Values, Governance and Human Resource Management: Fighting the War for Talent Ethically Ifedapo Adeleye and Kemi Ogunyemi

Abstract With the scientific turn in human resources management in recent years, a burgeoning literature has emerged on building a decision science for strategic talent and organization. Many models, frameworks, concepts and tools have emerged, from potential-performance matrices to forced ranking, human resources utilisation allocation, and high-potentials management. The emergence of these new models have coincided with the rise of strategic HRM, which with its associated utilitarian developmentalism emphasizes identifying a relatively small proportion of ‘high performers’ and giving them special development and rewards to maximize their contribution to the firm. While acknowledging the critical role of talent management in driving business performance, there is a need to evaluate the ethical issues that arise from the implementation of talent management programmes. In this paper, we look at three specific issues: elitist talent programmes and equal opportunities, the glorification of outsiders, and self-fulfilling prophecies in talent development. We conclude by arguing for a more rigorous approach to talent governance, to de-risk talent management systems.

Keywords: Business ethics, talent war, talent management, HR differentiation, elitist talent management, equal opportunities, self-fulfilling prophecies.

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We break our population down into three categories: the top 20%, the high-performance middle 70% and the bottom 10%. The top 20% must be loved, nurtured and rewarded in the soul and wallet because they are the ones who make magic happen. Losing one of these people must be held up as a leadership sin—a real failing. The top 20% and middle 70% are not permanent labels. People move between them all the time. However, the bottom 10%, in our experience, tend to remain there. A company that bets its future on its people must remove that lower 10%, and keep removing it every year—always raising the bar of performance and increasing the quality of its leadership. General Electric (2000: 1)

With the scientific turn in human resources management in recent years, a burgeoning literature has emerged on building a decision science for strategic talent and organization (see Collings and Mellahi, 2009). Many models, frameworks, concepts and tools have emerged, from forced ranking to potential-performance matrices, human resources utilisation allocation, etc. (see, for instance, Lepak and Snell, 2009). One concept that has gained popularity around the world is forced ranking or forced distribution. The quote at the head of this paper describes the operationalization of the concept, popularized by Jack Welch at GE. The widespread diffusion of talent management practices such as forced ranking in the last decade has been somewhat controversial, and several commentators have been highly critical of this trend (see, for example, Pfeffer, 2001). The emergence of these new talent management practices have coincided with the rise of strategic

human

resource

management,

which

with

its

associated

utilitarian

developmentalism emphasizes identifying a relatively small proportion of ‘high performers’ and giving them special development and rewards to maximize their contribution to the firm. While it is clear that the management of talent is critical to firm competitiveness and even labour market efficiency (Adeleye and Anibaba, 2014), there is a need to pay attention to the ethical, governance and practical issues that arise from the adoption of talent management programmes. A fundamental issue is whether – like in the case of forced ranking – it is appropriate to ‚import‛ a practice from another organization with a totally different business strategy or model, culture and HR philosophy and systems. What may have been ‚best practice‛ in the GE context may be totally irrelevant in another organization. The unquestioning acceptance of ‚strategic‛ talent management concepts and practices by HR professionals appears inappropriate, and there is a need to reflect on fundamental issues such as: On what basis are employees designated talent or ‘high-potentials’ (HIPOs)? By what criteria are HIPOs’ results compared to those of non-HIPOs? Is performance to be appraised on the output of effort or on the effort towards output? Is there any element of self-fulfilling prophecy in managing people who produce apparently different levels of output? Do outsiders tend to have an advantage over existing employees in terms of career opportunities and competitive pay? Is high performance driven by high performing 2

individuals or high performing teams? Can the resources put into elitist talent management programmes be justified in economic terms? Our objective in this conceptual paper is to examine some of these critical issues through ethical lenses. In the next section, we briefly mention five ethical belief systems that could be used to evaluate talent management programmes and discuss the one most relevant to our purpose. Our discussion will focus on three talent management issues: elitist talent programmes and equal opportunities, the glorification of outsiders, and self-fulfilling prophecies in talent development. The paper concludes by arguing for a more rigorous approach to talent management and governance, to de-risk strategic talent initiatives. Ethics and Talent Management: An Overview of Ethical Belief Systems There have been several calls in recent years for putting ethics, values and governance into people management processes or programmes. In a recent article, Swailes (2013) developed a framework for analysing the ethicality of talent management programmes. Swailes identified five ethical belief systems – duty ethics, virtue ethics, distributive justice, stakeholder theory, and utilitarianism – and explained the implication of each of these perspectives for the management of talent (see Table I).

