Chapter 7 Managing Global Talent Recruitment Selection and

Developing a Global Talent Pool at Schlumberger Why is Schlumberger so successful today (2009)? • • Revenues doubled in 5 years reaching $23 b ($27 b in 2008) $3 b profits in 2009 ($5. 4 b 2008) (300% increase in 5 years) Historically close to local markets Drivers of growth: People and Technology 1992: Decision to invest in local talent • • • Support local engineering schools Treat everyone the same, regardless of passport Rigorous performance evaluation Mobility for the best A job in HR is a stepping stone 7 -2

The Challenges of Talent Management What is talent management? Why is it so important? And what are the key challenges? Managing recruitment • Attracting local talent • Building a differentiated ‘employee value proposition’ Managing selection and assessment • Selection methods vary greatly with context ; Guiding frameworks • Diversity management across the globe • Internal selection (ways of spotting ‘potential’) Managing retention Balancing the short and long term in talent management 7 -3

What is Talent Management? Talent is everyone? Talent is the critical few? Key argument: Focus resources on building capabilities to implement the strategy of the firm Focus on A-positions: • Those with a direct impact on company strategy • Positions with wide variation in performance • Those that involve firm-specific skills Does this means that B and C positions don’t count? 7 -4

Which Jobs Make the Most Difference? SOURCE: Adapted from M. A. Huselid, R. W. Beatty, & B. E. Becker, « A Players or A Positions? » Harvard Business Review, December 2005. 7 -5

Why is Talent Management so Important? « What are your biggest business concerns in China? » The responses in 2007 of 600 CEO’s of multinational companies with businesses across Asia Source: The Economist, 18 August 2007 7 -6

Why is Talent Management so Important? The shift to the knowledge economy Demographic changes Demand in emerging countries where the educational system lags behind demand Globalization of talent: Outsourcing to countries with high talent quality/cost ratios Increasing individual mobility 7 -7

Demographic Changes: German Demographic Profile 2015 7 -8

Demographic Changes: Brazilian Demographic Profile 2015 7 -9

The Deep Corporate Challenge is Creating a Talent Management Mindset There are 3 key stakeholders : CEO TALENT MANAGEMENT HR Line Managers “These issues aren’t HR issues anymore. They are line management issues. There’s been a profound shift” Murray Dalziel, group managing director, Hay Group 7 -10

The Scope of Global Talent Management It should encompass: • Ensuring that strategy is translated into TM implications • Forecasting needs (workforce planning) • Diagnosing gaps • Managing processes for attraction, recruitment, induction, career development, training, performance management, and retention • Managing appropriate globalization of these processes • Ensuring consistency between these activities • Ensuring that line managers focus on development discussions, performance differentation, mentoring, and succession planning 7 -11

Balancing Acts in Talent Management (I) Local adaptation or global consistency? TM is traditionally a local matter … … but there may be strong arguments for global consistency • • • Finding the best people locally for global needs The ability to deploy talent across borders Access to a global talent dataset Better learning on process improvement Facilitation of forecasting How do you react when local managers say « We are different» ? 7 -12

Balancing Acts in Talent Management (II) Build or buy talent? • This is a recent challenge. In the past, companies tended to have undifferentiated talent strategies (some focused on internal development, while others focused on external recruitment) The influence of the institutional environment The importance of complex knowledge and firm-specific skills 7 -13

Internal Labor Markets: Advantages & Disadvantages 7 -14

Towards a Mix of Build and Buy: Four Key Questions to Ask 1. 2. 3. 4. For how long will the talent be needed? Is there a career hierarchy of skills and jobs that facilitates internal development? Is the culture of the firm part of its competitive advantage? How accurately can one forecast demand? See P. Cappelli Talent on demand. Boston: Harvard Business Press, 2008. 7 -15

Managing Recruitment: Identifying and Attracting Potential Employees The ethnocentric bias: Home-country staff get the best start … and so the best finish to their careers ! How to reach out to attract talent: • • Relationships with universities and technical schools Internships Contests and competitions Employee referals Internet (e. g. targeting passive job seekers) Advertising Recruitment agencies Wide variation in practice from one country to another 7 -16

Global Employer Branding How can one build a global reputation as an employer of choice? • It requires much more than cosmetic action • Close collaboration between marketing, external relations, and HR What’s the downside of having a strong brand? • Think of recruits as customers – you only want to attract the right customers. The need for segmentation. Focus on clarifying the employee value proposition 7 -17

