16th International Conference on Human Resource Development Research and Practice

UFHRD Annual Conference 2015

Towards Evidence Based HRD Practice: Bridging the Gap

Title: Developing and retaining talent in the context of austerity: shifting the paradigms of exclusivity and linearity

Name of author(s): Dr Julie Haddock-Millar and Professor David Clutterbuck

Organisation affiliation/position(s): Middlesex University Business School

Address: Department for Leadership, Work and Organisations, Middlesex University Business School, Williams Building, The Burroughs, London, NW44BT, United Kingdom;

Email address:

Stream: Employee leadership, management and talent development – stream 7

Submission type: Refereed paper

Abstract

Purpose: This empirical studyseeks to identify and evaluate the significance of talent development complexities in the local government sector, within the context of austerity and ever decreasing budgets. The intent of this large-scale national project was to identify the key challenges facing the Local Government Sector in talent management, understand how authorities are tackling those challenges and recognise examples of practice both within the sector and in the wider world of employment. The purpose of this paper is to examine one of the five challenges identified in the research: how to develop talent in the context of austerity and unprecedented budget cuts.

Methodology:Quantitative and qualitative data collection tools and methods of analysis were combined. Primary evidence was gathered from two sources. First, a survey was sent to all Public Sector People Managers’ Association (PPMA) members. Second interviews were carried out with respondents representingpublic and private sector organisations.

Findings: Local Governmentas a community is absolutely committed to the development of their workforce and business transformation. The greatest barrier is knowing what to do and how to do it. The most significant challenges cited included the development of talent and driving workforce capability within the context of austerity measures.

Implications: Practical and social implications include the issues associated with the need to adopt an inclusive, flexible and adaptable approach to talent - key levers in the rapidly changing environment.

Key words: Talent development, retention, Local Government, Austerity

Introduction

The intent of this large-scale national project was to identify the key challenges facing the Local Government Sector in talent management, understand how authorities are tackling those challenges and recogniseexamples of practice both within the sector and in the wider world of employment. The Local Government Association’s (LGA) 2013/14 top priorities for local government are: reform of the finance systems to enable councils to have confidence their financing is sustainable and fair; recognition of the importance of councils in contributing to economic growth, jobs and prosperity; and supporting public service reform, delivering more effective services for local people and holding other providers to account (LGA Business Plan, 2013/14: 7). The top priorities provide an indication of the challenges facing local government and the increasing pressure to transformation service models, in large part, triggered by the current spending review of public sector cuts of up to 30 per cent. Local government’s funding is shrinking; conversely the demand for council services is rising. The scale of the budget reductions and impact on staff numbers in local authorities is significant.

This study, which consisted of a survey, interviews with those responsible for talent management both within and outside the sector, and an extensive literature search, identified five core themes the sector needs urgently to address.

  • How to create a viable and coherent talent management strategy. Arguably, standard HR practice is increasingly inadequate to cope with the complexity of today’s rapidly evolving, resource-stretched employment environment.
  • How to define talent. How widely or narrowly should we define it? How do we establish a sufficiently diverse talent population to meet evolving job roles?
  • How to recruit and identify talent. Should we be trying to identify talent or find better ways for talented people to identify themselves?
  • How to develop and retain talent. Is it justifiable to invest developmental resources preferentially in a “chosen few” high potentials? How do we balance the need for specific expertise against the need for increased role flexibility?
  • How to facilitate talented employees to take accountability for and manage their own careers and self-development. What processes and structures will remove the barriers? How can we engage people in constructive dialogue that aligns employee and employer aspirations?

This paper examines one of the five challenges identified in the research: how to develop and retain talent in the context of austerity and unprecedented budget cuts.

Literature Review

Academics and practitioners acknowledge the problems with talent are many and varied(Ashton and Morton, 2005; Mellahi and Collings, 2010). Talent management is often substituted for the term human resource management, which can limit discussion to topics such as recruitment, leadership development and succession planning (Mellahi and Collings, 2010). The term talent and competitive advantage suggests that key positions and therefore ‘A-list performers’ have the potential to contribute competitive advantagerepresenting an ‘exclusive club’ rather than inclusivity. There is not a single or concise definition (Ashton and Morton, 2005). The terminology means different things to different people; a lack of clarity and transparency can create confusion and tension. Furthermore, judgements about individuals are often arbitrary, inconsistent and based on hearsay (Sorcher and Brant, 2002). Many organisations do not know who their talent is. When leaders look for potential, they can introduce gender and racial bias; talent management programmes unconsciously reflect and promote traits shown by the organisation’s mainly male leadership team (Warren, 2009). Competency frameworks do not take sufficient account of the changing needs of jobs; adopting a linear approach, they are not sufficiently flexible and are backward-looking rather than forward-looking. Key activities such as attraction, development and retention can interact in negative ways (Delery, 1998). The importance of alignment and integration with strategy, business planning and the organisation’s overall approach to people management is critical (Ashton and Morton, 2005), but not always evident.

