewis and Heckman 2006) – that is, ‘how’ (Makela, Bjorkman and Ehrnrooth 2010) to attract, develop and retain talent (Tarique and Schuler 2010). This lack of research is surprising given the amount of attention talent receives in the business press (e.g. Thomson, Stensholt and Sibillin 2007), and given the growth in importance of knowledge as a source of competitive advantage which underscores the importance of talent in the economy (Teece 2003).

The purpose of this article is to fill this gap, through an exploratory qualitative study involving senior human resources (HR) practitioners and managers in the Australian context. The research investigates the nature of TM by examining what is ‘talent’ and what is ‘talent management’; what are the objectives of TM; and what approaches are adopted for TM? The paper also explores whether Australian organisations adopt an indi- vidualistic or systems-level, strategic perspective to TM. Thus the study contributes to prior research in two important ways. First, it adds to the very few field studies that have investigated TM in Australian-based organisations. Specifically, the research contributes to our understanding of senior HR practitioners’ views on TM. Our second contribution is to derive two distinct, overarching perspectives on TM from the literature which provide a basis for empirically exploring whether firms take an individualistic or systems- level, strategic perspective on TM. While Lewis and Heckman (2006) and more recently others (Iles 2008; Iles, Preece and Chuai 2010) have been advocating a shift away from the ‘individualistic’ focus, to date, empirical studies have not examined whether organisations adopt an ‘individualistic’ or ‘star’ perspective or a systems-level, strategic perspective on TM in Australia.

The first section of the paper reviews literature on TM. We draw on work by Lewis and Heckman (2006) which provides a concise, critical review of literature in this area and, more recently, Iles, Chuai and Preece (2010) who extend this research. We highlight some differences in interpretation and terminology. The second section describes the research design. Findings are presented in the third section. The paper concludes with a discussion of the main findings and implications for future research.

Literature review

Defining talent management Research in the area of TM has been distilled into three streams of thought. The first views talent and TM broadly, applicable to all employees (Iles, Chuai and Preece 2010) and comprising typical HR practices, functions and activities, though some researchers tend to narrow the focus to specialist areas within human resource management (HRM; e.g. recruitment, selection, development and career planning) (Iles, Chuai and Preece 2010; Lewis and Heckman 2006). Regardless of the scope of HR activity, the primary problem

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with this perspective is it replaces ‘human resource management’ with ‘talent management’ – in other words, ‘old wine in a new bottle’ (Iles, Chuai and Preece 2010; Lewis and Heckman 2006).

The second stream conceptualises TM as processes designed to ensure an adequate flow of human resources into jobs in an organisation, and encourages managers to manage succession pools of talent for specific jobs (Lewis and Heckman 2006). While Iles, Chuai and Preece ’s (2010, 149) ‘organizationally-focussed competence development’ approach focuses on strategically managing the flow of talented employees through a range of roles, Lewis and Heckman emphasise the development of ‘talent pipelines’ to deliver current and future employee competence requirements, and an organisation-wide, holistic talent mind- set. This stream is closely related to, and builds on, HR planning and succession planning, typically through the use of enterprise TM systems (Lewis and Heckman 2006).

According to Cappelli (2008, 2009) however, succession plans, particularly long-term plans, are mistakes in a business environment characterised by uncertainty in demand and labour markets, because they assume that the jobs that will need to be filled in the future and the employees needed to fill them are known in advance. In order to reduce the effects of uncertainty, Cappelli (2008, 2009) draws on the notion of talent pools, and advocates the development of employees in the talent pool with broad and general competencies that fit a range of jobs, as opposed to narrow, specialised jobs.

The third stream of research focuses on managing talent pools, which comprise an exclusive segment of the organisation’s workforce typically described as high performing and high potential (Iles, Chuai and Preece 2010; Lewis and Heckman 2006). According to Iles, Chuai and Preece ’s (2010) ‘integrated HRM, selective focus’ approach, this segment of talented individuals is the subject of a set of tightly coupled HRM tools, activities and processes. While Lewis and Heckman (2006) also conceive talent as performance pools to be managed, they suggest that organisations are encouraged to categorise employees based on their performance level and reward them accordingly, or fill all positions with high per- formers. This perspective is also problematic, since it ignores the reality that for some jobs, satisfactory performance is acceptable, while organisations may find it beneficial to empha- sise specific competencies and de-emphasise others (Lewis and Heckman 2006). If all employees are classified as talented, then the question is: how does TM differ from con- ventional HRM (Collings and Mellahi 2009)?

Notwithstanding recent conceptual and empirical advances (e.g. Cappelli 2008, 2009; Iles, Chuai and Preece 2010; Collings and Mellahi 2009; McDonnell et al. 2010 discussed below), Lewis and Heckman (2006, 140) conclude ‘there is a disturbing lack of clarity regarding the definition, scope and overall goals of talent management’. Indeed, in one of the few scholarly studies to examine the definition and scope of TM, Iles, Chuai and Preece (2010, 185) found this lack of clarity was also the case with their sample of organisations, although they also state ‘broadly speaking, they reasonably readily fell into one or the other of the three main forms’. The ‘war for talent’ was identified as driving the adoption of TM, with the need to attract and retain key employees most relevant to firms which took an ‘integrated HRM, selective focus’ approach, while overcoming the barriers to the attraction

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and retention of talent underlies the ‘organizationally-focussed competence development’ approach. Iles, Chuai and Preece (2010) conjecture these conceptualisations are likely present in other companies, particularly multinational corporations (MNCs), but suggest they may vary across sector, size and nationality. In a study of Irish-based MNCs, organ- isational size, the existence of a global HR policy formation committee and regional or global product/service standardisation explained the use of (global) TM practices (McDon- nell et al. 2010). While a relatively large number of MNCs utilise systems to strategically identify and develop talent, many more adopt an ad hoc approach (McDonnell et al. 2010). It is the strategic perspective, and an alternative, competing – individualistic – perspective to which we now turn.

