Human Capital Investments and Relevance of the Concept of Talentship

free essayModern studies and publications on human recourses (HR) management no longer search for the staff and executives, but for exceptional talents and leaders. Currently, recruiters and employers refuse to train and develop all employees as it used to be even a decade ago. Nowadays, they want to invest in those who can bring direct or indirect profit in their business. This approach to the development of the HR budget is reasonable in new conditions of increased competition, but there appears an urgent question how to determine the key audience for training or search.

In the modern world of market relations, success of a company depends on effective management. Positive influence and motivation of staff have become an urgent topic among recruiters and company leaders. In challenging conditions of the new global world and international communication, the concept of leaders and talents management has been developed and transformed. Effective human capital investment is an important aspect of any business all over the world.

Two American specialists, John Boudreau and Peter Ramstad, have offered a very interesting approach to the problem. These scientists have invented and developed a new concept of talentship, which has revealed a new vision of professional competence.

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Understanding of the Concept of Talentship

Development of international trade has led to the importance of diversity of human resources in a company. It has become one of the mandatory factors for development, which at the same time requires careful attention to a talent management system. Competent employees contribute to maintaining integrity and collaboration of workmates of each company.

Boudreau and Ramstad believe that intellectual capital and talent are crucial resources for the success of modern organizations (Boudreau & Ramstad, 2013). At the same time, they define success not as a current strong financial performance, but as stability of results and continuous, sustainable prosperity of the company. The role of HR-department becomes strategic and proactive. However, work of the Department of Personnel Management remains reactive. Major investments in HR are based on measurement tools. They include balanced scorecards, financial reports, counting ROI of HR-projects, and employees’ own research programs on the impact of changing attitudes, skills, and abilities (Boudreau & Ramstad, 2007).

The authors draw an analogy with business functions where data are crucial in making decisions about corporate finance and marketing. In the financial analysis, as well as marketing and production analysis, value of a contribution is judged by results. Data help business leaders to adopt the most effective solution for appropriate resources. The same approach of calculation and relevant estimation is important for detecting talents and leaders of the company who would be worth of investments and additional funding (Boudreau & Ramstad, 2007).

Talent management implies activity aimed at creation of the company’s recruitment, development, use, and retention of talented employees and the ability to achieve exceptional business results. Talentship is not just an additional branch of professionals who work with human resources of their company. It is a different world, a new vision based on the fact that employees are a major asset to the company and the company’s competitive advantage. In addition, talentship is a complex concept, which combines new trends in technology development, recruitment, compensation, motivation, and retention (Boudreau & Ramstad, 2007).

According to Boudreau and Ramstad (2007), three market resources are crucial for a modern business. They are finance, customers or products, and market talent. The first two aspects adhere to a clear division of professional practice and the science of decision-making. Nobody confuses Accountants (Professional Practice) and finance (the science of decision-making). Accounting is important for reporting and compliance with external requirements and financial business tools are used to make decisions about optimal investment thresholds. It is important to separate the professional practice of human resource management (recruitment and retention, development, compensation, working relationships, and so on) from the science of decision-making. Boudreau and Ramstad determine this science as talentship. It should create a logical, safe, and orderly system of decision-making in relation to the organization of talent as a key resource. By analogy with finance and marketing, talentship does not prescribe required steps and gives businesses a way to work with unique information in a particular context (Boudreau & Ramstad, 2007).

Employees’ Equality in Modern Talent Management

Many people want to have good salary and money compensation for their job. Others look for promotion in their professional field. Some people are ready to take on challenges and responsibility, while others want stability. Modern tools of assessment allow to detect each employee’s impact on the common success more precisely than it was some decades ago when people did not have computers at their disposal. Schliemann claims that there are drivers and enablers at any enterprise and in any organization. He reveals that the concept of talentship is close to leadership (Schliemann, 2011). Some organizations need strong discipline and others need creativity and initiative for effective development and competition. Leaders have to adapt their personal interaction style and motivation to needs of the company in order to get required results.

There are different approaches to modern understanding of the concept of leadership. It can be a set of personal human traits or a process of ruling and interaction with people. The first vision reveals existence of inborn talents and characteristics or behavioral peculiarities, which stipulate position in the organization hierarchy. The other vision underlines importance of interaction and effective motivation of people in the same social and working environment for getting the necessary result (Schliemann, 2011).

Leadership can be inborn or acquired. Many scientists believe that leaders’ skills and behavior can and need to be developed in modern conditions of a high level competition. Success of effective team production and management depends on flexibility and personal readiness to learn of those at top positions in the organizational hierarchy. Talentship is different in the aspect of vision and more genes stipulate origin. If people want to be demanded, they need develop their inner motivation and initiative, be ambitious and at the same time adequate in the assessment of their professional qualities. Modern assessment tools help in detection and promotion of the most effective workers.

Balanced Assessment of Achievements

Financial analysis offers a number of tools that define a certain point of reference for business leaders and focus on elements that are critical to effective decision making. An example of such tools is economic value added and return on invested capital. Boudreau and Ramstad offer for its installation. Talentship coordinates a system of bridge, assessing impact, effectiveness, and efficiency of solutions (anchors) (Schiemann, 2006).

