The Big Idea COMPETING TALENT ANA What the best companies know about their people— and how they use that information to outperform rivals by Thomas H. Davenport, Jeanne Harris, and Jeremy Shapiro 1390 Oct10 Davenport.indd 52 9/2/10 7:47:07 AM HBR.ORG D ILLUSTRATION: LAURENT CILLUFFO ON LYTICS Do you think you know how to get the best from your people? Or do you know? How do investments in your employees actually affect workforce performance? Who are your top performers? How can you empower and motivate other employees to excel? October 2010 Harvard Business Review 53 1390 Oct10 Davenport.indd 53 9/2/10 7:47:22 AM COMPETING ON TALENT ANALYTICS Applying Talent Analytics Leading-edge companies are increasingly adopting sophisticated methods of analyzing employee data to enhance their competitive advantage. Google, Best Buy, Sysco, and others are beginning to understand exactly how to ensure the highest productivity, engagement, and retention of top talent, and then replicating their successes. If you want better performance from your top employees—who are perhaps your greatest asset and your largest expense—you’ll do well to favor analytics over your gut instincts. Harrah’s Entertainment is well-known for employing analytics to select customers with the greatest profit potential and to refine pricing and promotions for targeted segments. (See “Competing on Analytics,” HBR January 2006.) Harrah’s has also extended this approach to people decisions, using insights derived from data to put the right employees in the right jobs and creating models that calculate the optimal number of staff members to deal with customers at the front desk and other service points. Today the company uses analytics to hold itself accountable for the things that matter most to its staff, knowing that happier and healthier employees create better-satisfied guests. For example, Harrah’s used metrics to evaluate the effects of its health and wellness programs on employee engagement and the bottom line. Preventive-care visits to its on-site clinics have increased, lowering urgent-care costs by millions of dollars over the past 12 months. And because Harrah’s understands the relationship between employee engagement and top-line revenue, it can evaluate the program according to revenue contribution as well. Here’s how other organizations use analytics to improve their management of human capital: • Almost every company we’ve studied says it values employee engagement, but some—including Starbucks, Limited Brands, and Best Buy—can precisely identify the value of a 0.1% increase in engagement among employees at a particular store. At Best Buy, for example, that value is more than $100,000 in the store’s annual operating income. • Many companies favor job candidates with stellar academic records from prestigious schools—but AT&T and Google have established through quantitative analysis that a demonstrated ability to take initiative is a far better predictor of high performance on the job. • Employee attrition can be less of a problem when managers see it coming. Sprint has identified the factors that best foretell which employees will leave af- Six kinds of analytics can help companies answer critical talent questions— from the simple ones at the bottom of this ladder to the more sophisticated ones at the top. TALENT SUPPLY CHAIN WHY DO EMPLOYEES CHOOSE TO STAY WITH—OR LEAVE— MY COMPANY? Google suspected that many of its low-performing employees were either misplaced in the organization or poorly managed. Employee performance data bore that out. WHICH ACTIONS HAVE THE GREATEST IMPACT ON MY BUSINESS? By keeping track of the satisfaction levels of delivery associates, Sysco improved their retention rate from 65% to 85%, saving nearly $50 million in hiring and training costs. WHAT ARE THE KEY INDICATORS OF MY ORGANIZATION’S OVERALL HEALTH? JetBlue analysts developed a metric— the “crewmember net promoter score”—that monitors employee engagement and predicts financial performance. TALENT VALUE MODEL WORKFORCE FORECASTS HUMAN-CAPITAL INVESTMENT ANALYSIS HOW SHOULD MY WORKFORCE NEEDS ADAPT TO CHANGES IN THE BUSINESS ENVIRONMENT? Retail companies can use analytics to predict incoming call-center volume and release hourly employees early if it’s expected to drop. HOW DO I KNOW WHEN TO STAFF UP OR CUT BACK? Dow Chemical has a custom modeling tool that predicts future head count for each business unit and can adjust its predictions for industry trends, political or legal developments, and various “what if” scenarios. ANALYTICAL HR HUMAN-CAPITAL FACTS WHICH UNITS, DEPARTMENTS, OR INDIVIDUALS NEED ATTENTION? Managers at Lockheed Martin use an automated system to collect timely performance-review data and identify areas needing improvement. 54 Harvard Business Review October 2010 1390 Oct10 Davenport.indd 54 9/2/10 7:47:36 AM HBR.ORG Idea in Brief Leading companies such as Google, Best Buy, P&G, and Sysco use sophisticated datacollection technology and analysis to get the most value from their talent. These companies have taken the guesswork out of employee management by leveraging analytics to improve their methods of attracting and retaining talent, connecting their employee data to business performance, differentiating themselves from competitors, and more. ter a relatively short time. (Hint: Don’t expect a long tenure from someone who hasn’t signed up for the retirement program.) • Professional sports teams, with their outsize expenditures on talent, have been leading users of analytics. To protect its investments, the soccer team AC Milan created its own biomedical research unit. Drawing on some 60,000 data points for each player, the unit helps the team gauge players’ health and fitness and make contract decisions. What’s driving this shift to analytics? Certainly, companies today want more from their talent. That’s why some are reinventing a whole range of people practices: Netflix has tossed aside traditional HR absence policies, and Best Buy’s corporate office eschews standard work schedules. Analytics takes the guesswork out of fresh management approaches. At the same time, voluminous “digital trails” of data from knowledge management systems and social networks are now available for analysis. The public relations firm Ketchum, for example, analyzed personal networks in its London office to learn how easily information flowed across teams. Cognizant, a U.S.-based professional services firm with many employees in India, analyzed social media contributions, particularly blogs. It found that bloggers were more engaged and satisfied than others and performed about 10% better, on average. In this article are six key ways to track, analyze, and use employee data: They range from establishing simple metrics that monitor your organization’s overall health to identifying talent shortages and excesses long before they happen. Companies that want to compete on talent analytics must have access to high-quality data and manage them at an enterprise level, support analytical leaders, choose realistic targets for analysis, and hire analysts with a broad base of expertise. In our work with companies like these, we have seen best practices emerge for using analytics to manage people. Six Uses of Talent Analytics Analyzing talent is not significantly different from analyzing customer relationships or supply chain management. It starts with the delivery of historical facts (“What happened?”) and ends with real-time deployment of talent based on rapidly changing needs. The six kinds of analytics for managing your workforce, from simplest to most sophisticated, are human-capital facts, analytical HR, human-capital investment analysis, workforce forecasts, the talent value model, and the talent supply chain. Human-capital facts are a single version of the truth regarding individual performance and enterprise-level data such as head count, contingent labor use, turnover, and recruiting. Companies should carefully consider what facts will give them that version. For some, one or two data points may indicate overall health. For example, JetBlue created an employee-satisfaction metric around its people’s willingness to recommend the company as a place to work. This “crewmember net promoter score” (modeled after the customer-satisfaction metric) has been used to study the impact of compensation changes and to help determine executive $100,000 $100 At Best B increase in employee engagement at a particular store is $100,000. October 2010 Harvard Business Review 55 1390 Oct10 Davenport.indd 55 9/8/10 2:21:47 PM COMPETING ON TALENT ANALYTICS Talent Analytics at Google Google’s highly analytical culture and practices extend to its human resources function. The company’s goal is to identify leading peoplemanagement practices and confirm them with data and analysis. To achieve it, Google created a people analytics function with its own director and a staff of 30 researchers, analysts, and consultants who HBR.ORG Do you have questions or comments about this article? Tom Davenport will respond to reader feedback at hbr.org through mid-October. study employee-related decisions and issues. The People and Innovation Lab (PiLab) conducts focused investigations for internal clients. Google has analyzed a variety of HR topics and has often moved in new directions as a result. It has determined what backgrounds and capabilities are associated with high performance and what factors are likely to lead to attrition— such as an employee’s feeling underused at the company. It has set the ideal number of recruiting interviews at five, down from a previous average of ten. Google’s Project Oxygen—so named because good manage- bonuses. Employees are asked annually on their hiring date if they would recommend the company, so JetBlue can effectively monitor employee engagement monthly. JetBlue and other successful organizations are transparent with end users about the process: Any manager or employee may see how the data were collected, what formulas are being used, and, most important, why the data matter to the operation. For example, Harrah’s provides documentation in its HR scorecard to ensure that all readers understand how human-capital facts are created and what they mean for daily management. Analytical HR collects or segments HR data to gain insights into specific departments or functions. For example, a manager might be able to see that staff-turnover intervention is needed for the East Coast sales team but not the West Coast team. Analytical HR integrates individual performance data, such as personal achievement in key result areas, with HR process metrics, such as cost and time, and outcome metrics, such as engagement and retention. Lockheed Martin built a performance management system to link each employee’s performance to organizational objectives. The automated system collects timely performance-review data throughout the year. The data can then be compared with knowledge management information, such as who has undergone formal training in specific areas. With the system, Lockheed Martin can identify its high potentials for special programs or monitor employees who need improvement in certain areas. Human-capital investment analysis helps an organization understand