Talent management: Individualistic versus systems-level, strategic focus Despite the efforts made towards defining and creating a taxonomy of TM, there are, in general, two competing perspectives to TM – an individualistic perspective versus a systems-level, strategic perspective.

The individualistic or star perspective follows from concepts originally developed by the McKinsey research (Michaels, Handfield-Jones and Axelrod 2001) that sees organisational performance as the individual efforts aggregated or as noted by Iles (2008, 216 ), ‘if you attract/retain people who do well individually, you can win the competitive battle’. However, Pfeffer and Sutton (2006, 90) find ‘deep flaws’ in the McKinsey studies, especially in the findings that the performance of the organisations was the result of managing talent and note that ‘the best evidence indicates that natural talent is overrated, especially for sustain- ing organizational performance’.

According to Beechler and Woodward (2009, 277), recent research has shown that the ‘nearly single-minded focus on individuals that is endemic to companies’ strategies for fighting the talent war often backfires and reduces, rather than enhances individuals, teams and organisations’, which accords with the findings of a study of star investment analysts, who, after switching firms, experienced an immediate and ongoing deterioration in per- formance (Groysberg, Nanda and Nohria 2004). Groysberg, Nanda and Nohria (2004) attribute the stars’ former excellence to their previous employers’ general and proprietary resources, organisational culture, networks and colleagues.

The individualistic perspective essentially views talent as a form of human capital, and overlooks the importance of firm context, social capital and organisational capital to organisational performance (Iles 2008; Iles, Chuai and Preece 2010; McDonnell 2011; Pfeffer 2001). The so-called ‘best athlete’ practice of hiring of outside individuals (Huckman and Pisano 2006) is a strategy increasingly used by organisations to appropriate individuals’ skills and experience (Cappelli 2009; Wezel, Cattani and Pennings 2006) and the organisational routines in which they have played a role (Wezel, Cattani and Pennings 2006). While human capital and social capital are typically bound to individuals and thus transferable across firms,1 transporting organisational capital in the form of organisational routines and processes is less clear cut because they are partly independent of individuals (Wezel, Cattani and Pennings 2006). Routines typically stem from repeated interaction

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among multiple participants internal or external to the firm over an extended period of time, rendering them less sticky to individuals.

With the maturing of the TM field, there have been calls to move from an individualistic to a ‘strategic’ perspective. As with the strategic HRM literature (Dainty 2011), and indeed, wider strategy literature (Purcell 2001), there is considerable ambiguity surrounding what the concept ‘strategic’ in the context of TM means. Lewis and Heckman (2006) use the terms ‘systems-level, strategic perspective’ and ‘systems-level or strategic framework’ inter- changeably, while Collings and Mellahi (2009) and Silzer and Dowell (2010) refer to ‘strategic TM’. McDonnell (2011) refers to TM as a ‘strategic (management) activity’. Others (e.g. Cappelli 2009 and Iles, Chuai and Preece 2010) simply draw attention to aspects that have strategic connotations. Following Lewis and Heckman (2006), we use the term ‘systems-level, strategic perspective’ but also draw on related literature to explore what ‘strategic’ means in the TM context.

Collings and Mellahi (2009, 305) define strategic TM:

as activities and processes that involve the systematic identification of key positions which differentially contribute to the organisation’s sustainable competitive advantage, the develop- ment of a talent pool of high potential and high performing incumbents to fill these roles, and the development of a differentiated architecture to facilitate filling these positions with com- petent incumbents and to ensure their continued commitment to the organisation.

This definition incorporates recent conceptual advances in the field – most notably the work of Huselid, Becker and Beatty (2005) and Boudreau and Ramstad (2005) that has called for a greater distinction between jobs or roles within organisations, and in particular, an increased focus on key positions vis-à-vis talented individuals, which have the potential to differentially impact the competitive advantage of a firm. Importantly, the focus on employees who are in the firm’s talent pool, and who either occupy, or are undergoing development to occupy, key talent positions, provides a point of departure from strategic HRM, which tends to apply to all employees. Key talent positions are not limited to top management, but may include functional or technical roles that have a significant impact on firm performance (Collings and Mellahi 2009), or even all jobs that are difficult to fill (Cappelli 2009). Importantly, a strategic approach to managing talent ‘takes as its starting point organisational goals and not human resource targets’ (Cappelli 2009, 7).

A strategic orientation is also characterised by an emphasis on systems-level issues, e.g. networks, teams, and social and relational processes in TM (Iles 2008; Iles, Chuai and Preece 2010; Lewis and Heckman 2006; McDonnell 2011). This perspective sees a shift of emphasis away from what we refer to as a micro focus on talent and individual-level talent analysis to a macro focus on systems-level issues. The rationale that underlies this perspective is that the performance of individual or even team talent is strongly influenced by firm-specific factors (such as leadership, relationships, internal networks, training and team member- ship), and the processes and systems in which they operate. Collings and Mellahi (2009, 307) state: ‘While the organisation’s strategic capital is encompassed in the employees of the organisation ... it is the organisational systems and processes [emphasis added] which create

Janice T Jones et al.

and manage this strategic human capital and ensure that its contribution is maximised.’ Figure 1 provides a diagrammatic illustration of this distinction.

The large ellipse denotes that TM appears to be different things to different people. In this study, the focus is on the central tenet that underpins TM, and whether the emphasis is on the individual star with a concomitant micro-focus on tactical/operational issues (e.g. recruiting, incentives etc.) (i.e. the bottom left quadrant of Figure 1); or whether TM is more organisational/system-level, strategic, which also includes an emphasis on building talent pipelines, establishing processes to identify and assess high-potential talent, devel- oping leadership talent, performance management for the talent management function, succession planning and leadership change management, etc. (i.e. the top right quadrant of Figure 1). The bottom left quadrant is the focus of the earlier TM literature, while the top right quadrant incorporates recent developments in the literature (elaborated on below).