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Table 1 – Ethics and Talent Management

Ethical belief system

Implications

Duty ethics

The goodwill and intentions behind talent programmes govern their ethicality. If strong self-interest is present in organizational motives the action would not be ethical.

Virtue ethics

Talent management is ethical if it properly identifies employee potential and enables participants to reach their potential in the fullest sense (not just for the organization’s benefit) and if other employees are not denied opportunities.

Distributive justice

An elite group is justified so long as participants are there on their own merits and not because of the labours of those who are excluded. The excluded should benefit in some way and not be denied opportunities for themselves.

Stakeholder theory

So long as a talent programme benefits its participants and other stakeholders (e.g., other employee groups and investors) and is done to strengthen the organization then it can be considered as moral.

Utilitarianism

Participants in talent programmes can be seen as a means to an end (e.g., to give greater innovation or job security) if the majority benefit. A talent programme is moral if it maximizes good to the greatest number and gives the least harm to others.

Source: Swailes, S. (2013). The Ethics of Talent Management. Business Ethics: A European Review 22: 32 – 46.

The question that naturally arises is which one of these five ethical perspectives is the ‚right‛ or ‚best‛ one? As Swailes concludes, none of them (singularly) gives a best way of determining whether a particular talent initiative is right in an ethical sense. For HR professionals and organizational leaders, evaluating talent programmes from multiple ethical perspectives can be very useful. We however highlight one of the perspectives – virtue ethics, because it of its richness and relevance to the talent discourse. Virtue ethics examines the moral character of the person undertaking an action, rather than the ethical duties and responsibilities, or the consequences of specific actions of persons. It seeks to provide guidance on the desired behaviours and characteristics a good or virtuous person aspires to. In this sense, virtue ethics is holistic, and focuses on the entirety of how a person behaves generally in life, rather than on singular actions or events. Virtue theorists generally maintain that a virtuous person acts virtuously as a result of rational thought. This is a critical point. The emphasis here is that there is a logical reasoning and deliberate attempts to act in a particular manner rather than being led by instincts. 4

Many virtue theorists also believe that there is a common, universal set of virtues that all human beings naturally desire and would benefit from. According to James F Keenan (1995), there are four cardinal virtues: justice, fidelity, self-care and prudence. 

Justice, which demands that all people be treated equally and fairly. To Langbert (2011), justice should serve as the foundation of managerial competence.



Fidelity, which requires that people closer to us ought to be treated with special care and consideration.



Self-care, which posits that individuals have a responsibility to take care for themselves, physically, spiritually and otherwise.



Prudence, which encapsulates the three virtues above. Hence, a prudent person should aspire to acquire more of the other three virtues.

From the virtue ethics perspective, therefore, a talent management initiative is ethical if it properly identifies the potential of employees and provides them opportunities to flourish; to maximize their potential, and does this not just for the employer’s benefit (Swailes, 2013). From this perspective, the management of talent would be focused on the whole person, on his or her life, rather than being directed to aspects selected to maximize utility for the organization while disregarding what is good for the person(s) in it. In the next section, we draw attention to three interrelated areas of talent management – elitist talent programmes and equal opportunities, the glorification of outsiders, and selffulfilling prophecies in talent development. Elitist Talent Management and Equal Opportunities One of the fundamental concerns often raised about the so-called ‚war for talent‛ is how to properly define and identify ‚talent‛. Whereas some in academic and professional circles use the word talent liberally – interchangeably with ‚people‛ or ‚human resources‛ – others use it as a label for an elite set of people, usually the top 10 or 20% of employees, ‚those who make magic happen‛, to borrow from the quote at the head of this paper. Talent management meets the Pareto principle – a now commonly accepted affirmation that about 80% of a set of consequences typically come from 20% of their causes. This notion that a relatively small number of talented people will deliver the exceptional business results for a firm has led to the proliferation of all manner of high-potential talent identification initiatives as businesses search for their 20%. We discuss some of the salient ethical, philosophical and practical concerns with this trend. A fundamental ethical issue here is whether a small number of individuals are really responsible for producing the group results that they are credited with. Anecdotal evidence suggests that in many situations, the differences in the performance of ‚high performers‛ 5

