The War for Talent

http://www.businessmirror.com.ph/09132007/perspective01.html


Published in BusinessMirror, September 13, 2007


Today’s companies face five critical business challenges: globalization, technology, the quest for profitability through growth, intellectual capital constraints and the exigencies of continuous change. Regardless of their industry, size or location, these challenges require these organizations to continuously build new capabilities—a responsibility which, University of Michigan School of Business professor Dave Ulrich writes, human resources (HR) should embrace for these organizations to last.
For Philippine companies, these challenges are no less important. The growth of the global economy, particularly of the Asia-Pacific region, has vastly changed the business landscape. As tariffs crumble and technology blurs geographic lines, the Filipino enterprise now finds itself as part of the global supply chain, competing with businesses from all over the world. Slightly disadvantaged in terms of capital and infrastructural support, Filipino firms at least have that precious resource few other countries have: human capital.

This resource, though, is slowly being depleted by the global war for talent, intensified by the growth of economies around the world and the growing recognition of the Filipino worker’s skill and attitude. As a result, human capital has become a perilously rare commodity in a growing number of sectors, such as in engineering, IT, education and the health sciences. And yet, in a sad irony, unemployment remains at a constant high.

In the global village, where knowledge has become the most important currency, the truism about people being a company’s source of competitive advantage rings truer than ever. In the new economy, Ulrich writes, “Winning will spring from organizational capabilities such as speed, responsiveness, agility, learning capacity and employee competence. Successful companies are those that are able to quickly turn strategy into action; to manage processes intelligently and efficiently; to maximize employee contribution and commitment; and to create the conditions for seamless change.”

All these, of course, can only be done by having the right people in place.

HR evolves
AT no other time has the war for talent been as fierce. The search for the right talent has become such an essential function that it has forced the evolution of the HR function.
“Whereas HR used to be very traditional, generating systems and procedures and focusing on administrative functions, today, it is more strategic in nature,” notes Rey Silvestre Canilao, vice chairman and managing director of Global Executive Solutions Group, a human consulting company servicing multinationals and global firms. It is now oriented toward organizational development, straddling such matters as succession planning, talent acquisition, training and, recently, company culture, following the flurry of mergers and acquisitions worldwide.
Indeed, the HR function “has evolved. It is not just service-related, but is more a partner of the CEO,” Canilao adds.
For today’s HR firms, it is thus imperative to understand their clients’ businesses. “This is critical for us to find the right talents for them,” explains Canilao. “We ask: Are they strong in customer development, distribution? Do they have inventory, IT problems? We have to understand all that.”

In fact, firms engaging in executive searches have ceased to see themselves as HR practitioners, but rather, as human capital-resource consultancies. “We are nontraditional; we are businessmen, industry people who can offer a hands-on business perspective,” Chico Chuaquico, director of ZMG Signium Ward Howell Global Executive Solutions, says. “We are in constant touch with industry leaders so we know where the industry is going. We are more of analysts and strategists and we understand the business of our clients.”
The business and its people are, after all, inseparable. Companies are, of course, ever hungry for information and insight that will help them arrive at the correct business decisions that would inevitably influence who they should get for their companies.

Complex process
Research underpins much of the consulting process. Executive search, which Signium managing director Gigi Zulueta likes to call “the highest form of management consultancy,” is a human-capital solution that needs a good research framework as its foundation.
Needless to say, executive search is never a simple process. “It’s really consulting and not an order-taking type of business. You become a stakeholder somehow, especially when you get the C-level executives. It’s an activity that will give that firm competitive advantage, an answer to a specific problem of the business,” Chuaquico says.
In fact, a growing number of US private-equity, asset-management and direct-investment firms are having head-hunters sit on their boards. For a number of global companies, partnerships are sealed by the promise of being able to get the right leaders.
Jose Balderama, Asia Select managing director and Signium director, recalls how Signium India helped effect vulture fund 3I’s acquisition of a transformer-manufacturing firm. The buy-in proceeded when 3I was able to present the company’s skeptical chairman with the right candidate to head the company.

Access to information has become a critical component of the human-capital challenge. By providing important information to large companies in search of a home for their outsourced operations, Signium was able to bring Chevron, Watson Wyatt and GSM (Baker & Mackenzie) into the Philippines and helped build up their businesses from the ground.

For Balderama, this meant “telling them what to expect” in very specific terms. Time and again, he has found himself advising clients on their wish list of competencies to include what is most critical and dispense with what may be whimsical. “You can really just focus on a number of competencies since the search strategy is dependent on what the talent market can bear,” he explains.
A shared services firm, for instance, wanted candidates with at least five years of experience even when they were the first in the Philippine market. Another wanted SAP-literate professionals with 10 years of experience in the software even when SAP has not been around that long in the country. A third wanted statisticians with psychology backgrounds. “This is when the value of the firm comes in,” he says. “We tell them what to look for, help them temper their expectations to what’s available in the market and tell them when the people they want don’t exist. We don’t sugar-coat.”