The systems-level, strategic perspective is supported by Pfeffer (2001) who argues for a more diverse, inclusive TM focus. It is not just about individual talent but the processes and system within which individuals interact and work that will see individuals, teams and ultimately organisations perform better than others. Lengnick-Hall and Andrade (2008, 38) concur, showing that a staffing system is needed to provide the necessary talent supply and movement to achieve organisational objectives. Individual staffing decisions (for example who to promote or transfer), in turn, are viewed from the perspective of how they affect the organisation’s overall supply and movement of talent. But as also noted by Lengnick-Hall and Andrade (2008, 40), with reference to von Bertalanffy (1974): ‘optimising subsystems

Individualistic Organisational

Tactical/ operational

Strategic

Micro- focused

Figure 1 Individualistic versus systems-level, strategic focused talent management

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(i.e. doing each part well separately) does not maximise organisational system performance ... what is needed is the integration of ... subsystems ... to accomplish desired organisational goals’.

Indeed, for TM to be considered a strategic activity, its value to the bottom line must be demonstrated (McDonnell 2011). Vance and Vaiman (2008, 6) conclude that ‘if talent management is to make a significantly new contribution ... it must hold a more clear link with strategic human resource management (Boudreau and Ramstad 2005; Wright and Haggerty 2005)’. While most researchers take business strategy as the starting point with talent and HR aligning with strategy (McDonnell 2011; Silzer and Dowell 2010), some (e.g. Boudreau and Ramstad 2005; Lewis and Heckman 2006, 145, 147) go further, arguing that for TM to be strategic, it must utilise talent investments that open new opportunities. As Silzer and Dowell (2010, xxii) observe, this emphasis reflects a ‘significant paradigm shift for HR ... to strategic talent management’ in which the emphasis is significantly different from traditional TM.

In Australia, there is a distinct lack of systematic empirical (as opposed to anecdotal) evidence on TM. The evidence that is available is drawn from single-organisation case studies (e.g. Blackman and Kennedy 2008), or from survey data not specific to TM (e.g. Holland, Sheehan and De Cieri 2007; Sheehan, Holland and De Cieri 2006).

Method

As the aim of the study is to explore in-depth HR practitioners’ and senior managers’ perceptions in the area of TM, we used a qualitative research method. This study is posi- tioned at the end of the spectrum of methodologies founded on an interpretative perspec- tive, which furnish rich insights over time on social phenomena. The qualitative researcher is interested in perspective rather than the truth per se. As such, a qualitative study offers exploration and clarification of the TM phenomenon, which are reflective of HR profes- sionals’ and managers’ personal experiences.

Sample We used a convenience sampling method. Participants were identified through two methods: industry contacts and cold calls (via e-mail or telephone). In some cases, the e-mail was forwarded by the initial contact to another person within the organisation who was respon- sible for TM, as a key criterion for inclusion in the study was the HR practitioner needed to have some responsibility for TM. In some organisations, the person responsible for TM was a senior manager with HR as part of their responsibilities. HR practitioners’ involvement in TM varied, with practitioners developing, overseeing, implementing and/or participating (e.g. as part of the executive group) in the TM process. There were two rounds of data collection: the first set of interviews were conducted in 2009–10 and focused largely on HR managers in South Australia. The second set of interviews conducted in mid-2011 comprised a much broader sample across different industries and states in Australia and also included some executives who were responsible for recruiting, mentoring and managing talent.

Janice T Jones et al.

A total of 22 senior HR practitioners, senior managers with HR as part of their respon- sibilities, and executives were included in the study. We focused on senior HR managers since they were more likely to be involved in strategic activities, and thus more likely to have accurate knowledge of the strategic nature (if any) of TM. We also interviewed the chief executive officer (CEO)/managing director (MD) or other members of the executive team in five of the 18 organisations in order to provide an additional, managerial perspective on TM. Table 1 summarises sample characteristics.

Data collection Face-to-face interviews were conducted, each lasting between 40 minutes to two hours (except in one case which involved a telephone interview due to geographic distance). A semi-structured interview format was employed. At the same time, the interviewer was able to probe statements in order to clarify and explore emerging issues.

The interview protocol focused on three areas: 1) background data, which related to the HR practitioner, and the setting in which the business operates; 2) the meaning of talent and TM, including its foci, objectives and context; and 3) the TM process, including its relationship to other HR activities, organisational processes, culture and structure, and wider context. Interviewees were asked to describe and elaborate on these issues in detail and give examples. As with previous qualitative research (Brown et al. 2009), we looked for specific examples in order to ensure interviews were anchored in the reality of actions undertaken, not what HR managers might feel obligated to state (Hunt and Boxall 1998). In some cases, documentation pertaining to TM was provided and related information systems demonstrated, both of which provided the opportunity to explore the meaning of responses more fully (Patton 1990) as well as to triangulate data.

Permission was obtained from each participant to digitally record the interview. Recordings of each interview were carefully transcribed and e-mailed to the participant for verification of accuracy of content.

Data analysis Transcripts were analysed for key themes using a qualitative research method (Glaser and Strauss 1967). Specifically, the constant comparative method was used to generate themes from the data. This method involved looking for ‘recurring regularities’ (Patton 1990) including recurring phrases in the verbatim expressions of interviewees.

The research questions and literature review suggested initial classifications of the content of the interviews (Miles and Huberman 1994). As analysis of data relating to TM approaches progressed, the results showed remarkable similarity to the Iles, Chuai and Preece (2010) framework. These classifications and results then formed the basis for further analysis since it incorporates the three major HRM activities – attraction, development and retention – that are the hallmarks of TM systems (Tarique and Schuler 2010).

