DECLARATION OF ORIGINALITY UNIVERSITY OF PRETORIA FACULTY OF EBIT Graduate School of Technology and Management The Graduate School of Technology

and Management places great emphasis upon integrity and ethical conduct in the preparation of all written work submitted for academic evaluation. While academic staff teach you about referencing techniques and how to avoid plagiarism, you have the responsibility in this regard. If you are at any stage uncertain as to what is required, you should speak to your lecturer before any written work is submitted. You are guilty of plagiarism if you copy something from another authors work (e.g. a book, an article or a website) without acknowledging the source and pass it off as your own. In effect, you are stealing something that belongs to someone else. This is not the only case when you copy work word-for-word (verbatim), but also when you submit someone elses work in a slightly altered from (paraphrase) or use a line of argument without acknowledging is. You are not allowed to use work previously produced by another student. You are also not allowed to let anybody copy your work with the intention of passing it off as his/her work. Students who commit plagiarism will not be given any credit for plagiarised work. The matter may also be referred to the Disciplinary Committee (Students) for a ruling. Plagiarism is regarded as a serious contravention of the Universitys rules and can lead to expulsion from the University. The declaration which follows must accompany all written work submitted while you are a student of the Graduate School of Technology and Management. No written work will be accepted unless the declaration has been completed and attached. Surname & initials Student number Course code Name of lecturer Due date Date of submission : : : : : : Abraham, J R 23070732 PEM 884 Mrs A Crafford 11 April 2011

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What Technology Managers should know about Managing Talent

What Technology Managers should know about Managing Talent

Executive Summary: This is an In-house guide for ArcelorMittal South African Technology Managers on how they can manage Talent within their sections as well as within the group. This document will provide multiple frameworks adapted from various leaders of Talent Management, subsequently it will provide a theoretical background on Talent Management as well as practical guidelines in applying effective Talent Management strategies. Furthermore, this document will show the benefits of Talent Management. It will provide direction on how competitive advantage will be obtained by applying Talent Management by fusing the theoretical work with practical examples. This document will also show that Talent Management is a complex collection of connected Human Resource processes with the aim to deliver a simple fundamental benefit for ArcelorMittal South Africa.

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Table of contents Executive Summary ........................................................................................................................ II 1. 2. 3. 4. Introduction .............................................................................................................................. 1 Growing Challenges for effective Talent Management ............................................................. 1 Importance of Talent Management .......................................................................................... 2 Frameworks for Consideration ................................................................................................. 2 4.1. Clearer Thinking about Talent Management McKinsey .................................................. 2 Target Talent at all levels, the inclusive approach: ..................................................... 2 Develop a number of Value Propositions ................................................................... 2 Bolstering Human Resource (HR) Department .......................................................... 3 Managing Demand .................................................................................................... 3 Managing Supply ....................................................................................................... 3 4.1.1 4.1.2 4.1.3 4.2 4.2.1 4.2.2 4.3 4.4 4.5 4.6 5.

Application of Operations Principles to Talent Management Harvard Business.............. 3

Assessment of Talent Corporate Executive Board ......................................................... 4 Top-Down approach SumTotal ...................................................................................... 5 Functionality and Vitality Development Harvard Business .............................................. 6 Integration of Frameworks with Technology Oracle Corporation .................................... 8

Summary: ................................................................................................................................ 9

Notes in writing this guide. ............................................................................................................ 10 References: .................................................................................................................................. 11 List of Figures Figure 1: Risk Analysis approach based Talent Management ......................................................... 5 Figure 2: Holistic view of the life cycle and sustainability of Talent Management ............................ 6 Figure 3: Hypothetical functionality graph for ArcelorMittal Newcastle............................................. 7 Figure 4: Hypothetical Vitality graph showing sectional performance for ArcelorMittal Newcastle ... 8 Figure 5: Incorporating various strategies with the aid of technology .............................................. 9

