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Is talent management just old wine in new bottles?

The case of multinational companies in Beijing
Xin Chuai and David Preece
The Business School, University of Teesside, Middlesbrough, UK, and

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Paul Iles
Leeds Business School, Leeds Metropolitan University, Leeds UK
Abstract
Purpose The purpose of this paper is to explore whether talent management (TM) practices are fundamentally different from traditional approaches to human resource management (HRM) and whether TM in China is an element of the struggle by those in the human resource (HR) profession to improve its credibility and status. Design/methodology/approach Case studies are the main method of collecting data. These are supplemented by documentary analysis. Four in-depth case studies were undertaken in Beijing. The target organizations were chosen from the information technology, health care and education sectors. The interviews were semi-structured and were conducted with a range of stakeholders in each organization, including at least one HR specialist (normally, the senior HR professional, senior and functional managers as well as non-managerial staff. In addition, interviews were also conducted in three management consulting firms regarded as being at the cutting edge in order to explore the orientation of such firms to the TM phenomenon. Findings TM emerges as being different from traditional HRM, incorporating new knowledge rather than being a simple repackaging of old techniques and ideas with new labels. Therefore, TM should not be seen simply as old wine in new bottles with respect to the case of China. In addition, this study challenges the idea that TM is yet another struggle by HR professionals to enhance their legitimacy, status and credibility within their organizations. Research limitations/implications This study concerns itself with only well-established and recognized multinational corporations in Beijing. There might be different conclusions for the other types of enterprises. Originality/value This paper offers new research on TM in China. Keywords Human resource management, Leadership development, Multinational companies, Organizations, China Paper type Case study

Introduction A recurring topic among human resource (HR) professionals is the search for an appropriate role and status for practitioners who have suffered the pain of trying to achieve credibility, recognition and status in the eyes of senior management groups and even employees (Legge, 1995; Shipton and McAuley, 1993). However, despite the inability of the HR profession to resolve its credibility problem, the situation has never been as favourable to HR professionals as it is today. Making their mark at the strategy table is now an achievable goal for HR professionals (Ulrich, 1997). With the emergence of the so-called knowledge economy, since the late 1980s increasing numbers of personnel managers have demonstrated their willingness to adopt different roles and positions to strengthen the profession and provide it with additional credibility. Since the emergence of the HR profession, several labels have been employed to describe the tasks this group performs, including personnel management, human

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resource management (HRM) and strategic HRM. Today, we have talent management (TM). Nevertheless, Abrahamson (1991, 1996), Furusten (1999) and Huczynski (1993) all suggest that popular management concepts may represent nothing more than old techniques, which have been re-invented or re-discovered. Recently, a debate about whether TM is just a collection of old ideas re-packaged in a new format has surfaced. Perhaps TM is nothing new (Adamsky, 2003) and just a fad or a fashion label that integrates some old ideas to let them emerge as fresh thoughts? In the light of this question, this study explores whether TM practices are fundamentally different from traditional HRM and whether TM is only a continuation of the struggle by HR profession to improve its credibility and status inside organizations. The emergence of TM in China Since 1997, when the consultancy firm McKinsey exposed the war for talent as a critical driver of corporate performance, TM has become increasingly popular. In the face of globalization, the Peoples Republic of China (China) has enjoyed nearly three decades of economic growth with an average of around 10 per cent per annum over the years since Deng Xiao Ping launched the open door and four modernizations policies in 1978 (Newton and Subbaraman, 2002). From the onset, these reforms produced dramatic changes within the structure and management of Chinas enterprises, including the decentralization of planning and decision-making processes, the introduction of responsibility systems enhancing individual accountability for performance and the encouragement of private and foreign-invested enterprises. Accompanying these changes were changes to the Chinese labour management system, which remains in a state of transition even today (Shen, 2007; Warner, 1997). During this period, the HR function evolved along with organizations in general (Schweyer, 2004). The changing political environment, reformed legal frameworks and economic pressures continued to add new dimensions to HRM in the 1990s (Poole, 1997). Most recently, with the widely recognized importance of the intangible resources in a knowledge economy, attention has focussed on the new concept of TM. Chinas exacerbating shortage of managerial talent and the relentless pressure of fierce competition have fuelled a strong interest in TM. As a newly emerging management area, TM has become the latest trend within the field of people management in China generally but particularly in Chinas MNCs that are exposed to Western approaches to management. Methodology A case study method was selected as the main research methodology given the scope of the issues at hand. The study was undertaken in Beijing and the target companies were limited to MNCs, for the reasons discussed below. No homogeneous model of HRM exists in Chinese enterprises. In the state-owned enterprises (SOEs), the labour management system is a hybrid structure, somewhere between the old-style Maoist model and a market-driven model, which has not fully evolved along either Western or East Asian lines. In private and collective enterprises in China, it is likely that HRM systems are being reformed differently, on the basis of prevailing conditions. Meanwhile, in the more prominent MNCs, the term HRM is in fact mostly de rigueur (Warner, 2002). Given TM is an emerging managerial concept, it would seem more likely that MNCs are establishing their own TM strategies. Chinas tier-1 and tier-2 cities like Beijing, Shanghai and Guangzhou, have less than 20 per cent Chinas population but possess more than 80 per cent of its leadership talent

