Navigating the Talent Conundrum

“What are you doing?” yelled the mentor from the ground, looking at his over-enthusiastic apprentice climbing the coconut tree.

The apprentice replied, “Climbing the tree to cut grass, can’t you see? You never asked me to, and yet here I am, taking the initiative.” He thought, surely his mentor would be impressed with his proactive ways!

The mentor bellowed, “You fool, do you have to climb a tree to cut grass?”

To which the apprentice instantly replied, “Isn’t that why you see me climbing down?”

This apocryphal story will resonate with you when you read this article. No one other than one’s own self can manage talent. But the process of talent management becomes dramatically different when the first step of the process is Planning, Strategizing and Budgeting for Human Capital Management.

Managing Human Capital over Managing Talent

Talent refers to the manifestation of an individual’s latent Capabilities; the Capacity to Transform and the Ability to Perform to a continuously Transforming Context. So, how are organizations around the globe claiming to manage these talents for individuals? Are they implying that what they perceive as valuable constitutes an individual’s talent? What prompts us to continually discuss the looming talent shortage and the possibility of a talent war?

When organizations foster a clear symbiotic connection with individuals to acknowledge and value their skills, then each employee would be assessed and recruited based on the following criteria:

? A genuine passion for the industry in which the company operates. For example, a travel company will look for individuals who truly love travel.

? Unique skills that facilitate the creation of solutions aimed at benefiting industry customers and consumers, helping the company maintain its leadership position.

? Expertise in a specific Subject (such as the Traveler’s Journey), Theme (like Service or Economics), and/or Topic (like Technology or Experience) that is crucial.

? Inclination towards the type of work the organization engages in, along with the associated challenges and excitement it presents.

? Opportunity to contribute and receive recognition, rewards, and celebration for your efforts.

When organizations effectively recruit individuals who fulfill the checklist criteria and form teams that enhance each other based on these qualifications, it should be difficult to find replacements for such valuable talent that drives growth and maintains competitiveness. Surprisingly, evidence does not support this notion.

The graph showcased by Statista in September 2024 regarding Technology Companies challenges the idea of effective Talent Management. The tech sector faced a challenging beginning in 2024, with global technology firms experiencing a considerable workforce reduction in the first quarter, resulting in over 57,000 layoffs. By the second quarter, more than 43,000 tech employees had been affected by layoffs.

Human Capital Management is the art of investing in human potential and cultivating skills that are vital for both organizational and societal growth. It involves aligning individuals with their growth aspirations while helping them acquire the necessary skills to achieve those goals. Each person possesses unique talents shaped by their social, cultural, and economic backgrounds. This inherent potential requires support through tools, methods, and resources to flourish. Over the past 150 years, a select few have largely dictated employment opportunities for the majority. Globalization has also influenced the workforce, conditioning the education system to cater to the interests of monopolies and oligopolies. However, with the rise of the internet access and the evolution of democracies, we should expect significant changes in this landscape.

Companies with human-first approaches showed 32% higher retention cites the Deloitte Human Capital Trends 2024 report. Korn Ferry’s Engagement Study 2024 showed Employee engagement increased 45% with human-first approaches. Morgan Stanley’s Capital Research 2024 found companies with strong human capital focus saw 41% higher market valuation.

As shown in Illustration 4, the Human Capital process alone will not influence an organization’s growth trajectory. The concept of Work, which is guided by the Value the organization aims to create, along with a workplace that fosters collaboration and sharing through appropriate tools, methods, and resources, is crucial. This enables the development of a Human Capital Process that Plans, Strategizes, and Budgets for equipping its people to be Aspirational, Agile, Anticipating, Authentic, and Able of fulfilling the Mission, Vision, Goals, and Objectives. This integration of Work, Workforces, and Workplaces is vital in the context of the Digital Economy.

The key takeaway is that what was relevant in the past is no longer applicable today. The idea of employment is evolving from meeting the needs and wants of industrialization to embracing aspirations through personalization. In simple terms, Work must align with the Potential of prospective candidates, developing their capabilities and encouraging their involvement and immersion in the creative, production and distribution / reach processes. Consequently, roles and key result areas will undergo transformation. For instance, design will take on increased importance, as core engineering utilizing Large Language Models (LLM) will demand design skills over coding abilities. Humans must be considered as assets on the balance sheets of companies rather than resources. Unless this shift is acknowledged, there is little hope for growth of enterprises. This is true for every industry in every sphere of life.

Innovation is now an essential element as the demand for intrapreneurs and entrepreneurs in our societies continues to grow. Currently, education systems worldwide are failing to produce an industry-ready workforce due to outdated syllabi and teaching methods that do not align with future needs. Therefore, to develop and empower a workforce distinct from previous generations, it is crucial to reshape the structures, synergies, and systems to remain relevant moving forward.