which actions have the greatest impact on business performance. One leader in this area is Sysco, the $36.8 billion Fortune 100 global food-service company. Sysco is a complex organization made up of nearly a hundred autonomous operating units and about 51,000 full-time employ- ees serving approximately 400,000 customers. The company began its workforce analysis with three gross measures for each operating unit: work climate and employee satisfaction, productivity, and retention. It has drilled deeper to understand, measure, and manage seven other dimensions of the work environment, including frontline supervisor effectiveness, diversity, and quality of life. Sysco’s analysis revealed that operating units with highly satisfied employees have higher revenues, lower costs, greater employee retention, and superior customer loyalty. The company can efficiently identify what actions by management will have the greatest impact on the business. For example, in six years it has improved the retention rate for delivery associates—who provide customer service and build customer relationships—from 65% to 85%. Sysco tracks the group’s satisfaction scores, and when they dip, it institutes immediate improvements to get them back on track. By retaining this key talent, Sysco saved nearly $50 million in hiring and training costs for new associates. Workforce forecasts analyze turnover, succession planning, and business opportunity data to identify potential shortages or excesses of key capabilities long before they happen. As Vinay Couto, Frank Ribeiro, and Andrew Tipping wrote recently in Strategy + Business, Dow Chemical has evolved its workforce planning over the past decade, mining historical data on its 40,000 employees to anticipate workforce needs throughout the chemical industry’s volatile business cycles. It forecasts promotion rates, internal transfers, and overall labor availability. Dow uses a custom modeling tool to segment the workforce into five age groups and 10 job levels and calculates future head count by segment and level for each business unit. These detailed predictions are aggregated to yield a workforce projection for the entire company. Dow can engage in “what if” scenario planning, al- 56 Harvard Business Review October 2010 1390 Oct10 Davenport.indd 56 9/8/10 2:22:50 PM HBR.ORG ment keeps the company alive—was established to determine the attributes of successful managers. The PiLab team analyzed annual employee surveys, performance management scores, and other data to divide managers into four groups according to their quality. It then interviewed high- and lowscoring managers (interviews were double-blind—neither interviewers nor managers knew which category the managers were in) to determine their managerial practices. Google was eventually able to identify eight behaviors that characterized good managers and five behaviors that all managers should avoid. Google’s vice president of people operations, Laszlo tering assumptions on internal variables such as staff promotions or external variables such as political and legal considerations. Workforce forecasts can be used to staff up in key growth areas or identify knowledge management risks for retiring employees before they are clear to managers. The talent value model addresses questions like “Why do employees choose to stay with our company?” A company can use analytics to calculate what employees value most and then create a model that will boost retention rates. Such a model can help managers design personalized performance incentives, assess whether to match a competitor’s recruitment offer, or decide when to promote someone. Google uses employee performance data to determine the most appropriate intervention to help both high- and low-performing employees succeed. Laszlo Bock, Google’s vice president of people operations, told us, “We don’t use performance data to look at the averages but to monitor the highest and lowest performers on the distribution curve. The lowest 5% of performers we actively try to help. We know we’ve hired talented people, and we genuinely want them to succeed.” The company’s hypothesis was that many of these individuals might be misplaced or poorly managed, and a detailed analysis supported that idea. Understanding individuals’ needs and values allowed Bock’s team to successfully address a number of difficult situations. The talent supply chain helps companies make decisions in real time about talent-related demands— from optimizing a retail store’s next-day work schedules, on the basis of predicted receipts and individuals’ sales performance patterns, to forecasting inbound call-center volume and allowing hourly staff members to leave early if it’s expected to drop. This is the most complex of the six kinds of talent analytics, because it requires particularly high-quality data, rigorous analysis, and the integration of broad talent Bock, says, “It’s not the company-provided lunch that keeps people here. Googlers tell us that there are three reasons they stay: the mission, the quality of the people, and the chance to build the skill set of a better leader or entrepreneur. And all our analytics are built around these reasons.” management and other organizational processes. Talent supply chains are still in their infancy, but the early success of some organizations, particularly in the retail space, suggest that they will spread. Mastering Talent Analytics Unsurprisingly, building a capability in this domain requires the same fundamentals that most other business analysis does. We summarize them with the acronym Delta (access to high-quality data, enterprise orientation, analytical leadership, strategic targets, and analysts). Data. Organizations can get increasingly good HR data from their enterprise systems, but they some- Cognizant’s analytics revealed that employees who blogged were more engaged and satisfied. times need to augment them with new metrics, like JetBlue’s. At Harrah’s many line managers, who are already on the floor at its properties, observe and record the frequency with which customer-facing staff members smile, because that behavior is highly correlated with customer satisfaction. Data needn’t be perfect to be appropriate for analysis—just sufficient to understand trends that matter. Enterprise. HR can no longer confine employee data to its silo; organizations need access to those data to be successful. JetBlue, Best Buy, and Limited Brands have observed an important statistical relationship between employee satisfaction and company performance—usually at the station, branch, or store level. The significance of the relationship motivated Best Buy to make its employee engagement surveys quarterly rather than annual. October 2010 Harvard Business Review 57 1390 Oct10 Davenport.indd 57 9/2/10 7:48:04 AM COMPETING ON TALENT ANALYTICS ! HBR.ORG Common Mistakes in Talent Analytics Companies that use analytics for employee management can create tangible value for themselves as long as they avoid these mistakes: * Making analytics an excuse to treat human beings like interchangeable widgets a metric * Keeping live even when it has no clear business reason for being * Insisting on 100% accurate data before an analysis is accepted—which amounts to never making a decision * Assessing employees only on simple measures such as grades and test scores, which often fail to accurately predict success on just a few * Relying metrics to evaluate employee performance, so smart employees can game the system Dow mines employee data to forecast promotion rates and internal transfers. * Using analytics to hire lower-level people but not when assessing senior management * Failing to monitor changes in organizational priorities, thus creating irrelevant— if accurate—analyses aspects of * Ignoring performance that can’t easily be translated into quantitative measures HR ef* Analyzing ficiency metrics only, while failing to address the impact of talent management on business performance Leadership. The success of almost any initiative depends on its leaders, and talent analytics is no exception. In fact, at the organizations we’ve researched and worked with, leaders’ commitment to this approach is the single most important factor in whether it succeeds. Because the data pertain to human behavior, executives may be skeptical. Comcast’s senior vice president of compensation and benefits, Bill Strahan, recalls, “It was crucial for manager adoption that we present the analytics business case in the language of our company, focusing on competitive pressures and the people component of our change.” Leaders who believe that human-capital insights should be used to solve business problems must constantly press for decisions and analyses based on facts and data rather than on tradition, hearsay, or supposition. And they should foster a culture that allows for experimentation and mistakes—which are often unacceptable in HR functions today. Targets. Organizations that use talent analytics have already made people the focus of analytical activity. But should they concentrate on hiring, assignments to projects and tasks, or retention? Which types of employees need the most analytical attention? Which of the six kinds of talent analytics should be employed when? When Google was adding 100 employees a week, from 2005 into 2008, hiring the right people was its primary focus. When hiring slowed in 2008 and 2009, the company turned to gaining insights into employee attrition and effective management approaches. Analysts. Analytical theory must be converted into practice. This requires experts not only in quantitative analysis but also in psychometrics, human resource management systems and processes, and employment law. Industrial-organizational psychologists are especially helpful in creating analytical initiatives and ongoing programs. Google, P&G, Royal Bank of Scotland, Intel, and Tesco have all established HR analytics groups to get deeper insights into their people practices. The best analysts can persuade managers to adopt analytical decision making. In late 2009 Harrah’s began recruiting an external sales force and used organizational psychologists to create a predictive assessment for the job. But during the interview process managers became emotionally attached to some of the candidates with low probabilities of success. The analysts were prepared: They used randomized testing to prove that analytics was the superior method, and relied on their interpersonal skills to sway decisions when necessary. One management team at a troubled Harrah’s location was astounded by the high call volume and conversion rates the new hires achieved, which helped reverse a decline in sales. No organization we’ve worked with has embraced an analytics-only method of managing, motivating, and retaining employees. But early adopters have created tangible value for themselves by applying the right data and tools to people processes. The best organizations see their people not only as individuals but also as a rich source of collective data that managers can use to make better decisions about talent. Future organizational performance is inextricably linked to the capabilities and motivations of a company’s people. Organizations that have used data to gain human-capital insights already have a hard-toreplicate competitive advantage. Others, too, can draw on these new techniques to improve their business results. HBR Reprint R1010B Thomas H. Davenport (tdavenport@babson.edu) is the President’s Distinguished Professor of Information Technology and Management at Babson College and the author, coauthor, or editor of 13 books. Jeanne Harris (jeanne.g.harris@accenture.com) is an executive research fellow and a senior executive at Accenture’s Institute for High Performance. She and Davenport are the coauthors of Analytics at Work (Harvard Business Review Press, 2010). Jeremy Shapiro (jeremy.shapiro@morganstanley.com) is an executive director in human resources at Morgan Stanley and a coauthor of Ultimate Performance (Wiley, 2007). 