First part of the article – The search of talent and China case

Author: Juan Carlos Ladines Azalia, Professor at the Academic Department of Social and Political Sciences at Universidad del Pacífico.

A. Introduction

On 1998 McKinsey developed a new definition of talent in the international scene. The so-called “War for talent” was predicted to be the next crucial challenge in globalisation. This idea enables the ability to discuss aspects of globalisation, talent and migration for the next century.

This paper examines not just the individual perspectives of talent, but the perceptions from the corporate view in the ever-changing debate shaping the intellectual landscape. How the notion of talent (encapsulated in terms of abilities and skills) and its terminology is adapting to the changes and in its meaning over time. This analysis will take a step further in the discussion of not only defining talent, but also understanding, what are the foundations of talent in the real world scenario? In addition, showing how new global players are becoming, not only witness of global change, the main actors in this development.

In this article, China has been selected to understand how it is dealing with the production talent and its effects on western society. Throughout the 20^th Century western universities became knowledge production centres. A report from the BBC puts into question the future of these institutions as a model to capture talent, claiming:

“Higher education has become the mirror and magnifier of economic performance – and in the post-World-War-II era, universities in the Unites States (US), Western Europe, Japan and Russia have dominated.” (BBC, 2012)

University model has changed as a result of globalisation process, to “whom” is receiving this knowledge (and by that reproducing talent). According to the report, at least 40% of the graduate population will come from two main countries, China and India (OECD and BBC, 2012). This will be in the future, the major shift in the paradigm of talent.

B. What is talent?

The era of globalisation has opened a new window: talent movement. This means that human capital is moving from one country (or economy) to another. It is important to explore what are the main drivers for talent to shift to different places. It becomes relevant to understand what is talent, why it is important and finally what is the global impact of this movement?

Therefore what is talent? To give a proper definition it is important to bear in mind the globalised context where the definition is expressed, a world where multinational corporations are the main participants in the search of talent.

In this scenario, in McKinsey’s report of 1997 called “War for talent” defines it the following: “the sum of a person’s abilities… his or her intrinsic gifts, skills, knowledge, experience, intelligence, judgment, attitude, character and drive. It also includes his or her ability to learn and grow” (Michaels et al., 2007, 2001: xii). Although this definition satisfied general purposes, the concept was still an issue in corporate world. According to Beechler and Woodward (2009), talent still is an undefined concept by many organisations and companies.

The meaning of talent provided by McKinsey only applicable on individual basis.  Besides these capabilities offered by persons as resources, it still did not engage on a competitive world. Talent should not defined from an individual perspective, but also more transversal, and holistic one. David Ulrich (2006) made an effort to understand what precisely defined was talent. He made an important contribution to the definition on the matter:

Talent = competence, commitment, contribution

In his definition, the competence embraces the knowledge to perform proper tasks (which included their skills and values which can endure in time). Commitment could be understood as part of the effort in performing the job. Finally, contribution, which stands as an added-value created in the environment. These three elements would be transversal to the individual and would sustain on a continual re-evaluation, which could lead to an improvement of their abilities.

Florida (2005) and Tee Ng (2011) took this concept further, by adding the idea of creation:

“The creative age is a key factor propelling us forward, the rise of creativity as the prime mover of our economy. It is the ‘creative talent’ that really enhances economic competitiveness.”

While Ulrich was defining talent among three borders, by adding the idea of creativity, talent could be understood as a borderless concept. There are no limits in talent, reinforcing not only the three elements, but also re-evaluating to perform a better task or job.

These three elements are balanced through two important agents: the person itself and a Multinational Corporations (MNC). At an individual level talent can produce adequate competences; at a corporate level (MNC) the searching for commitment and contribution. The combination of these two agents should be done in a creative environment, resulting in real contribution to the world.

C. Talent and more

In a globalised context talent strives to engage with the real world needs. In this gap a new concept emerges as a binder to satisfy the needs of different agents (individuals and MNC). Talent management adapts better in the dimension of the globalised world.

These corporate entities are the ones searching for talent to run their businesses, to manage their resources and most importantly produce an added value and profits to their companies. As Hartmann, Feisel and Schober (2010) pointed out: “talent management has increased in importance and has gained attention in both the literature and in business practices”. It has been claimed to be more critical than ever to be an organisational strategic success (Boudreau, 2005) and a fast gaining top priority for organisations across countries (Bhatnagar, 2008).

