By TA News Bureau:

There is a dearth of talent worldwide. Recruiting talented workforce and retaining them are challenges that CEOs face constantly. The situation is particularly grave in small and medium enterprises. Dr TN Krishnan, Associate Professor & Chairperson, Research Committee of Organizational Behaviour and Human Resources at the Indian Institute of Management, Kozhikode (India) has done considerable research in talent management which has become one of the key strategic issues for leaders in global organizations. Although a majority of research on TM focuses on the large multinational enterprise (MNE), not much work has been done in the context of small and medium enterprises. It is here that he has done intensive study on talent management practices in SMEs. They are different from major organisations because of their distinct institutional and structural factors. In this interview, Dr Krishnan explains to Tyre Asia his research and elaborates on the challenges being faced by small and medium enterprises in evolving good TM practices

Talent Management (TM) is a key strategic issue before corporate leaders who always try to get the best talent and then struggle hard to retain them. This issue is particularly severe in small and medium enterprises.
Attracting and retaining talent is a key concern for most organizations, says Dr TN Krishnan, Associate Professor & Chairperson, Research Committee of Organizational Behaviour and Human Resources at the Indian Institute of Management, Kozhikode (India).
“We start with the uncomfortable truth that there is no universal definition of talent across organizations,” he told Tyre Asia in an interview.
“While Talent Shows are popular contests across the world, most of these are skill-based shows. While skill and/or knowledge are valuable assets to possess, it should get translated to performance in an organizational context,” he points out.
Boris Groysberg and his colleagues at Harvard University through their research have shown how even in the role of security analysts, where individual skills and knowledge matter a lot in exhibiting performance, star analysts who switched employers experienced an immediate decline in performance that persisted for at least five years.
“So talent should possess skills and knowledge that translate to performance in a given firm. We also know that not every good engineer becomes a good manager.”
When organizations visit management campuses, they do not just hire a good marketer or a finance expert, they expect that this functional expert becomes a good leader over time. Hence, the potential to reach higher level management positions is another element that most good organizations that are rated as ‘talent nurturers’ screen for and identify early on in their employees.
Talent could also be in certain niche or technical areas where the passion and learning agility in a particular domain could be key indicators of potential talent.
“Once we have the right talent in the organization, engagement and retention become a key concern,” asserts Dr Krishnan.
Talented employees look for three fundamental features in the work environment — purpose, autonomy, and learning opportunities. Talented employees try to constantly reflect on how their work aligns with the larger purpose of the organization. This helps them carve out the actions best suited to the demands of the job/organization at a point in time.
Autonomy refers to the sense of freedom in deciding on what to achieve and how to go about achieving it. While every job would have its set of tasks and duties, in a dynamic business environment, talented employees should be provided the opportunity to constantly redefine how they are going to go about the job.
This brings in a great sense of psychological ownership to achieving results. Learning is enhanced when there is a sense of challenge and mastery, where employees are able to hone their skills or knowledge on a constant basis.
All these changes call for doing away with the dominant paradigm of measuring-controlling-rewarding employees and creating an alternate paradigm of acknowledging-empowering-engaging employees where shared purpose, commitment to collaboration and involvement inspire people to perform and strive in the organization.
When asked what kind of organisational structure CEOs would need to create institutional meritocracy, Dr Krishnan is of the view that such a structure should be able to do two things. Differentiate performance and reward and recognise people based on the performance they showcase.
Differentiating performance could be a challenge, especially when there is a strong cohort influence on performance evaluation and promotions.
“In one of the firms that I was consulting with, the HR Head recounted how there was a strong batch influence in setting expectation on the hierarchical position a person should be in, translating into, “if one is of this batch….he/she should be at this level”. This would not work well in a context where one is trying to differentiate performance based on efforts or achievements.”
A concerted effort should start at the top in articulating the vision for the organization and making sure that these are cascaded down to the employees of the organization. Managing performance should not be seen as an activity in appraising individuals once every six months or every quarter, but a constant engagement with employees on how they are doing at work and understanding what areas need to be improved.
“Evaluating performance should not be seen as a perfunctory activity but an important source of competitive talent to the organization.”

