Editorial Board

A Refereed Monthly International Journal of Management

Impact of Talent Management Practices on Employee Effectiveness

Author

Dr. Kavita Rani Assistant Professor Department of Commerce DGC, Gurgaon (Haryana) - 122001

Dr. Sanjiv Kumar Professor Department of Commerce Maharshi Dayanand University, Rohtak (India) – 124001

Abstract

Unprecedented changes in global workforce market are putting pressure in front of Indian IT Companies to equip themselves with a pool of people having talent. Regardless of all profound developments, talented employee always has additional career options. In point of the fact, it becomes imperative for an organization to manage the talent. By drawing insights from literature review, it is found that management of talent is a critical element in organizations as it further leads to improvement in the performance of employees. Present study sought to find out the impact of talent management practices on employee effectiveness. 600 respondents from six IT MNCs from NCR were participated in survey. Confirmatory Factor Analysis and Multiple Regression technique were used for analysis. From richer results, present study revealed that there is positive and significant relationship between talent management practices and employee effectiveness. Talent management practices accounted a major percent of change in employee effectiveness.

Keywords: Talent Management, Employee Effectiveness, Confirmatory Factor Analysis, IT Companies, NCR etc.

Introduction

Changing dynamics of the workforce market, shortage of skills, employee’s demands for balance in work and personal life and growth opportunities are creating a burning obsession to the organizations to identify, develop, deploy, manage, retain and replace the valuable assets. Assets in any organization can be divided into two major parts viz. its human capital and everything else Thrift (2012). In this increasingly complex global era, there is a decline in the value of hard assets in comparison to intangible assets namely name recognition, reputation, knowledge, knowhow etc. The prime source of intangible assets in an organization is human capital, which is also known as talent Serrat (2010) and how a company manages its talent holds a direct correlation with the organizational success. Talent as a critical resource is increasingly scarce; therefore the organizations need to manage it with their fullest efforts. Hence, in order to manage talent for business success, the term talent management is becoming one of the most significant buzzwords among the business world. Furthermore, since the phrasing of “war for talent” was coined in 1997, Piansoongnern & Anurit (2010), talent management emerges as a most pressing topic Serrat (2010) in the organizations for improvement in their practices for the attraction of talent, developing the talent, deploying the talent and for their retention Tansley et al (2006). The demographic changes in the labour market are putting pressure on the organizations to retain their talented employees which makes the term “talent management” increasingly important.

THEORETICAL UNDERPINNINGS

The word “talent management” is still in its infancy stage. The concept of talent management emerged in public in the year 1981 Darvish et al (2012). The strategic importance of the term, has been realized when it was coined by McKinsey consultants as “war for talent” in1990’s. They called it war for talent in response to the shortage of skilled employees in the labour market which makes the organizations to compete for the limited talent pool Darvishet al (2012). The “war for talent” was further prompted by the realization that the talent shortage was becoming one of the prime concerns of the human practitioners in the multinational organizations. TM starts with business strategy. It is one of the trendy words thrown about in human resource today; but we should know meaning of it to an organization and to understand the meaning of talent management, first and foremost, we should know about its historical background or how it becomes talent management from the personnel department. In a study by Bersin (2006), the genesis of talent management from personnel department is described as follows:

Phase I Personnel Department

In tardy 1980s, the business function, responsible for the people was called "Personnel Department." The role played by this department was to recruit people, reward them, and ascertain that they are availing the obligatory benefits. To fortify this system, the batch payroll system has grown up. Under this role “Personnel Department” was a well understood business function.

Phase II Strategic HR

Conception of “Strategic HR” has been emerged during 1980-90s, when the organizations realized that the human resource function is more consequential. During this era the business organizations realized that the role of vice president of human resource had a wider role i.e. recruitment of the right people, training of them, helping the business in designing the job roles and organizational structures, development of "total compensation" packages including other benefits and bonuses. It also tried to serve a key point for communication for health and bliss of the employees. The "Head of Personnel" converted in to the "VP of HR". The systems which were made to fortify this incipient role consist of recruiting, applicant tracking systems (ATS), total compensation systems, portals and management of learning systems. HR department is now known as s a business partner, which is developed to aid and serve the lines of business.