58 Harvard Business Review October 2010 1390 Oct10 Davenport.indd 58 9/2/10 7:48:14 AM Harvard Business Review Notice of Use Restrictions, May 2009 Harvard Business Review and Harvard Business Publishing Newsletter content on EBSCOhost is licensed for the private individual use of authorized EBSCOhost users. It is not intended for use as assigned course material in academic institutions nor as corporate learning or training materials in businesses. Academic licensees may not use this content in electronic reserves, electronic course packs, persistent linking from syllabi or by any other means of incorporating the content into course resources. Business licensees may not host this content on learning management systems or use persistent linking or other means to incorporate the content into learning management systems. Harvard Business Publishing will be pleased to grant permission to make this content available through such means. For rates and permission, contact permissions@harvardbusiness.org. Journal of World Business 45 (2010) 122–133 Contents lists available at ScienceDirect Journal of World Business journal homepage: www.elsevier.com/locate/jwb Review Global talent management: Literature review, integrative framework, and suggestions for further research Ibraiz Tarique a,*, Randall S. Schuler b,1 a b Pace University, Lubin School Business, One Pace Plaza, New York, NY 10038, USA Rutgers University and GSBA Zurich, HRM Department, 202 Levin Bldg., 94 Rockafeller Road, Piscataway, NJ 08854, USA A R T I C L E I N F O A B S T R A C T Keywords: Talent management War for talent High potentials Globalization The environment for most organizations today is global, complex, dynamic, highly competitive, and extremely volatile, and is likely to remain so for years to come. In addition to these external conditions, most organizations are also facing several global challenges including those related to: talent flow; the managing of two generations of employees, viz., older or mature workers and younger workers; and a shortage of needed competencies. One major result of these challenges for organizations is that they have to be global and that they have to be systematic in managing their human capital if they wish to have any hope of gaining and sustaining a competitive advantage in the years ahead. Many human resource practitioners and consultants (HR professionals) are now recognizing this, especially those that operate globally, the multinational enterprises. Academics are also showing a strong interest as evidenced by their work in the new area referred to as ‘‘global talent management’’. In this article we review that academic work and attempt to organize that literature by creating an integrative framework for understanding and advancing further research in global talent management. To guide this research our framework highlights several selected challenges in global talent management, and several drivers of those challenges. It also highlights the potential role of IHRM activities in addressing those selected challenges. A discussion of possible criteria of global talent management effectiveness completes the framework. Hopefully this integrative framework may guide further academic research on global talent management and might also inform the work of HR professionals. ß 2009 Elsevier Inc. All rights reserved. Contents 1. 2. 3. 4. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . GTM challenges in the context of international human resource 2.1. Defining GTM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.2. Differences between GTM and IHRM . . . . . . . . . . . . . . . . . Literature review – global talent management . . . . . . . . . . . . . . 3.1. Broad findings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Framework of global talent management (GTM) in MNEs . . . . . 4.1. Exogenous drivers of GTM challenges . . . . . . . . . . . . . . . . 4.1.1. Globalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.2. Demographics . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.1.3. Demand–Supply Gap . . . . . . . . . . . . . . . . . . . . . . 4.2. Endogenous drivers of GTM challenges . . . . . . . . . . . . . . . 4.2.1. Regiocentrism . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2.2. International Strategic Alliances . . . . . . . . . . . . . 4.2.3. Required Competencies . . . . . . . . . . . . . . . . . . . . 4.3. IHRM activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.1. Attracting talent . . . . . . . . . . . . . . . . . . . . . . . . . ............ management . ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ ............ * Corresponding author. Tel.: +1 212 618 6583. E-mail addresses: itarique@pace.edu (I. Tarique), schuler@rci.rutgers.edu (R.S. Schuler). 1 Tel.: +1 732 445 5827. 1090-9516/$ – see front matter ß 2009 Elsevier Inc. All rights reserved. doi:10.1016/j.jwb.2009.09.019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 123 124 124 124 125 126 126 126 126 126 126 126 126 127 127 127 I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 5. 6. 4.3.2. Developing talent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.3.3. Retaining talent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4. GTM effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.1. Improve HRs impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.2. Competitive advantage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.4.3. Talent positioning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Further research, challenges for GTM researchers, and concluding thoughts . 5.1. Theory building. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.2. GTM systems. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.3. Exogenous/endogenous drivers and challenges and GTM systems. . . . 5.4. GTM effectiveness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.5. GTM as a bridge field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.6. Other areas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.7. Managerial relevance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1. Introduction Today’s global economy has created a more complex and dynamic environment in which most firms must learn to compete effectively to achieve sustainable growth. Workforces around the world have become larger, increasingly diverse, more educated, and more mobile (Briscoe, Schuler, & Claus, 2009; Friedman, 2005). This global environment has not only changed the way business is conducted, it has also created the need for organizations to manage their workforces in a global context. As a consequence, the notion of a ‘‘global workforce’’ has received extensive discussion recently (Briscoe et al., 2009; Collings, Scullion, & Dowling, 2009; Scullion & Collings, 2006). One of the major topics of this discussion has been around talent management. Most of the research in the area of talent management so far has been premised on the idea of talent shortages, reflecting the robust economic conditions from 2000 to 2008 (Collings & Mellahi, 2009). In the past year or two, however, there have been numerous examples of organizations downsizing operations and reducing their workforces as a result of global economic and financial conditions. Thus for many organizations there now seems to be a talent surplus with unemployment increasing across many countries and too many qualified people chasing too few jobs. Regardless of economic and workforce conditions, however, organizations large and small, public and private, have come to the realization that in order to gain and sustain a global competitive advantage they must manage their workforces effectively. And to do so they must confront the reality of global talent management (GTM) and its many challenges and develop human resource management activities to meet those challenges (Beechler & Woodward, 2009; Collings & Mellahi, 2009). There is considerable evidence that organizations worldwide face formidable talent challenges. The ability to attract, develop, and retain a needed supply of critical talent is a challenge facing all organizations (e.g., Coy and Ewing, 2007). In a 2008 Deloitte Research Study, Athey (2008, p. 1) noted that Despite millions of unemployed workers, there is an acute shortage of talent: science educators to teach the next generation of chemists, health care professionals of all stripes, design engineers with deep technical and interpersonal skills, and seasoned marketers who understand the Chinese marketplace. Resumes abound, yet companies still feverishly search for the people who make the difference between 10 percent and 20 percent annual growth, or between profit and loss. Critical talent is scarce. . . Similar trends and HR challenges are reported in survey based studies conducted by other consulting and professional research . