Introduction
Contemporary Business Environment places a lot of pressure on the company with regards to sustainable and profitable development. In order to be able to compete in the international arena, companies have to look for new ways to differentiate and diversify their business. One of the biggest challenges for a modern company is to build on internal expertise and skills that would help this organization create competitive advantage based on its intangible assets and people.
Individuals are subject to a variety of influences and the employment relationships are becoming more complex. Human Resource Management (HRM) is facing new challenges, such as growing organizational diversity and the demand for the most innovative approach to staffing and motivation. This demand is explained by the organizational need to build on more diverse skills to work in global market as well as to address individual expectations of employees that seek for career development, intrinsic and extrinsic motivation and choose the company they work for based not only on monetary compensation but on a number of other motivators, such as working environment, organizational culture, personal and professional development opportunities.
Talent Management for the Twenty-First Century
Josephs (2016) outlines the some critical challenges that modern American companies are facing in the increasingly difficult long-term employment market. The author suggests that Human Resource Organization has shifted from facilitator to the change leader a the objectives of HRM changed over the past decades. The point that the author is making is that the companies should invest more time and financial resources to build on the sustainable strategy of employee retention through effective talent management programs.
The article outlines that the reality of the country is the lack of ready-for-real-work graduates and talent shortage that place further pressure on the employment market. This trend makes many companies rethink their HR strategies and seeks for ways to develop needed expertise and skills internally. Companies continue to increase investments in outside recruiters and raise salaries to match their competitors. The example of a CEO, outlined in the case, demonstrates that high-level managers are eager to tolerate incompetence to the certain level and train their employees to achieve higher rates of productivity and effectiveness of operations, rather than accept low retention rates. Josephs (2016) argues here that initially high investment in talent management and training pays off in a long term when productivity increases and the cost of hiring new employees significantly goes down.
Globalization and HRM
The article, written by Mary Josephs raises some of the most popular issues, which HRM and organizations as a whole face in the contemporary environment. It is important to mention that the companies today have to face some new and unexplored challenges, such as diversity management, internationalization of the business, which demands specific and rare skills and extremely high competition for young talent on the market. All these factors have transformed HRM from a function of facilitator and support of the business to one of the major assets, which lead change and builds on competitive advantage (Groysberg and Connolly 102-122). With the above in mind, talent management, personal and professional development projects and performance-based pay started to gain more attention and popularity among forward-looking companies.
Talent management has been lagging behind d business offering a number of theories of leadership, diversity management consideration, and performance appraisal systems. At the same time, constantly changing global business landscape demands further research and analysis in the field of Talent Management. Current situation analysis demonstrates that the companies that recognize the role of human capital in building their competitive advantage benefit from their investments in HRM. Some of the good examples are the companies in technology sectors, such as IBM and Apple that are seen as pioneers in talent management and strategic HRM (Swanson and Elwood 45-60).
Performance-based Pay
Heneman and Werner (2005) define performance pay as an incentive form of employee compensation for their services. In other words,employment contract based on the incentive payment scheme allows the employer to reward the employee or guide his personal development based on how well this individual performs a work. Companies that choose to invest in talent management recognize that performance-based compensation schemes can provide them with an effective tool to motivate employees and encourage their learning process within the companies. These companies choose to boost organizational performance not only through technology investment but through significant financial investment into people management, where performance-based compensation boosts motivation. Josephs (2016) provides examples of a CEO, whose experience shows that investment in machinery and equipment, accompanied by high turnover rates allowed her company to solve immediate issues, but could not ensure sustainable competitive advantage. Once the company started investing in the effective retention program that included the change from standard pay to performance-based compensation, turnover fell and individual and departmental performance increased significantly. The numbers, provided in the article for the trucking industry to support the above statement, illustrate how effective retention policy based on incentive-based pay can vastly increase average retention rate.The author further suggests that not all skilled workers in the companies that strive to build their competitive advantage through people management and development reside on the top of the wage scale. This incentive to gain personal recognition and, consequently, financial reward is one of the drivers of productivity (Joseph, 2016).
It is important, however, to highlight that when a company decided to implement a performance-based pay, it changes the entire organizational culture, affecting all stakeholder groups. This demands very accurate approach to the development of the suitable performance-based system as well as diversity and change management. Failure to approach this HRM program from strategic perspective wills results in strong resistance and rejection by employees. That said, companies should always focus on the parallel development of management training programs as well as diversity training throughout all the levels of organizational hierarchy.