What Technology Managers should know about Managing Talent

1. Introduction In the course of human history, one has travelled through many significant eras all leading to the advancement of humans within planet Earth. These eras include the Agricultural age, Industrial age, Information age and now Talent Age. The Talent Age was coined by Mckinsey in 1997 (Taleo,2011) when they instigated their War for Talent research (Guthride, Komm and Lawson,2008). Talent Management should be seen as a multifaceted system of tasks, which on the highest level includes the following: Attracting highly skilled persons Integration of new workers into the team, group and company Developing current employees Retaining these skilled employees

The above mentioned tasks should be conducted such that the employees and team can meet current and future business goals, but as stated by Guthride(2008) one of the foremost challenge managers face is the un-preparedness to find, motivate and retain capable workers as time progress. Key factors for Talent Management to succeed, pointed out by Douglas A.R and Jay A.Cogner (2007), as well as Faust (2011) include the acknowledgement that existing Talent Management procedures within organisations may have been applicable in the past but now are out dated. This is due to the misalignment of Talent Management policies with the organisations revised goals and requirements. Secondly, even if the systems and procedures are in place for effective Talent Management, organisations need full commitment from the highest managers and executives to ensure its success. Without the support of the highest echelons of the business, policies and practices in terms of Talent Management will ultimately disintegrate to bureaucratic routines. GuthridgeGuthride(2008) further emphasises that the most important managerial preoccupation will be to finding skills that can cater for company goal. 2. Growing Challenges for effective Talent Management Three external factors play a major in the challenges in effectively implementing Talent Management. These include Globalisation, Demographic Changes and the Rise of the Knowledge Worker (Guthridge,2008). Generation Y people (people born after 1980) are forming the core work force of many companies both locally and internationally. These people have contrasting mindsets to those of their predecessors and therefore require a renewed Talent Management approach. This in conjunction with globalisation as well as high availability of information and knowledge leads to a unique Abraham, J 23070732 1

What Technology Managers should know about Managing Talent

situation that the employee is not an expendable item but rather an asset. (Adapted and enhanced from Guthridge, 2008) 3. Importance of Talent Management

Strategic steps to cater for the increased drive to acquire skilled workers. Preparation for the impending retirement of the aging workforce. Means to increase the low levels of employee engagement. Recognition of the high cost of turnover and subsequent prevention. Strenuous demands of managing global workforces. Preparedness for succession planning and business continuity.

4. Frameworks for Consideration 4.1. Clearer Thinking about Talent Management McKinsey Guthridges suggested approach in Talent is a three-prong approach, namely one has to Target talent at all levels, Develop a number of Value Propositions and Bolster Human Resource (HR). The simplicity of this emphasis the key points mentioned in the introduction. 4.1.1 Target Talent at all levels, the inclusive approach:

Previously, based on War for Talent research in 1997, a companys A-players where two times as more effective in improving sales, productivity and profits and therefore compensated 40% more than B-players. B-players were defined as capable, steady performers who make up the majority of the workforce or team. The impact over the years of A-players has not diminished but more emphasis has to be given to the B-players who form the majority of the work force and a key support area to all A-players. Top talent is more effective when it operates in a vibrant internal network and has shown to be less effective and productive when such support systems are absent (Subramaniam and Youndt, 2005). This calls for companies to address the needs of talent at all levels especially on the unsung levels such as front line staff, technical specialist and at times the indirect workforce. In essence, the inclusive approach sees the work force as a collection of talent segments that actively create and or apply knowledge. Management are not exempt from this. Managerial skill sets need to evolve or developed to handle the changing work field. 4.1.2 Develop a number of Value Propositions

The companys senior management have to sell the concept of why a smart, energetic, and ambitious person might want to work for ArcelorMittal as opposed to another steelmaker during recruitment. This approach should also cater for what the employee is looking for, such as more freedoms like working from home. The company or management with appropriate approvals should provide a rewards system that promotes smart, hard and dedicated work such as early time off or unexpected monetary rewards. The company should highlight and re-enforce the employees Abraham, J 2 23070732

What Technology Managers should know about Managing Talent

potential growth path as well career development (training or presentations) and provide the opportunity for real-decision making. ArcelorMittal, will be providing autonomy and development paths, therefore ArcelorMittal is not only acting in a persuasive role to the new candidate but also provides the prospective recruit reason(s) to stay. 4.1.3 Bolstering Human Resource (HR) Department