We did not ask interviewees whether they adopted an individualistic or systems-level, strategic perspective to TM, but used their responses to questions pertaining to talent, TM and the TM process, together with criteria based on key ideas and concepts derived from the

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literature reviewed above. An individualistic perspective includes an emphasis on the attraction and retention of talented individuals or stars and a strong focus on the develop- ment of, and analysis of, individual-level attributes, skills and capabilities. The key elements of a systems-level, strategic perspective include: a focus on key or pivotal positions that

Table 1 Overview of the sample

Interviewee number

Industrial sector Location of headquarters

Number of employees in Australia

Job-holder’s title

1 Manufacturing South Australia 200 Executive manager, human resources

2 Banking/finance Australia 5 000 Head of human resources

3i* Fast moving consumer goods

MNC, United Kingdom

1 000 (Corporate) HR practitioner

3ii Forestry/timber Australia/NZ 750 Manager, human resources (business-unit level)

4 Public sector organisation

South Australia 30 000 Manager, human resources

5 Manufacturing (automotive)

Australia 400 Director of human resources

6 Software MNC, USA 850 Manager, human resources

7a & b† Manufacturing South Australia 30 Manager, human resources & MD

8a & b† Manufacturing South Australia 230 General manager of human resources & CEO

9† Consultancy Sydney, NSW 70 CEO

10 Consultancy MNC/USA 1 255 Senior HR associate/ consultant

11† Telecommunications Australia ~40 000 Group managing director (of functional area)

12a & c‡ Public sector organisation

South Australia 700 Manager, human resources & organisational development consultant

13§ Information technology

MNC, USA nd Human resource specialist

14§ Australian public sector

Canberra, ACT 164 596 Senior manager/HR consultant

15 Travel South Australia 160 Manager, human resources

16a & b† Professional sporting organisation

South Australia 130 CEO & head coach

17 Agribusiness Australia 3 390 General manager, human resources

nd, not disclosed. * Interviewee 3 was able to provide data for two organisations (i & ii) having moved between organisations. † Interviewees also included managing director/CEO, or other member of senior management group at enterprise level. In order to protect the anonymity of the respondent, the functional area has not been disclosed. HR manager is denoted by ‘a’; MD/CEO or other senior manager is denoted by ‘b’. ‡ Interviewees also included organisation development consultant denoted by ‘c’. § HR interviewee was a contractor.

Janice T Jones et al.

impact the firm’s competitive advantage; an emphasis on systems-level issues, TM processes and the wider organisational context in which talent operates; and TM ‘architecture’ align- ing talent to firm’s strategy reflecting a congruent approach to TM.

Findings

Talent management and talent defined As can be seen from Table 2, the majority of respondents define TM as the identification, attraction, development and/or retention of a segment of their workforce. This segment is typically described as ‘high potential’ or ‘high quality’. The focus of TM is typically on the individual employee, although there are also references to specific job families or positions: for example, executive positions (#2, #14 and #17), or highly significant roles (#6). Accord- ing to interviewee #12 (Table 1), TM is focused on individuals described as ‘up and coming leaders’ and ‘stars’, and positions, which are considered difficult to fill as a result of national skills shortages. Only a few interviewees adopted an inclusive perspective (Iles, Chuai and Preece 2010): interviewee #4 (Table 2) described TM as a ‘very, very broad concept’ which applied to all employees, and encompassed the entire spectrum of HR activities, from the start to the end of the employment relationship. Another interviewee (#9, Table 1) included all employees, but on the basis that each employee performs a business/operational-critical role. The focus of TM was on the ‘system’ or team in only two participants’ (#8 and #16, Table 1) organisations. Interviewee #16b, head coach of a professional football organisa- tion, explains the rationale:

it doesn’t matter how good they [talented players] are, if they can’t adhere to a team fabric, ... play within the team guidelines then ... they’re not going to be successful, ... in Australian football. There’s 18 on the team and there’s 3 or 4 interchange ... So ... everyone has to work really closely together otherwise it breaks down with that many participating.

Overall, the objectives of TM accord with the definitions provided. For example, one interviewee (#5, Table 2) defined TM as ‘the identification and development of high poten- tial employees’ and stated that the objective was to achieve this outcome – ‘that those people ... identified as high potential actually reach that potential and progress up the company structure’. Employee progression, and in particular, management progression, was evident among other respondents (e.g. #2 and #6, Table 2). Interestingly, progression is also con- sidered a goal by interviewee #16a (Table 1), despite the fact that such progression means: ‘if we’re ... successful ... developing someone they’ll get picked up by an AFL2 club, .... While that may not necessarily help our senior team win next week ... another way we measure success is giving people the opportunity to go on’.

Other interviewees also linked the objectives of TM to the overall organisation. For example, one participant (#1, Table 2) spoke of ‘growing employees and in turn growing the capacity of the business’, while another interviewee (#6) translated TM objectives into business benefits (e.g. employees extend their knowledge of their business and their knowl- edge of, and relationships with, the customer base).

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While all interviewees clearly articulated their understanding of the term TM, overall, what constituted ‘talent’ was significantly less clear-cut: some respondents drew analogies with sports stars,3 while others referred to broad qualities such as ‘high calibre’ or ‘high potential’, and in a number of cases, a combination of traits, values, behaviours, attitudes

Table 2 Talent management and talent: Definitions, objectives and foci

Interview number

Definition of TM Objectives of TM Focus of TM: individual/position

1 is about identifying high potential candidates, fostering and growing them

growing employees and in turn growing the capacity of businesses

high potential candidates

2 is looking at a specific job family or group of people in an organisation that for purposes of development, retention or attraction, ... the organisation wants to spend time and effort on

one is succession planning, ... looking for people that you can identify at various levels coming through the organisation. The other ... is retention, ... providing people with development they have an opportunity to move on, ... talent management ... also is an attraction strategy for those looking to join your company.

