Global talent management and global talent challenges: Strategic opportunities for IHRM

Abstract

The need for multinational firms to be as competitive in the global marketplace as possible has increased dramatically over the past twenty years. For international human resource management this has meant many strategic opportunities to international human resource management. An excellent example of such an opportunity is that which exists regarding the management of talent. This opportunity began to develop in the late 1990s with the advent of the challenge of “global talent management.” During the past few years this opportunity has expanded to include challenges dealing with talent shortages, talent surpluses, locating and relocating talent, and compensation levels of talent. Together, these conditions are all “global talent challenges”. In this article we describe these several global talent challenges and the strategic opportunities they present to firms and propose the implications of these for firms and for the field of international human resource management.

Introduction

In describing the competitiveness of nation in relationship to each other, Porter (1990) conceptualized four key attributes that are often referred to as “Porter's Diamond,” Briefly, the four include: strategy, structure and rivalry; demand conditions; supply networks; and factor endowments. Factor endowments refer to a country's productive capabilities, including the qualities and characteristics of its workforce, its natural resources and infrastructure. Increasingly, these factor endowments, particularly the workforces of countries around the world, have received extensive discussion for several reasons. One is that workforces around the world have expanded, both quantitatively and qualitatively. A second one is the expansion of economies and businesses globally, thus increasing the need for larger workforces. A third is that the compensation levels of these workforces vary dramatically across countries, even for comparably skilled workers. The fourth reason is, and following from the previous three, is that firms see that they are able to gain and sustain a global competitive advantage when they manage their workforces effectively (Bryan, 2010, Gupta and Govindarajan, 2001, Porter, 1990). To do so successfully, we propose that these firms must confront the reality of several global talent challenges and develop global talent management initiatives to address these challenges.

Beginning in the late 1990s, firms around the world were confronted with a major threat to doing business: a demand for talented employees that far surpassed the supply, thus creating a global talent shortage (Chambers et al., 1998, Michaels et al., 2001). As a consequence, “talent acquisition, retention and management” became a key expression (challenge) in global business (Guthridge, Komm, & Lawson, 2008). The interest in this challenge came to be embraced with the label of “global talent management” or GTM (Beechler & Woodward, 2009). Reflecting the wide acceptance of GTM after the seminal book entitled The War for Talent (Michaels et al., 2001), several special issues of academic journals such at the Journal of World Business (Scullion, Collings, & Caliguri, 2010) and the Asia Pacific Journal of Human Resource Management (McDonnell, Collings, & Burgess, in press) and books such as Global Talent Management by Scullion and Collings (2011), Strategy-Driven Talent Management (Silzer & Dowell, 2010) and Talent Management of Knowledge Employees (Vaiman, 2010) were published. The major focus of these works was on corporations obtaining and managing a sufficient number of highly talented individuals (also known as “valuable contributors” including high level executives, those with high managerial potential, and those with rare technical skills) to deal with the challenge of the global talent shortage (Beechler and Woodward, 2009, Guthridge et al., 2008).

While the global talent shortage remains a significant human resource talent challenge for global firms, equally significant global talent challenges have emerged. These include those associated with the need to: (a) reduce and remove talent in order to lower the costs of operations; (b) locate and relocate of operations around the world; and (c) obtain equally competent talent anywhere in the world at lower wages (Guthridge et al., 2008, Lohr, 2010). Collectively, these challenges have become significant because of their strategic value and impact to the success of global firms (Guthridge et al., 2008, Lohr, 2010). Because of their common association with global talent, they have come to be known as “global talent challenges (GTCs).” These deal with through human resource policies and practices that have their roots in global talent management. When these policies and practices are systematically focused on these global talent challenges, they can be referred to as “global talent management initiatives (GTMs)” (Schuler, Jackson, & Tarique, 2011). The traditional treatment of “global talent management” is being expanded here to encompass additional global talent challenges. This work is built upon the suggestions of Scullion and Collings (2011), Tarique and Schuler (2010), and is consistent with some of the work on the traditional discussion of GTM (Guthridge et al. (2008).

This article begins by describing these global talent challenges and global talent management, as well as by describing some of the events that have produced this expanded treatment of “global talent management.” As such, some of our discussion reflects conditions that were present during recent economic and financial boom times (i.e., the years leading up to 2008), when worker shortages were a primary concern. Economic expansion is likely to return, so labor shortages are likely to be of continuing concern, particularly in the rapidly emerging economies, such as China, India and Brazil (Jorek, Gott, & Battat, 2009). Regardless of the size of the gap between the available and desired pool of talent globally, however, human resource location and relocation, and cost reduction through lower compensation levels are likely to become major global talent challenges over the next several years (The Economist, 2010a, The Economist, 2010a, The Economist, 2010b).