Phase III Talent Management

We are now taking foot in the incipient era of "Talent Management". Although, “Strategic HR” perpetuates to be a major endeavor, still human resource and learning and development organizations are currently emphasizing on a nascent set of strategic affairs viz. How to make the recruiting process more systematic, well-organized and efficacious by using "competency based" recruitment in lieu of assorting through resumes, one at a time? How can we better enroot the managers and leaders to support culture instill the values, and engender a sustainable "leadership pipeline?" How do we fervently identify and recognize competency gaps so that we can provide training, e-learning, or other development programms to fill these gaps? How can we work with these gaps to hire and select just the right people? How do we manage those people in a more rational and quantifiable way so that everyone feel aligned held accountable and obligated, and rewarded fairly? How do we identify and recognize the high performers and successors to linchpin positions throughout the business organization to make sure that we have a highly flexible and responsive organization? How do we provide learning that is flexible, relevant, convenient, and expedient? These contemporary and challenging problems are vital and new. They requisite higher integration between the different HR silos and direct integration into line of business management processes. In the present hyper competitive and extremely volatile technological environment, organizations are starting to buy, build, and stitch together performance management systems, competency management systems and succession planning systems.

Various definitions of “talent management,” are given. Literature offers a number of definitions of talent management, but rather than providing a consistent and concise statement, different authors give a plethora of definitions. Talent management is mainly viewed in three perspectives: (1) traditional HR functions and practices; (2) a new term of succession planning; and (3) the management of people’s natural capability that benefit an organization. According to the first perspective, talent management is merely an alternate for the label talent management for human resource management. In this approach, empirical studies often cynosure on some particular HR practices such as recruitment, selection, leadership development and succession planning. In the stream of the strategic HR, contribution of the literature is relatively limited, as it largely amounts to a rebranding of human resource management. Secondly, talent management is still the rebranding of human resource management, but accentuates on the development of the talent pools by focusing on projecting the employee needs and wants and managing them their through positions. The last perspective of talent management focuses on managing talent according to performance and it is viewed that it as an undifferentiated good that emerges from humanistic and demographic perceptions. In this aspect, talent management is considered as generic and does not emphasize on specific positions or the boundaries because people may have more to gain by developing and leveraging their natural skills than by trying to rehabilitate their weaknesses” Roberts et al (2005), McCauley & Wakefield (2006), Redford (2005) and Lewis and Heckman (2006).

TALENT MANAGEMENT AND INDIAN IT SECTOR

Indian IT Sector is on its high momentum pathway which is growing rampantly. However, this industry is growing rapidly at global pace but the shortage of talented and skilled employees to tap the available opportunities in the market, is the biggest challenge faced by IT Sector in India which is apparent from the literature review. Not only the attraction of the talented employees but also to ensure that they are stick to the organization as long as possible. IT Companies are facing high percentage of attrition rates which is increasing at faster rate than ever. The major chunk of talented employees belongs to young generation employees. At the leadership level, churn rate is almost static although there are numerous reasons of leaving an organization but according to article in Business Standard by Mohapatra (2015), talented employees are mainly leaving for new generation technology enabled IT Companies to learn and develop their new skills. The IT Companies are putting their maximum efforts to spot the talented employees in order to fulfill the needs of their clients. But the real challenge is the retention of these employees as we all know efficacious management of talent leads to increase in the commitment of the employees which in turn strengthen their effectiveness in the organization. Availability of talented and committed employees with great will power and team spirit always work as a motivator for the other employees in an organization with in turn helps in enhancing the growth of the organization. The effectiveness of the employees lies in their will power and the dedication which have impact on work culture of any organization which results in the creation of a strong brand name for the product of company Jyoti et al (2011), Donahue (2001) and Christensen Huges (2008). Nowadays the successful customer services organizations have realized that maximizing the potential of employees is a key for success in both the good and bad times. Moreover, the organizations attain its objectives when the employees fulfilled the needs of their clients and the clients feel confidence in them and the achievement of these objectives become easier when commonly shared by employees, managers and organization. Employee effectiveness is the fundamental base for the organizational effectiveness. Although it is very difficult to measure the effectiveness of the employees because different organizations perceive it in different ways, still the in the present study an attempt has been made by the researchers to find out the impact of Talent Management Practises and Employee Effectiveness.

OBJECTIVE OF STUDY

· To find out the impact of Talent Management Practises on Employee Effectiveness.

