Need Global Talent? Grow Your Own

With so much competition for skilled people and so much worker mobility, the best recipe for success is to build from within

by Harold L. Sirkin

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Of all the resources for which everyone from everywhere will be competing in the years ahead, talent is the most precious—and may be the most difficult to come by. In the age of globality, the success of companies will be dependent on winning the contest for talent. Decision makers will have to think just as carefully about who will accomplish what needs to be done as they will about how to do it.

Even in China and India, where there is a seeming glut of workers, human resources is no longer a straightforward operational issue. The simple equation, "We need to hire X number of people at the following rate at such and such location," no longer works. As the rapidly developing economies continue to grow and the Western economies continue to age, the competition will only intensify. Winning this competition will require new strategies that don't always fit traditional molds.

Consider the talent contest as a series of challenges. The first challenge in the era of globalism is finding people. The second is aligning the talent with the work that needs to be done. The third, as they say in real estate, is location, location, location: having the right people in the right place at the right time. The fourth challenge is retention: avoiding high turnover rates and motivating people to stay with the company. And the final challenge is quality: making sure the available people have the necessary skills.

Battling High Attrition Rates

We have all seen the stats on the number of engineers and IT workers India is producing each year. But most people don't know that attrition rates in the outsourcing industry can often be as high as 50% per year. As a result of this constant churning, a tremendous number of people must be hired each year just to maintain current employment levels. India's IT and business-process outsourcing industries face severe shortages, especially in big growth centers like Bangalore and Pune, in spite of all these new graduates.

Location is another issue. Work is often available, but in places where there aren't enough qualified workers. The problem is particularly acute in Eastern Europe, which millions of skilled workers have abandoned for higher-paying jobs elsewhere, leaving companies with three options: increase wages (thus diminishing cost advantages), engage in massive and expensive recruiting efforts to attract African and Middle Eastern workers, or shut down operations. In "Detroit East," the huge auto-making cluster near Bratislava, Slovakia, the demand for workers is so intense that Peugeot Citroën (ENXTPA:UG) is now providing housing to entice workers from other parts of the country.

Quality, of course, is the biggest issue. People who appear to have the right credentials don't always have the necessary education, skills, or experience to do a particular job. Consider language. We've probably all called a customer service line at one time, which was answered by people in India who spoke English but weren't fluent in the way we needed them to be. Then there's the matter of education. India has 20 times as many higher-education institutions as the U.S.: some 80,000, compared with approximately 4,000 in America. But the Indian schools' quality varies so wildly that, according to Hewitt Associates, only a quarter of India's higher-education graduates are sufficiently hirable for IT and other high-end job without extensive in-house training.

What can managers do?

Cultivating Loyalty

First, they should start thinking in terms of "growing" people. What this means is that your job isn't over when you locate and recruit somebody. In many ways, it is just beginning. To make these hires useful, companies need to provide training, education, mentoring, and motivation, so employees develop the necessary skills and the desire to stay with the company.

Consider how India's ICICI Bank, the country's second-largest, is doing this.