Month: December 2021

Talent acquisition and management has emerged as a key strategic process in an organization. Though there is a better availability of workforce in the market than ever before, yet the challenge to acquire the right talent still persists for any organization, worldwide. This is essential to achieve the strategic objectives and ensure long term success of an organization. Thus, enhanced corporate competitiveness and globalization has transformed the regular process of human resource recruitment into talent acquisition.

Moreover, the work of an organization these days does not end with hiring of the right talent into the organization. There is a wide spectrum of activities like career management, leadership development, talent planning, etc. which are constantly buzzing in the HR departments of organizations. Such activities fall into the realm of talent management.

Talent management is all the more essential to keep up with the future needs of the organization. Otherwise, if the organization does not focus on talent management within itself then it will have to resort to the process of recruitment every time the need for appropriate talent arises. Hence, we can say that talent management is all about nurturing and guiding the talent in your organization in alignment to the strategic and long run goals of the organization. It is the succeeding step to talent acquisition.

An organization generally avails the services of an HR Consulting Firm to provide with a cost-effective and quick, yet high quality, talent acquisition and management process. An HR Consulting Firm efficiently and effectively contributes towards recruiting the best and the most appropriate person for the organization with the allocation of minimal resources and within a short period of time. Also, HR Consulting Firm provides the right analysis, strategies, and plans for the management of talent in an organization.

As far as talent acquisition is concerned, an HR Consulting Firm maintains a highly effective research team which keeps a detailed track of the requirements of both the organization as well as the candidate. It may be possible that an HR firm may specialize in certain industries or sectors as far as acquisition of talent is involved. This helps the HR Firm in maintaining high standards of success in meeting the talent demands in particular industries by employing in depth knowledge and research in those industries.

The Firm conducts behavioral interviews with the prospective candidate to obtain a comprehensive analysis of the leadership, team-building, decision-making and problem solving skills of the candidate. Also, the candidate is thoroughly assessed for his attitude towards working in a team, response to change management and reaction towards the cultural climate of the prospective organization. Such analysis helps the organization in not only recruiting a candidate with right educational and professional experience, but also one with the required attitude and flexibility to be a part of the organization.

The HR Consulting Firm undertakes following steps for talent acquisition process in an organization:

• Comprehend the business strategy of the organization.
• Assess the talent availability within the organization.
• Discuss the talent requirements of the organization with the management.
• Analyze the gap areas between availability and requirement.
• Build strategies and plans to meet these gap areas.
• Measure the success of the implemented plans.

Talent management basically works in creating a pool of talent within the organization which helps in achieving the strategic objectives of the organization in the long run. This requires the HR Firm to work on the present set of employees of the organization and polish them so as to align their talent with the strategic objectives of the organization. Talent management process also requires an HR Firm to:

• Analyze the talent strategy and succession planning of organization.
• Develop a talent plan as required for strategic long run success of organization.
• Review talent in the organization.
• Plan various tools and techniques to develop talent within the organization.

Talent management process:

• Carry out performance management
• Develop career management plans
• Benchmarking talent activities
• Leadership development programs
• Team building exercises
• Action learning programs
• Interactive workshops
• Individual development guidance and coaching
• 360 degree feedback

Recruiting

The foundation of talent management is hiring the right people. The best recruiting processes support those efforts by carefully defining job descriptions, using an applicant tracking system to help manage the workflow of the interview process, and carefully interviewing applicants to select the strongest candidates.

Career Management

Managing your employees’ career paths can help increase satisfaction while reducing costly turnover. Building on the information collected during annual reviews, companies can learn more about employees’ Strengths and interests. With that in mind, it’s possible to work with employees on long-term career development plans. Whether you’re dealing with someone on the management track or someone interested in being a highly skilled individual contributor, career management is a critical component of talent management and employee satisfaction.

Performance Management

Once employees have been hired, it’s essential to have the right processes in place to successfully manage them. HR technology and service solutions in areas such as time and attendance can help track productivity and performance. Regular review processes help keep lines of communications open between management and staff, allowing workers to get feedback on what’s going well and where they need to improve their performance.

Organizational Strategy

Talent management activities rarely happen in isolation. Instead, strategic recruiting and support of workforce development begins with a company-level commitment. Your HR team may play a leading role in making this happen, from identifying talent management as a strategic priority to determining how and where that focus will be applied.

Focusing on talent management is a critical component of your broader workforce management strategy, because recruiting, training, retaining, and promoting the right people are essential steps in reaching your staffing goals. While human capital management initiatives encompass talent management and much more, understanding and executing the day-to-day activities of recruiting, leadership development, strategy creation, and career management are essential for successful HCM.