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127 128 128 128 128 128 128 129 129 129 130 130 130 131 131 131 131 groups, such as the Boston Consulting Group, World Federation of People Management Associations, Manpower Inc, Economist Intelligence Unit, and The Chartered Institute of Personnel and Development (CIPD). The academic literature (e.g., Boudreau & Ramstad, 2007, 2005; Cappelli, 2008a, 2008b; Collings & Mellahi, 2009; Lewis & Heckman, 2006) also suggests that organizations face greater competition for talent worldwide and face challenging times in attracting, retaining, and developing people they need. So even though there is currently a global economic slowdown, there are major structural conditions in place to ensure that competition for talent worldwide will continue to be a significant challenge. More specifically, organizations are and will continue to be searching for individuals who can effectively manage through the complex, challenging, changing, and often ambiguous global environment. In other words, most companies worldwide, regardless of size, are confronting and/or will soon confront many GTM challenges, if left unmet, will impact their global business strategies, both in the near term and longer term. 2. GTM challenges in the context of international human resource management GTM and its many potential challenges can be examined in the context of international human resource management (IHRM), a field that has witnessed tremendous advancements in the research and practice during the last two decades (see Schuler & Tarique, 2007; Sparrow & Brewster, 2006). During this time, several challenges have emerged in IHRM with the introduction of increased world wide economic development, extensive global communication, rapid transfer of new technology, growing trade, and emigration of large numbers of people (see De Cieri, Wolfram Cox, & Fenwick, 2007; Schuler & Tarique, 2007 for a review of IHRM). A major topic that has emerged in IHRM in recent years is the importance of maximizing the talent of individual employees as a unique source of competitive advantage (Scullion & Collings, 2006) – managing global talent effectively has become an important area for future research (cf., Budhwar, Schuler, & Sparrow, 2009; Stahl et al., 2007). For example, Roberts, Kossek, and Ozeki (1998) identified major GTM challenges in the context of IHRM as: (1) easily getting the right skills in the right numbers to where they are needed; (2) spreading up-to-date knowledge and practices throughout the MNE regardless of where they originate; and (3) identifying and developing talent on a global basis. Similarly, Scullion and Collings (2006) noted that multinational enterprises (MNEs) are facing severe challenges in attracting, retaining, and developing the necessary managerial talent for their global I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 124 operations. Several others (e.g., Stephenson & Pandit, 2008) have suggested that having the right number of people at the right place at the right time with the right skill sets and levels of motivation are fundamental to talent management. This is just a sampling of challenges in GTM that have been identified thus far. In the context of IHRM, research is still needed to examine if the same patterns exist in the GTM literature: much has been written on GTM but, to date, no thorough review of the literature has been done. The goal of this paper is to remedy this deficiency by developing an integrative framework which categorizes the major body of GTM research published between 2000 and 2009 in a manner that identifies key drivers of selected GTM challenges, selected GTM challenges, and IHRM activities used by organizations to manage these challenges. 2.1. Defining GTM Although there seems to be a growing consensus as to the meaning of ‘‘talent management’’ (e.g., Collings & Mellahi, 2009; Lewis & Heckman, 2006), there is no consensus regarding the exact meaning of the GTM – it varies depending on the context it appears in (e.g., Brewster, Sparrow, & Harris, 2005; Scullion & Collings, 2006; Stahl et al., 2007), and has even been used interchangeably with IHRM. This can provide contradictory advice and fragmented theories. The recent trend in domestic talent management literature may provide some clarity to defining global talent management. In their review of the domestic talent management literature, Lewis and Heckman (2006) found that the literature can best be described in terms of three research streams: (1) talent management is conceptualized in terms of typical human resource department practices and functions; (2) talent management is defined in terms of HR planning and projecting employee/staffing needs; and (3) talent management is treated as a generic entity and either focuses on high performing and high potential talent or on talent in general. Because this third stream, is the most encompassing, we build on Lewis and Heckman (2006) third stream and use the strategic human resource management literature (e.g., Schuler and Jackson, 2007; Becker & Huselid, 2006) to argue that ‘‘talent management’’ in the context of IHRM should emphasize the management of people-embodied2 human capital (generally defined as the combination of knowledge, skills, abilities, and personality characteristics) as crucial to the attainment of strategic goals. Defined most broadly, global talent management is about systematically utilizing IHRM activities (complementary HRM policies and policies) to attract, develop, and retain individuals with high levels of human capital (e.g., competency, personality, motivation) consistent with the strategic directions of the multinational enterprise in a dynamic, highly competitive, and global environment. 2.2. Differences between GTM and IHRM While academics and practitioners may differ on the meaning of GTM, we suggest there are three significant differences between GTM and IHRM. First, IHRM includes more stakeholders. The field of IHRM is broad in its inclusion for the concerns of wide variety of stakeholders (Briscoe et al., 2009). The stakeholders can include customers, investors, suppliers, employees, society and the organization itself. While it might be argued that in so far as effective GTM can improve the effectiveness of the MNE, it can also impact the same variety of stakeholders, the most immediate and significant impact of GTM is on the employees and the organization itself. Second, IHRM addresses broader concerns and criteria. As a consequence of more stakeholders, IHRM has broader concerns 2 Our use of the term ‘‘talent’’ is based on Florida (2002). than those of attracting, developing, and retaining employees from the MNE. While these are certainly important, these concerns of GTM reflect concerns mainly of the employees and organization as stakeholders. Correspondingly, the criteria against which HR actions for GTM would be evaluated relate more specifically to the employees and the organization such as employee morale and engagement and organizational productivity and innovation. Third, IHRM encompasses more HR policies and practices. In the field of IHRM, there are several HR policies and practices including planning, staffing, compensating, training and developing, appraising, labor relations and safety and health (Briscoe et al., 2009; Dowling, Festing, & Engle, 2008). Within each of these policy and practice activities, there are many more topics and choices that researchers and professionals can select and utilize. This is in contrast to the situation with GTM that needs to focus only on a sub-set of topics in each activity. Indeed, GTM may find itself focusing primarily on the HR policy and practice activities of planning, staffing, appraising, compensating and training (Collings & Mellahi, 2009). In addition to these three major differences, GTM is a much more focused, topic, or issue, similar to diversity management or knowledge management (Briscoe et al., 2009; Lengnick-Hall & Andrade, 2008; Scullion & Collings, 2006). Additionally, GTM researchers can investigate the field without a significant concern for the multiple set of stakeholders and broader set of concerns traditionally associated with IHRM. In this manner, GTM can be examined in the context of IHRM. Viewing GTM in the IHRM context enables future researchers to build on work already undertaken in IHRM and apply some of those theories and models to GTM. Indeed, we use this perspective in this article. 3. Literature review – global talent management The articles selected for inclusion in this review were initially restricted to those published in leading academic journals (between 2000 and 2009) specializing in general management, organization sciences, human resource management, international human resource management, international management, and international business. To identify top academic journals, we reviewed the journals selected by Budhwar et al. (2009) in their recent review, and identified earlier by Caligiuri (1999), which ranked top journals in terms of international human resource research. This list includes top journals in mainstream management (e.g., Academy of Management Review and Administrative Science Quarterly), in international management (e.g., Journal of International Business Studies and Journal of World Business), and in human resource management (International Journal of Human Resource Management and Human Resource Management). Because the number of articles identified by reviewing these above journals was relatively very small, we supplemented the list with academic and trade and popular articles from outside these journals that were identified through the ABI/INFORM article database by searching using the subject headings ‘‘global talent management’’, and ‘‘international global talent management’’. All the articles were examined for GTM content and an article was selected if its focus was on any aspect of GTM. In addition, we reviewed selected articles on each of the challenges and IHRM activities. The list, along with the number of GTM articles published in each journal from 2000 to 2009, is reported in Table 1. The articles were then grouped into four categories: (1) exogenous or coercive isomorphic drivers of GTM challenges; (2) endogenous or mimetic isomorphic drivers of GTM challenges; (3) IHRM activities (policies and practices) to meet those challenges; and (4) GTM effectiveness. These four categories were created post hoc, based on institutional theory and our integrative framework. Because no formal content coding method was used, these categories should be treated as an organizing tool rather than a definitive classification of the body of I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 Table 1 Journal lista and the number of GTM articles (2000–2009). 1. International Journal of Human Resource Management (9) 2. Journal of International Business Studies (6) 3. Academy of Management Journal (0) 4. Academy of Management Review (0) 5. Management International Review (5) 6. Human Resource Management (13) 7. Journal of Applied Psychology (1) 8. Asia Pacific Journal of Human Resources (5) 9. Journal of World Business (6) 10. Journal of International Management (1) 11. Human Resource Management Journal (4) 12. International Business Review (1) 13. Administrative Science Quarterly (0) 14. Journal of International Compensation (0) 15. Academy of Management Executive (7) 16. International Labor Review (1) 17. Journal of Management (0) 18. International Journal of Intercultural Relations (3) 19. European Management Journal (3) 20. International Journal of Selection and Assessment (0) 21. Journal of Cross-Cultural Psychology (3) 22. Others (50)a a Others include Applied Psychology, An International Perspective, Asian Survey, Australian Journal of Management, Career Development International, Chinese Management Studies, Far Eastern Economic Review, Global Business & Organizational Excellence, Harvard Business Review, Human Resource Management Review, Human Resource Development International, International HRD, International Journal of Management Reviews, International Journal of Training and Development, Journal of Occupational and Organizational Psychology, Journal of Organizational Excellence, New Zealand Journal of Psychology, Personnel Review, S.A.M. Advanced Management Journal, SOJOURN, Strategic HR Review, The Leadership Quarterly, Total Quality Management, Training & Development. Reports and articles and reports from The McKinsey Quarterly, Towers Perrin, Deloitte Boston Consulting Group, A.T. Kearney, World Federation of People Management Associations, Manpower Inc., Economist Intelligence Unit, the ILO, The Chartered Institute of Personnel and Development (CIPD), MIT Sloan Management Review, Strategy + Business (complete list of articles is available from the first author). 