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A tale of two strategies
Aanand Pandey | July 22, 2008
Finally, there is empirical evidence that you and I make a difference. Two recent surveys, one by Mckinsey and the other by Boston Consulting Group, released barely a month apart, point out that in an increasingly globalised world the "people strategy" is going to be the key differentiator.
A recent issue of The McKinsey Quarterly in its report, "Why MNCs are struggling with local talent", highlighted a strong link between the financial performance (measured by profit per employee) and talent management policies of top multinationals.
Similarly, the BCG report, titled "Creating People Advantage" published findings from surveys covering 83 countries and markets, observed: Sourcing talented employees globally is one action that is expected to grow most quickly around the world.
This means that multinationals - both foreign and Indian - need to brace themselves for a talent management turf war in the near future.
How do MNCs define talent? Claus E Heinrich, head, global human resources and labour relations, SAP, says that a lot of human resources professionals relate the term talent with top talent.
"Talent, in a company's context, is an attribute that is a combination of performance and potential."
Hema Ravichandar, an HR consultant who has also served as the global HR head at Infosys [Get Quote], says that ideally, an MNC should define talent as a sum total of its human capital.
Interestingly, the way companies define talent also reflects their immediate talent needs. ICICI Bank [Get Quote], in the recent years, has established its presence across 18 countries.
Much like a lot of fledgling Indian MNCs, the bank faces a peculiar young-leading-the-young paradox. For the bank, talent is not a relative but an absolute value. Which is to say that Mirza Ghalib has talent not because he is better than Daag Dehelvi but because he is, well, Mirza Ghalib.
K Ramkumar, group head-HR, ICICI Bank, explains, "At ICICI, a talented employee is someone who has potential for leadership. It's not that, say, a customer service executive is devoid of it. It is our job to identify which individual has untapped potential."
Linking talent and strategy
The BCG study found out that the HR-corporate strategy links were either broken or non-existent in a majority of companies. Successful MNCs ensure the two are linked.
SAP, the German business-software MNC that employs more than 50,000 people across 50 countries, has mapped each building block of its strategy pyramid to a critical talent management function.
"We understand that the need to align and engage every employee in the pursuit of a company's business goals. It is a prerequisite to success," says Heinrich.
Similarly, the California-based Hewlett-Packard, which has 172,000 employees working for its diverse technology solution groups in more than 170 countries, actively integrate the two. Talent management is one of the critical measures of performance for its business heads.
"The balanced scorecard of a CEO has four components, one of which is human resources development," says Mayur Bharath, director, people development, H-P APAC and Japan.
The link becomes even more imperative for a company like Mahindra and Mahindra, which operates in areas as diverse as automotive technology, financial services and infrastructure.
The company has a network of regional and functional talent councils that is steered by a five-member apex talent council. Anand Mahindra, vice-chairman and managing director, is one of the five members of the apex council.
"The company has 140 senior managers at any time of the year working on formulating talent strategies that shape the careers of 65,000 employees working across five continents," says Rajeev Dubey, president (HR, after-market and corporate services).
Managing acquired talent
Building an HR brand is the biggest challenge that multinationals face when entering new markets. Often, companies start with offering the best packages in town.
"Using compensation as a differentiator is easy, but short-lived. Any new kid on the block can take you on this one," warns Ravichandar. She suggests a three-pronged approach to building a strong HR brand. "The first is to make your arrival known."
The company, she says, should talk through niche channels about their business philosophy and their commitment to the geography.
The second, she says, is very critical. "At this stage, the companies should hunker down and work hard to achieve credibility among the internal as well as external stakeholders."
A great HR brand would mean nothing if the employees are not saying it. In the third stage, the company should showcase its thought and execution leadership through various forums.
According to Ravichandar, many companies move from the arrival stage straight to the third, ignoring the credibility phase, much to their peril.
Tata Consultancy Services [Get Quote], which has over 10,000 employees of non-Indian origin from over 60 nationalities, has been recruiting overseas since the mid-1980s. The company has an evolved talent sourcing model both in India and abroad.
Ajoyendra Mukherjee, global head-HR at TCS, says that in India alone, the company goes to 272 institutes including those located in the Tier II and III cities to recruit. Abroad, TCS follows a two-step approach to recruitment.
First it educates the candidates - the company has tied up with universities based in the respective geographies where it conducts interactive programmes with students to educate them about the future of information technology solutions and apprise them of the company's role in it.
The second step is to visit job fairs where students, having heard of the company through the interactive programmes, approach the TCS recruiters.
In additional to direct recruitment, TCS associates with AIESEC, the world's largest student organisation, to tap into a pool of undergraduates and graduates from 100 countries.
Additionally, TCS replicates its Academic Interface Programme at the global level to establish itself as a preferred employer at the university campuses across the Asia Pacific, the US, Canada, Latin America and Europe.
Local talent, global leaders
"MNCs do most of the localisation at the recruitment level. A global model can only be said to be evolved if it happens at the leadership level," says Vikram Bhalla, partner and director, BCG India.
Ramkumar says that a local leader needs to show a proclivity to think globally. "We follow the GE (General Electric, one of the most admired companies) way when identifying global leaders from a local talent pool," he says.
TCS takes a structured approach to leadership development at its offshore delivery centers. The initial deliveries at the offshore centres are done by Indian leaders sent on deputation. They recruit and train the local talent in development and design jobs. The company then identifies employees who can take up leadership roles at the programme management and project leadership level.
The new leaders are given an intense training on the quality processes, which also involves corporate training since the local leaders will need to be in touch with the central leadership. The Indian leaders then hand over the country management to the local leaders and come back.
SAP significantly raised its talent benchmarking when it introduced a global talent management programme two years ago that covered identifying talented staff and preparing them for leadership positions.
Additionally, SAP launched the Career Success Center last month. It is a global resource application that allows SAP employees to plan, manage, and develop their careers in line with the needs of the business. The company claims that, to date, 37,000 unique users, or about 92 per cent of SAP's employees, have accessed the centre.
Through the various leadership development processes, the company found international leaders who started in local positions.
Leo Apotheker, who recently joined the company as co-CEO, and the three newest members of the board - Bill McDermott, who will be responsible for all sales regions, Jim Hagemann Snabe, who will have full development responsibility for SAP Business Suite and the SAP NetWeaver technology platform, and Erwin Gunst, who will become the chief operating officer - all started in local management roles.
Cross-border rotation plays a key role in developing global leaders. Both SAP and TCS have active support systems to encourage cross-border mobility. SAP has a global mobility department that works with the employees in identifying assignments to help broaden their career development, offering language classes and cultural coaching.
TCS provides a forum called Maitree to all its employees worldwide. The forum facilitates employee engagement and helps them strike work-life balance.
The company also holds an annual event called Global Village to spread cross-cultural awareness - employees from 45 nationalities participate in the event every year.
Clearly, Indian multinationals have not only taken big strides in acquiring and running businesses overseas, but also positioned their organisational model well in line with their evolved international counterparts.
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