Assuming the organisation has defined and identified ‘talent’, what can the organisation do to develop the talent to prepare people to adapt to the changes in the Local Government sector and continually develop themselves and those around them? It is important to recognise that the decision to invest in talent is influenced by budget and resources constraints; therefore the question of ‘who’ is developed is an important one. Iles et al (2010) suggest that there is no real consensus concerning ‘what’ talent may fall within the scope of the talent development process, suggesting four possible scenarios:

  • Inclusive approach – focuses on developing each potential employee.
  • Inclusive approach – focuses on the development of social capital within the organisation.
  • Exclusive approach – focused on the development of specific elite individuals.
  • Exclusive approach – focuses on key positions, roles and develops talent to fulfil these roles.

When the organisation has addressed the questions of ‘why’ and ‘who’, those responsible for talent development can then begin the discussions around ‘how’.Garavan et al (2012) suggest that our knowledge base is weak in relation to talent development and that very little has been published in this area, particularly in the global context. There are a number of reasons for this. First, published research tends to focus on specific initiatives or interventions, rather than the strategic role of talent development in relation to the broader business and talent perspective; and second, research focuses on specific aspects of talent development, rather than the holistic view of talent development. Therefore, making sense of this area is challenging.

Garavan et al (2012: 6) define talent development focusing on “the planning, selection and implementation of developmental strategies for the entire talent pool to ensure that the organisation has both the current and future supply of talent to meet strategic objectives and, that developmental activities are aligned with organisational talent management processes.” Definitions or descriptions of talent development emphasise leadership talent development and therefore focus on exclusive models, rather than a broader more inclusive approach. The degree to which leadership and management (those that tend to be regarded as ‘talent’) development has grown as a topic adds to the perplexity. Questions around diversity and equality are often raised in the context of talent development: ‘who receives talent development; why; how and when?’ Harris and Foster’s (2010: 427) study of two UK public sector organisations - the Legal Services Commission and a large unitary City Council – revealed several interrelated and overlapping themes:“the alignment of talent management with other HR policies; processes for selecting talent; the impact of resource constraints; anddelivering performance targets.” Line managers did not understand how talent management interventions were aligned to other HR policies, particularly in relation to meeting diversity and equality requirements. Issues concerning under representation of certain groups in talent programmes exist where processes around self-selection and/or applications. Women are a group that might ‘opt out’ of talent programmes for a variety of reasons, one of which is the balance between work and home. Line managers and employees regard openness and transparency as the most important influences on perceptions of diversity and equality.

The most recent CIPD (2013) annual Learning and Development survey, which reports on trends in learning and development in the HR community, provides a useful insight into what are regarded as the most effective practices in this area. Participants ranked on-the-job training (56%), in-house development programmes (48%) and coaching by line managers (39%) as the most effective. On-the-job training effectiveness is an upward trend which has continued over a three year period (from 30% in 2010 to 56% in 2013). In a large-scale managerial survey of 692 managers from a range of organisational hierarchical levels sectors, McCauley et al (1994: 551) defined 10 dimensions of developmental quality in relation to on-the-job learning.

  1. Unfamiliar responsibilities – eg switching from line to staff, or changing employers − make managers think about what they do and how they do it.
  2. Developing new directions – eg initiating a new strategy or creating a new department.
  3. Inherited problems – addressing problems left by a predecessor.
  4. Problems with employees – eg engaging with and developing the competences of direct reports, who may be resistant to change.
  5. High stakes – eg high visibility, especially to senior management.
  6. Scale and scope – eg responsibility for large budgets, a substantial number of people, and/or diversity of functions.
  7. Influencing without authority – having to work through peers and more senior managers to get things done.
  8. Handling external authority – eg dealing with suppliers and other independents, again through influence.
  9. Managing work group diversity – eg managing and working with a range of disciplines, who need to collaborate.
  10. Working across cultures – eg preventing intercultural conflict and using cultural difference to stimulate creativity.

The results suggest that on-the-job training can motivate employees and provide opportunities for development, however indicators of stress can be common and a lack of support from colleagues and wider networks can prove a barrier to learning. Where a manager is asked to take on an unfamiliar project, the issue of peer support is even more important. The CIPD (2013) found that the trend is declining in relation to on-the-job coaching by line managers, from 51% in 2010 to 39% in 2013; job rotation, secondment and shadowing, from 30% in 2010 to 13% in 2013. Off-the-job instructor-led training was also common across the community (54%), alongside in-house development programmes (57%). There is then a marked gap; across the remaining talent development practices, e-learning methods (31%), coaching by line managers (29%) and off-the-job instructor-led training, yielded similar results.