Effect of HR activity is a figure proportional to increase in profit and success of the organization after detection and improvement of a specific space. Consumer segmentation system forms demand for certain talents and stipulates selection of a particular pool of talent. Correctness of the chosen talent depends directly on success of the business. It may not be just a bunch of posts, but also a general description: “those who have direct contact with the customer” (Boudreau & Ramstad, 2007).

Efficiency describes how HR-programs and processes affect capacity and actions of employees included in the pool of talent. It tells how many HR-programs and processes can be obtained for invested resources of time and money. There is an analogy in marketing where a number of actions (advertising, sales) are made with the investment of certain resources.

According to authors, HR professionals should obtain answers to the following questions:

  • What can the trained employees bring to the business? (adjoint action)
  • How have they integrated actions with the rest of the staff in the organization to create this value? (talent pools)
  • What are the key processes in the business for which these actions have the greatest impact? (business processes)
  • How will excellent performance of these processes maximize contribution to the stability maintenance and advantage in the market? (Boudreau & Ramstad, 2007).

Modern managers need strategic actions for acquisition of talent no less than application of new technologies. Rapid development of social media networks and software programs, which help attracting new staff, has motivated senior managers to reconsider appropriateness of the traditional organization of talent acquisition function in the modern world. There has appeared the term “integrated talent acquisition.” It is a strategy for organizational design with the main purpose of eliminating barriers between similar processes and activation efficiency through implementation of quality HR management and training.

The concept reveals coordination of efforts. Through greater information sharing and group communication between different departments and divisions, speed increases the quality and reduces the cost of acquisition of talent. Different departments carry out corporate functions such as finance, manufacturing, business development, as well as external service providers. In some cases, when business largely depends on the ability of talent acquisition, development, motivation, and retention become the question of highest priority.

Talent revealing process reflects all activities of the organization, breaking boundaries between departments. Serious arguments against this integration do not persist because of obvious benefits of closer cooperation. Modern scientists emphasize that a fully integrated service for talent acquisition has been found (Mondore, Douthitt, & Carson, 2011).

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In most cases, departments of talent management function as semi-autonomous units. At the same time, they are never independent. Jack Foster says that creative people “by definition and purpose are freedom-loving folk who find it difficult to adapt. They all have original thinking, rejecting dogma and authority “. Therefore, the only way for a manager is not to intrude upon them with purposes and instructions, but provoke their ideas (Mondore, Douthitt, & Carson, 2011).

According to Schiemann (2006), talents are developed through challenge and risk management. They have to face serious problems and be placed outside their competence and comfort. The greater the problem or challenge is, the greater is the risk of failure. At the heart of risk management, there is sharing of experience, coaching, and business consulting (Schiemann, 2006).

The inner conflict often becomes a starting point for creativity and revealing talent. Talented people often behave in a strange and eccentric way in everyday life. Strong demand for activities of imagination linked with curiosity and the need for new experiences gives a creative personality a trait of initiative and creative courage. Desire for intellectual independence, non-suggestive behavior, and thinking characteristic of creative individuals are often accompanied by self-confidence and a tendency to give appreciation for abilities and achievements. Such features are not always welcome in collective team work. This aspect needs special attention and formation of tolerance and pluralism in the company’s employees.

Schiemann believes that there is a big difference between talent management in the US and Europe. Europeans believe in the development of their talents within the organization. It is the basic approach to labor legislation of many countries, i.e. workers acquire additional rights after working for several years in one company. Americans, on the contrary, do not tend to believe in long-term career development effects (Schiemann, 2006).

They more actively search for top managers outside the company. Involvement of external experts with specialized skills meets needs of key positions in the organization for a short time. Companies must rely on the development of talent to be competitive in the long term. The UK, for example, is opened to allow the US market. It, in turn, increases pressure of the market and continental European companies, causing a heated political debate and change. As for the difference between Western and Eastern Europe, Schliemann mentions two major differences. Firstly, countries of Central and Eastern Europe have a long tradition, especially for development of leading technical experts like engineers, and attention to development of professional leaders is a new trend. Inheritance is more focused on business and not so much on leadership and this is understandable in terms of popular psychology in these countries. Another difference is that talent management in Eastern Europe is largely a priority for the HR manager, but is not among the priorities of senior executives (Schliemann, 2011).

Maximizing Impact and Effectiveness of HR Analytics

Modern HR managers face a dilemma whether effective employees should be trained or searched. Some human recourse managers claim that a long-term development program of employees is of paramount importance because skills and qualifications of the staff should be constantly and regularly improved. At the same time, many experts in the field of HR argue that existing systems for talent management can improve /real outcomes in organizations. The best way for a modern recruiter is to find a strongly motivated candidate, detect his/her talents and perspectives for the company, and invest in them.

