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Talent Management Challenges

faced byPublic Sector Enterprises in

India

AIMARobertBosch36thNATIONALCOMPETITIONFORYOUNGMANAGERS

THEME:ManagingOrganizational&ManagementChallengesinIndia.

Team: 1)JeeteshBansod

2)MansiDubey

3)SonalBansal

Organisation: BharatPetroleum Corporation Ltd.

Address: Plotno.A5andA6,Sector 1,UdyogMarg,

Noida201301

TelNo: 09650130278

FaxNo:

Email: [email protected]

Numberofwords: 3000

DateofSubmission: 20.07.2010

Signatureof aTeamMember


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AIMA Robert Bosch 36th National Competition for Young Managers

TalentManagementChallengesfacedbyPublicSectorEnterprisesinIndia 2

TableofContents

Introduction.............................................................................................. 3

FindingsoftheSurvey&Analysis............................................................. 8

Recommendations.................................................................................. 25

CaseStudy............................................................................................... 28

Conclusion............................................................................................... 31


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Introduction

In Peter Drucker's article, "The Future Has Already Happened," the

authorpredictsthatthe"dominantfactorforbusinessinthenexttwo

decades,absentwar,pestilenceorcollisionwithacomet,isnotgoingto

beeconomicsortechnology. Itwillbedemographics." Peoplearethe

differentiatorswhenitcomestocomestocompetitiveadvantage.Jack

Welchfurtherpropoundedtheconceptofrightpeople intherightjob

whoareacompetitiveadvantage.Hesaid,Ifyoupicktherightpeople

and give them the opportunity to spread their wings and put

compensationasacarrierbehind ityoualmostdon'thave tomanage

them. But it is notassimpleandas admitted by JackWelch himself,

Mymainjobwasdevelopingtalent.

The term talent refers to a person that has demonstrated great

performanceandisseenashavingthepotentialtobepromotedatleast

two levels. While Talentmanagement is the additionalmanagement

processes and opportunities that aremade available topeople in the

organizationwhoareconsideredtobetalent,(Dr.EddieBlass,2007).

Itisaconscious,deliberateapproachundertakentoattract,developand

retainpeoplewiththeaptitudeandabilitiestomeetcurrentandfuture

organizationalneed

SHLssurveyof280HRmanagersreportedseveralchallengesfacedby

HRdepartmentsinvaryingordersofpriority(Pandit2007)(seeTable1).


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Table ChallengesfacedbyHRdepartments.Challenges PercentageRetentionoftalent 73%Identificationandhiringofrighttalent 53%Leadershipandmanagementdevelopment 50%Compensation 45%Staffingoravailabilityoflocalresources 44%Employeemotivation 38%Culturebuilding 36%Changemanagement 35%Successionplanning 31%HReffectivenessmeasurement 30%HRtechnologyandimplementation 12%M&Aintegration 11%Industrialrelations 6%TableI

OurreportlooksattheissuesandchallengesfacingPSUswithregardto

talentanditsmanagement,atopicwhichisparticularlyrelevantattime

whentheworldisfacinga`talentcrunch.

ThepublicsectorisinacrisisontheHRfront(TVMohandasPai,2006).

Inthenextfiveyearsaboutonethirdofthepublicsectoremployeeswill

retire.Thepublicsectorwith85lakhpeopleandaverageageof47


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48hasbeendownsizingand hasn'thired in15years.There's abig

challenge there, as the average age has crept up, and there is no

pipelineofyoungerpeople.And thepublicsectorbusiness isgrowing.

The pending wave of retirements and competitive recruitment

pressures from other industries are therefore the major challenges

perceived.

PSUsattractedhighlycompetentpeopleinthepast.Itusedtobea

prestigious

thing

for

engineering

graduates

from

leading

educational

institutionstojoincorporationslikeNTPC,BHEL,BEL,HMT,HALandthe

likeintheseventiesandeighties,(TVRao,2009).Theeraofseventies

wascharacterizedastheHRLeadershipErainPSEs.