There is a multitude of ways to evaluate the effectiveness of talent development methods. Deciding on the most suitable evaluative approach, as appropriate for each method prior to the implementation is essential in order to challenge our theoretical assumptions and principles about what works in practice and what will best address the issues relating to outcomes and impact. The Kirkpatrick four level model (1994) is still widely used today (CIPD, 2013), in order to gauge reaction, learning, behaviour and results. However, the extent to which it is used in full is questionable. At the first level, Kirkpatrick (1994: 21) refers to the “level of customer satisfaction”, in other words, the reaction of those that participate in the activity. The second stage evaluates the extent to which participants change their attitudes, improve knowledge, and/or increase skills as a result of attending the talent development ‘programme’. The third stage evaluates the extent to which the behaviour has changed as a result of the talent development ‘programme’. The final layer considers the results of the talent development ‘programme’, which is often concerned with HR and business performance metrics such as reduced absence and increased revenue. The model is not without its critics (Passmore and Velez, 2012) and since it was first introduced, consultants and academics have been adapting the model and creating a variety of alternative approaches (Kaufman and Keller, 1994; Bates, 2004; Guerci et al, 2010). Passmore and Velez (2012) identify ten ‘popular’ evaluation models and their criteria, then offering their own model of evaluation. There is no commentary around how popular the models are, and to what extent organisations use them in practice. When selecting a particularly approach/model it is important to question:

  • How effective is the method of evaluation in assessing the real value and impact of the talent development activity?
  • How frequently do organisations review their evaluation methods and adapt them to the needs of each talent development activity?

The CIPD (2013) annual Learning and Development survey does shed some light on this issue, and asks respondents to report on the methods used to measure the effectiveness of learning and development activities, and the frequency of application. Methods include:

  • “general HR metrics such as absence, sickness, retention;
  • business metrics such as profitability, revenue, market growth;
  • return on investment after the intervention has been delivered;
  • limited stages of the Kirkpatrick model to plan and evaluate;
  • Kirkpatrick model to fully evaluate from reaction level up to business impact;
  • development data such as psychometrics, 360;
  • integrated learning system to collate focused metrics around issues such as talent and performance.” (CIPD, 2013: 33)

The CIPD survey shows that there is no consistency around the methods used to measure the effectiveness of learning and talent development activities across all organisations and sectors.

Shifting the focus to retention, the CIPD Resourcing and Talent Planning annual survey (2013: 44) identified the difficulties organisations will have retaining talent in the years ahead and that:

“the public sector in particular has seen dramatic increases in the proportion reporting difficulties retaining managers and professionals/specialists. Ongoing budget cuts in this sector, frozen or limited pay increases and the additional stress of widespread reforms mean the public sector’s retention challenges are unlikely to diminish.”

The costs of losing talent are often unknown and few organisations assess the real costs of replacing a key person. The Manager’ Mentors Inc, recently came up with a list of eight factors to consider and calculate for cost of replacement of key personnel.

  • HR recruiter time – coordinate interviews, screen candidates.
  • Search firm consulting fee.
  • Interviewing time (# interviews X # interviews X hours per interview).
  • Lost productivity of interviewers due to recruiting activities.
  • Hiring bonus, plus salary differential if a new hire commands greater salary.
  • Lost productivity while position is not filled.
  • Lost productivity due to training and start up time.
  • Lost productivity of workers in the group speculating why the co-worker left.

The direct costs associated with losing employees can exceed 100% of the annual compensation for the position (Cascio, 2006), when we add in the non-direct costs such as work disruption, loss of tacit or strategic knowledge and mentors (Allen et al, 2010) the costs are significantly more. At a recent US international mentoring conference Margo Murray suggested that organisations might spend time identifying those positions that may be vacated within the next 2 – 5 years and consider the impact of losing key people. The worksheet was developed out of the research for a doctoral dissertation on the cost of replacement of high tech employees, which revealed that replacing a first engineer who leaves the organisation after one year costs $577,000.

These themes are important within the context of this paper: the degree to which resource constraints influences talent development investment decisions, and the growing need to deliver performance targets, requiring specific expertise and role flexibility.

Methodology

The authors adopted a pragmatic approach, using mixed methods. Quantitative and qualitative data collection tools and methods of analysis were combined to triangulate the results of the research questions. Primary evidence was gathered from two sources. First, a survey was sent to all Public Sector People Managers’ Association (PPMA) members (800+); 43 members responded (+5%). Second, telephone, skype and face-to-face interviews were carried out with 29 respondents from 26 UK and international organisations representing the public and private sector, 6 of which were subject specialist consultants.

The survey consisted of 34 structured and unstructured questions, using comment boxes, multiple choice and ratings scales to record the data. Key topics included: Challenges in relation to talent and their importance; identification and development of talent including succession planning; measurement and effectiveness of processes and systems; job security, movement, changing roles and skills; diversity; social networks; communication and change; and, the quality of conversations.