specific job family or group of people

3 it’s about understanding what your enterprise’s strategic plan is, and ensuring that you have the people resources in place to deliver on that ... therefore it’s .attracting and retaining high quality people

the retention of high caliber employees ... aligned to the ... strategic direction of the business

high quality people

4 it is management of a candidate or an employee from start to finish, your entire relationship with that candidate, ... Very, very broad concept

to attract, engage and retain the best people you can for your organisation. ... the people who have the best fit, the skills, knowledge, competencies that you’re looking for

candidate or an employee

5 it’s the identification and development of high potential employees.

to ensure that those people that we’ve identified as high potential actually reach that potential and progress up the company structure

high potential employees

6 the attraction, recruitment and retention of employees in our business.

to compete for talent. ... to recruit the best people that we can, to retain ... people in the longer term through career development predominantly and actively supporting their career development advantage to ... the business bottom line with A) their extended knowledge of your business and B) their knowledge of the customer base and the relationships that they build there,

it’s all employees in its broadest ... clearly more effort is put into some employees than others ... those highly significant roles in our business

Italic denotes interviewees’ quotes.

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and skills. Two respondents (#1 and #8a) acknowledged they did not have a definition of talent. One respondent succinctly defined talent as the ‘ability to go up two positions in the organisation’ (#5, Table 2).

Approaches to talent management Analyses of TM in participants’ organisations indicate that a range of approaches are used, which broadly fit into the forms identified by Iles, Chuai and Preece (2010). Thus at one end of the spectrum, TM is not significantly different from conventional HRM, with mandatory training or professional development requirements and opportunities (e.g. conferences, workshops and sabbaticals) available to all professionals within a particular field, and a leadership development program illustrative of TM initiatives (see Table 3). The respond- ent (#4) did qualify that:

Talent management is about managers understanding who their employees are, what their needs are, what their skills are, and developing them, so it might not be ... going to a conference or going to a training program, it might be they have opportunities to go into a job rotation or opportunities for coaching or mentoring. Or they have job shadowing, those sorts of things. That, to me, is all part and parcel of talent management programs.

The analysis suggests that the approach is consistent with what Lewis and Heckman (2006) note is the tendency to narrow the focus to specialist areas within HRM – in this case, training and development.

At the other end of the spectrum, TM approximates what Iles, Chuai and Preece (2010) refer to as ‘organisationally-focussed competence development’. According to interviewees in these organisations, TM is strongly linked to succession and replacement planning, with a focus on executive roles (#2) or ‘highly significant roles’ (#6). As one interviewee (#6) put it, this emphasis reflects the fact that ‘those are the people that we expect to have the biggest future impact in our business’. At this level, development is tailored to specific (develop- ment) needs, and deficiencies identified between current performance and future require- ments, on the basis of the annual talent or executive review (#2) or career development conversations (#6) (Table 3). Although there is a strong focus on the ‘next role’ (#2) and ‘bigger roles’ (#6), development initiatives are also aimed at retaining key staff. For example, interviewee #6 stated that significant resources are expended on international job transfers to enable people to ‘a) achieve their own career development goals but b) retain their talent in the broader organisation’.

While formal TM is centred on high level individuals and roles, at lower levels (e.g. middle or senior management), TM is focused on development of employees for replace- ment purposes. Development programs are more generic as opposed to tailored, and might involve conferences, workshops and on-the-job training such as job rotation designed to develop skills. At low levels (e.g. entry-level positions), the process of talent identification is significantly less rigorous, with talent identification based upon one person’s perception as opposed to the ‘9 box methodology’ employed at higher levels, which includes a range of individuals’ input and psychometric assessments. Talent management initiatives at this

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Table 3 Talent management process

Interview number/ organisation TM process

Identification phase and Development/retention phase

1 Does not have formal approach to TM. According to respondent, this reflects the fact the firm is a private company in which the owner is the MD, who is fairly switched on in terms of knowing ... who has what capabilities

Learning & development rather than formal TM activities meet current business needs. 2 By hierarchical level. At executive level, talent review involves 9 box methodology.

At lower levels similar process but less detailed assessment, i.e. by immediate manager only. Followed by career discussion between employee/s & immediate manager re: development

needs. Extent/type of development dependent on level at which TM operates. More specific, tailored

activities at higher level designed to close specific performance gaps vs generic activities at lower levels. Strongly linked to succession/ replacement plans, because most appointments are internal.

Activities also aimed at retention of executives & tool in attraction/ recruitment of new executives.

3a Talent identification part of, & tool in, attraction of talented, high calibre, candidates. Focus is also on individual’s potential/ role in next 2–5 yrs.

Career development focused on cross-functional skills development. 3b Compilation of ‘list’ of talented individuals firm-wide (irrespective of level/role) with

identification of those with strong potential based on line manager & executives’ observations. Executive includes HR manager.

Ranked against criteria. Talent linked to long-term business needs/strategy. Linked to performance management process, but degree of cynicism & lack of engagement

among line managers. 4 Differs by region & departments/units within regions, as each operates with degree of

autonomy. Identification for leadership development program offered by head office based on employee’s

self-nominating, with support of their manager. Focused on training and professional development opportunities, which vary according to

professional group. Activities reflect premise public sector exists to provide (clinical) services. 5 Identification of ‘high potential’ employee/s based on line manager’s opinion/s & may vary

between line managers. Talent identification strongly linked to succession planning. Identification & development of high potential employees part of an integrated performance

management system. This incorporates personal business objectives, performance appraisals, succession plans, high potential employees, leadership assessment & upgrade plans.

This system, in turn, is linked to organisation’s vision, mission & values & strategic plans. Line of sight between vision, mission & values & day-to-day activities.

6 Focused on top 2 organisational levels. Assessment of individual’s potential is very subjective – based on prior performance, current

skills/competencies & individual’s future value to firm, including their potential to take on bigger roles & future leadership capability.