Personal and Professional Development Programs
Employee retention is a challenging task. Modern businesses face various issues with regards to HRM, as the diversity grows and employees are becoming more demanding and selective when it comes to their professional careers. With that in mind, employee retention and productivity of the companies depends on the ability of these organizations to offer employees possibility for professional and personal development, appropriate for their personal qualities and professional qualifications. Josephs (2016) places a lot emphasis on people development. She highlights the examples of WinCo Foods and Schweitzer Engineering as pioneering organizations in their respective fields, which integrated talent management in a form of personal and professional development programs, into their high-level strategies. Both companies recognized the potential of in sustainable competitive advantage achieved through unique and rare skills and expertise, built from within the core of the companies. Indeed, personal and professional development programs in the companies outline, in a way, the difference, between organizations that are focused only on talent management and those companies that aim at talent development. Surely, both, management and development of people are critical for a given organization. The comparison of low-cost Wal-mart approach as opposed to costly talent management programs of H-E-B and WinCo, provided in the article, supports the above this statement (Swanson and Elwood 98-105).
Employee Motivation
Joseph (2016) argues that "in the industry with the low barrier to entry, retention of key employees is essential". The point that the author is trying to make is that employee motivation is the key to high retention rates and effective business operations. While each company has its unique strategy and specific goals, the ultimate objective of any business is to build sustainable profit and reduces operational costs. That said, companies found the way to compete with each other in a complex contemporary business landscape through the talent competition, creation, and retention. This allows these organizations to "develop over-more-sophisticated products".
The article looks at the upstream profile of organizational costs. Joseph (2016) suggests that hiring and training costs, along with lost production and overtime expense can turn into a significant burden for the company. Indeed, one side of the HR activities is to find this talent. Retaining this talent, however, is even more challenging. Companies look at two types of motivation, intrinsic and extrinsic. Effective HRM can and should address both of them to build on long-term employment commitment and effective learning. This detailed approach to people management demands training of HR staff and management in diversity and emotional intelligence (Lauby 24-35). Joseph (2016) outlines several examples of motivation and notes that talking and listening to employees should be as important as listening to the clients. Some of the critical elements of motivation, according to the author include financial reward, creating a feeling of belonging, making employees feeling valued and offering them an opportunity to develop and grow.
Management Development Programs and Diversity Training.
Joseph (2016) chooses to name the article Solving Employee Turnover And Skill Deficits: How Some Companies Prosper As Others Fail. The entire underline of her argument is people as the main strategic asset for the contemporary organization. The author outlines the example of a CEO that recognized that heavy investment strategy, based on equipment and machinery upgrade and emergency management in HR field, cannot take the company to sustainability in a long-term. Additionally, the article focuses on the technology sector and retail businesses, highlighting the appropriateness of long-term planning for sustainable competitive advantage through people. Finally, Joseph notes that productivity is, to a great degree, an indicator of individual motivation. Indirectly, but the author introduces the concept of diversity in employment relationships, by outlining different triggers of intrinsic and extrinsic motivation in the discussion about Surprising Successes in Hiring and Retention. The primary argument of the author is that organizational success comes with employee ownership, which means investment in talent management as well as retention, employee training, and personal development. In fact, successful HR-based strategies are the result of the effectively combined planning for management development and diversity training. For most of the companies, according to Joseph (2016), this shift to employee ownership was a long process and training and management development is the key to making this change smooth and less intrusive.
Conclusion
Globalization and internationalization of the business provide a number of opportunities to the companies. These opportunities come at the certain cost. Modern companies should learn to become more responsive to the market needs and flexible in terms of their internal policies. The role of HRM in a contemporary organization is no longer a support function, but a strategic element of organizational development. Many organizations already realized that human capital is one of the critical distinction characteristics of a successful company. Moreover, poor retention rates and the lack of individuals with specific to the company skills make HR costs grow rapidly. This makes businesses invest in talent management and focus on employee retention rates as a long-term investment and cost-reduction strategy.
Works Cited
Groysberg Brian, and Connolly Kent. Great Leaders Who Make the Mix Work. Harvard Business Review. 2013. [Online]. Retrieved 18 April 2016, https://hbr.org/2013/09/great-leaders-who-make-the-mix-work
Swanson Richard.A. and Elwood F.Holton. Foundation of Human Resource Development. 2nd Edition. San Francisco: Barret-Koehler. 2009. Print.
Josephs, Mary (2016). Solving Employee Turnover And Skill Deficits: How Some Companies Prosper As Others Fail. Forbes [Online]. Retrieved 29 April 2016, http://www.forbes.com/sites/maryjosephs/2016/02/05/solving-employee-turnover-and-skill-deficits-how-some-companies-prosper-as-others-fail/#5169c6c63b5f
Heneman R. Werner J. M. (2005). Merit Pay. Linking Pay to Performance in a Changing World. 2nd Edition.Greenwich: Information Age Publishing
Lauby, Sharlyn. Motivating Employees: Career Planning and Talent Management. Fort Lauderdale: ASTD Press. 2008. Print.