Howevertherecenttrendsindicatethattheprivatesectorisbecoming

a preferable employer as compared to public sector because of good

compensation and better work environment. Also as indicated in a

combined study(TheNewManager,Leaders in the making,2008 )by

Deloitte&AIMA,thefollowingtheparadigmshiftscharacterizetheNew

IndianManagers:

ManagersPreLiberalization ManagersPostLiberalization

Knowledgeof rules, regulationsand

bureaucracy

GlobalOutlook


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Ability to work in hierarchical

environment

Manages innovation and

efficiency

Needtomanageunionsononehand

andbureaucracyontheother

SeeksEmpowerment

Little incentive for innovation,

efficiencyenhancement

Collaborates across

hierarchies,workslaterally

Littleappetiteforrisk Impatientwithbureaucracy

NationalFocus.Littlevisibilitytothe

outsideworld

Expects to be rewarded for

outcomesv/sinputs

Silofocused MotivatorandMentor

TableII

Companies are now looking at ways and means of providing a work

environmentwhichcaterstothecharacteristicsofNewIndianManager.

WhilePSUsarealsoremodelingthemselvestoattractandretaintalent,

the pace is not fast enough as compared to the opportunities being

presentedbytheprivatesector.Asperthefindingsofthestudy,thisis

leadingtoanincreasingchallengeinattractingfreshtalentandcausing

migrationofcurrenttalenttoprivatesector.

Asurveywasadministeredto80seniormanagementroleholders(HR)

invariousPSUswithobjectivesasstatedbelow.Outofapproximately

80respondentsinvitedtoparticipateinanonlinesurvey,approximately

50revertedgivingaparticipationrateof62.5%.Thecomprehensiveset

of talent management practices were focused which influence

employee motivation and commitment that lead to organizational


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performance.Itwastriedtoensurethatthequestionnairecoveredthe

broadestspectrumofvarioustalentmanagementaspects. Asaresult,

the questionnaire included items about the full range talent

managementpracticesandchallenges.

Objective

Toidentifyvariousupcomingchallengesoftalentmanagement

Toestablishupcomingtrendsintalentmanagement.

Toidentifythewaystoretainthebesttalent.


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FindingsoftheSurvey&Analysis

AwellknownMcKinsey&Companyreportcoinedtheterm"talent

mindset"todescribethe"fundamentalbeliefintheimportanceof

talent"thathighperformingorganizationsexhibit.Ifwelookatthecore

beliefdrivingthetalentmanagementinPSUsitshowsthatitismainly

skewedtowardstheaccelerationofdevelopmentofthehighpotential.

FigureI

This is the developmental perspective that proposes talent

management is about accelerated development paths for the highest

potential employees (Wilcox, 2005), applying the same personal

developmentprocesstoeveryone intheorganization,butaccelerating

theprocess forhighpotentials.Hencethe focus isondevelopinghigh


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potentialsortalentsmorequicklythanothers.Thisshowsthatstillthe

TalentMindsethasnotdevelopedtotheextenttowhichitqualifies

for the cultural perspective that believes talent management is a

mindset (Creelman, 2004), and that talent is needed for success

(Michaels, HandfieldJones, & Axelrod, 2001). This can be an

organization where the development of every individuals talent is

paramount and appreciated, and allowing people to explore and

develop their talent becomes part of the work routine, (Eddie Blass,

2007).

ItwasfoundfromthesurveythatmostofthePSUs(80%)nowhavea

talent management policy and talent mapping is a regular process in

these organizations. The talent management has been regarded as a

highlysignificantissuebyapproximately80%ofthelinemanagers.The

response of the senior managers to the significance of talent

managementintheirorganizationsisgivenbythegraphbelow.


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FigureII

Whenaskedaboutwhichfactorshavecontributedmosttothegrowth

oftheirorganizationsthenthefollowingthreeemergedasthemain

factors:

FigureIII

Itcanbeseenthatalthoughasoundbusinessstrategywhichliesatthe

core, ishighlyregardedbytheseniormanagersasamajor factorthat


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contributestogrowthatthesametimeitisthehighqualityemployee

underthestrongleadershipwholeadtothesuccessofthestrategy.

Talent management as mentioned includes whole gamut of activities

involving attraction, retention and development of talent. It was

therefore inquired which are the areas of strength and weakness in

terms of attraction, retention and development of talent across

managementcadres.

Attraction Retention Development

Junior

Management

Middle

Management

Senior

Management

FigureIV

ItisevidentthatPSUsneedtogearuponretentionofmiddleandjunior

management cadre otherwise in years to come when approximately

15%babyboomerswillretireinthenextfiveyearsand30%innextten

years%( as indicated by the survey respondents) a huge talent deficit

shallbecreated.