RESEARCH METHODOLOGY

Although talent management literature is found rich in different studies but there is lack of research work related to its impact on employee’s effectiveness. In the present study, to find out the relationship between talent management practises and employee effectiveness, first of all five factors (consisted 35 statements) were extracted with the help of extensive literature survey which represents the talent management practices itself. After obtaining the predictors of talent management practices, 13 statements were refined from the extensive review of literature which represents employee effectiveness. After the observations from literature review, a questionnaire was administrated which consisted three parts i.e. Part A (demographic profile), Part B (talent management practices) and Part C (determinants of employee effectiveness). For the fulfillment of the objectives of study, primary data was collected from a total sample size of 600 respondents from six IT companies (IBM, HCL Technologies, TCS, Accenture, Wipro and Microsoft) working in National Capital Region. Companies were chosen on the basis of the highest number of employees among the top ten IT MNC’s in India. 600 targeted respondents were participated in the survey but after the elimination of the partially filled questionnaires, 510 were the usable questionnaires. Hence the response rate was 85 percent. Study was conducted in the year 2015-16.The sample profile of the respondents is summarized in table 1 which revealed that majority of the respondents were up to 34 years. 61.8 percent of males were contacted for survey. 55.5 percent of respondents wereunmarried whereas 60 percent belongs to graduation education level. Majority of respondents were from entry level.

Table 1: Sample Profile of the Respondent

Respondents Characteristics	Percentage	Cumulative Percentage
Age
Up to 34 Years	67.8	67.8
35-54 Years	28.4	96.3
Above 54 Years	3.7	100.0
Gender
Male	61.8	61.8
Female	38.2	100.0
Marital Status
Married	44.5	44.5
Unmarried	55.5	100.0
Education
Graduate	60.0	60.0
Post Graduate	32.5	92.5
Others	7.5	100.0
Annual Salary (In lakhs)
2,40,000 to 3,60,000	16.3	16.3
Above 3,60,000 to 4,80,000	32.2	48.4
Above 4,80,000 to 6,00,000	23.3	71.8
Above 6,00,000 to 7,20,000	5.9	77.6
Above 7,20,000	22.4	100.0
Designation
Middle Level Employees	39.8	39.8
Entry Level Employees	60.2	100.0

ANALYSIS AND RESULTS

The data collected by means of the questionnaire was further processed with the help of IBM SPSS Statistics version 21 and IBM SPSS AMOS (Analysis of Moment Structures) version 21 Software. The analysis of data was started with the assessment of reliability and validity of the scale. Validity of the scale was checked with the help of convergent validity and discriminant validity whereas Cronbach's alpha measured the reliability. Descriptive statistics,

Factor Analysis, and Multiple Regression techniques were used for data analysis. KMO statistics (.922>.5) and Bartlett test (p=.000) was used to know the sample adequacy and to check whether the correlation matrix is identity matrix or not and the results are satisfactory. Furthermore, all the factor loadings of the items related to constructs are greater than 0.6, which is also satisfactory Malhotra and Dash (2011). 63.292 percent of the variance is explained by these five factors. For the further validation purpose confirmatory factor analysis technique is used and the results are discussed.Table 2 depicts that all the model fit indices (CMIN/DF, GFI, AGFI, NFI, CFI & RMSEA) are satisfactory Hair et al (2010) Malhotra and Dash (2011) Tabachnick and Fidell, (2007) Hooper et al (2008) MacCallum et al (1996), Ho (2006) and Browne &Cudeck (1993).

Table 2: Assessment of Validity and Reliability

Factor	CMIN/F	GFI	AGFI	NFI	CFI	RMSEA	AVE	MSV	ASV	CR
Learning and Developmental Skills	4.766	.950	.916	.958	.966	.086	0.6	0.149	0.103	.930
Compensation and Commitment	2.857	.978	.956	.980	.987	.060	0.6	0.159	0.116	.910
Work Environment	2.441	.982	.963	.976	.986	.053	0.6	0.159	0.086	.895
Organizational Culture and Communication	4.359	.966	.933	.966	.974	.081	0.5	0.06	0.039	.865
Interpersonal Relationship	4.168	.984	.952	.984	.988	.079	0.6	0.145	0.104	.873

So now it is possible to make predictions about Employee Effectiveness on the basis of the above model equation. The b-values exhibit us to what degree each predictor at one time affects the outcome if all other predictors are held constant:

Learning and Developmental Skills (B= .269, Standardized β = .288)

The b-values in table depicts that as Learning and Developmental Skills increases by one unit, Employee Effectiveness increase by .269 units, when the effect of other factors remains constant. The value of Standardized β indicates that if Learning and Developmental Skills increase by one standard deviation, Employee Effectiveness increase by .288 standard deviations when the impact of other factors held constant.

