Global Talent ADVANTAGE
Recruiting and retaining talent have always been a struggle for global
companies. Today, the challenges are larger than ever. With demand rising and
supply dwindling, companies are finding that the talent issue, especially in
rapidly developing economies (RDEs), is one of their most critical challenges.
By Daniel Friedman, Jim Hemerling and Jacqueline Chapman
Three factors make the global marketplace for talent far more competitive than
ever before. First, the rise of RDEs and the globalisation of value chains have
sharply ratcheted up demand. Companies are seeking the best locations for their
operations, making decisions on the basis of cost, talent and proximity to
markets. One global company projects the need to hire 20,000 employees in Asia
over the next decade, which will strain its well-developed overseas
human-resources (HR) engine.
Second, big demographic shifts in the West are dramatically tightening supply.
Few companies have adequately prepared for the talent shortages that will be
created by the retirement of the baby boomers. In the US, 75 mn people are
approaching retirement, and only 30 mn members of Generation X are available as
successors. In the European Union, the working-age population is forecast to
fall by 48 mn, or 16 per cent, by 2050.
Third, skilled workers are at a particular premium. Although RDEs have a
bountiful supply of workers to take up the slack in unskilled jobs, they fall
short when it comes to educated and skilled positions. Candidates for those jobs
are increasingly difficult to find and keep because their relatively small
numbers make the competition for them so intense.
Talent management needs to become a core activity on a par with corporate
finance and strategic planning. Talent must be managed rigorously and globally –
across languages, cultures and time zones. Companies should be making plans that
look out at least three to five years. At the same time, the systems and
processes involved in managing talent must be sufficiently flexible to permit
customisation to local conditions and markets. Based on our experience with
global companies and interviews or surveys of close to 100 executives, we
identify five key actions for success.
Create a new global model. Global companies need to reorient their organisations,
operations and processes to reflect the new order of talent management, as Cisco
Systems is doing by committing itself to basing 20 per cent of its executives in
India by 2010. Recruiting, leadership development and training need to be
organised in a way that allows talent to develop in RDEs and other distant
markets. As companies distribute their operations globally, they will also need
to figure out how to assign decision rights and reorient decision-making
processes to reflect the new order. As people – and power – move away from a
single centre, companies must revisit fundamental organisation-design principles
regarding the role of the centre, the sizing and staffing of functions, and the
coordination of activities across the enterprise.
Elevate global talent planning to an item on the CEO’s agenda. Working in
concert with HR, the CEO and other top executives should routinely address
talent issues. The CEO of a 110,000-employee industrial-goods company, for
example, recently became concerned that the company’s talent pipeline was too
small to support its anticipated growth in RDEs and its entry into service
businesses. Subsequent analysis revealed that the company would have to increase
by a factor of eight the number of executives hired in Brazil, Russia, India and
China. Because senior managers recognised the importance of these hires to the
company’s success, they put their full weight behind a comprehensive
talent-management programme and an HR brand-awareness campaign in those markets.
Expand the hiring horizon. Many global companies rely largely on poaching talent
from competitors when they enter new markets. But to meet future needs, they
will have to start cultivating talent themselves. Among other things, they
should be hiring ready-to-use graduates from top schools in local markets. They
need to focus on hiring and training talented but untested recruits as well.
Companies also should develop strong ties to less renowned schools to gain
access to their best students.
Accelerate careers and create global leaders. To capture rapid growth in RDEs,
global companies need to build high-performing management and leadership teams
in a fraction of the time it takes to put them together in developed economies.
To construct these local teams, companies must deploy a new
leadership-development model and demonstrate that they offer meaningful
leadership positions and promotion opportunities to recruits from RDEs. Money
alone is often insufficient to keep the best employees, but a combination of
compensation, career opportunities and a good working environment can go a long
way toward retaining the best and brightest.
International rotations are a key part of career and leadership development
programs, offering high-potential candidates in RDEs the chance to be exposed to
cultures and business practices in other parts of the world. Rotations also help
feed the global talent pipeline.
Ensure that all leaders embrace the new global mindset. If companies are to grow
quickly in local markets, they need strong local leaders with an entrepreneurial
bent and a belief in the global values of the organisation. This commitment
needs to start at the top. At Air Liquide, an industrial goods company with
headquarters in France, two of the top five performance indicators for the local
leadership team in China pertain to talent.
Every year, the senior leaders in China develop talent strategies and project
talent needs for coming years. In 2007, they had already developed a plan for
2015. The company is investing heavily in talent today in order to be prepared
For too long, companies have treated talent and strategy as separate spheres.
Top executives have taken care of strategy and delegated talent to HR or to
junior staff. That approach no longer works. Talent and strategy need to fit
together like a hand in a glove, requiring senior executives to work closely
with their HR staffs and local business-unit executives. Achieving a global
talent advantage is hard, which explains why few companies do it successfully.
But it is not an optional exercise.
(Daniel Friedman is a partner in the Los
Angeles office of The Boston Consulting Group. Jim Hemerling is a senior partner
in the firm’s San Francisco office and author of the new book, “Globality:
Competing with Everyone from Everywhere for Everything” (Business Plus, June
2008). Jacqueline Chapman is a topic specialist in BCG’s Los Angeles office.)