Leadership Development

Have you identified the next generation of leaders within your organization? That’s a vital part of the talent management process. Once these high-performance, high-potential individuals have been located, businesses need to consider the best way to retain them over the long-term. Often, this process requires a focus on training, stretch assignments, and mentoring.

Organizations work towards the achievement of their mission and strategic objectives. This requires a thorough understanding of the resources required for achieving the same. Resources here imply financial and non-financial both and they are equally important and interdependent.

Technically these resources have been divided into two, non-contingent and differentiating capabilities. Whereas non contingent capabilities are basics that enable an organization to compete and exist in the marketplace, differentiating capabilities are those that differentiate an organization from that of the other and offer competitive advantage. Effective marketing management, for example can be one of non-contingent capabilities. Similarly, many HR processes aspire to develop non contingent capabilities but they often fail to align with the strategy and offer competitive advantage. Most of these processes end up developing people in similar areas and similar capacities as their rival firms but this fails to provide any competitive advantage.

For organizations to develop competitive advantage through HR processes it is very important to define strategic differentiating capabilities and then develop a process for identifying and developing the same. This empowers the HR people to create an impact on the organizational strategy and also provides a link between talent management and strategy.

For HR to prove that talent management can be of strategic importance to organizations, the critical relationship between the two must be proven. Talent management specially needs to be projected as a differentiating strategic capability that can offer real and substantial competitive advantage.

According to research conducted by various bodies it was found out that creation of differentiating strategic capabilities signifies the relationship between business strategy and human resources. Human resources, it was deduced are the primary sources of strategic advantage. The research study was primarily based on Resource based view (RBV) of an organization. This view has gained significant ground among HR practitioners as basis of models for formation and structure of resources.

Unlike other non-contingent capabilities that can be developed easily and cannot contribute to a large extent towards the development of a sustainable competitive advantage, differentiating strategic capability such as strategic HR through talent management can. However, for human resources to qualify as potential sources of competitive advantage they should fulfil the following criteria:

• Strategic Value: The resource has to contribute substantially and add value in his/her area of expertise.
• Rare: Unique in terms of skills, knowledge and abilities in order to qualify as rare.
• Appropriable: The extent to which the resource is owned by the firm.
• Inimitable: Such that the resource cannot be replaced even after the competitors having spotted the same.
• Cannot be Substituted: This means that the resource cannot be substituted by the rival firms and that there is no match for the talent.

There are not many things in the business environment that can fulfill all the above criteria and offer unique competitive advantage except human resources and that is under the jurisdiction of talent management. There is also a need to understand the strategic intent of the organization before defining strategic capabilities.

Strategies:

1. Adopt a growth mindset. A scalable and expanding customer and values-driven mindset is a living, breathing thing. It begins with the existing leadership of the organization and permeates throughout the organization, its functions, and its stakeholders. It is not only led but managed and habitually normal; it is culture. This mindset connects the organization to the people who matter.
2. Have organizational character. Reference and align the corporate vision, values and mission. Know and understand the current/future state of the organization and industry. Integrate strategy and aspirations for any innovation, disruption and digital strategies. Be prepared and flexible as the progression of transformation takes place and begins to thrive.
3. Have ethics. Good business practices create good business value.
4. Embrace technology. Digital, automation and self-service technologies are creating change in talent management services.
5. Rethink the HR lifecycle. Address the future of automation and technology, analytics, service models, governance, etc. to ensure it is affording the organization value now and in the future. The future of talent management strategies are flexible, people-oriented and reliable.
6. Champion the strategy. Existing leadership teams should collaborate to prioritize, support and lead the success of the organization’s talent management strategy.
7. Assess and redesign talent management programs to support all levels of leadership in the organization. Keep them people-centric through experiential learning to ensure they are ready to lead. These programs should support and measure cultural diversity, creativity and legacy, leadership and team excellence, brand equity, employee engagement and productivity, and revenue prosperity.
8. Conduct assessments. Align talent to future value. Develop individual career frameworks and leadership plans for effective insight, growth and success.
9. Develop your workforce. With scarcity in talent and the ever-growing desire for job security, it is critical organizations provide professional development programs to up-skill and reskill their workforce. Enabling the workforce to thrive ensures positive and lasting employee experience and engagement, resulting in positive productivity and profitability.
10. Create a brain trust. Develop an internal and external data source that attracts social interaction from employees, stakeholders and suppliers. Utilize the data to analyze, validate and identify innovation, disruption and key business information to support leadership decisions and corporate strategy.
11. Redefine metrics. Redefine traditional performance management to a coaching culture. Align metrics to mirror the organization’s mission, vision, strategic initiatives, transformational goals and milestones, all while streamlining incentives and rewards accordingly.