(Lau, 2007). Moreover, three quarters of people who attended higher education (especially those with a Masters degree or a PhD) want to work in Beijing, Shanghai or Guangdong (Lau, 2007). Considering this unbalanced development, it would appear more likely that TM will be on the agenda of organizations in cities of this type. Furthermore, on a pragmatic note, the researchers conducting this study had direct access to a range of people and organizations in Beijing. Four in-depth case studies were conducted in firms operating in Beijing in the information technology (IT), health care and education sectors. The participants are representative of management level employees in Chinese MNCs, with both local and expatriate participants. The interviewers were fluent in both English and Chinese. Participants were provided with an interview schedule and the interviews were semistructured within a 30-60 min timeframe. The interviews were recorded with the permission of the participants. Interviews were conducted with a range of stakeholders in each organization but in all firms at least one HR specialist was interviewed (including the senior HR professional wherever possible). Other participants included the senior and functional managers and non-managerial staff. In addition, to broaden the perspectives and insights about TM, the researchers interviewed senior members of three consulting firms normally regarded as management fashion setters. Empirical findings The case study firms are coded as A, B, C and D and the three consulting firms as E, F and G. Firm A is a full-service, full-spectrum communications software company and a market leader in the industry with 25 corporate offices and headquarters in the USA. Firm B is one of the worlds largest IT management software providers, a global company with headquarters also in the USA and 150 offices in more than 45 countries. Firm C provides online multi-vendor sales channels for diagnostic, treatment and surgery planning solutions; it is headquartered in London with offices in the USA, Japan and China. Firm D, registered in Canada, is mainly responsible for education investment, management, consultation, communication and cultural media. It has 22 branch offices in China and Canada. Consulting firm E is a leading provider of HR outsourcing and consulting services, headquartered in the USA and located in 35 countries. It employs ~24,000 associates. Consulting firm F is also headquartered in the USA. As a well-established consulting firm, it serves more than 8,000 clients from 88 offices in 47 countries worldwide. Consulting firm G is headquartered in the USA and employs more than 15,000 individuals, serves clients from more than 180 cities and operates in 42 countries worldwide. A summary of some of our key empirical findings is provided in Table I. Analysis The analysis below addresses was guided by three research questions, which were constructed to identify similarities and differences between TM and traditional HRM. The research questions were: RQ1. Is TM really different from HRM? RQ2. Is TM another managerial rhetoric through which HR struggles to improve its legitimacy? RQ3. Is TM really different from HRM? The transcripts were analyzed by reference to key words that included: differences, similarities, rhetoric, struggle and legitimacy in the context of HRM and TM. Words and

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Table I. Summary of principal findings based on respondents location Defining TM Differences between TM and HRM Why adopt TM? Competence development but with an organizational focus Improvement of organizational competence as a whole Equal to traditional personnel development A smooth supply of suitable people for key positions A series of functional models to guarantee smooth talent supply Life and development cycle of talents Competence development of the whole organizations TM breaks HRMs egalitarianism and tends to favour elites TM is a part of HRM because its target is part of HR TM emphasizes differentiation Urgent demands for retention and need to attract talents Retention and attraction of talents for further development Demand for development of organizational competence and pressure from the talent war Demands for retention and attraction of talents TMs management ideology satisfies the demands of current enterprises Overcome the hurdles of the retention and attraction of talents Meets an enterprises internal urgent demands TM is one part of HRM but a more directed and detailed approach to management Point of departure for TM is talents, rather than split functional models like HRM TM works from the perspective of people rather than management functions TM is discussed from the perspective of organizational development