The term “Capacity” must evolve from merely referring to headcount to representing an individual’s ability to transform to the essential demands needed to achieve the intended impact of the organization’s goals.

Glocal Workforce Strategy

No it isn’t a typo. There must be a clarity on how organizations worldwide will convert the B in Global to C. The principles of conquering, monopolizing, or oligopolization that marked the efforts of Globalization will not work anymore. Organizations must learn to democratize their engagement with Talent. The talent worldwide must be excited by the work they are offered and they should be rewarded, recognized and celebrated for their contributions. This is a new aspirational generation that does not have any of the socio economic and political baggage of the previous generations.

The opportunity for new growth and continuous innovation over the coming decades lies in the transformation already underway in the wider business environment. C K Prahalad and M S Krishnan in their seminal work published by McGraw Hill in 2008 titled “The New Age of Innovation: Driving Co-created Value through Global Networks” opined:

“We have finally reached the point where the confluence of connectivity, digitization, and the convergence of industry and technology boundaries are creating a new dynamic between consumers and firms.” The authors characterized the new value creation landscape as an N=1, R=G world, where N=1 represents the goal of creating a highly personalized experience for each consumer, one consumer at a time, while R=G (Resources = Global) reflects the need to be able to access the resources needed to do that from anywhere in the world. Increasingly, companies will have to learn how to mobilize the “resources of many” to “satisfy the needs of a segment of one.”

The Global Capability/Competency Centers that organizations are currently establishing should not function as mere extensions or branches of existing enterprises; instead, they must be regarded as entirely new businesses, akin to startups. While leveraging all the positive aspects of the current structure, these centers should focus on becoming hubs for digital transformation rather than just IT Operations centers. Despite the narrative suggesting a shift from traditional offshore centers to digitally transformative hubs, the command-and-control organizational structure remains intact. Furthermore, there has been little progress in developing local ecosystems that contribute to global objectives, and early adopters have yet to establish a digitally intelligent infrastructure.

The lack of evidence is striking, as there appears to be no clear intent and strategy to integrate Data, Talent, Resources (including Materials and Energy), and Financial Investments at the intersection of Value, Intellectual Capital, Human Capital, and Intelligent Digital Infrastructure. Organizations continue to grapple with Permanent Establishment (PE) risks, while their vendors focus on downplaying innovation and prioritizing operations. Although there is marketing for AI-driven Talent Acquisition, there is scant evidence of data curation that supports the planning, strategizing, and budgeting necessary for acquiring, onboarding, servicing, retaining, and renewing talent. In summary, there is little indication that organizations are adapting their Design Playbooks to accommodate the new landscape. Even Poaching which is still the popular method of fulfilling talent requirements lacks the evidence of AI support. India is expected to host 2,550 GCCs by 2030, with a market value of USD 110 billion. There is a scramble among state governments to renew the policies and procedures that will help reduce the stress of Taxation, Compliance, Transfer Pricing, secondment and legal regulations.

The latest survey of more than 1,100 business leaders by McKinsey Global Institute (MGI) finds that companies that prioritize venture building are doing so for growth and the Glocal Capability Centers must fall in that category. While creating new ventures has always been an effective way to accelerate revenue growth, today’s technology innovations have heightened the opportunity — and the pressure — to do so. The types of new ventures receiving the most interest vary by industry, and 60% of respondents are eager to pursue Artificial Intelligence (AI) / Generative Intelligence (GI) enabled ventures in the next five years.

The main challenge for companies that struggle to prioritize venture building is the availability of capital, although many have discovered ways to overcome this obstacle. Those that have found solutions are experiencing significant rewards: survey results indicate that companies allocating 20% of their growth capital to develop new ventures enjoy revenue growth that’s two percentage points higher than those that do not focus on new-venture building. They also experience organic growth that surpasses competitors by 2.8 percentage points, along with double the success rate in meeting or exceeding their growth and scaling expectations. Over the last decade, the largest new ventures established by established companies have generated 1.5 times the revenue of the largest startups.

Here’s a table outlining the opportunities for creating a comprehensive Human Capital Management Process:

Summary

1. This marks the first of a five-part article series aimed at Fortune-rated incumbents, seasoned business enterprises, and startups considering a glocal workforce strategy.
2. In this piece, we advocate for prioritizing Human Capital Management in your strategy, rather than focusing solely on Talent Management.
3. Our next article will delve deeper into the business rationale, exploring the shift from an age of information to one characterized by intelligence.
4. Any innovation, particularly in the current climate, that lacks a strong emphasis on transformation will ultimately be ineffective.
5. There is no doubt that technology will continue to play a central role in this transformation. However, without being supported by Intelligent Process Automation that encompasses a Customer Universe Ecosystem, this technology will provide minimal value for the investments made.

Authored by Subbu Iyer, Founder & CEO and Siddharth Patel, Co — Founder & COO, Giggr Technologies