Gain or Loss to Stakeholders

In mergers and acquisitions it largely depends upon the terms and conditions of the merger and the track record of the transferee or acquirer company. Based on the cardinal principle, every buyer, in other words transferee or acquirer has to pay more than the book value of the transferor or target company. However, the terms and conditions of the transaction depend upon their present operations and past historical records.

Implementation of Objectives

We have so far discussed various objectives, motives, reasons and purposes which are to be achieved and accomplished by implementing them after completion of merger, amalgamation or acquisition. Much of the senior management’s attention must be focused on developing a ‘post-transaction’ strategy and integration plan that will generate the revenue enhancements and cost savings that initially prompted the merger or acquisition. After merger or acquisition, the resources of two or more companies should be put together for producing better results through savings in operating costs because of combined management of production, marketing, purchasing, resources etc. These economies are known as synergistic operative economies. Synergy is also possible in the areas of Research and Development function of the combined company for optimum utilization of technological development, which could not be taken up by the separate companies for want of resources.

A key challenge in mergers and acquisitions is their effective implementation as there are chances that mergers and acquisitions may fail because of slow integration. The key is to formulate in advance integration plans that can effectively accomplish the goals of the M&A processes. Since time is money and competitors do not stand still, integration must not only be done well but also done expeditiously.

To implement the objectives of mergers or acquisitions, there are various factors, which are required to be reorganized in the post merged or acquired company. Such factors can be grouped in the followed heads:

(i) Legal Requirements

Fulfilment of legal requirements in post-merger reorganisation of any amalgamating company becomes essential for an effective and successful venture. The quantum of such obligations will depend upon the size of company, debt structure and profile of its creditors, compliances under the corporate laws, controlling Integration of Businesses and Operations regulations, distribution channels and dealers network, suppliers relations, labour etc.

(ii) Combination of operations

The amalgamating company has to consolidate the operations of the transferor company’s operations with its own. This covers not only the production process, adoption of new technology and engineering requirements in the production process but also covers the entire technical aspects like technical know-how, project engineering, plant layout, schedule of implementation, product designs, plant and equipment, manpower requirements, work schedule, pollution control measures, etc. in the process leading to the final product.

Integrating two different technological systems for complex business entities while continuing to run the business can be a massive challenge. It requires proper planning for phased transitions, extensive preparation and intensive testing. It is necessary to define workable implementation plans as to what needs to be integrated, when it should happen and how it can be done successfully.

(iii) Top Management Changes

The takeover or merger of one company with another affects the senior managerial personnel. A cohesive team is required both at the board level as well as at senior executive level. The reorganisation would involve induction of the directors of the transferor company on the Board of the amalgamating company, or induction of reputed and influential persons from outside who have expertise in directing and policy planning to broad base the Board for public image as well as smooth functioning of the company. Selection of directors, finalising their term of holding the office as directors, managerial compensation and other payments or reimbursements of expenses etc. are issues to be sorted out.

At the senior executive level also, changes are required particularly in respect of compensation depending upon the terms and conditions of merger, amalgamation or takeover and to adjust in suitable positions the top executives of the amalgamated company to create a congenial environment and cohesive group leadership within the organisation. Understanding different cultures and where and how to integrate them properly is vital to the success of an acquisition or a merger. Important factors to be taken note of would include the mechanism of corporate control particularly encompassing delegation of power and power of control, responsibility towards accounting, management information system, to and fro communication channels, interdivisional and intra-divisional harmony and achieving optimum results through changes and motivation.

(iv) Management of financial resources

Takeover, merger, amalgamation or demergers facilitate the attainment of the main objectives of achieving growth of the company’s operations. Growth is dependent upon the expansion, modernization or renovation or restructuring. Generally, the management plans in advance about the financial resources which would be available to the company to finance its post-merger plans. Such preplanning is based on certain assumptions which might change post-merger depending upon the volatility of a variety of factors involved.

(v) Financial Restructuring

Financial restructuring becomes essential in post merger reorganisation. Financial restructuring is characterised by liquidity crisis, ‘abnormal’ balance sheets and negative equity. The ‘clean-up’ must happen fast. Replacement of costlier fundings by cheaper borrowings on a long and short term basis as per requirement is one of the several ways and means of financial restructuring for a company. This being an important aspect concerns most of the top management, creditors, bankers, shareholders, regulatory bodies like stock exchange, SEBI as well as the government where provisions of corporate laws are attracted and their permissions or approvals for planned changes are required. Generally, financial restructuring is done as per the scheme of arrangement, merger or amalgamation approved by the shareholders and creditors but in those cases where takeover or acquisition of an undertaking is made by one company of the other through acquiring financial stake by way of acquisition of shares, e.g. IPCL by RIL, reorganisation of financial structure would be a post-merger event which might compel the company to change its capital base, revalue its assets and reallocate reserves.