Defining talent

Key employees with distinguished performance and competence Part of HR with better performance and competence All employees, as long as they meet their job requirements

People occupying key positions in each job sequence

People with high strategic value and high degree of scarcity

Part of the way employees directly relate to the core business value chain People occupying the posts with core business competence

phrases that implied similar meanings also added to the interpretation of the interview data. Similarities Two clear similarities between TM and HRM were identified. Both TM and HRM see that placing the right people into the right roles is an important means of integrating people practices with organizational goals, including individual development. Tichy et al. (1982, p. 51) argue that a key process of HRM is one of matching available HRs to jobs in the organization. Huselid (1995) also posit that HRM activities involve getting the right person into the right spot (employee skill and organizational structures) in order to contribute to higher productivity. A similar finding was found in the empirical study, typified by the Public Relations Manager at company C who said that simply speaking, TM is to get the right people into the right places, make sure that people and places are well matched. Arguments of this type can be found in a wide range of literature on TM. For example, according to Duttagupta (2005), TM assures that a supply of talent is available to align the right people with the right jobs at the right time, based on strategic business objectives. In a similar vein, Stainton (2005) claims that talent management is concerned with having the right people in the right roles in the right environment with the right manager to enable maximum performance. Here, the implicit focus on fit and talent is evident. Both TM and HRM cover the same core functional areas of people management. The majority of people management treatises on HRM and TM have identified similar key functional areas. For example, Cascio (1998) explicitly defines HRM as the attraction, selection, retention, development and use of HRs in order to achieve both individual and organizational objectives. This is the same as, or similar to, most of the descriptions of TM offered by participants during the interviews. Nearly, all the respondents mentioned that their TM projects cover almost all the traditional functional areas of HRM, albeit sometimes with a different focus. This commonality between TM and HRM is also found in the normative literature. For instance, Creelman (2004) defines TM as the process of attracting, recruiting and retaining talented employees, whereas Knez and Ruse (2004) assert that TM refers to a continuous process of external recruitment and selection and internal development and retention. Thus, HRM and TM share much in common. Differences Notwithstanding the findings above, it is important to note some key differences exist between HRM and TM. For the majority of participants, TM is one part of HRM. TM is talent focused, with a more directed and detailed focus by management upon certain groups of people; that is, talents as against HRMs focus on the management of all staff. However, participants at firm C did not generally hold this view. One educator from firm D stated that TM is just one aspect of HR . . . HRM cares about the management of all employees in enterprises . . . while TM just focuses on the most valuable people in the organization . . . therefore, TM is just one part of HRM. This conclusion is directly related to the way individual firms define talents. If they adopt a relatively narrow, exclusive definition, they will be drawn to this conclusion. TM requires not only the buy-in of HR department and line managers as does HRM, but also the support of the senior management team. Staff in the case study firms unanimously asserted that all stakeholders have to be engaged and involved in the process of TM a talent mindset was an essential orientation. According to the Sales