Two challenges

Dr Krishnan says companies struggle with two central challenges in talent management. The first is with regards to the basic approach the organization should adopt in talent management. There could be two approaches – inclusive and exclusive.
While the inclusive approach holds the view that all staff can potentially contribute to competitive advantage and that everyone should get their share of development, the exclusive approach holds that a set of high potential individuals differentially contributes to the performance of the organization and hence are worthy of higher investment in development.
Central to the latter approach is the belief that talent must be identified, nurtured and placed in pivotal roles that are crucial to the competitive advantage of the firm. While exclusive approach is dominant in multinational enterprises, many domestic firms and SMEs have an inclusive view of talent where every employee is considered as a talent or potential talent.
The lack of objectivity in evaluations of both performance and potential are possible risks in adopting an exclusive approach and may also undermine the egalitarian and informal work culture in organizations.
The inclusive approach on the other hand fails to invest in development based on potential of employees and is also likely to gloss over meritocratic performance and talent management is just a pseudonym for traditional human resource management practices.
The second challenge is in coming out with a shared understanding of what talent means in a firm. While this is very important when a firm adopts an exclusive approach, even in an inclusive talent management approach there are individuals who are going to adorn senior management positions.
In those cases it is important to have a mutually agreed notion of what leadership talent looks like in the organization. While companies are able to more clearly identify technical talent in terms of their domain proficiencies, many of them struggle in creating a well-recognised notion of what leadership talent looks like in their company’s context.
What is an effective leader in one company could be a potential disaster in another and also what is an effective leader during one time period may not be so in another time period for the same company as the biographical experiences of Steve Jobs highlights.
It is found that talent management strategies differ among big corporate set-ups and small and medium industries. “In the recent article that I co-authored with Hugh Scullion and published in the journal Human Resource Management Review, we argue that big corporates and small and medium enterprises differ primarily in their institutional, resource and economic contexts which impact their approach to talent management.”
Research on talent management in large firms have established two conceptual realities –most of them adopt an exclusive approach to talent management by identifying high potential talent pools and identifying key positions or strategic roles to be occupied by the identified talent pool.
“We contend that as organizations grow in size and complexity, the changing structural forms along with resource constrains makes it harder for SMEs to systematically identify key positions and the development of a talent pool of high potentials to fill these roles.
“We further argue that given the importance of informality and personalised management style to the organizational culture in SMEs, SMEs would prefer to adopt an informal approach to TM and would not adopt approaches which require differentiation of workforce by the formal identification of talent,” Dr Krishnan said.
Given the inclusive approach to talent management and evolving structural form of the SME, there is a need for the owner-managers in SMEs to understand the role requirements as hierarchical levels get added and also upskill themselves to the evolving role demands of the top level managers by envisioning the directions the organization plans to go through and making sure that the right talent is there to take the organization to the next level.
The right talent might be the owner-manager himself/herself in which case he/she has to relinquish what they had enjoyed doing and have been doing so successfully and take up new responsibilities that a higher level position demands in a fast growing firm.
This might also entail the owner-manager stepping down and recruiting a new individual who could play the role better. Many start-ups falter on this count and hence are not able to become successful and evolve to the next stage of growth to a SME.
Challenges are emerging in finding talent in the light of competition that is getting tougher as market economies unleash disruption. “A competitive market plays two fundamental roles in managing talent,” says Krishnan.
One, it has a regulatory role wherein companies that are weak in talent management practices risk losing out their valuable employees to competitors. Companies are finding that increasingly employees are seeking out global opportunities and are not restricted to geographic domains.
In such a context, it is important for companies to leverage social media platforms, create a powerful employer brand, pay competitive salaries and above all create an engaging work climate in order to attract good talent.
Second, a competitive market could also incentivise employees to upgrade their skills and knowledge as there is an external market that would provide good rewards for the talent. If an employer is able to provide jobs that are challenging, are able to provide opportunities that could engage the various capabilities of employees and offer assignments that help build up proficiencies of employees, there is a high chance that potential talent would get attracted and get retained in the organization, says Dr Krishnan

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