How to Build a Differentiated Employee Value Proposition (EVP)? What is an EVP? As with customers, employees pay a price to come to work • • • Long hours Stress Travel/time away from home Effort/concentration Blood, sweat, and tears But they get something in return • • • Money ; pension Interesting work to do ; Freedom and autonomy A good culture to work in; good people to work with Recognition Growth and development opportunities Praise and appreciation The EVP is the balance between GIVE and GET 7 -18

The Elements of the Employee Value Proposition Company Values Culture Strong Results Exciting Challenges Leaders Affiliation Work Content Career Indirect Financial Direct Financial Integrity Focus on People Career Development Respected Boss Freedom Autonomy Exciting Tasks Growth/Development Rewards SOURCE: Professor Stewart Black, INSEAD Job 7 -19

Managing Selection and Assessment What is selection? • Identifying the most suitable person from a pool of candidates Internal and external selection Selection is the HR area which most depends on the institutional context • • Interviewing Testing Assessment centers The role of HR managers versus line managers Selection is a 2 -way process, especially for talented people 7 -20

Selection and Diversity Management What selection practices would heighten discrimination, decreasing diversity? • • Secrecy and « confidentiality » around selection Absence of clear selection practices A subtle and informal culture Nominations for appointments by HQ or senior management What does DIVERSITY mean? • Gender, race, ethnic background, sexual orientation, disability, age, nationality, educational background (old school club) … 7 -21

What Types of Initiatives can Promote Diversity? • Identification of high potentials among minority groups • Recruitment targets; targets for high potentials • Recruiters come from minority groups • Policies favoring the preferences of targeted groups • Networking and mentoring programs • The measurement of INCLUSIVENESS Should the diversity strategy be global or local, or mixed? 7 -22

Competency-based Frameworks for Managing Selection (and for Steering TM) « Competences are the glue that joins all our HR processes. » Colgate CEO 3 approaches to specifying the firm-specific competencies that should guide selection decisions 1. Performance-based approach (research-based) 2. Strategy-based approach 3. Values-based approach Adapting competencies in the transnational firm: • The definition of leadership competencies is typically global, but behavioral indicators may be local 7 -23

Three Competency Logics Guiding Talent Management SOURCE: Adapted from J. P. Briscoe & D. T. Hall, « Grooming and picking leaders using competency frameworks » , Organizational Dynamics, Autumn 1999. 7 -24

Linking Competence to Career Progression: An example of a performance-based approach (Royal Dutch Shell in the past) 7 -25

Internal Selection (Potential Identification) The Elite Cohort Approach (The « Japanese » Model) Source: Evans, Pucik, Barsoux « The global challenge » , 1 st edition, 2002 7 -26

The Elite Political Approach (The « Latin » model) 7 -27

The Functional Approach (The « Germanic » Model) 7 -28

The Managed Development Approach (The « Multinational Corporation » Model) 7 -29

Managing Retention Why is retention management so important? • The more talented the person, the more options they have elsewhere • Professional recruitment without retention is throwing $’s away • Development without attention to retention isn’t a good business proposition Big regional differences in turnover rates How do you retain people in high velocity environments Like IT in India? Low High 7 -30

Why do People Leave? Pay and compensation The quality of the relationship with the boss • • « People don’t leave companies, they quit bosses » How to get line managers to take responsibility for retention? Work-life balance Internal development and promotion NB: The influence of location 7 -31

Why People Leave Data from the United States Belief 89% of managers believe employees leave for more money Reality (as suggested by employee surveys) 12% of employees leave for more money 88% of employees leave for reasons other than money • It takes a 5% increase in base salary to tempt a dissatisfied employee to leave and join another firm • It takes a 20% increase in base salary to tempt a satisfied employee to leave and join another firm Source: Saratoga Institute research, 2003 7 -32

Balancing Short and Long Term in Talent Management The danger of a vicious cycle of boom-and-bust in TM Managing countercycle : • Asking oneself in the good times the Shell question: « What will we fight to preserve when the cold wind blows? » • Rigorous performance management in the good times • Recruiting and developing for the future in the hard times • When no-one else is recruiting, that’s the time to get the best! 7 -33