Use forced distribution. Structured, career development conversation with supervisor. Development/retention activities stronglylinked to formal succession plans. Development directed at future role, to be achieved within certain time-frame to ensure

business continuity. Activities include international transfers. Emphasis on planning employee development, but ultimately employee responsible for own development (reflects laissez-faire organisational culture).

Italic denotes interviewees’ quotes.

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level are focused on retention, although interviewee #2 pointed out that ‘it does feed into succession planning ... down the track’.

Emphasis on talent development and flow is also evident in the professional football organisation, with talent ‘pipelines’ developed to deliver current and future player require- ments. Interviewee #16a explains:

[it] doesn’t matter if you had the best 21 players available playing for you, you still need, ... depth, because you’re going to have injuries, ... form lapses, there’s going to be a whole host of reasons why they won’t play at their optimum levels every week. ... we’re working on the best juniors in the zones, good coaching programs, good development, making sure they’re learning, ... it’s very specific to fast tracking these guys. ...

This focus on internal development also reflects the fact that the football code rules and regulations (e.g. salary cap and import rules) restrict the extent to which clubs can ‘buy’ talent. Interestingly, these restrictions are designed by the sports ruling body to encourage clubs to further develop their own metropolitan and regional talent pools.

As stated above, we suggest that these organisations approximate the ‘organisationally- focussed competence development’ approach due to the close link between talent, TM practices and succession and replacement planning, including development activities designed to close the gap between current performance and future requirements; and the development of talent further down the organisational hierarchy that ultimately flow into higher level positions. We do not suggest that these organisations ‘neatly’ fit this category, since, in practice there is an emphasis on not only positions, but also individuals (‘with more effort ... put into some employees than others’ (#6)). Further, there is no systematic evidence to suggest ‘an enterprise-wide, holistic “talent mind-set” characteristic of this approach’ (Iles, Chuai and Preece 2010, 181). Indeed one interviewee (#6) used concepts such as ‘employee value propositions’ and ‘employer of choice’ that are more closely asso- ciated with the ‘integrated HRM, selective focus’ approach.

Other organisational approaches to TM accord with Iles, Chuai and Preece’s (2010) integrated HRM, selective focus. According to these interviewees, the focus of TM is on selected individuals deemed to be talented by virtue of the fact that they are ‘high calibre’ (#3i), or have ‘strong’ or ‘high potential’ (3ii and 5) consistent with the exclusive people focus, or narrow view of talent (Iles, Chuai and Preece 2010). Participant #5 stated that TM was part of an integrated performance management system. Similarly, interviewee #3b noted there existed a ‘very well defined process for managing ... talent’ in which talent identification and review were linked to the performance management process. Interviewee #3i said TM centred on talent identification and development, particularly career develop- ment, which included initiatives such as coaching and cross-functional skill development for high calibre or talented individuals. However, the interviewee acknowledged that ‘it was a loose talent management program’ with ‘no ... link to the performance management processes’.

Factors which appear to influence approaches to TM include whether the organisation is a subsidiary of an organisation with a TM policy. For example, interviewee #2 said the

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approach adopted was that which was used by its parent organisation. And while a cor- porate policy also existed in interviewee’s #3ii organisation, the HR manager had some degree of choice in terms of how TM was implemented at the business-unit level: ‘the New Zealand business provided the [HR] process, but they didn’t really have much of an input into anything beyond providing the process’. He attributed the ‘ad hoc’ approach in the wider organisation to this flexibility, with approaches varying between business units. Managerial choice appeared to influence approaches in public sector organisations too, with interviewees pointing out that there was considerable autonomy with respect to management of departments, including HRM, which contribute to ‘ad hoc’ (#4), ‘frag- mented’ (#12) and ‘non-uniform’ approaches (#14).

Data also indicates the nature of labour markets in industry sectors influence TM. In the financial services organisation, interviewee #2 said the overwhelming majority (90%) of promotions are filled internally, leading to a strong focus on talent development and flow associated with ‘organisationally-focussed competence development’. The participant high- lighted that internal development was more cost effective than external recruitment, with employee progression integral to the retention of talent. While talent development and flow was emphasised by interviewee #6 too, the competitive nature of the labour market in the IT sector meant attracting and developing talent was also central to TM, which explains a concomitant focus on initiatives such as being ‘employer of choice’ and ‘employee value proposition’. Interviewee #3i also spoke of a competitive labour market (reflected in lateral movement of staff between firms) in the fast-moving consumer goods sector, with the attraction and retention of talent driving TM, which aligns with the ‘integrated HRM, selective focus’ approach. He indicated that the firm’s high profile brands, together with the fact the fast-moving consumer goods was ‘a sexy industry to be in’, helped it to attract its fair share of talent. In contrast, according to interviewee #3ii, his forestry/timber organisation ‘had to work very hard to attract people ... it was a much tougher gig’. These responses may also suggest that it is not sector per se, but rather the sophistication of the sector that influences TM approach.

Skills shortages were also strongly associated with competitive labour markets, and to some extent appeared to cut across TM approaches, with various interviewees (#9, #11, #12, #13 and #17) drawing attention to skills shortages as a driver of TM.

Talent management in practice We also posed the question: do organisations in Australia adopt an individualistic or systems-level, strategic perspective to TM? Data clearly shows that some respondents equate the attraction and retention of talented individuals with competitive advantage – in other words, an individualistic perspective (e.g. Michaels, Handfield-Jones and Axelrod 2001). This point is illustrated by interviewee #3: ‘you’ve got to retain the best people if you want to create a point of difference between your organisation and your competitors’. In addition, as noted above, in the majority of the organisations in the sample, TM has an exclusive, individual focus. Furthermore, in some firms in which the focus of TM is position-related, and in particular, focused on management positions/roles, the emphasis

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is on the development of talented individuals. Interviewee #17 illustrates this point: ‘it’s really ... just about developing the individual and the individual going on the journey’. Interviewee #16 also emphasised individual development, and in particular, leader devel- opment: ‘if we’re talking talent management ... think ... leadership and hence we’ve done the ... leader’s perspective’. These responses are reminiscent of Iles and Preece’s (2006) contention that leadership development is often equated with leader development, engen- dering a focus on the individual rather than the wider context of leadership. However, both interviewees also indicated that TM as an organisational practice was in its early stages or ‘infancy’.