and other team or organizational members are not considerable. Management guru Prof Jeffrey Pfeffer (2001) believes that this overemphasis on individual performance is inappropriate as it invariably rewards star performers and discounts the contribution of other team members, thereby diminishing the recognition of the value of teamwork. For HR professionals, there is a need to empirically determine whether the differences in productivity of their employees justifies having a special, elitist talent management programme. The core ethical issue here is the need to ensure that talent practices pass distributive justice test and also the virtue ethics test. The created ‘elites’ may be in fact riding on the efforts of their team, and artificially setting them apart would not be conducive to their flourishing once it is based on injustice and stints their possibility of practicing justice – one of the cardinal virtues mentioned above. Simultaneously, an organization or HR department that allows injustice, whether real or perceived, to fester among staff would be acting counter to the virtue of prudence. Beyond the philosophical argument, there are also several ethical concerns about the actual implementation of talent management practices. For instance, in many organizations with elitist programmes, the search for ‚top talent‛ is usually restricted to only a small number of elite academic institutions, which themselves may not be inclusive institutions. This denies ‚high-potential‛ graduates of other institutions an opportunity to advance their careers; of course this also denies the hiring organization the opportunity to hire the best qualified candidates. One approach to addressing this is by opening up the entire recruitment and selection process, beginning with the process of advertising job openings, so that everyone has a fair opportunity. With regard to the issue of selection criteria, it sometimes happens that seemingly unbiased practices may have a disparate impact on a group, even if unintended. Take, for example, the persistent reduction in age ceilings for entry level graduate jobs (initially from 30 some years ago, to 28, 26 and now 24) in many firms, even by multinational companies where such practices are either unacceptable or outrightly illegal in their home countries (Adeleye, Atewologun and Matanmi, 2014). Inadvertently (perhaps), candidates from middle class families who tend to attend private universities seem to have an advantage over their more mature colleagues in the public universities (who after several years of waiting for the few available spaces in public universities, and waiting through strike actions by academic unions) find themselves ‚too old‛ by the time they graduate. This may actually be a case of disparate treatment, not disparate impact. The imposition of ‚age floors‛ has a similar effect, where highly qualified people are denied the opportunity to participate in talent/leadership development programmes because of age requirements (for example, that candidates must be at least 35) or the imposition of an unnecessarily high number of years of work experience to qualify. In these two cases, people have been (unjustly) denied the opportunity to compete and advance their careers. In a bid to copy other organizations’ practices without adequate regard given to justice and fairness concerns and to what is best for the particular 6

organization, decisions have been taken that may not have been the most prudent for the organization. Another contentious matter is the type of selection and assessment tools employed. Many HR professionals use inappropriate (‚off the shelf‛) tools which they may not even be certified to administer. In some cases, the selection tests could be discriminatory or lack validity and reliability; yet, important talent and career decisions are made using such tools. HR professionals and organizations need to embrace an evidence-based approach to talent acquisition, one which embodies the virtue of justice. At this point, we advance a new but related issue for consideration: Should high-potential talent be identified and placed on elitist talent programmes before or after they have joined the organization? The issue of timing is clearly important, particularly for graduate or early career programmes where participants do not have a proven track record of performance. It is now common for fresh graduates (of elite/foreign academic institutions or those with the best assessment scores/university grades) to be placed on fast-track programmes as they are hired, while other graduates remain on the regular track. In some cases, these ‚special‛ graduates are placed two or three pay grades above their peers, and sometimes, awkwardly, on a grade level close to that of their supervisors (who may have taken several years to reach their position). And this is done before they have even had a chance to prove themselves, to deliver on the job! The aftermath is quite unsurprising. Disgruntled and envious peers and supervisors who cannot make sense of this, and feel unjustly treated, often refuse to cooperate with these HIPOs, at times to the extent of frustrating them (the HIPOs). Talent acquisition professionals need to rethink this issue of timing, particularly when they have not established that the selection criteria are highly correlated to on-the-job performance. Some organizations are already coming up with creative ways to handle this. At GE, for instance, graduates are admitted on the Early Career Development Programme on a oneyear contract, and only after performing can they compete for positions on a full-time leadership development programme. The Glorification of Outsiders In the search to find the best people, there is a tendency to see those people as existing primarily, although not exclusively, outside of the organization...outsiders have the advantages of mystery and scarcity value. In other words, there is more than a little truth in the adage that familiarity breeds contempt. Pfeffer (2001: 253)

As Pfeffer succinctly put it, HR professionals and line managers often tend to glorify the talents of those outside the company and undervalue those of their employees. Sometimes the challenge is that they have not paid sufficient attention to properly identifying employee potential, or that they actually have not invested in the development of their human capital. 7