It is for these above reasons why talent management has become an important consideration in a global perspective. Corporations will try to attract talent with the objective to increase their income, and indirectly produce wealth. These entities have been expanding all over the world this has produced a migration of talent to other places, therefore creates a global shift of human capital.

This movement of talent has incorporated a new consideration from the used version. Beecher and Woodward (2009) summarised these in four main points: (i) transformational changes to business environments, skills and cultures; (ii) growing (quality) levels of workforce; (iii) global demographic and economic trends; and (iv) increasing mobility of people and organisations. The first two are more focused on a long-term vision, while the other two are short-term perspectives. These four main points are contributing to the driving force aimed in changing the landscape^[1].

D. Asian migration and talent management in China, a scarce resource

The Asian continent has witnessed an important increase in migration numbers, from one country to another. A globalised world has reduced the barriers to be selective in what kind of migration is a country prepared to receive.

The main drivers of migration, in the case of Asia have been: a goal to increased levels of education, proliferation of international media, improved transport systems and the internationalisation of business and labour markets. These drivers have produced important networks in social capital terms (Hugo, 2006). The mobility factor, induces talent to be in constant state of movement, and in each stage creates a new community.

Due to these characteristics China’s objective is to expand the search for talent management. This is because an emerging economy like this tend to concentrate on the hubs of productions, where MNC are opening subsidiaries and, in some cases headquarters. The need of talent is latent and in the long term, expectations are that it will surpass the US and the European Union (EU) in economic terms.

Straszheim (2008) points out three key patterns in the Chinese case:

“First, China’s continuing industrialization, its urbanization and growth of megacities, the associated mass migration to those cities and the depopulation of rural China.

Second is demographics – the extraordinary “greying” of China, which is getting old much more rapidly than the presently industrialized states (United States, Europe, and Japan). This trend is accompanied by a changing gender mix, with far fewer young females than males.

Third is China’s emergence as a fully integrated global participant in every respect, but especially as an economic force around the world.”

China has shown it can be a model of low cost for MNC and primarily be an important supplier in the supply change model. Also technology has evolved, and the need to import talent has become a key strategy in which the consequences of this can produce an out of balance for the rest of the world. Under provision of talent it has demonstrated to be one of the fastest growing economies. (Straszheim, 2008)

In that sense, is China capturing the ideal talent management? How is China coping with the production of talent? Despite the impressive results shown, it is quite a problem in capturing the essence of talent.

Why China is an important contributor in terms of talent and human resources? Many reasons highlights their value in a global dimension (Wang, 2011):

• China is now the largest country sending students abroad, especially to the US, over 130,000 in 2010. Also is the largest investor immigrants’ country to the US, second largest in immigration after Mexico to US.
• Nearly 300,000 Chinese go overseas annually to study, with additional over 2 million who have studied mainly in US, United Kingdom, Canada, Australia, Japan and other EU countries.
• Over 700,000 Chinese graduates have returned to China.
• More than 90% of Chinese respondents cited economic opportunities in their countries as a very important factor in motivating the return home.
• The returnees took pride in contributing to economic development in their home countries. More than 51% of Chinese rated this as very important.
• 59% of Chinese said their quality of life back home was better or equal to what they had experienced in the US.

This data presented clearly the importance of China in the global sphere in terms of knowledge production. Furthermore it showed that in the long term China will concentrate their talent (management) in the corporate world.

According to the Organisation for Economic Co-operation and Development (OECD), China will produce in the future, vast amount of knowledge from their human capital, at least 40% of the graduate population will come from two main countries, China and India (OECD, 2012; BBC, 2012).

In spite of that, the gap to find high-skilled professional to take positions in the corporate world, has been growing in the short term. This has become a new challenge for companies attracting talent from abroad that will satisfy the demand for talent. For China there is still a lot of work to do in terms of engaging the educational system with the business world.

^[1] Also mentioned by Salt and Findlay (1989), they argue that a theoretical framework for highly skilled migration needs to incorporate four elements: the new international spatial division of labour, the role of internal labour markets, the nature of careers and the lubrication provided by recruitment and relocation agencies. While the first two conditions have been already mentioned by Beecher and Woodward, the last are more focussed on closing the gap in terms of careers and the response of international recruitment to understand the international labour market and finding how talent can be placed in other countries, they become facilitators in the process of relocating talent.