125 research. This approach to categorize, however, follows that applied broadly to the field of IHRM (Schuler, Dowling, & DeCieri, 1993). To help provide researchers with a way of understanding and researching these categories and their relationships, we propose the use of institutional theory (see DiMaggio and Powell, 1991, 1983). This theory has been widely used to study the adoption and diffusion of organizational forms and HRM activities (e.g., Björkman, 2006). According to institutional theory, organizations are under social influence and pressure to adopt practices including HRM, and to adapt to and be consistent with their institutional environment. Organizations attempt to acquire legitimacy and recognition by adopting structures and practices viewed as appropriate in their environment. According to DiMaggio and Powell (1983) there are three types of ‘isomorphisms’ that can affect organizations: coercive isomorphism (e.g., a constituency such as the government imposes certain patterns, restrictions, or boundaries on the organization), mimetic isomorphism (e.g., organizations adopt the pattern and behaviors exhibited by successful organizations in their environment); and normative isomorphism (e.g., organizations act as the disseminators of appropriate organizational patterns, which are then adopted by other organizations). The isomorphic processes explained by institutional theory can be used to identify and highlight the complex and dynamic relationship between factors both endogenous and exogenous to a MNE. In addition, the isomorphic processes enables us to establish the basis for linking GTM with IHRM and to efficiently organize the GTM literature into four categories described above and depicted in Fig. 1. 3.1. Broad findings Based on our narrative review of articles, there are several broad observations regarding the state of the field at that time: (a) Fig. 1. Integrative framework of global talent management (GTM) in MNEs and suggestions for further research. 126 I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 most of the research examined specific aspects of managing talent, but the research usually did not focus on ‘‘human resource management issues’’ (e.g., Koh, 2003); (b) a few studies conceptualized ‘‘talent’’ in very broad or generic terms (e.g., Faust, 2008); (c) most of the existing research was limited to descriptive essays, based on the author’s consulting experience (e.g., Chaisson & Schweyer, 2004); (d) the majority of the empirical studies used descriptive statistics (frequencies and means) to analyze data and evaluate talent issues in several countries (e.g., Dietz, Orr, & Xing, 2008); and (e) a small number of studies used qualitative methodology; a handful of studies surveyed managers of organizations, a few studies analyzed case studies, and others used scenarios to describe issues related to talent management (e.g., Stahl et al., 2007). Overall, the evidence would suggest that the GTM field is in its infancy compared to IHRM but it is an important component of IHRM (Collings & Mellahi, 2009). We used relevant concepts and ideas from the IHRM literature to discuss selected GTM challenges in detail so as to provide a framework for further research and practice in each ‘‘challenge’’ area. For space reasons, not all challenges identified in the literature and reviewed above are discussed here, rather only those discussed most frequently. It is important to point out that our approach in examining the GTM literature depicts just one of many ways the field can be organized. Others may focus on different drivers and/or identify different selected challenges. 4. Framework of global talent management (GTM) in MNEs 4.1. Exogenous drivers of GTM challenges In the context of institutional theory, exogenous drivers are based on coercive isomorphism. These refer to forces or drivers external to the firm that are largely beyond management’s control but can create challenges that can affect an organization’s IHRM system (cf., Schuler et al., 1993). These exogenous drivers can include national culture, economic conditions, political system, legal environment, and workforce characteristics (Schuler et al., 1993). In reviewing and analyzing the recent research in GTM, three major drivers emerged in this category: Globalization, Demographics, and the Demand–Supply Gap. 4.1.1. Globalization Majority of studies in this area discussed the challenges associated with talent flow which refers to the migration of talented individuals between countries for a variety of reasons such as to undertake advanced studies abroad and/or acquire foreign work experience, and then subsequently return to their country of origin to take advantage of economic opportunities and development (Carra, Inkson, & Thorn, 2005; Tung, 2008). A few studies have compared talent flow to the notion of ‘brain drain’ and suggested that the later is too restrictive and does not focus on the psychology of migration as well as the economic, political, cultural, family, and career forces motivating it (e.g., Carra et al., 2005). Studies have considered the effects of government type and as well as the effects of government regulations on talent flow (e.g., Koh, 2003). A few studies have examined talent flow issues in Singapore (Koh, 2003), New Zealand (e.g., Jackson et al., 2005), China (Zweig, 2006) and Tawian (Leng, 2002). 4.1.2. Demographics Research in this category has examined the challenges associated with the changing workforce demographics. Current trends show that while the size of populations of much of the developed economies is projected to remain relatively stable (but get older), and in some cases even shrink, the populations of the developing economies and those just emerging economies are expanding and getting younger (Strack, Baier, & Fahlander, 2008). Research along these lines has attempted to examine how organizations attract, select, develop, and retain two generations of employees: older or mature workers and younger workers (also referred to as ‘‘Generation Y’’ born between 1980 and 1995) both of which have many high talent individuals (cf., Faust, 2008). The research on older workers has focused on the stereotypical beliefs toward older workers and found that the relationship between employers’ policies, practices and attitudes towards workers over 50 is complex with both positive and negative biases towards older workers (e.g., Loretto & White, 2006). In addition to examining the negative biases, several studies have identified important differences between the aging and younger workers (e.g., Broadbridge, Maxwell, & Ogden, 2007; Faust, 2008; Marjorie, 2008; Terjesen, Vinnicombe, & Freeman, 2007). 4.1.3. Demand–Supply Gap Studies in this category have found that a majority of employers worldwide are having difficulty filling positions due to the lack of suitable talent available in their markets (Strack et al., 2008). Several studies have attempted to describe the shortages in emerging economies (Stahl et al., 2007; Wooldridge, 2007; Dietz et al., 2008) such as China and India. Others have identified shortages in developed economies such as the United States (Adult Literacy, 2008). Other studies have focused on the causes of the shortages such as the changes in the employment relationship (e.g., Cappelli, 2005), and a misfit or mismatch between the training adequacy and employment structure (McGuinness & Bennett, 2006). A few studies have provided strategies to manage staff shortages (e.g., Henkens, Remery, & Schippers, 2008) such as increasing the labor supply of existing workers (through overtime, encouraging part-timers to work extra hours, etc., outsourcing work, and substituting technology/capital for labor). 4.2. Endogenous drivers of GTM challenges In the context of institutional theory, endogenous drivers are based on mimetic isomorphism and refer to forces or drivers that are internal to the firm including competitive or strategic position, headquarter’s international orientation, organizational structure, and workforce capability (cf., Schuler et al., 1993). In reviewing and analyzing the recent research in GTM, three major drivers emerged in this category: Regiocentroism, International Strategic Alliances, and Required Competencies. 4.2.1. Regiocentrism Research in this area suggests that many of GTM challenges are region and industry specific (e.g., Rugman, 2003). Organizations are seeing the importance of strategically focusing on specific geographic regions, such as the European Union (EU), North American Free Trade Agreement (NAFTA) and the Association of Southeast Asian Nations (ASEAN), as one market and customize IHRM activities to best serve the needs of a particular region (e.g., Tarique, Schuler, & Gong, 2006). An important challenge for MNEs is to consider a regional workforce with an appropriate regional talent strategy. Studies have examined specific countries such as China (Tung, 2007). Other studies have examined challenges can be industry specific (Weng, 2008), that is certain industries provide more favorable environments to retain talent than others. It is important to note that the current global economic conditions may have any impact on how MNEs struggle with availability of talent in specific regions. 4.2.2. International Strategic Alliances Retention of top level talent (e.g., CEOs, executives, vice presidents) during the merger or acquisition process is an I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 important challenge for MNEs. A few studies have examined the notion of ‘talent raiding’ (Gardner, 2002), which refers to an aggressive attempt by an organization that is, to attract or hire employees from a competing organizations. A few studies have examined antecedents of talent retention such as executives’ perceptions of the merger announcement, interactions with the acquiring firm’s top managers, and long-term effects of the merger (Krug & Hegarty, 2001). Several studies have examined how retention affects post-acquisition performance. Current evidence shows that there is a positive relationship between postacquisition performance of the acquired firm and degree of retention of the top management team of the acquired firm (Kiessling & Harvey, 2006). Other studies in this category have examined challenges in international joint ventures (IJVs) such as the selection and development of managers in complex IJVs (3 or more parent firms) (see Adobor, 2004 for more details), and managing at least six groups of employees each having somewhat different cross-cultural competency requirements. The different IJV employee groups highlight the complexity of developing staffing systems that can effectively select the right mix of talent for the various stakeholders in an IJV system. 