CAN ONE-WAY WORK IN A PROFESSIONAL SERVICES’ FIRM?
Background and Context
ProfessionalCo (an assumed name) operates within the professional services industry and delivers knowledge- based services and is structured as a member firm of a larger private listed company, headquartered in the United Kingdom, and operating in over 150 countries. ProfessionalCo is responsible for the Asia-Pacific region with this part of the multinational business self-described as one of the largest management consultancy firms operating within the region. Clients engage ProfessionalCo’s services via a distinct Business Unit (BU) which offer deep expertise in various areas of speciality including consulting, accounting, finance, taxation, digital transformation and strategy. While able to operate independently, the firm maintains partnership ownership with two levels of seniority - equity partner and non-equity partner – creating a situation whereby equity partners are simultaneous “employers” and “employees” as revenue and equity are distributed amongst these stakeholders. The senior executive team comprising of the Chief Executive officer (CEO), Chief Strategy Officer (CSO), Chief Operating Officer (COO) and Chief Financial Officer (CFO), are responsible for setting the firm’s strategic direction.
Boasting over 44,000 staff, its workforce is separated into either a Corporate-based role which focuses on the provision of services delivered subsidiary-wide, or within a specific part of the business. That is employees either work for the organisation in the subsidiary headquarters (referred to as Corporate Executives) or in a distinct Business Unit (referred to as a Business Unit Executive). Each Business Unit (BU) differs in relation to the services and knowledge provided to clients, workforce size, number of partners, and the skills and capabilities desired in “talent”. The firm’s Human Resource function is also separated into three teams: recruitment; policies and practices to be implemented organisation-wide; or the management of talent within a specific BU.
Importance of Talent Management
In stark contrast to many of their competitors, ProfessionalCo did not seek to dramatically downsize during the organisation during 2007-2009’s period of economic uncertainty (otherwise referred to as the Global Financial Crisis on other parts of the world). Instead of making a large part of the workforce redundant, ProfessionalCo implemented a new remuneration policy severely restricting pay increases, bonus and equity distributions. The CEO was particularly proud of the ability to “keep its workforce in tack” during the wider Global Financial Crisis and frequently referred to this action (or lack of action) as the firms' unbridled commitment to talent management.
References to the importance of talent and talent management feature prominently in both internal and external talk and texts. The firm publicly declares that talent and talent management is imperative to its operational and strategic ambitions. The importance of talent management stems not only from the inherent connection between the quality of its internal workforce and organisational success but also the desire to compete in and win the widely heralded “War for Talent”. Asserting the presence of a talent shortage, ProfessionalCo deliberately invested in enhancing the firm’s external reputation in order to “win its unfair share of talent”. Recognised as an Employer of Choice operated as a further mechanism to pull potential talent towards the organisation and to widen the external talent pool.
Operating within a knowledge-based industry presents a unique set of challenges for talent management because, without talent, there would be no ProfessionalCo. The fixed relationship between talent management and the firm’s operations further compounds the imperative need to manage “talent” effectively. Professional services are different to production or manufacturing organisations which provide stakeholders with physical goods and/or services as the value proposition and “talents” of its workforce represent the sole source of competitive advantage. That is, knowledge-based firms such as ProfessionalCo sell services to clients. These services are founded on the skills, capabilities, and knowledge of the people within. While many organisations adopt the adage that “Our people are our most important asset”, this sentiment is factually correct for ProfessionalCo as the people-based assets underpin all assets within the organisation.
Driven by a formalised talent management strategy to “grow” concerning size and revenue, the subsidiary, proactively invested in talent management policies and practices to enhance the organisations competitive positioning domestically. Employing discourse by strategy approaches which recognise the power of words and talk in shaping actions, the firm’s senior executive team explicitly encourage everyone to “take action and invest in their talent” to achieve the subsidiaries strategic ambitions and goals. The charismatic CEO acted as a salient stakeholder in all talent management and strategy interactions and was frequently observed conversing with employees about their experiences working at ProfessionalCo, instigating opportunities to garner real-time data about the organisation’s progress and the ability to balance client and workforce needs.
Factors Influencing Talent Management
The ability to enact an integrated approach to talent management – whereby all Business Units and Senior stakeholders were “doing the same thing” - and realise formalised strategic ambitions, however, is encased in complexity for the following reasons:
Talent management practices were not founded upon a pre-established definition of talent. There is no single agreed upon understanding of “who” (individuals or everyone) and “what” (skills and capabilities or pivotal roles and positions) is talent across the organisation. Senior partners and HR managers within each BU can define talent in a way that they see fit, without intervention from the Firm’s Asia-Pacific or global headquarters. This creates a situation whereby understandings of the defining characteristics of a “talented” employee may be vastly different within the firm. The potential for diversity in talent conceptualisations results in ambiguity and confusion within the workforce as employees are unaware of specific promotion requirements beyond the ability to present a convincing business case and demonstrate the ability to contribute to the firm through revenue generation.