However, regional and global studies show that the lack of people with excellent quality and high achievements is experienced throughout the world. Demographic prospects do not allow hoping that the problem will be solved in the coming decades. At the same time, shortcomings of the corporate culture in companies are a reason for high turnover of the staff. Some employees pay attention to violations and deficiencies within the competence of the staff in their organizations. Their behavior is dictated rather by motivation of failure avoidance than by motivation of achievement. An optimal and effective decision lies somewhere on the intersection of corporate and personal interests.

Professional HR managers tend to create conditions in which employees start experiencing the company’s success as their own. Mondore, Douthitt, and Carson argue that organizations need changes to adapt to modern conditions and learn to use new network tools. Development of technology enables employees to work and perform most of their duties from their home or even from another country. In addition, organizations today should be willing to attract workers from other countries. It is necessary to look for talent wherever they can be located (Mondore, Douthitt, & Carson, 2011).

In the modern world of business relations, a high level of competition makes people cooperate and use all their best professional and personal abilities for gaining the common result. Talent management is based on leadership. Positive influence and motivation of staff is an urgent topic among recruiters and business managers in local and international companies. Workers should have personal motivation to perform perfectly and do their best. Such approach implies development of leadership skills in employees and their permanent professional growth and promotion (Mondore, Douthitt, & Carson, 2011).

Involvement in management is achieved through confidence in workers and delegating to them necessary powers, clarifying the mission, goals, and objectives of the company, as well as creating normal conditions for work. Quality requires a system of motivation, according to which any work is rewarded and the collective result does not conceal a visible proportion of individual work.

Under new conditions, prosperity of the organization depends on attracting valuable people. It makes HR professionals broaden the network of sources when looking for professionals. In addition to traditional practices and training, many companies offer specialized training for students to help them prepare and acquire professional licenses and certificates.

Human recourses investment is the HR technology tool, which is being transformed with the changing market. High levels of competition among companies deprive them of the possibility to predict a visual plan of company’s strategies and amounts of production for the nearest five or ten years. A modern market requires new tools to improve efficiency and leadership features of employees. In the last century, plants could organize mass production in the market without any fear because it was far from saturation. Main attention was paid to the increase of commodity manufacturing efficiency, which could be judged by financial results. In the 1970th, customers became much pickier and forced companies to shift their focus to meet their requirements with the saturation of the market in the most developed countries. As a result, traditional approaches of accounting no longer met vastly different business environments and more sophisticated customers’ needs.

Balanced Scorecard Technology

Balanced Scorecard has become a promising new generation system. It was invented by Robert Kaplan, a professor of Harvard Business School, and David Norton, the founder and the president of Balanced Scorecard Collaborative. The basis of their research was the hypothesis that successful management of financial data alone at a modern enterprise was no longer sufficient and therefore required a new, more balanced approach (Kaplan, 2010).

This principle was implemented in the system of Balanced Scorecard, which took into account four perspectives of organization: traditional financial indicators and factors that they influence directly or indirectly, success of customers, optimality of internal business processes, and overall competence of the personnel of the company in its field. Taken together, those aspects were to provide a complete picture of the strategy of the company and its dynamics (Kaplan, 2010).

Periodic measurements of carried indicators provide feedback and appropriate regulation of organization’s activities. Efficiency of business processes and work across the company, its subsidiaries, and each employee is at the same time determined by values of so-called “key performance indicators” (Key Performance Indicators, KPI). If they are connected with motivation of employees, it is expected that they will be interested in achieving the company’s goals. Thus, Balanced Scorecard has become a kind of “skeleton” (framework) to translate organization’s strategy into a set of operational goals that determine behavior of the company and, therefore, its financial thriving (Kaplan, 2010).

Talent management implies the ability to respond quickly to market changes and introduction of innovative products and technologies. Competitive advantages of successful companies are higher performance of qualified employees who can respond to demands of the market and customers, rapid production of new products, new and better services, etc.


Development of the concepts of talentship and adequate assessment of personal and collective achievements in the organizational production have contributed to maximization of the company’s productivity in the modern highly competitive world. Visions of the company’s future and individual initiative are main features of perspective candidates for human recourses investments. High individual motivation has become an essential part of the society and every individual striving to be successful and demanded in the global arena. Professional competence needs encouragement, training, crises, and their further overcoming. It implies constant adaptation to challenges in life, as well as the ability to transform reality and enjoy the process. It forms an alert and critical mind ready to react adequately here and now. The experience of winning and promotion contributes to the employee’s self-esteem and motivation.

Formation of a new personality ready to respond creatively and quickly becomes a major task and a necessary condition for maintained stability and success of any organization. Challenges of talentship development are determined primarily by a person’s attitude to his/her creativity. Personal characteristics can become an insurmountable obstacle for realization of even most ambitious creative potential, but a persistent and emotionally rich person can achieve unexpected results. It is important to learn to love crises and process more than any achievement or result. It is crucial to understand meaning of tolerance and pluralism for effectiveness of cross-cultural collaboration.

Modern social networks and connection on the Internet allows people to recruit personnel all over the world. The question is to manage to transform the company’s interest into the personal interest of a potential employee. There is also an urgent need in the application of modern on-line tools of adequate performance assessment and achievement such as Balanced Scorecards and other useful internet technologies.

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