Weakness Strength


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FigureV

Itisseenfromthegraphabovethatthemajorchallengethatisfacedby

thePSUsaremainlythefactorsthatarecontrastingtoprivatesectorin

India. Thenumbersofjobgroups/gradesaremuchmoreforPSUsthan

anyotherprivatesectorcompany.Totopitallthepromotionis

generallytimebound.However,itstimeforPSUstoidentifytheways

togetoverthesechallenges.CompanieslikeNTPCandONGChavebeen

able

to

work

on

the

strengths

and

right

fit

talent

and

are

now

widely

acclaimedfortheirtalentmanagementpractices.DPEguidelinesnow

providealotofscopetoworkoutinnovativelyinthedefined

framework.


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FigureVI

FigureVII


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It isseen from the graphsabove thatmany professionalsbelieve that

retention is simply a matter of offering an employee better

compensationthananothercompany.

Money iscertainlyadriverwhenemployeesareconsideringachange.

AACE International project controls professionals indicate that while

compensation and benefits are important, there are things that are

even more important. Survey by AACE shows only 19 percent of

professionals

would

have

stayed

at

their

last

jobs

compared

to

24

percent who said they could have been retained if offered

development/advancement opportunities and 28 percent who would

have stayed if the culture/work environment was different. Therefore

the major dimension that PSUs need to work on is to improve their

attractiveness.Thereisadireneedtostrengthentheinternalbrandfirst

togiveastrongbasetotheExternalBrand.Theemployeeswithinthe

organization carry the image to external world.

FigureVIII


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The above chart indicates that the major focus area for the talent

management should be the junior management. It is imperative to

realize the needs of GenY so as to enhance their engagement levels.

Effortsshouldbemadeinthedirectionthatanemotionalconnectionis

established.InastudybyDeloitteDoYouKnowWhereYourTalentis?

ConnectingPeopletoWhatMatters,2008animportantpropositionon

the connection part has been touched. Three kinds of connections

matter most when it comes to performance: connecting people to

people in ways that promote personal and professional growth,

connectingpeopletoasenseofpurpose,andconnectingpeopletothe

resourcestheyneedtodogreatwork.Theconnectmodelisshownin

thefigurebelow:


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FigureIX


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FigureX

Itwas largely felt that thereneeds tobea focusedapproach towards

the employment strategies that should cater to the critical positions

which cannot be risked at any cost. Also the prospective employees

needtobemadeawareoftheopportunitiesandinnovationinPSUs.

StepsthatcouldbetakentoImproveEmploymentStrategy


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FigureXI

Withincreasedsuccessofliberalization,thecountryrealizedthatthere

isnoalternativetotalentmanagement.ThePSUshavecometoterms

withreality.Giventhedifficultiesincompensation,thereisa

recognitionthatPSUscannotcometocompetewithMNCsforsalaries.

TheyhoweverrecognizethattheirCTCsareunderestimatesofwhat

theyreallygivetotheiremployees.Thisrecognitioncoupledwiththe

reformsinPSUshasputpressureonthenewHRmanagerinPSUsto

create aperformancedrivencultureasshowninthefigureXI.Today,


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almostallPSUshaveDirectorlevelpositionsforHR.Thedirectivefrom

theDPEappealingtoallPSUstorevamptheirPMSsandmakethem

morerobustandtransparent,especiallyinviewoftheintroductionof

performancebasedpay,islaudableandmaygiverisetosome

innovationsandaccountability.

(TVRao,2009)

FigureXII


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A frequent problem arises when the high potential is not adequately

compensatedand therefore there isa requirement feltto rewardand

acceleratethehighperformersasshowninFigureXII.Asperthesurvey

reportby2nd

PayRevisionCommittee,44%CPSEsfavourforcomplete

autonomyinthepaystructure.Nearly66%oftheCPSEsfeelthatthere

shouldbebroadguidelinesforpaystructurebuttheissueoffinalization

ofperquisitesmaybelefttotheindividualorganization.SofarasPerks

are concerned, 58% respondents are in favour of autonomy in fixing

perks.44%oftheCPSEsareoftheviewthatasthepayandperksofthe

employees in the organization has to be generated through internal

resourcesthesemaybedecidedbytheindividualorganization.

For retaining the talent, About 33 % of CPSE`s have suggested better

pay packages, Perks & benefits like offering ESOPs, Profit linked

incentives etc will help, 32 % have asked for continuous training &

development efforts forupgradation of technical skills and remaining

(35 %) have said that they should be given higher status, more

autonomy & better services condition along with full responsibility &

accountabilityof theirrelatedarea.PSEsare losingtheirmanagement

levelemployeestotheprivatesectorduetononcompetitivepaylevels.

To recruit the top in thejob market, companies must understand the

localsalarymarketandwhatcompaniesareoffering Indianrecruitsto

ensurecompetitivesalarylevels.Asthedemandfortalentcontinuesto


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increase,thecompanieswhichdonotoffercompetitivesalarypackages

risklosingtalent.