Although talk about talent permeates throughout the organisation with the term “talent” used frequently to describe certain policies and practices, Corporate HR executives acknowledge that there are vastly different perceptions of what “talent” looks like in an idealised sense. While there was the widespread agreement of the crucial importance of “talent” to the organisation (for the reasons noted above), Senior HR and non-HR executives held different opinions about whether there should be “one” talent conceptualisation. Questions about whether there was one-way or a best-way to define the defining characteristics required in order for a certain individual to be classified as “talent” was frequently debated.
Assertions about the value of a consistent and one-size-fits-all approach resulted in a few of the BU’s establishing set talent parameters about the defining characteristics of talent. Via a formalised “talent definition”, these BU’s articulated the specific criteria used to evaluate an individual’s “performance” and their “potential”. This also created a situation where individuals are privy to the same evaluation methods within the context of these BU’s. Other BU’s however, elected not to instigate one specific idea about what the composition and defining attributes of a talented individual and elected to enact talent management founded upon fluid and agile conceptualisations, whereby the definition of talent could change if and when needed.
Another challenge arises from the absence of a talent management “system”. The firm does not utilise technologically-enabled processes to guide talent evaluations and subsequent talent identification. The firm uses a software-as-a-service vendor created technology to evaluate individual and team performance as part of the organisation-wide performance management process. However, the use of HR technology stops at performance management, and although data captured during this process informs remuneration allocation, there is no mandate to use, nor guidelines of how to use, this information to quantify an individual’s value and distinguish between higher and lower performing employees. As a result of this, BU’s and senior partners within each separate division can self-determine how the criteria for and processes of talent identification without any input from Corporate executives.
The absence of a talent management system and talent definition resulted in divergent perceptions about how talented individuals are best identified. While debate rages about the value of either intuitive (unstructured and informal processes based on gut feel), individualised (informal processes that focus on a single individual) or strategic (integrated, and proactive processes applied consistently) talent identification processes within industry and academia, ProfessionalCo executives debated whether talent was best identified by “measuring” or “observing”. BU’s adopting the measuring perspective believed that talent is a construct that is quantifiable and that stakeholders can capture and represent employee value via statistical measures and “scores”. This talent identification process relied heavily on Business Unit Line managers. Line managers were tasked with evaluating the performance and potential of team employees annually via the organisation-wide performance management practice. Line managers, during this process, would allocate scores (out of five) to each following defined criteria and then would input these numerical scores into the relevant HR technology module. These processes relied heavily on HR technology to capture line manager determinations and used the embedded algorithms to force-rank employees from highest to lowest performing employees. Line managers could also use HR technology to rank employees with the highest levels of potential and generate a list of individuals with the highest evaluations of both performance and potential. Individuals included in this latter list were subsequently classified as “talent”.
The alternative observational based approaches sought not to measure an employee’s value quantitatively but instead emphasised subjective evaluations and observations. While individuals were subject to the organisation-wide performance management and allocated scores for performance and potential, senior stakeholders in these Business Unit’s didn’t want to rely on these scores, nor technology-based algorithms, to decide which individuals were indicative of “talent”. Line managers, in combination with senior HR managers, would meet face-to-face to share opinions and then debate and discuss which individuals were indicative of future leaders of the specific Business Unit and/or the wider organisation. From this perspective, humans, rather than technology, were responsible for making talent decisions.
There are also divergent opinions about whether the subsidiary should adopt and enact an inclusive or exclusive approach to talent management. Corporate HR executives tasked with providing talent development activities across the organisation would like the organisation to adopt an exclusive approach whereby only some individuals are invited to participate in the organisation-wide talent development program. While some Units within ProfessionalCo agree with their Corporate HR counterparts, others including the Taxation-based Unit assert that all employees are valuable, therefore advocating for an inclusive understanding of “who” is “talent” and arguing that all employees should have equal access to talent development opportunities.
Summary and overview
Overall, while there is an unbridled acceptance of the inherent importance of talent to both the wider organisation and its Asia-Pacific subsidiary, the ability to manage talent effectively in an integrated and consistent manner is complex. Business Unit’s, via the senior stakeholders within these Units, have differing opinions about whether there should be a pre-determined definition of what talent is (or is not). There are also different ideas about whether the organisation should identify talented individuals consistently and systematically. These differing perceptions have implications for the role of HR technology in
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