As per common practice in the 1990s (Guthridge,2008) HR should be in charge or responsible for formulating and managing standard process. This includes recruitment, training, compensation and performance management. HR should also assert influence over business strategy by providing proactive counsel and support to Chiefs, line managers and business units in order to coordinate and establish effective Talent Management. Old mentalities of Line Managers is that HR is ineffective, this mentality has to be overcome and allow HR to establish the platform such that Talent Management methods can succeed. This can only be done if HR management widens their focus area to beyond that of senior managers and see the collective practice of Talent management established and in full use. 4.2 Application of Operations Principles to Talent Management Harvard Business This is the supply chain view of Talent Management, a unique and critical approach. It realise on four main principles. Two of the principles focus on addressing the risk of estimating demand and the other two on the uncertainty of suppy (Cappelli,2008). This approach in an amendment to the supply chain concept of Just-in-Time or better defined as the Talent-on-Demand Framework. 4.2.1 Managing Demand

Principle 1: Make and Buy to manage risk, essentially a deep bench of talent is expensive to maintain therefore ArcelorMittal should undershoot their estimates for employing permanent talent and contract any short term skill sets that are needed. Talent Management is an investment not an entitlement therefore extra thought should be taken in hiring permanent and contractual staff. (Cappelli,2008). Principle 2: Adapt to the uncertainty in Talent Demand, uncertainty in demand is a given, ArcelorMittal should adapt to this. A suggested approach is to invest in shorter development programs. In essence, instead of sending high end talent staff on a three year functional management course with the risk of them leaving rather incorporate selected members from different sections on a 6 to 12 month course on general management and allowing them to specialise within their sections. Another option will be create a general talent pool, where resources can be allocated as the need arises. 4.2.2 Managing Supply

Principle 3: Improve the return on investment in developing staff, one should consider allowing the employee to share in the cost of development. This can include asking the employee Abraham, J 3 23070732

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to apply the skills acquired in a demonstration of a beneficial project. Another means is not to lose contact with employee that have been invested in but left the company, essentially enticing them to return. Principle 4: Preserve the Investment by balancing Employee-Employer interest. Talent development should be seen as a perishable resource due to the fact employees leave for better opportunities. In order to minimise this, the balance of interest between employee and employer should be maintained, such balancing acts can include allowing the employee have a voice in advancement decisions. 4.3 Assessment of Talent Corporate Executive Board The CLC (2005) proposes a Risk Analysis means of Talent Management with the subsequent data used to implement Compensation-Based Strategy or Development and Communication-Based Strategy. The first phase is to assess the risk of talent and the lack thereof. This is a three tier analysis. The first tier is the evaluation of Position risk and individual risk, that is, the significance of a specific role or position to the business and the risk that the individual will leave that position. The second tier is recognising the risk post to the organisation if that person leaves especially if no substitute is available. By analysing the first tier in conjunction with the second, the company will have to develop a customised retention action plan. The third tier is the management responsibility for employee engagement, this will re-evaluate the risks in tier one and two. This can only succeed with support and engagement by HR and the creation of a diverse target Retention Metrics. Retention is key to effective and lasting Talent management. Two main retention strategies should be looked namely compensation as well as development and communication based strategies. Compensation has been shown to be the largest and most effective strategy but in doing so one has to look at the bottom line of the company, that long term incentives such as retention bonus or stock option are meaningful, incorporation of short term incentives to long term strategies and seeing compensation as only one piece of the equation. A more meaningful approach is using development skills focused on individuals desires linked to company goals and career enhancement. This should be done by creating individual development plans. These plans should encompass rotation of the staff to enhance skills not just vertically but horizontally as well. Communication is key to the success and must come from all levels. Addressing employee worries on a organisational level must be done by the Executive board, personal communication by direct Managers and development, growth and retention by HR.