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Manager from firm A, TM is a top-down process and the buy-in of the senior management team plays a key role because TM can only be effectively conducted with its support. Thus, senior management controls the orientation at a macro-level. Her view was that the HR department plays the dual roles of advocator and designer of the whole system as well as the role of the result examiner. In most cases, the HR department also assumes the responsibility of co-ordinating different functional departments in order to guarantee successful outcomes for TM activities. Other functional departments are responsible for concrete operations although they can always seek guidance and consult the HR department. In essence, the vast majority of respondents across all firms adopted a similar position. The normative literature claims that TM will fail if it is viewed purely as an HR initiative (CIPD, 2006). TM needs to be embedded in the entire organization, led by the senior management team, supported by a range of initiatives developed by HR and implemented by HR and line managers. As suggested by Chambers et al. (1998, p. 48), superior talent will be tomorrows prime source of competitive advantage. Any company seeking to exploit it must instil a talent mindset throughout the organization, starting at the top. TM seems to emphasize segmentation, whereas HRM asserts a degree of egalitarianism. A viewpoint widely held among the participants from the case study firms is that TM is significantly different from HRM because the latter treats each employee in the same way and avoids differentiation in the allocation of a firms resources. In contrast, TM sees the needs of core and non-core employees as being different and starts to pay attention to different demands of different groups of people, at least according to a IT Support Manager in firm D. Firm As HR Manager explained the notion of difference by referring to Maslows hierarchy of needs. He suggested that the needs of employees with different performances and potential are different and therefore, management techniques and methods should account for these differences. The Sales Manager from firm A believed that TM stresses favouring the deployment of firms resources towards selected elites and key employees. The Finance Manager from firm A also pointed out that it is a kind of waste of a companys resources to manage employees without any particular emphasis in pursuit of egalitarianism. The HR Manager from firm B echoed similar sentiments stating that traditional HRM means that enterprises equally distribute their resources while TM emphasizes a differentiated distribution of resources. Similar positions in the normative TM literature can be detected. For example, Ledford and Kochanski (2004, p. 217) argue that segmentation, that is the division of the workforce into parts that are treated differently, is fundamental to talent management. Furthermore, successful organizations tend to have a dominant talent segment, while their weaker peers have a bit of everything; but no company can be all things to all people. Ideally, a company should simply figure out who it is aiming for, and make sure its brand is tailored to the talent segment it seeks to attract (Chambers et al., 1998, p. 51) suggest that a company should simply figure out who it is aiming for, and make sure its brand is tailored to the talent segment it seeks to attract. While traditional HRM stresses managing HRs as the organizations most important asset and main source of competitive advantage, it also advocates egalitarianism, considering everyone as (potentially) equally capable. TM advocates take the opposite standpoint, arguing that employees should be distinguished from each other in terms of their performance, potential and core competencies (Berger, 2004).

TM also stresses talentism (Lin, 2006) and premises the classification of employees, viewing segmentation as effectively a practical version of labour economics. Without segmentation, managers would treat all employees as equally valuable, regardless of their performance, competence, potential or other characteristics that distinguish them from each other. This is seen as potentially creating unnecessarily high costs in recruiting, hiring, training, developing and compensating employees. Starting points The starting point of HRM had a consensus among the senior consultants, respectively, from firms E and F. HRM concerns accomplishments in separate functional areas such as recruitment, training, development and assessment. Its focus is not on people but on the successful fulfilment of each function. On the other hand, the starting point of TM is people, namely talents. Under the TM umbrella, management functions are no longer seen as divided but as linked tightly around talents. Consequently, the ultimate result of TM is a smooth supply of networked talents. A senior engineer from firm B commented that previously we only had a selection mechanism and we lacked the corresponding management means and a method aimed at those selected top talents . . . current TM makes the management of those specific groups of people systematized. According to a senior consultant from firm E, this can be seen as a fundamental change in thinking. However, it is just such a change that enables TM to gain popularity in the world of professional managers. The above comparisons between TM and HRM ideology and practice suggest that it is unacceptable to conclude that TM is completely new or a repackaging of HR practices. As an associate HR generalist from firm B observed, TM is a logical result of the further development of HRM, it is not something completely different and isolated from HRM, it is a kind of management developing and evolving on the basis of HRM; moreover, it is still covered by HRM. TM, therefore, has elements of both HRM and TM. As Neil Paterson, the Director for regional business units at Hay Group asserted, there is an element of TM being both a sound bite and a bandwagon (Warren, 2006, p. 29). This is supported by Guest who sees that TM integrates some old ideas and gives them freshness (Warren, 2006, p. 29). TM has emerged and developed in its own particular social and economic contexts and time period, inheriting from and building upon existing practices, norms and processes. It also draws upon an extant language, which defines what organizations needs from its employees to meet the performance requirements of organizations, both now and in the future. Old wine in new bottles? Berglund (2004) argues that HR professionals have attempted to (re)establish their legitimacy and status by showing a willingness to adopt different roles and rhetoric to impress their colleagues. Evans (1999) argues that companies have begun gradually to realize that talented employees play a critical role to the success of the organization, which has resulted in more enhanced responsibilities for HR professionals. She further claims that through TM, the HR function will increasingly become valued as a strategic business partner with senior managers, ensuring that HR activities are aligned with the business goals of the organization. The findings presented here do not entirely support the above arguments. Participants fairly consistently commented that the real driving force for adopting TM was their own demands for further development and the urgent demands for the