4.2.3. Required Competencies This area includes studies on general business competencies, cross-cultural competencies, and knowledge workers. Studies looking at general business competencies have focused on competencies needed in most managerial jobs. These competencies include basic education, communication skills, ability to use sophisticated technology, to interact with demanding customers, to perform under changing conditions, and motivation to adapt to new conditions as needed (see Adult Literacy, 2008). It appears that these increased requirements (competencies) are being associated with almost all jobs traditionally performed in multinational firms around the world today (Price & Turnbull, 2007). Studies on cross-cultural competencies (e.g., Johnson, Lenartowicz, & Apud, 2006) have attempted to conceptualize cross-cultural competencies into stable and dynamic competencies (e.g., Johnson et al., 2006; Shaffer, Harrison, Gregersen, Black, & Ferzandi, 2006). Stable competencies (e.g., personality) are characteristics and abilities that are consistent over time, relatively fixed, enduring patterns of how individuals feel, think, and behave. In contrast, dynamic competencies (e.g., knowledge and skills about cultural differences) tend to be malleable over time and can be acquired through learning experiences, e.g., training and international travel (cf., Peters et al., 1997). Several other studies in this category have examined antecedents and outcomes of cross-cultural competencies. Finally, studies in this category have proposed the creation of knowledge workers. While all workers today could be regarded as requiring more knowledge than ever before to do their jobs well, ‘‘knowledge workers’’ appear to be defined by having special skills developed through extensive education and training and capable of having a significant impact on the success of the company (Jackson, Hitt, & DeNisi, 2003). 4.3. IHRM activities Schuler et al. (1993) define IHRM activities as both formal policies of the organization and the actual daily practices that employees experience. Due in part to the existence of many drivers of the selected challenges for GTM, there are many possible IHRM activities that MNEs can consider as actions or tools to address the many challenges. Matching the possible action with an accurate diagnosis of an MNEs talent management situation is a first step in gaining and sustaining a global competitive advantage that may result from the successful implementation of the correct action. Our review of the recent GTM research suggests that three major 127 sets of IHRM activities that have been studied and also used by multinational firms facing their talent management challenges: Attracting (includes reputation management, recruitment, and selection), Retaining (includes performance management and compensation activities), and Developing (includes training and career development activities). These three major IHRM activities are a hallmark of a GTM system. The strategic HRM literature (e.g., Schuler and Jackson, 2005) suggests that by adopting a systems perspective, a large number of IHRM activities that are considered as distinct activities in the IHRM literature can all be considered part of a GTM system (cf., Schuler and Jackson, 2005). Furthermore, a systems perspective allows us to examine how the three IHRM activities fit together. 4.3.1. Attracting talent This area includes three major IHRM activities: developing HR reputation; attracting individuals with interest in international work; and, recruiting vis-a-vis positions. Studies on HR reputation, which refers to a shared evaluation by stakeholders of an organization’s HR philosophies, policies, and practices (Hannon & Milkovich, 1996), have examined why an organization’s HR reputation has become an increasingly significant aspect of building organizational capabilities (Holland, Sheenan, & De Cieri, 2007). A few studies have focused on how organizations develop a compelling recruitment brand or HR reputation necessary for attracting talent from diverse populations (e.g., Ferris et al., 2007; see also earlier studies including Hannon & Milkovich, 1996; Koys, 1997). In addition to HR reputation, research in this category has looked at a similar concept of organizational attractiveness and how this concept has become an important action for most organizations with respect to attracting talent (e.g., Chapman, Uggerslev, Carroll, Piasentin, & Jones, 2005). Several studies have focused on identifying and examining factors at the organizational (e.g., size) and individual (e.g., personality) levels that influence potential applicants’ attraction to multinational enterprises (MNEs) (Lievens, Decaesteker, Coetsier, & Geirnaert, 2001). Another possible IHRM policy for MNEs is to attract individuals interested in international work as well as those interested in permanent international careers (Tarique and Schuler, 2008). Scholars in the area of international careers (e.g., Tharenou, 2003, 2002; Wang & Bu, 2004) as well as in global staffing (e.g., Collings et al., 2009) have identified antecedents, covariates, and consequences of attractiveness to international work/careers such as self-efficacy, martial status, and family attachment (e.g., Konopaske & Werner, 2005; Konopaske, Robie, & Ivancevich, 2005). Finally, research in this category has examined how organizations use a talent pool strategy: the company recruits the best people and then selects them for positions rather than trying to select specific people for specific positions. Following the talent pool strategy MNEs remain committed to being very selective in hiring (Seigel, 2008). 4.3.2. Developing talent The majority of research in this category has examined IHRM activities related to developing executives for global leadership responsibilities. A few studies have described trends and crosscountry differences in executive talent development (e.g., Dickson, Hartog, & Mitchelson, 2003). Others have identified competencies needed to work effectively in a global environment (e.g., Bartlett & Ghoshal, 2003), and competency models for developing competencies (e.g., Caligiuri & Di Santo, 2001Caligiuri et al., 2001; Stahl et al., 2007). A few studies have examined the processes involved in designing, delivering, and evaluating developmental experiences or activities, such as long term and short term global assignments, participation in global teams, and cross-cultural training (Morrison, 2000). Some studies have challenged the general assumption 128 I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 that everyone benefits equally from developmental activities (e.g., Caligiuri and Tarique, 2009). These studies have argued that it is important to understand who will benefit the most from certain type of developmental activities (Caligiuri, 2006). Organizations should identify those individuals with the requisite individual characteristics (e.g., personality), and then offer developmental experiences or activities to those identified. Developmental activities may only be effective when learners are predisposed to success in the first place (Caligiuri, 2000). Finally, there has been evidence that organizations that excel in talent management make leadership development an integral part of their culture and actively involve their senior leaders in the process (see Novicevic & Harvey, 2004; Seigel, 2008). common mistakes encountered by managers in identifying, monitoring and implementing important or right talent metrics for their organizations. Other studies have examined specific talent metrics including talent brand mapping, employee-recruit gap analysis, strategic readiness of individual talent, employee satisfaction, work motivation, employee commitment, and extra-role behaviors (see Becker et al., 2009; Collings & Mellahi, 2009; Lawler, Levenson, & Boudreau, 2004). The remaining studies have attempted to develop talent based scorecards that focus on becoming employer of choice (e.g., Branham, 2005), sustaining employee engagement and developing a high-performance culture (e.g., Rampersad, 2008). 4.4. GTM effectiveness 4.4.2. Competitive advantage Research in this category suggests that because the scope of this challenge for GTM for MNEs is so large and the major drivers of the challenges so significant and complex, MNEs have an opportunity to gain and sustain a global competitive advantage if they can create IHRM activities to meet the challenges (Gupta & Govindarajan, 2002; Stephenson & Pandit, 2008). And ‘‘those that get the solution ‘‘right’’ configuration HRM activities will create a real source of competitive advantage’’ (Lane & Pollner, 2008). As shown in Fig. 1 there are several potential results from successfully developing actions to address the drivers of GTM challenges. One result is that it is difficult to do well and for others to copy. But for those organizations that are successful, it is possible to gain global competitive advantage, and develop IHRM activities to enable them to sustain this advantage. An important point here is to realize that sustainability of short and long-term competitive advantage is not ensured (Daniels, Radebaugh, & Sullivan, 2007). But the development of IHRM activities to initially develop the appropriate talent is likely to facilitate the development of more appropriate IHRM activities going forward. The development of these activities is in turn likely to also result in stronger management leadership and HR leadership. These strengths are likely to be further enhanced by programs and actions specifically designed to train and develop the firms’ leaders and HR managers (Caye & Marten, 2008; Guthridge, Komm, & Lawson, 2008). In framing the topic of effectiveness for international human resource management, Schuler et al. (1993) defined MNE effectiveness in terms of utilizing and integrating appropriate HRM practices and policies that enhance overall performance of the MNE on several criteria, both short term and long term oriented. This category had the least number of studies and because GTM is an important sub-set of IHRM, the focus on GTM effectiveness is also a sub-set of the effectiveness of IHRM. As shown in Fig. 1, there are three criteria that called for inclusion in our framework: improve HRs impact, competitive advantage, and talent positioning. While others could be included, these seem to be the most relevant and the most discussed in the literature. 4.4.3. Talent positioning Another result from successfully addressing the challenges of GTM is the firms having the right talent at the right place at the right time with the needed competencies and motivation at all levels and all locations of the firms (Guthridge et al., 2008; Lane & Pollner, 2008). We refer to this as talent positioning. A shown in Fig. 1, and important challenge is to develop a bench strength in all of its positions within the company, both anticipated and unanticipated, in all current and future locations around the world (Rawlinson et al., 2008). The result of this is that the organization has the needed employees at the right place at the right time. In addition, it also ensures loyalty, thus aiding retention (Seigel, 2008). 