Post Merger Success and Valuation and Impact on Human and Cultural Aspects

Every merger is not successful. The factors which are required to measure the success of any merger:

1. The earning performance of the merged company can be measured by return on total assets and return on net worth. It has been found that the probability of success or failure in economic benefits was very high among concentric mergers. Simple vertical and horizontal mergers were found successful whereas the performance of concentric mergers was in between these two extremes i.e. failure and success.
2. Whether the merged company yields larger net profit than before, or a higher return on total funds employed or the merged company is able to sustain the increase in earnings.
3. The capitalisation of the merged company determines its success or failure. Similarly, dividend rate and payouts also determines its success or failure.
4. Whether merged company is creating a larger business organisation which survives and provides a basis for growth.
5. Comparison of the performance of the merged company with the performance of similar sized company in the same business in respect of (I) Sales, (ii) assets, (iii) net profit, (iv) earning per share and (v) market price of share.

In general, growth in profit, dividend payouts, company’s history, increase in size provides base for future growth and are also the factors which help in determining the success or failure of a merged company

6. Fair market value is one of the valuation criteria for measuring the success of post merger company. Fair market value is understood as the value in the hands between a willing buyer and willing seller, each having reasonable knowledge of all pertinent facts and neither being under pressure or compulsion to buy or sell. Such valuation is generally made in pre merger cases.
7. In valuing the whole enterprise, one must seek financial data of comparable companies in order to determine ratios that can be used to give an indication of the company position.
8. Gains to shareholders have so far been measured in terms of increase or decrease in share prices of the merged company. However, share prices are influenced by many factors other than the performance results of a company. Hence, this cannot be taken in isolation as a single factor to measure the success or failure of a merged company.
9. In some mergers there is not only increase in the size of the merged or amalgamated company in regard to capital base and market segments but also in its sources and resources which enable it to optimize its end earnings.
10. In addition to the above factors, a more specific consideration is required to be given to factors like improved debtors realisation, reduction in non-performing assets, improvement due to economies of large scale production and application of superior management in sources and resources available relating to finance, labour and materials.

Human and Cultural Aspects

The merger is a period of great uncertainty for the employees of the merging organizations. The uncertainty relates to job security and status within the company leading to fear and hence low morale among the employees. It is natural for employees to fear the loss of their revenue or change in their status within the company after a merger since many of these employees literally invest their whole lives in their jobs. Hence the possibility of a change in their position is likely to be viewed with fear and resentment. The possibility of a change in compensation and benefits also creates a feeling of insecurity and unease. The influx of new employees into the organisation can create a sense of invasion at times and ultimately leads to resentment. Further, the general chaos which follows any merger results in disorientation amongst employees due to ill defined role and responsibilities. This further leads to frustrations resulting into poor performance and low productivity since strategic and financial advantage is generally a motive for any merger. Top executives very often fail to give attention to the human aspects of mergers by neglecting to manage the partnership in human terms. By failing to give attention to the problems faced by their employees, they fail to fully develop their companies’ collaborative advantage.

The successful merger demands that strategic planners are sensitive to the human issues of the organizations. For the purpose, following checks have to be made constantly to ensure that:

sensitive areas of the company are pinpointed and personnel in these sections carefully monitored;

• Serious efforts are made to retain key people;
• A replacement policy is ready to cope with inevitable personnel loss;
• Records are kept of everyone who leaves, when, why and to where;
• Employees are informed of what is going on, even bad news is systematically delivered. Uncertainty is more dangerous than the clear, logical presentation of unpleasant facts;
• Training department is fully geared to provide short, medium and long term training strategy for both production and managerial staff;
• Likely union reaction be assessed in advance;
• Estimate cost of redundancy payments, early pensions and the like assets;
• Comprehensive policies and procedures be maintained up for employee related issues such as office procedures, new reporting, compensation, recruitment and selection, performance, termination, disciplinary action etc.;
• New policies to be clearly communicated to the employees specially employees at the level of managers, supervisors and line manager to be briefed about the new responsibilities of those reporting to them;
• Family gatherings and picnics be organized for the employees and their families of merging companies during the transition period to allow them to get off their inhibitions and breed familiarity.