Interpersonal Relationship (B = .239, Standardized β = .246)

When the effect of other factors remains constant the B (Unstandadrized Coefficient) value indicates that as Interpersonal Relationship increases by one unit, Employee Effectiveness increase by .239 units. The value of Standardized β depicts that if Interpersonal Relationship increase by one standard deviation, Employee Effectiveness increase by .246 standard deviations and other predictors remains constant.

Compensation and Commitment (B = .207, Standardized β = .213)

The b-values in table depicts that as Compensation and Commitment increases by one unit, Employee Effectiveness increase by .207 units, when the effect of other factors remains constant. The value of Standardized β indicates that if Compensation and Commitment increase by one standard deviation, Employee Effectiveness increase by .213 standard deviations when the impact of other factors held constant.

Working Environment (B = .206, Standardized β = .218)

When the effect of other factors remains constant the B (Unstandadrized Coefficient) value indicates that as Working Environment increases by one unit, Employee Effectiveness increase by .206 units. The value of Standardized β depicts that if Working Environment increase by one standard deviation, Employee Effectiveness increase by .218 standard deviations and other predictors remains constant.

Organizational Culture and Communication (B = .146, Standardized β = .162)

When the effect of other factors remains constant the B (Unstandadrized Coefficient) value indicates that as Organizational Culture and Communication increases by one unit, Employee Effectiveness increase by .162 units. The value of Standardized β depicts that if Interpersonal Relationship increase by one standard deviation, Employee Effectiveness increase by .246 standard deviations and other predictors remains constant.

Hypotheses Testing

The results of hypotheses testing revealed thatthat there is significant contribution of the factors affecting talent management practices in Employee Effectiveness. On the basis of the t-statistics, we can state that Learning and Developmental Skills (t = 8.442 and p<.05), Interpersonal Relationship (t = 7.221 and p<.05), Compensation and Commitment (t = 6.130 and p<.05), Working Environment (t = 6.873and p<.05) and Organizational Culture and Communication (t = 4.851and p<.05) are the significant contributors of Employee Effectiveness. But if we talk about the magnitude of the t-statistics, the highest value is of the first factor i.e. Learning and Developmental Skills in comparison to other factors which depicts that this factor had highest impact on Employee Effectiveness whereas Organizational Culture and Communication had less impact as the t-statistics is lowest. Hence, all the hypotheses are rejected on the basis of their p-values and we can conclude that TM Practices and Employee Effectiveness are positively related to each other. The impact of Talent Management Practices on Employee Effectiveness is 53.1 percent which shows that 53.1 percent change in Employee Effectiveness accounts because of TM Practices.

CONCLUSION

Talented employees are striving to work for strong brands of employers whereas the employers are striving to become the best to work for. In today’s hypercompetitive business environment; employees notice much more than the product itself. They look for the company’s values, social responsibilities fulfilled by them, compensation including other non-monetary benefits, transparent and clear career paths, learning and developmental skills, working environment, organizational culture, communication between superiors, subordinates and other departments, how the company treat their employees, how they value their competitive advantage and on the basis of these aforesaid things they support or reject an employer very easily indeed. Nowadays, the employers should focus on needs and requirements to get things done. Emphasize should be given that the employees need to acquire and develop their knowledge and skills which also helps in the expansion of their creative vision. If the employees are to believe that they are valued and recognized by the organization they are working for, then there is need to see the visible signs of management’s commitment to their development via training and career needs Asfaw et al (2015). Regular enhancement in learning and developmental skills enables the employees to meet the demands of their clients whereas organizational success by defending the competitors in the market can be achieved by following the customer centric approach or you can say that a successful company always addresses the needs and requirement of their clients first and foremost for the better survival. If the employees have the memory of their clients, it shows that their clients are so important and on top priority for them. It also helps in the development of better service culture in the organization which further leads to increase in the productivity and the effectiveness of the employees.

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