4.4.1. Improve HRs impact Studies in this category have examined three specific challenges: need for alignment, developing talent management matrices, and building talent management scorecards. Research on alignment has shown that although HR professionals spend a great deal of their time on formulating and managing the traditional HR activities such as recruiting, selecting, training, performance appraisal and compensation, systemically linking HRM activities with the firm’s strategies and directions is lacking. ‘‘HR underperforms in companies where its capabilities, competencies, and focus are not tightly aligned with the critical business priorities’’ (Rawlinson, McFarland, & Post, 2008). Research on talent metrics (e.g., Boudreau & Ramstad, 2007) have identified 5. Further research, challenges for GTM researchers, and concluding thoughts 4.3.3. Retaining talent Articles in this category have focused on two major IHRM policies: reducing repatriate turnover, and increasing employee engagement. Several studies have examined how global assignments have become an integral part of individuals’ careers and, for most companies, an indispensable tool for attracting, developing and retaining talent – the issue of repatriate turn-over continues to be an important concern for many MNEs (e.g., Lazarova & Caligiuri 2001; Lazarova & Cerdin, 2007; Yan, Zhu, & Hall, 2002). Other studies in this area have focused on identifying factors that can facilitate the retention of individuals when they return back. These factors can include satisfaction of repatriates with the repatriation process (Vidal et al., 2008), perception of justice (Siers, 2007), and availability of repatriation practices perceived important for successful repatriation (Lazarova & Caligiuri 2001). Finally, research on employee engagement has examined how and why increased levels of engagement in global firms promotes retention of talent, fosters customer loyalty and improves organizational performance and stakeholder value (Lockwood, 2007). Furthermore, studies have looked at universal practices to effectively promote engagement such as the need to be aware of country, regional and cultural differences when designing employee engagement and commitment initiatives (Lockwood, 2007). Our proposed integrative framework illustrates the influences and interrelations of the factors in a MNEs external and internal environment that may help shape its GTM system. Although the GTM research is in the early stages of development, and is a relatively new multi-disciplinary field of enquiry that draws on a range of academic and applied perspectives, our framework identifies critical environmental contingencies, discusses the linkages between MNEs external and internal environment and the GTM system serves as a basis for future theory building, teaching, and practice. I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 Table 2 Summary of major GTM challenges and major IHRM activities. 129 The challenges and IHRM activities identified in Table 2 are purely exploratory, and further research is needed to develop and understand them. Space limitations prevent us from developing these challenges and IHRM activities as fully as they need, but we feel that by identifying and briefly discussing each challenge and IHRM activity might suggest several opportunities for further research in this area, and much more work could be done on essentially every aspect of in GTM. three streams of IHRM research identified by Dowling, Welch, & Schuler (1999): Comparative IHRM, HRM in Multinational Companies (MNCs), and cross-cultural HRM. Scholars in the area of Comparative IHRM attempt to describe, to compare and to analyze HRM issues, policies, and practices in different countries (e.g., Brewster, 1999). Researchers exploring aspects of HRM in MNCs attempt to study HRM issues, policies, and practices related to the process of internationalization of firms (e.g., Briscoe et al., 2009). Finally, cross-cultural HRM researchers attempt to analyze the impact of multiple cultures on HRM issues, practices, and policies (e.g., Adler, 2008). Our review revealed a disproportionate emphasis on GTM in Multinational Companies. While studies on GTM in Multinational Companies are extremely important, more studies in the other two streams would also add significantly to the literature. Finally, similar to Werner (2002) review of the international management literature, our review suggests that levels of analysis in GTM research include countries, states, industry clusters, industries, firms, strategic business units, subsidiaries, teams, and individuals. Our review suggests that most GTM research has been at the macro rather than micro level. Specifically, the firm appears to be the dominant level of analysis, while only a small minority of studies is at the individual level or HRM system level. Numerous micro and cross-level IHRM topics appear to be potential research areas not currently addressed in top management journals. 5.1. Theory building 5.2. GTM systems Our literature review suggests that most of existing research on GTM is based on anecdotal or limited information and has a number of theoretical deficiencies. The first step in theory building here would be to further examine the challenges we have identified and to further explore the relationships within and between the elements in our framework. In order to do so, researchers may choose to develop specific research propositions or hypotheses that operationalize their particular research focus. Second, is to select an appropriate theoretical framework to expand upon the framework presented in this paper. We propose to do by using institutional theory and human capital theory. Although we used institutional theory as a foundation to organize the literature on GTM, this theory can further explain how the challenges identified in this paper influence the configuration of IHRM activities. Using institutional theory, IHRM researchers can view the challenges as legitimate forces that need balancing to gain access to and control needed resources to develop appropriate IHRM activities (see Björkman, 2006 for more on institutional theory). Human capital theory, in contrast can be used to explain the choices the MNE makes in managing IHRM activities to meet the GTM challenges. Using this theory, researchers can view global talent in terms of capital and thus make decisions about investments in talent just as they make decisions about investing in other types of capital. Costs related to attracting, retaining, and developing talent can be viewed as investments in the human capital of the firm. Furthermore, efforts to develop HR metrics that establish the value of investments in talent practices can be grounded in the logic of human capital theory. Third, we suggest that because the field of GTM is relatively young, more qualitative methodologies may be used to facilitate grounded theory building including participant observation, interviews, and content analysis of archival documentation. Such qualitative methods might be employed, or paired with nonqualitative methods (e.g., surveys). Fourth, to aid in our understanding of how the GTM literature maps onto the overall IHRM literature and to assist in identifying literature gaps for future research, we classified each paper into the We recommend that in further research scholars take a closer look at some of the complexities surrounding the formation of GTM systems, as well as the relationship among IHRM activities. Researchers could develop and examine a range of possible configurations or bundles of IHRM activities that include three key activities of attraction, development, and retention. One possibility is to derive a taxonomy of GTM system configurations by cluster analyzing firms on the basis of the configuration of IHRM activities. Future research is also needed to examine how IHRM activities of attraction, development, and retention operate together to confront the exogenous/endogenous challenges identified in this paper. The strategic HRM literature suggests that IHRM activities may supplement, substitute, or interact in positive or negative ways with each other (cf., Delery, 1998). Given the potential relationships among IHRM activities, researchers can examine not only which GTM systems are most important for which challenges, but which configuration of IHRM activities might best be used to realize objectives (see Lepak & Shaw, 2008). For example, further research can examine how GTM systems will differ for different employee groups (older workers vs. generation Y). As mentioned earlier, each of the two employee group will differ from the other – each group contributes in different ways to organizations, and as a result, each group needs to be managed differently with its own unique employee value proposition. A related issue of investigation here is to examine if competitive advantage will be created when the GTM system is aligned with the needs of different employee groups including older workers and generation Y. This occurs because the alignment of employees with GTM system is difficult to copy or imitate by competitors, and hence, becomes a source of value creation (Barney, 1991; Becker & Huselid, 2006). Major GTM challenges Talent flow Two generations of employees: older or mature workers and younger workers Shortage of needed competencies Changes in the employment relationship Regional workforces Talent retention in international strategic alliances General business competencies and cross-cultural competencies Major IHRM activities in GTM systems Developing HR reputation Attracting individuals with interest in international work Recruiting based on positions Developing global leaders Reducing repatriate turnover Increasing employee engagement 5.3. Exogenous/endogenous drivers and challenges and GTM systems Strategic HRM research suggests that the design of a GTM system may be influenced by the characteristics of the challenges within the exogenous/endogenous environments. Research is needed to examine the constraints the exogenous/endogenous 130 I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 challenges place on the ability to design a GTM system. For instance, because of globalization, if organizations need to be sensitive to regional conditions, they need to design GTM systems for the entire organization and also adapt their IHRM activities to multiple regions and industries, each with their own special and unique needs. Future researchers can examine the ways organizations can be most effective in making generic (i.e., can be implemented across cultures) GTM systems, and then tailoring IHRM activities in order to be sensitive to regional and industrial conditions in efficient ways. Further research is also needed to examine the extent to which there are country and cultural differences in the extent to which organizations tailor their GTM systems to regional and industrial conditions. 5.4. GTM effectiveness Among the various areas discussed in this paper, limited research exists in which authors have examined assessments of the ‘‘effectiveness’’ of an organization’s GTM system. Strategic HRM research suggests that effectiveness of a HRM system can be measured along a continuum ranging from HR outcomes to organizational outcomes to financial outcomes to market based outcomes. Further research is needed to examine why a particular GTM system is associated with a specific outcome (cf., Lepak & Shaw, 2008). Future theory-driven research is also needed to examine the causal chain that explains how attraction, development, and retention influence HR outcomes (e.g., motivation, productivity, turnover) and how those outcomes, in turn, are related to specific indicators of financial and market performance or other indicators of organizational effectiveness. An intriguing area for further research might involve how organizations develop GTM scorecards using the logic of balanced scorecards and strategy maps (Kaplan and Norton, 2004), or develop sophisticated models of how IHRM activities directly influence internal operations as well as customer satisfaction. 