Even in firms in which the approach to TM is arguably strategic – with the explicit identification of key positions that can add significant competitive advantage (Boudreau and Ramstad 2005; Collings and Mellahi 2009; Lewis and Heckman 2006), or in the words of interviewee #6, ‘the people that we expect to have the biggest future impact in our business’, and differentiated HR architecture (discussed below) – evidence of an underlying, individualistic premise appears to co-exist. Interviewee #6 illustrates this point:

we operate in a competitive marketplace, ... that means that we compete for talent. There is pressure for us to recruit the best people that we can ... there is a competitive advantage to that ... almost a productivity advantage in having higher ... performing employees.

The question therefore is: is TM strategic when accompanied by an underlying belief that organisational performance is underpinned by talented individuals? It may be that while the process of strategic TM has been implemented in the organisation, a talent mind-set is yet to be engrained into the psyche of the HR practitioner (Silzer and Dowell 2010).

An explicit link between talent and strategy (Lewis and Heckman 2006; Vance and Vaiman 2008) was evident in a few organisations only. For example, interviewee #11 stated ‘we had a new strategy, a new approach, we needed new kinds of people’. He elucidated the strategy, and its people implications:

we wanted to set up a market-based management approach to the market. And so market- based management requires people with special skills and knowledge and experience, so it was strategic in that sense ... And then we also wanted to build a nationwide 3G wireless network, so we brought in people who knew about that, we wanted to do an IT transformation so we brought in people who knew the IT. And so [for] every element of the transformation ... we brought in the best people that we could ... every person we brought in was somebody ... that we knew that ... could perform.

Similarly, interviewee #10, a consultant, recounted an almost textbook example of strategic TM (e.g. Collings and Mellahi 2009) in a client organisation: using metrics, the call centre identified which key talent roles were driving value (customer service), and then:

differentiated them [employees] as far as salary was concerned, as far as development was concerned, ... how they engaged them ... so that they could attract and retain the best people for those roles because they were actually the roles that were making the money.

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Interviewee #6 also referred to ‘differentiation’, with ‘clearly more effort ... put into some employees than others’. These employees were considered ‘top talent ... the people ... expect[ed] to have the biggest future impact in ... [the] business’ with differentiated HR practices or ‘architecture’ (Lewis and Heckman 2006) implemented to reflect this impact. For example, with respect to remuneration, the interviewee drew attention to a:

long term incentive program, ... the quantum of which is based on the likely potential of that person in the business. So, someone with high future potential to continue to contribute to the business to continue to take on more senior roles will receive long term incentives of much higher value than someone who isn’t.

However, we find no evidence of talent driving strategy (Boudreau and Ramstad 2005; Lewis and Heckman 2006), which should not be surprising, given research shows only the minority of senior HR managers in Australian organisations are actively involved in strategic decisions (Sheehan, Holland and De Cieri 2006). Moreover, this involvement is primarily reactionary in nature, being mostly concerned with implementing decisions already made. Indeed, interviewee #9, a CEO, made the point:

HR provides the tools, [but] it’s the Managing Director, it’s the Chief Executive, it’s the Senior Executive level that in fact lead from the front and provide the opportunities for people, ... if the CEO doesn’t believe in it, it doesn’t matter what systems you’ve got in place, it’s not going to work.

The CEOs, MDs and senior managers in this study displayed a high level of commit- ment to strategic TM, with some CEOs expressing very strong ideological views on the interrelationships between, and relative importance of, individual talent vis-à-vis the organisational system, as illustrated by interviewee #8b:

no one is able to be individually splendid in isolation. We are so interdependent all of us that yes you may be a very good performer but you can only be good or allowed to flower in a positive environment.

Human resource practices were then developed to support and reinforce this environment: ‘We believe in sharing the rewards of good business performance; this sharing should be based on the performance of the business as a whole not on the outcomes of an individual or section in isolation.’

Overall, in the majority of organisations in the sample, TM is not strategic in the sense that there are clear links between strategy and talent (Boudreau and Ramstad 2005; Lewis and Heckman 2006; Vance and Vaiman 2008); nor does it reflect a congruent approach (Collings and Mellahi 2009), with TM described by interviewees as ‘ad hoc’ (#1, #3ii, #12 and #13), ‘unstructured’ (#3i), ‘very fragmented’ (#4), ‘not uniform’ (#14) and in its infancy (#17). In these organisations there was little emphasis on systems-level issues, although there were some links between TM and individual factors associated with this perspective. These include: vision, mission and values (#5 and #3i), strategic goals and plans (#5 and #3ii), succession and workforce plans (#5, 17 and 12), performance management (#3ii, #5

Janice T Jones et al.

and #15), leadership assessment (#5 and #4), values-based and collegiate organisational culture (#3i and #12) and organisational structure (#3i, #3ii and #12).

Summary, implications and future research

In this paper, we explored TM in the Australian context. The results reveal that senior HR managers define talent variously, as has been the case elsewhere (e.g. Cappelli 2009; Iles, Chuai and Preece 2010; Lewis and Heckman 2006). In contrast, there was much more uniformity among HR practitioners in their definition of TM, which also shows some similarity with recent advances in the academic literature (e.g. Collings and Mellahi 2009).