Search the world
This is not to say that Signium does not exhaust its resources in scouring the world for the best possible talent.
Just as the world’s poachers get their talents from the Philippines, so does Signium consider the globe as its hunting ground. It scours the world to keep tabs on Filipino professionals and diligently conducts “road shows” in Singapore and the United States to know who these people are. Chuaquico recalls how the realization that telecommunications will evolve from a utility to a consumer product sparked the search for the next head of a large telecommunications company, a search that Signium ended in Singapore.
When a semiconductors company realized it was losing out to manufacturers in cheaper Asian locations, it knew it needed a new leader to bring it out of the woods. The company wanted a man who knew three languages, had managed a million-dollar organization, had a business development orientation, and was a Filipino. Signium found their man in the US Midwest, and though negotiations stretched for half a year, the leader has since taken the company public in Singapore and has dramatically increased shareholder value. “The easiest searches,” notes Balderama, “have a few qualified people.”
Beyond competencies, leadership counts for a lot. “We believe in identifying leaders,” says Canilao. “A company may have the products, the business processes and everything else, but most important are its people. The real competitive advantage will come from leadership—the capability to manage people, to rally people.”
The right attitude, a willingness to learn and the capacity to adjust are qualities of leaders who can bring successful companies to the next level.
For Global Executive, thus, it is especially important to not just have the best talent but the “fit” as well. “The chemistry and the culture is a big factor,” Canilao points out. Personality, too, counts for a lot. Moving talents from multinationals to local conglomerates, for instance, may present problems for both the company and the talent due to cultural differences. He notes, though, that local conglomerates are professionalizing their ranks and are adopting global processes such that large Filipino companies such as Unilab, Jollibee and Smart are hiring from multinationals with success.
“At the end of the day,” he says, “you will need to understand the culture of the client: their vision and mission, their business landscape, their leadership style, their management style.”

Tech helps
Understandably, the war for talent is an expensive one. “We don’t have a fixed mindset on costs,” says Signium’s Chuaquico, adding that the company doesn’t mind paying for calls made all over the world.
“We’re building our research. These calls will generate a lot more,” he reasons. “We’re the only one with the enterprise approach. We spend time, which is very expensive. We don’t think of the short term, it’s always the long term for us.”
Fortunately, information technology has brought about the “death of distance.” With information technology, “we’re on real time, so we move faster,” says Chuaquico.
Videoconferencing facilities, 3G broadband and Blackberries have speeded up the search process. “We realize that clients are always on a timeline. We’ve always believed project managers will rule the world, and we keep up with the pace of managers,” he says. This, adds Canilao, is particularly important when one is serving clients overseas.
As the war to attract and retain talent rages, companies are coming up with innovative ways to stand up to the human-capital challenge. Signium, for instance, is organizing trade missions to Vietnam, knowing that any partnerships forged or businesses consummated would trigger a need for human-capital solutions. It is also working in collaboration with the Commission on Higher Education, the Ateneo de Manila University and the University of Asia and the Pacific so that the academe may produce the competencies that the job market so urgently needs. On his own, Chuaquico finds time to help La Salle high-school juniors and seniors plot their future careers.

Beyond salaries
Across all levels, talent searches have become more creative. Many companies are working closely with third parties to help shore up their manpower needs. ICTSI, for instance, has partnered with equipment operator Monark to train high-school students for a year and eventually hires those who successfully complete the training program. There, too, are the usual school job fairs held all over the country in malls, plazas and government halls.
Call centers are known to hold concerts and host open houses everywhere, from parks to coffee shops, to hunt for the people they need. One call center, People Support, even put up recruitment kiosks in malls. Others pay referral fees ranging from P5,000 per applicant plus an additional P2,000 when the applicant hurdles the training program. Accenture talent acquisition specialist Christa Perez says such promotions are necessary to fill up shortfalls in demand. Sometimes, they would have to fill up as many as 1,000 slots in one day.
Of course, compensation packages are also being enhanced. “You have to be innovative,” said Stella Garcia, office practice leader of the Human Capital Group of Watson Wyatt. Cash and benefits, for instance, are not the only carrots to dangle to talents. Rather, there is a greater emphasis toward a more “holistic” employment deal that gives weight to work/life balance, career breaks and training opportunities. Being able to work from home or being mobile appeals to workers who want to be free from the encumbrances of work.
More important, people need to have a personal stake in the enterprises they work for. Willy Arcilla, regional director of ZMG Signium Ward Howell and president of Market Mentor, believes in the merits of power sharing. “The worker who is a part-owner is more productive. He will take the initiative to drive revenues and reduce costs—even without being told by his superior,” said Arcilla.
Need is indeed the mother of innovation. As the global war for talent intensifies, so will organizations find new ways to meet the human-capital challenge. “If people are a company’s greatest asset, then providing human-capital solutions is the best industry with the highest ROI—both financially and personally—especially if the supply of the best talent is in constant shortage globally,” Arcilla said.
Through all this, the challenge for HR, as enunciated by Dr. Ulrich, is not just to become a “partner in strategy execution, helping to move planning from the conference room to the marketplace,” but also “to become an agent of continuous transformation, shaping processes and a culture that together improve an organization’s capacity for change.”