In such situations, insiders watch (and perhaps later respond) as their employers pay a considerable premium and make idiosyncratic deals with new joiners. The consequences are twofold. First, those insiders experience a loss of motivation stemming from perceptions of injustice and, second, it exacerbates the recruiting challenge, as departing employees who have inadvertently been ‘chased away’ then have to be replaced. It invariably reinforces the fallacy that employees need to embark on job-hopping to reach the top (Hamori, 2010). From an ethical standpoint, this poses some problems. The virtue of fidelity, for instance, requires that those who are close to us ought to be treated with special care and attention, which implies that employers ought to invest time and resources in identifying and developing the talent of their people. Several studies now show that extensive reliance on outside star performers can be counterproductive. Groysberg, Nanda, and Nohria (2004) find, in their insightful paper ‚The Risky Business of Hiring Stars‛ that: Top performers resemble comets more than stars: once they’re lured to another firm, their performance plummets by as much as 20% - permanently. That’s because just 30% of a star’s performance stems from individual capabilities; 70% derives from resources and qualities specific to the company that developed him, such as reputation, etc.

Moreover, they found that ‚transplanted‛ stars pose a significant attrition risk as they do not tend to stay with their new employers for long. In another study, Khurana (2003) reports that the trend in the US toward hiring ‚charismatic‛ or celebrity CEOs, rather than competent executives with requisite skills, has led to many disastrous results. Khurana argues that, although such appointments tend to drive up the company’s market value in the short term, in most cases performance is not sustained. What then can we conclude about the glorification of outsiders? Not only is it unethical because it fails the ethical tests of justice, fidelity and care, and causes employers to fall short of their responsibilities to develop their people, it also does not always lead to a desirable outcome. As such, continuing to indiscriminately engage in this practice demonstrates a lack of prudence on the part of those responsible for hiring decisions. Self-fulfilling Prophecies: The Pygmalion and Golem Effects Social scientists have codified the concept known as self-fulfilling prophecies since the 1960s (Rosenthal and Jacobson, 1968; Livingston, 1969). Simply put, they have empirically demonstrated that expectations of performance are a critical enabler of people performance, from the teacher-student to the commander-soldier relationship. Management scholars like Eden (1984) later argued for the adoption of this powerful concept as a management tool, and the positive leadership movement has embraced it (Cameron, 2009). Surprisingly, however, this has not featured prominently in the talent management discourse.

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A distinction is often made between self-fulfilling prophecies when high expectations lead to high achievements (the ‚Pygmalion Effect‛), and situations where low expectations lead to poor performance (the ‚Golem Effect‛). Clearly, talent managers matter. When they label some people on elitist programmes as ‚high-potentials‛, it has a motivating impact on those people. It actually also has an impact on the talent manager, who now provides them with more responsible ‚critical‛ positions, and invests considerably more resources in their training, mentoring and compensation. The Golem Effect, unfortunately, then automatically applies to many others who are not in this category – the vast majority of the workforce, and manifests itself in psychological and intellectual disconnection, reduced drive and disengagement. The HIPOs often lose, as they might be overburdened by work. Again, the ethical issue of distributive justice comes to the fore, as well as the virtues of justice, fidelity and prudence, and the engagement of the entire workforce as genuine stakeholders in the firm. Talent Governance Talent management is about marshalling thoughtful strategy…We need to be far more challenging before we label someone Talent” Sparrow, Hird, and Balain (2011: 45)

What our discussions so far clearly show is that organizations and talent managers need to take the ethicality of talent programmes more seriously. This starts with addressing the talent governance issue. HR leaders, business leaders and board members must take more interest in talent management issues, to ensure better governance and balancing of business risk and talent, and to ensure that the resources invested in talent programmes be justified in economic and ethical terms. This may require setting up (effective) talent governance bodies at the HR leadership, executive leadership and board levels. Talent management/HR professionals have a critical role to play here. By being proactive at the design stage of talent management programmes, they can avoid many of the flaws we have highlighted in this paper. They must bring the ethical dimension to bear in the talent management discourse, desisting from the unquestioning acceptance of prescriptive models, frameworks, and concepts which often do not take into account ethical considerations and challenges. Becoming more ethics and governance literate is important, and we recommend familiarity with the ethical perspectives discussed in this paper, particularly distributive justice and virtue ethics. Embodying talent management with virtues is very likely to make such initiatives more widely accepted within the organization and more sustainable, the very outcome HR professionals and organizations (should) strive for.