The results suggest that organisations in our sample are similar to those examined elsewhere (e.g. Iles, Chuai and Preece 2010): Australian-based organisations exhibit a range of approaches to talent, and TM – from what is, in essence, a relabelling of HRM, albeit with a narrow functional focus, but a very broad view of talent; to integrated HRM, with an exclusive individual focus; and an ‘organisationally-focussed competence development’ approach, with a concomitant focus on positions and individuals. The results also indicate that organisations which adopt a similar approach to TM share similar drivers: the attrac- tion and retention of talented individuals was a central driver of the ‘integrated HRM, selective approach’; and while also integral to ‘organisationally-focussed competence devel- opment’, there was a concomitant focus on talent development and flow as a means of retaining talent. This finding provides support for the proposition that Iles, Chuai and Preece’s (2010) three conceptualisations of TM are applicable in other organisations, including those in Australia and is important in as much as Iles, Chuai and Preece’s (2010) study focused exclusively on MNCs in China; our sample included four Australian- based MNCs, but also included other types of private and public sector organisations.

Two factors contributed to explaining differences between firms in TM approaches: first, whether a firm is a subsidiary of an organisation with a corporate head office directing policy on TM. However the relationship is not straightforward, with managerial choice at the business-unit level contributing to explaining heterogeneity in TM approaches. To the extent that a corporate policy on TM allows the devolution of decision-making so that the detail of how TM takes place is determined at the business-unit level, different approaches to TM are likely to emerge. Allowing for different approaches may be appropriate if the approach adopted reflects business-unit talent priorities. However, an ensuing outcome is that TM is unlikely to be uniform across the wider organisation.

The second factor that emerged as influential is the sector in which a firm operates. McDonnell et al. (2010) suggest that knowledge-intensive, high-tech sectors are likely to have formal TM systems. Our data suggests it may not be sector per se, but the sophis- tication of, and nature of labour markets within sectors that contribute to explaining differences.

From a wider economic and policy perspective, however, Australian organisations cannot afford to mirror what the rest of the world is doing, given the nation’s relatively small economy and distance from major global economic centres. As Patrickson and Linley

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(2001, 204) noted a decade ago, ‘the Australian labour market lacks the density and range of career opportunities evident in higher population areas of the USA and Europe’. To keep ahead of the competition, Australian organisations needed to develop staff by ‘assisting them to operationalize strategic endeavours, forecasting skill demand and developing rapid response systems’, all key aspects highlighted in the academic and practitioner-driven literature to develop TM more strategically.

While researchers advocate a more strategic approach, the evidence in this study indi- cates there is little traction in practice, with most firms taking an individualistic approach to talent/management. The lack of explicit links between talent and strategy in most organisations in the sample in particular begs the question: how do managers identify what positions or who the talent should be, if they do not know where they are going? This is of particular concern given the sample comprises senior HR professionals who are more likely to have a strategic orientation (De Cieri et al. 2008). An equally important question for practitioners in organisations in which TM is, in effect, HRM relabelled (Iles, Chuai and Preece 2010; Lewis and Heckman 2006) is: how does the HR function add value to the bottom line (Sheehan, Holland and De Cieri 2006)?

Qualitative research raises the question of generalisability. Our findings are based on a relatively small sample, and thus are not transferable to other populations of firms, and there is therefore a significant opportunity for further research. Along with Eisenhardt’s (1989) suggestions that qualitative studies can be extended along emergent theory lines to include follow-on cases and other research like questionnaires, more fieldwork is needed utilising samples in specific organisational settings and industry sectors in order to build a qualitative understanding of the nature of, and factors that influence, TM. Researchers could then move to quantifiable and generalisable research, which would follow Carlile and Christensen (2005) and, more recently, McDonnell’s (2011) position that using different methods and approaches to study management phenomenon, especially at the exploratory stage, will aid in building theory.

While this research included some senior managers, overwhelmingly, the focus was on senior HR practitioners, and making a contribution to understanding senior HR views on TM, and therefore represents a partial perspective. Further work is needed on other managers, including line managers further down the hierarchy who implement TM and manage talent. Studies in the human resource development field have shown that managerial attitudes within firms are not uniform, with managers in senior, strategic positions recognising the importance of skill development for sustainable competitive advantage, while middle- and junior-level managers in operational positions tend to be driven by short-term priorities (Smith and Dowling 2001). More qualitative research on managerial attitudes to TM is needed in order to explore whether differences in attitudes exist between managers, and if so, how such differences influence the implementation of TM.

Work is also needed on other stakeholders, including those who are in the talent pool or pipeline and are ‘talent managed’, as well as those excluded from TM, in order to generate a more complete understanding of TM.

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Acknowledgements

We thank the HR and other senior managers who participated in our research for their time. We would also like to thank the two anonymous reviewers for their invaluable feedback.

Notes

1 The extent to which individuals’ social capital involving relations with clients can be transferred is dependent on the presence of non-compete or restraint of trade clauses.

2 AFL: Australian Football League. AFL is played at the national level. State-level clubs (one of which is in the sample) act as feeders into the AFL.

3 These interviewees were not from the professional football organisation.

Janice T Jones (PhD, Flinders) is a senior lecturer at the Flinders Business School, Flinders University. Her research interests include human resource development, particularly in smaller enterprises, and corporatisation of healthcare organisations.

Marian Whitaker (PhD) is a senior lecturer with Flinders Business School. She teaches a range of HRM topics at undergraduate and postgraduate level, and supervises a number of higher degree students in the field. Her research interests include the management of scientific and technical staff.

Pi-Shen Seet (PhD, Cantab.) is an associate professor at the Flinders Business School, Flinders University. His current research interests include investigating what motivates talented individuals to migrate or repatriate from their home countries as well as how entrepreneurs and managers make decisions to overcome complex leadership, cultural, institutional and commercial dilemmas as they seek to grow their new ventures or transform their existing organisations.

Jarrad Parkin is an honours graduate interested in talent management, as well as behavioural aspects of business research, currently gaining experience in business administration.

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