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What Technology Managers should know about Managing Talent

Figure 1: Risk Analysis approach based Talent Management 4.4 Top-Down approach SumTotal Christopher Faust (2011) from SumTotal suggests that Talent Management should be viewed holistically with a top-down approach. An automated system should exist for employee development, which align with the business vision and goals. Talent Management should be designed such that performance drives development goals, which fulfils the companys strategic goals where the major focus should be on nurturing talent by prioritising and determining the individuals development plans. Based on ArcelorMittals current Talent Management Plans, the following enhancement is prescribed to ensure comprehensive Talent Management functionality. Cascading organisational objectives down to employees. Linking organisational goals to individual goals therefore creating a focused driven work ethic 360" feedback of the employee (of all levels) by peers, seniors and juniors. This will identify competency gaps in the individuals development plan. Skills gap auditing of the individual based on profiles, 360 evaluations and the subsequent identification of potential deficiencies in the individuals skill set. Prioritising development based on skills gap and competency shortages Personalising learning and or development to encompass organisational goals within the individuals learning program.

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What Technology Managers should know about Managing Talent

Figure 2: Holistic view of the life cycle and sustainability of Talent Management Consider the following practical example. ArcelorMittal decides to upgrade and standardise on Programmable Logical Controllers (PLCs) made by company A. The technicians tasked with this are pre-visioned with support and maintenance of company Bs PLCs. During the Goal alignment phase the ArcelorMittal and employees discuss and debate and come to an understanding that company As PLCs are the way forward. Once a 360 Evaluation is completed, it has seen that the technicians are highly dedicated, motivated and hard working but during the gap analysis it is observed that they only have rudimentary skills in company As programming skills sets. This leads appropriate development plans as well as customised learning such that maximum benefit is reaped for both company and employees. Once iterations of this life cycle occur, incentives and compensation should be given to the team in successful learning and completion of project as well as identification of future team leaders for succession planning. 4.5 Functionality and Vitality Development Harvard Business Functionality and Vitality is defined as a measurement standard on how well ArcelorMittal can groom ones high-potential employees to full-fill strategic management roles. The different strengths and weaknesses of the Talent Management Strategy are deduced from key factors that make up Table 1 and Table 2 below.

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What Technology Managers should know about Managing Talent

Table 1: Functionality Aspects and measurements standards Functionality Sourcing Assimilation Development Deployment Performance Management Rewards Engagement Retention Rating (out of 5)

Functionality
Retention

Sourcing
5 4 3 2 1

Assimilation

Engagement

Development

Rewards Permomance Management

Deployment

Figure 3: Hypothetical functionality graph for ArcelorMittal Newcastle Based on the Functionality graphs adapted for ArcelorMittal based on Douglas, 2007 one notes that ArcelorMittal shows strength in deploying their staff and assimilating them into teams but shows great weakness in the other 6 points of measurement. Table 2 Vitality of key roles and measurements standards Committed Engagement Vitality Top Executives Talent Pool Line Management HR/Talent Staff (out of 5) (out of 5) Accountable (out of 5)

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What Technology Managers should know about Managing Talent

Vitality Graph

Top Executives
5 4 3 2 1

Commited (out of 5) Enagement (out of 5) Accountable (out of 5) Talent Pool

HR/Talent Staff

Line Management

Figure 4: Hypothetical Vitality graph showing sectional performance for ArcelorMittal Newcastle Based on the Vitality graphs adapted for ArcelorMittal based on Douglas, 2007 one notices that ArcelorMittals employees show commitment and accountability possibly due to the high engagement by the line managers. Unfortunately, this process is not sustainable as top executives show little or no commitment, provide minimum engagement and have no accountability for staff. This can explain the low retention of A-players and supporting B-players as seen in Figure 1. 4.6 Integration of Frameworks with Technology Oracle Corporation Talent Management is the collaboration of key factors within an organisation. The main key factors are HR, Management and the Talent or Team of Talents. The definition of an integrated Talent Management framework is that of a secure, single-platform, workflow-driven system that leverages a single data model and is inclusive of the core HR system of record and all talent processes. ArcelorMittal already has many of these systems but lack the integrity and integration to sustain and leverage these systems effectively. By incorporating HR process to current methods of employee evaluation as well as adapting development plans from existing educational sources such as ArcelorMittal University and or training departments, one can achieve the suggested integrated solution. Adapting existing workflow solution and incorporating it with an Enterprise Resource Planning system, namely SAP, a total, comprehensive yet familiar solution will be obtained.