Following are the obstacles pointed by the respondents

preventing talent management programs from delivering

fromdeliveringbusinessvalue

Percentage 20% 40% 60%

Seniormanagement

dontspendenough

highqualitytimeon

talentmanagement

12.73%

Linemanagersarenot

sufficientlycommitted

topeople

development

12.73%

Organizationissiloed

anddoesntencourage

constructive

collaborationand

sharingofresources

9.09%

Linemanagersare

unwillingto

differentiatetheir

talentastopaverage

orunderperformers

14.55%

Seniorleadersin

organizationdonot

aligntalent

5.45%


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managementstrategy

withbusinessstrategy

Linemanagersdonot

addresschronic

performance

effectively

9.09%

SuccessionPlanning

and/orresource

allocationarenot

enoughtomatchright

peopletoroles

29.09%

CEOand/orsenior

teamdonothavea

sharedviewofmost

pivotalroles

5.45%

Others 1.82%

TableIII

AnothersignificantconcernforthepublicsectorasshowninTableIIIis

succession:asseasonedprofessionals leave,whowilltaketheirplace?

Attractingexperiencedtalentisdifficultintodayscompetitiveclimate.

Other industries have initiated aggressive marketing and attraction

strategiestoacquiretoptalent.Seniorleadersacrossthepublicsector

understandthesechallenges,andarebeginningtorespondeffectively.

AnalysisofCriticalPositionsinPSUs


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Themostcriticalpeople/talentissuesfacingPSUs

Percent 20% 40% 60% 80% 100%

Retainingkey

talent16.22%

Developing

leadership

talent

27.03%

Attracting

specifictypesof

talent

8.11%

Attractingnew

talent 12.16%

Keepingupwith

marketneeds9.46%

Managing

diverse

workforce

5.41%

Increasing

demandsfor

worklife

balance

10.81%

Managing

virtual/remote

work

arrangement

1.35%

Compensating

forinadequate

skills

1.35%

Retirementof

babyboomer

generation

4.05%

Increasing

workforce

diversity

4.05%


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TableIV

Mostcriticalrolesintermsofattractingandretainingemployees

Question Score1(very

critical)2 3 4

5(not

critical)

1. Project

Management

2.000

2. Technicalwork 2.222

3. Business

development

1.583

4. Projectlead 2.462

5. Field

operations

2.174

6. Researchand

development

2.593

7. Innovation 1.760

8. Businessunit

leadership

1.500

9. Senior

management

1.480

10. Programme

Management

2.520

TableV

CriticalPositions

as shown in Table

V

are the senior leadership

positions.However the leadershipdevelopment isan important factor

that would help in reaping the benefits of the critical positions. PSUs


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today require leaders who can initiate process of transformation by

bringing transformativeshifts in the mindset, outlook and perspective

of their followers with their visionaryappeal.Gill et al. (1998) believe

that the new post bureaucratic organizations will require

transformationalleadershipthatenablesflexibility,horizontalnetworks,

high trust relationship, adaptability to change and uncertainty,

innovation and empowerment of employees. Their leaders in the

competitiveenvironmentneedtobetransformationalwhoareableto

protect their vision powerfully and create support for it maintain a

momentum and empower others to take responsibility for realizing

their vision (Vishalliand Kumar, 2004).This requiresparadigm shift in

leadership.

Recommendations


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Themajorfindingscanbelistedasbelow:

There is high level of attrition being recorded at the juniormanagementlevel

SeniorManagementRolesaresignificantlyimportanttodelivertheresultsanddrivethejuniorandmiddlemanagement.

There is a dire need for image overhaul and to increase theattractiveness

Culture with a talent mindset needs to be developed whichvaluesperformanceanddrivesengagement

Focusedapproachtowardsmanagementofrighttalent

Toaddress

to

the

above

pain

points,

it

is

suggested

that

the

following

actionspoints(FigureXIII)tobetakenuponpriority.


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FigureXIII


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CaseStudy

NTPC(source:EconomicTimes,June,2010)

Thepower

major

employs

about

25,000

die

hard

loyalists,

whotakeprideinthe35yearoldbrandanditsempowerment

attributesandarediehardloyalists.Callitbrandingthrough

inspirationsettinguppower stations in record time, lighting

everyfourthbulbinthecountry,manpowerproductivityetal.

Thatmayexplain theultralow0.9%attritionand thehighly

efficient0.82mantomegawattratio.