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References Adeleye, I. and Anibaba, Y. (2014) ‚Strategic Human Resources Management, Labour Market Efficiency and Competitiveness in Africa: Contemporary Issues and Prospects for the Future‛, in S. Nwankwo and K. Ibeh (Eds) The Routledge Companion to Business in Africa. London and New York: Routledge. Adeleye, I., Atewologun, D. and Matanmi, O. (2014) ‚Equality, Diversity and Inclusion in Nigeria: Historical Context and Emerging Issues‛, in A. Klarsfed, L. Booysen, E. Ng and A. Tatli (Eds) International Handbook On Diversity Management At Work (Second Edition). Cheltenham, UK: Edward Elgar. Cameron, K. (2008) Positive Leadership: Strategies for Extraordinary Performance. BK Business. Collings, D. and Mellahi, K. (2009) ‚Strategic Talent Management: A Review and Research Agenda‛, Human Resource Management Review 19: 304 – 313. Eden, D. (1984) ‚Self-Fulfilling Prophecy as a Management Tool: Harnessing Pygmalion,‛ Academy of Management Review, 64 – 73. General Electric (2000) Annual Report 2000: Letter to Share Owners. Groysberg, B., Nanda, A. and Nohria, N. (2004) ‚The Risky Business of Hiring Stars‛, Harvard Business Review 82 (5): 92 – 100. Hamori, M. (2010) ‚Job-Hopping to the Top and Other Career Fallacies‛, Harvard Business Review, July – August: 154 – 157. Jussim, L. and Harber, K. D. (2005) ‚Teacher Expectations and Self-Fulfilling Prophecies: Knowns and Unknowns, Resolved and Unresolved Controversies‛, Personality and Social Psychology Review 9 (2): 131 – 155. Keenan, J. (1995) ‚Proposing Cardinal Virtues‛, Theological Studies 56 (4): 709 – 729. Khurana, R. (2003) Searching for a Corporate Saviour: The Irrational Quest for Charismatic CEOs. Princeton, NJ: Princeton University Press. Langbert, M. (2011) ‚Toward the Virtue-Based Business School‛, Journal of Interdisciplinary Studies 23: 97 – 116. Lepak, D. and Snell, S. (1999) ‚The Human Resource Architecture: Toward a Theory of Human Capital Allocation and Development‛, Academy of Management Review 24: 31 – 48. Livingston, J. (1969) ‚Pygmalion in Management,‛ Harvard Business Review, July – August: 81 – 89. Pfeffer, J. (2001) ‚Fighting the War for Talent is Hazardous to Your Organization’s Health‛, Organizational Dynamics 29 (4): 248 – 259. Rosenthal, R. and Jacobson, L. (1968) Pygmalion in the Classroom. New York: Holt, Rinehart & Winston. Sparrow, P., Hird, M. and Balain, S. (2011) Talent Management: Time To Question The Tablets of Stone? Lancaster: CPHR. Swailes, S. (2013) ‚The Ethics of Talent Management‛, Business Ethics: A European Review 22: 32 – 46. 10

Verma, N. (2009) ‚High-Potential Programs: Flaws and Fallacies in Managing Critical Talent in Any Economy‛, WorldatWork Journal First Quarter: 33 – 41.

Authors’ Profile Ifedapo Adeleye, PhD SPHR Ifedapo Adeleye is a Senior Lecturer in Strategy and Human Resources Management at Lagos Business School. A major strand of his current research and consulting activities focuses on how organisations can drive performance through talent management. He also has a keen interest in responsible management and sustainable HRM. Dapo has authored over 20 journal articles, teaching cases and book chapters, and presented his work at conferences around the world. He received his PhD in HRM from Manchester Business School and he is a certified Senior Professional in Human Resources of the Society for HRM, USA. He can be reached on 0805-805-8091 or via email: [email protected].

Kemi Ogunyemi, PhD Kemi Ogunyemi is a Lecturer in Business Ethics, Anthropology and Sustainability at Lagos Business School, where she teaches courses on business ethics and driving corporate values, the nature of the human being, and sustainability strategies. Her consulting and research interests

include

personal

ethos,

coaching,

work-life

ethic,

social

responsibility,

sustainability and governance. Her book Responsible Management: Understanding Human Nature, Ethics, and Sustainability was recently published by the Business Expert Press, New York, as part of the Principles for Responsible Management Education Series. Her PhD on human quality treatment was completed at Pan-Atlantic University. She can be reached on 0806 678 9009 or via email: [email protected].

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