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Managing the Pitfall of Talent Strategy

By Oliver Kamakura, Daniel Catelan & Julia Herrmann
Posted: 7th August 2014 08:55
The fact that Brazilian market has bounced back from the 2008/09 global economic downturn more readily than other economies, and that the new domestic economic middle class has been pushing the consume levels more than ever before is having a fundamental effect on organisations’ business models.  Companies are struggling to extend their market reach in order to feed these new demands and mobilise their workforce to exploit these opportunities.  We are therefore seeing in Brazil a major challenge for human resources executives to become global talent strategists – from inside out. 
In a context known by talent shortage, the opportunities and challenges coming from the globalisation phenomenon are more visible and urgent than ever before and the need to challenge paradigms to better compete in a such a complex scenario has become an urgent matter.  In response, new resources and capabilities have been considered by strategists for attracting and retaining people, especially the ones able to explore and sustain their businesses in new markets.
EY Institute for Emerging Market Studies (IEMS) has recently looked at how companies can undertake more targeted interventions to attract and retain key people, and to grow more profitably as a result.  Our study ‘Differentiating for success – securing top talent in the BRICS’, indicates talent shortage as a leading risk to the operational agility, competitiveness and strategic growth of organisations as from 2015 onwards.  We are aware that the concept of talent shortage is not new, especially in Brazil, but it is our perception business leaders are now reporting that talent shortages have become a serious risk to growth. 
The study shows that there is plenty of room to look at people strategy differently by shaping what really matters to your talents and build up a value proposition that will touch their hearts and minds.  For example, balancing work life.  Brazil has a traditional, hierarchical culture, and to reduce stress, it is important to maintain adequate resources (including time) to allow professionals to meet the demands of their jobs.  Respondents of our survey demonstrate the wiliness of having a low-stress, comfortable and high-energy work environment.  Our study reveals that, for a talent perspective, employer value proposition may have a greater importance than the competitive compensation and benefit package offering. 
In the same mood, but from the employer perspective, we observed that companies are paying a high price for focusing on tangible based compensation.  Untilrecently, Brazilian companies used to rely on the oversupply of skills or simply raising salaries to attract and retain talented professionals.  Our experience shows that this is no longer a sustainable response.  As known, the labour-cost inflation in Brazil is one of the top factors in depressing profitability — along with price erosion and regulatory pressure.  The inflation is leading organisations to focus on cost-reduction strategies to protect margins while still delivering growth.  Thus, we are experiencing the most rapid and complex succession of legislative and regulatory changes we’ve seen in generations.  Brazilian government is treading the fine line between raising desperately needed revenues and increasing their overall levels of competitiveness. 
Finally, it is clear the globalisation phenomenon has also impacted the ability of local companies in addressing compliance in multiple jurisdictions.  In this sense, even though the number of cross border business travelers deployed out of Brazil (Short Term Business Travelers) to fill up positions in new markets has increased over the last five years and the changes on the specific laws addressing international people transfers, the management models (policies and processes) have not been adjusted accordingly, impacting the accuracy at headquarters’ level to effectively track and monitor them over the globe. 
Organisations are becoming more sophisticated in their definition of what “talent” really means in their growth strategies and foreseeing the scarcity is a problem in a range of roles.  We bring to debate that the challenges around business travelers are similar to other key company functions.  In this situation, Brazilian companies are responding to the shifting of global landscape and to the talent shortage.  The convergence of these major challenges is pressing human resources executives for managing the pitfall that may lead to a significant change and increase of business proposition and performance.
We understand the HR function should be more sophisticated in their approach to talent attraction and retention success.  Business leaders should be more sensitive to understand the intangibles, the values that really matters at the eyes of their talents.  Although, understanding that a fully individualised employment offering might be the ideal approach; we attain that this level of refinement is often not possible or practical.  We have identified that tailored employment offerings to the preferences of targeted groups of critical employees may be the next frontier within the strategic HR management landscape.

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