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attraction and retention of certain staff (talents) rather than some superficial pursuits as put by one educator from firm D. Much evidence could be found for this position. For instance, many participants in firm B asserted that the HR department played the role of a strategic partner and consultant. Excluding routine work, all of the other decisive work has already placed the HR department in a strategic position. Certainly, if the HR department performs effectively, it will gain the respect of those in the line departments. The improvement of the position of HR might be one effect of TM. However, it is by no means a point of departure for our adoption of TM, according to the HR Manager of firm B. Other participants said they do not take the pursuit of an improvement of the HR departments legitimacy and status into consideration during their decision-making about TM. For example, an educator from firm D said that there are three classes of departments in our company, the HR department belongs to the A-class and has always been valued; our HR department is a stable department, it wont make any decisions based on those superficial pursuits. The literature on organization studies often claims that popular management concepts are powerful tools for individual managers inside their organizations, enhancing their efforts to appear modern and innovative (Abrahamson, 1996; Ernst and Kieser, 2002). Contrast this view with the observations of one participant:
Maybe certain individuals have this kind of cognitions or understandings in their subconscious; however, it is definitely not controlled by the HR department or these several individuals to decide for their enterprise to do or not to do something, because enterprises are organizations chasing for profits, they will do cost accounting for any business action (senior consultant from firm F).

On the basis of the case study findings and the argument developed above, the idea that TM is just another struggle and attempt by HR departments to establish and enhance their legitimacy and credibility can be challenged. There is more to TM than just being old wine in new bottles. Conclusion The paper explored what is distinctive about TM and the factors and purposes influencing the adoption of TM in China. The history of the HR profession has witnessed several different labels and approaches, many of which overlap over time, such as personnel management, HRM, strategic HRM and more recently TM. Some writers have argued that these concepts lack distinctiveness in relation to each other, merely exemplifying the struggle by HR professionals to enhance their legitimacy, status and credibility both within and outside their organization. By comparing models of HRM with normative and empirical findings related to TM, this study concludes that TM seems to presage some new and rather different approaches to the management of the people resource in MNCs in China rather than a simple repackaging of old techniques and ideas with a new brand or label. Meanwhile, the studys findings give grounds to challenge the idea that TM is another struggle by HR professionals to enhance their legitimacy, status and credibility. Rather, TM seems to be a new management ideology that may make a difference to the success and competitive advantage of the organization studied in the three Chinese cities in particular and to Chinese organizations in general. Therefore, TM should not be simply considered as old wine in new bottles, at least not in respect to the cases investigated in this study.

Finally, the study concerns itself only with well-established and recognized MNCs in China. Other types of enterprises, such as SOEs or private and joint-venture enterprises may produce different findings because different types of businesses do not necessarily fall into the same management trajectory. Hence, further investigation into TM in those companies will be a welcome addition to the literature.
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for Bass, Routledge, 1999 (with G. Steven and V. Steven). He is Editor of the Routledge Research Monograph Series Work, Technology and Organizations. Professor Paul Iles is a Running Stream Professor of HRD at Leeds Business School, where he provides academic leadership in HRD, leadership, and change management. He was formerly Professor of Strategic HRM and Head of the Centre for Leadership and Organisational Change, and MBA Programme Leader at Teesside University, Teesside Business School. Previously, he was a Senior Lecturer at the Open University Business School and the Littlewoods Professor of HRD at the Liverpool Business School, Liverpool John Moores University. He is a chartered psychologist, Associate Fellow of the British Psychological Society, and Chartered Fellow of the CIPD. Paul has published a large number of refereed publications in many refereed journals. He has written or co-written four books and many book chapters, and is co-editor of the Journal of Organizational Transformation and Social Change and associate editor of the Journal of Technology Management in China. He recently carried out research with the Standards Board for England on the development needs of Monitoring Officers, the Academy of Chief Executives (NE) on leadership development, and the Learning and Skills Council on world-class comparisons in HRD.

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