The company's 22 townships are a major draw. These are

fullyequipped townships with schools, hospitals, swimming

pools, auditoriums, stadia and the works, which are owned

andmaintainedbythecompany.

NTPCshuns from lateralhiringatmiddleandsenior levels. It

preferstorecruit"actionoriented"peopleoverthosewhoare

"articulate". So far as policies go, along with the Right to

Information, NTPC regularly uploads them on the company

intranet and strives to create a transparent culture. And to

blur the linebetweenexecutivesandnonexecutives further,

it has a quality circle at the plant levelwith awell laid out


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Whilethequalitycirclelookstheregionalas

wellasthecorporatelevel.

Whilethecompanyisnowdevelopinga

pipelineofleadersforkeyleadership

positionswithitshomegrownLeadership

AssessmentandDevelopmentSystem

(LEADS),ithasalsocomeupwithasystem

ofrewardingexemplaryideasfromwithin.

The

Idea

Portal

of

NTPC

(IPoN)

and

NTPC

OpenCompetitionforExecutiveTalent

(NOCET)aresterlingexamples.

WhileIPoNdealswithin-housesuggestions

onproductivityimprovement,NOCETis

morefocused,whereinthechairmanand

directors

throw

up

theme/s

for

the

year,

for

whichinnovativesolutionsaresoughtfrom

employees'teams.

participation forumthe core of the quality circle is the plant

council. While the company is now developing a pipeline of

leaders for key leadership positions with its homegrown

LeadershipAssessmentandDevelopmentSystem(LEADS), ithas

alsocomeupwithasystemofrewardingexemplary ideas from

within. The Idea Portal of NTPC (IPoN) and NTPC Open

CompetitionforExecutiveTalent(NOCET)aresterlingexamples.

While IPoN deals with inhouse suggestions on productivity

improvement,NOCET

is

more

focused,

wherein

the

chairman

and

directors throw up theme/s for the year, for which innovative

solutionsaresoughtfromemployees'teams

We see that NTPC has leveraged on the strengths and have

achieved in high engagement levels of the employees.

Development of talent and Innovative practices clubbed with

seniormanagementcommitmenthasworkedwondersforNTPC.


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ONGC(source:CorporateIndianCompanies:ForgingNewTalentPipelinesandCreativeCareerPathwaysNovember2008SHRMIndia)

ONGCis aleadingoilexplorationandproductioncompany,

rankedNo.1inAsiaandNo.3globally(Platts250GlobalEnergy

CompaniesList2007),withinterestsinrefining,liquifiednatural

gas,powerandpetrochemicals.ONGC,theonlyIndian

corporationintheFortuneMagazineslistofWorldsMostAdmired

Companies

2007,

operates

in

18

foreign

countries

throughitswhollyownedsubsidiary,OVL,andhasaworkforce

ofaround32,800employees.Asastateownedlistedcompany,

OilandNaturalGasCorporation(ONGC)hastraditionallyoperatedonthepracticeoflifelongemployment.Yet,keepingin

syncwiththechangingmindsetsoftodaysyoungpeople,ONCGnow

offers

four

year

term

appointments

at

higher

remunerations

tomeetthedemandsoffrontlinefieldoperations,aswellas

reemploymentofformeremployees.Further,withanoverall

focusonthecompanysyoungworkforce,ONGCoffersdevelopmentopportunitiesandchallengingassignments.ONGChasalsointroducedanewcareeroptionthedualcareer

ladder.ONGChaskeptpacewithchangingscenariorealizingthe

expectationsforGenYandatthesametimeengagingpeople

acrossalllevels.


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Conclusion

PublicsectorHRneedstoworkharderatsellingitselftoattracttalent.

ThecasesofNTPCandONGCclearlyshowhowdespitehaving similar

challengesasfacedbyotherPSUs,theyhavebeenabletocarveaniche

amidstpublicaswellasprivatesectorindustries.

The sector has to combat the negative perception that itsjobs are

inferior to those in the commercial world, said Thomas Burke. "The

private sector is seen as dynamic and fastchanging," he said. "Unlike

thepublicsector,itisregardedastheplacewhereambitiouspeoplego

to work". A cultural change encompassing performance orientation,

transformational leadership, and strong leadership pipeline and

challengingassignmentswouldbeimperativesforPSUs.

The public sector must work with a focused approach to reap the

maximum benefits. Talent Management needs to be addressed on

priority to meet the challenges posed by rising talent demand supply

gapandsurvivingintheageofexcessiveglobalcompetition.

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