5.5. GTM as a bridge field Based on our review, one can categorize GTM as a ‘‘bridge field’’. Future researchers can address the reverse academic-practice gap (cf., Rynes, Gyluk, & Brown, 2007), that is to examine ‘‘whether the issues of the greatest importance to practitioners receive commensurate coverage by researchers’’ (Rynes et al., 2007: 1004). The literature suggests that issues, problems, and ideas discussed by HR managers and professionals are occasionally examined by the academic IHRM community. Rynes (2007) provides important suggestions for communicating effectively with practitioners (p. 1047): change language or simplify academic jargon (e.g., academic terms such as theory, research), examine research questions based on practical needs or puzzling empirical phenomena, focus on ‘‘real’’ organizational life and current events, use a variety of methodologies (e.g., grounded theory, case analyses, or ethnography) (see Rynes, 2007 for more suggestions). Future research is also needed to facilitate the transfer of knowledge from academics to practitioners. One possibility is to use Action Research (Rynes & Trank, 1999), which is based on the implementation of new practices in real organizational settings, and is designed to address pressing problems that have been identified by organizational members (Rynes & Trank, 1999). In addition future research can focus on using complementary sources: academic literature, trade studies, and consultancy reports. The are several advantages of using such an approach such as increased collaboration between academics and practitioners, improved quality of papers and findings, greater publicity, and better holistic solutions (see Rynes & Trank, 1999 for more information). Academics, however, should be careful not to compromise on theory building or testing at the expense of seeking managerial relevance and pragmatic solutions. 5.6. Other areas Future research could examine several other issues that can be organized along two levels: organizational level and individual/ group level. At the organizational level there are two potential areas of further research: Global Talent Challenges (GTCs) and Extent of Coverage. To explicitly include the economic realities of good time and bad times in discussions of GTM, it might be helpful to utilize a broader umbrella concept such at Global Talent Challenges (GTCs). Global talent challenges include managing a firm to ensure just the right amount of talent, at the right place, at the right price, and at the right time when at times there may be shortages of talent and at other times surpluses of talent. These are all for the purposes of balancing the workforce with the needs of the firm in the short term, and positioning the firm to have the workforce needed in the longer term (Schuler et al., in press). Use of the GTCs framework greatly expands the treatment of GTM beyond the traditional base of ‘‘managing the global talent shortage.’’ MNEs have a choice in the extent of those employees to be covered in their global talent management programs. This can range from the top 10% to the virtually all employees, 100%. Reflecting programs to include a select few might incorporate the terminology of ‘‘Type A players’’, and ‘‘Type A positions’’ (Collings & Mellahi, 2009; Huselid, Beatty, & Becker, 2009). These scholars argue that while all employees and all positions help the organization succeed, a few contribute substantially more to its success, and, therefore, warrant more resources and development. Those that include all employees and all positions suggest that all employees contribute to the success of the organization, and that all need to be continually developed (cf., Guthridge & Komm, 2008). Further research might explore the impact of varying degrees of inclusiveness. At the individual/group level there are two potential areas for future research: Career Management and Global Teams. Although MNEs recognize the value of and need for retaining employees they appear to be encouraging a contradictory policy. This is the policy that encourages employees to be responsible for their own careers and success within organizations. Put simply, it is a policy of ‘‘Me, Inc.’’ that conceptualizes individual learning and mobility as positive and necessary. The result of this policy may be employees leaving an organization and moving to another one, even though the present employer is wholly acceptable, just because the individual is led to think about mobility in very positive career terms. MNEs conceive of IHRM and GTM policies and practices that might facilitate becoming an ‘‘employer of global choice’’, they may need to assess the potential contradictory effects of other IHRM and GTM policies and practices that are actually harmful to the organization. Of course, during times of global economic and financial recession, the talent shortage turns to talent surplus, then what? Career development programs in a scenario of surplus might be reduced to the top 10% of workforce, rather than the entire 100%. How employees might react to a GTM program that has varying degrees of inclusiveness might be an interesting topic of inquiry (Schuler et al., in press). As MNEs globalize themselves, and thus need to coordinate themselves more closer than ever, MNEs may increasingly rely on global team rather than individuals (Brewster et al., 2005; Nayman, 2003). This area appears to offer an important opportunity for IHRM and GTM researchers. More knowledge on how MNEs can develop cross-cultural teamwork competencies could be very helpful. It appears that IHRM practices should contribute greatly to I. Tarique, R.S. Schuler / Journal of World Business 45 (2010) 122–133 this competency buildup, but more research could offer helpful details on exactly how organizations can design IHRM systems that support and facilitate the utilization of knowledge-intensive teamwork (KITwork) to develop and sustain a competitive advantage (see Jackson et al., 2006). This said, however, the question is what is the role of GTM? Does GTM shift from an individual-based IHRM issue to a team-based IHRM issue? Then are all IHRM policies and practices for GTM really designed around teams rather than individuals? 5.7. Managerial relevance This review suggests that most organizations are facing several global challenges. The potential role of IHRM activities in addressing those selected challenges has clear implications for managing talent or individuals with high levels of human capital. The prevailing logic, thus far, has largely assumed that as MNEs first began expanding their international operations, they often assumed that IHRM activities of the parent country could and would be adopted worldwide. Consistent with this perspective, they staffed key management positions in their foreign operations with talent from the parent country. Increasingly, however, the efforts of most IHRM staff now have been redirected toward managing talent on a global basis, recognizing that it is critical for managers to examine how IHRM activities of attraction, development, and retention operate together to confront the exogenous/ endogenous challenges identified in this paper. Managers and IHRM professionals need to design GTM systems that fit the contours of the present context – a context that is more complex and multifaceted – while also anticipating the future concerns of varied stakeholders. For instance, managers and IHRM professionals will need to design their GTM systems so that certain ‘‘configurations’’ of IHRM activities are better than others with respect to attracting, developing, and retaining talent. Utilizing GTM systems as a long-term global talent management strategy in concert with the laws, culture, society, politics, economy, and general environment of a particular location are key to managing the global challenges for many MNEs. 6. Conclusion Many of the most pressing global challenges facing global firms today are directly related to human capital challenges. Many human resource practitioners and HR consultants (HR professionals) are now recognizing this, especially those that operate globally, the multinational enterprises. Academics are also showing a strong interest as evidenced by their work in the new area referred to as ‘‘global talent management’’. In this article, we attempted to review that academic work on GTM and to organize that literature by creating an integrative framework for understanding and advancing further research in global talent management. To guide this research our framework highlights several selected challenges in GTM, and several drivers of those challenges. It also highlights the potential role of IHRM activities in addressing those selected challenges. Our proposed integrative framework illustrates the influences and interrelations of the factors in a MNEs external and internal environment that may help shape its GTM system. Our review suggests that GTM research can categorized as a ‘‘bridge field’’, is in the early stages of development, and is a relatively new multi-disciplinary field of enquiry that draws on a range of academic and applied perspectives – much more work could be done on essentially every aspect of GTM. Accordingly, there is a strong need for theory building, for micro and cross-level IHRM topics, for understanding the complexities surrounding the formation of GTM systems, as well as the relationship among IHRM 131 activities for examining the causal chain that explains how attraction, development, and retention influence HR outcomes (e.g., motivation, productivity, turnover), and for transferring knowledge from academics to HR professionals (and vice-versa). We have pointed out where future studies can make incremental advances in those areas as well as in those that have been largely overlooked in the past. Finally, we hope that our article and our framework adds value to the existing work in GTM on a number of ways: (1) in particular, we hope that our framework provides clarity, promotes dialogue, and encourages new directions in practice and research that begin to examine critical challenges faced by HR professionals and academics with respect to managing global talent such as incorporating concerns about the need for firms to implement IHRM activities related to employee reductions; (2) as presented, we also hope that our proposed framework illustrates the influences and interrelations of the factors in a MNEs environment such as a global economic recession that may help shape its GTM actions; and (3) finally, we hope that our framework proposes critical environmental contingencies, discusses the linkages between an MNEs environment and GTM, and describes the many challenges for GTM (that are described throughout the article) that could be the focus for further research. 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