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What Technology Managers should know about Managing Talent

Figure 5: Incorporating various strategies with the aid of technology 5. Summary: In essence, business unit heads need deep-rooted conviction that people really matter. A conviction that leaders must develop the capabilities of employees, nurtures the employees career, and manages the performance of individuals and teams. HR professionals, meanwhile, need to improve their ability to translate business needs into talent strategies. ArcelorMittal as a top performing corporation has to instil the mind-set and culture needed to manage talent effectively this is done by emphasising a strong people culture to reinforce the companys employee value propositions. Irrespective of organisational size, there are certain processes that need to be applied in order for effective talent management to occur. Key points or similarities seen in the various frameworks mentioned above include: 1. Talent Attraction 2. Talent Retention 3. Talent Nurturing and Development 4. Growth Path for Talent 5. Effective HR and HR Policies 6. Communication from Top down, on a regular basis 7. Evaluation of the need. In contrast, Talent Management can also be seen as fulfilling a need. This need is accomplished by attracting the specific talent that is needed to accomplish organisational short-term goals as illustrated by Cappelli (2008) and once these goals are done, the talent is released. This process has its pros and cons, the balancing act in the end is the Return on Investment that the employee is potentially returning to the company for the investment placed on him (Creelman,2004). The

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What Technology Managers should know about Managing Talent

Negative impact of this can be mitigated by keeping in touch with this talent regularly such that the investment in the talent is not fully lost if a future project arises, where the talent is needed. Being a brand attracts Talent by the concept of association, however, research has shown consistently that the most important factor that influences a persons decision to stay or leave an organisation is the relationship with their boss (Meyer,2005). For any framework or amalgamation of frameworks to be successful, an integrated solution is needed with buy-in from the executive level and supported as well as implemented by a well functioning Human Resource department. Other key factors are opportunities for personal growth and career development, the culture of the organisation in terms of facilitating innovation and the nature of the work itself. This can only be made successful if ArceloMittals vitality and Functionality is seen to be strong and sound. Talent Management is key to the future of ArcelorMittals continued success and needs the attention and investment to be effective.

Notes in writing this guide. I attempted to write this in such a manner that credit for various frameworks is given right at the beginning of each framework. I also tried to encompass these frameworks in a practical manner in my work environment but on a high level. I found many frameworks to be very repetitive in terms of ideas and practices so I only took the crux of each and wrote ideas that where slightly different to provide as broad a spectrum as possible. In the summary section of this document, I wrote similarities and differences of all these frameworks as a whole.

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References:

1. Cappellli, P (2008). Talent Management for the Twenty-First Century. Harvard Business Review, March. 2. Christopher Faust (2011). Performance-Driven Learning: Putting the Horse before the Cart to Lead Organizational Growth. SumTotal Whitepaper, January. 3. Corporate Leardership Council (CLC, 2005).Retention of Key Talent During Business Uncertainties.The Corporate Executive Board, August 4. Creelman, D (2004). Return on Investment in Talent Management: Measures You Can Put to Work Right Now. Human Capital Institute Postion Paper, September. 5. Douglas, A.R and Jay, A.C (2007). Make your company a talent factory. Harvard Business Review, June. 6. Guthridge, M, Komm A.B and Lawson E (2008). Making talent a strategic priority. The Mckinsey Quarterly, January. 7. Meyer, T (2005). Talent Management. Fasset, November. 8. Oracle (2008).Integrated Talent Management: Extending the Value of a Strategic Framework. March. 9. Subramanian, M and Youndt, M.A The influence of social capital on the types of innovative capabilities, Academy of Management Journal, 2005, Volume 48, Number 3, pp. 45063. 10. Taloe and Society for Human Resource Management. What is Talent Management? [Online] Available: http://www.taleo.com/researcharticle/what-talent-management [22 March 2011]

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