How is Welingkar Mumbai

Issue 7 - 2012

In recent years India has increasingly developed from a low-wage country to a globally competitive business location. Talent management is also becoming increasingly important.

Companies like the Tata Group or ArcelorMittal are buying up their international competitors; other companies like Mahindra & Mahindra challenge their western competitors with high quality products that are marketed at low cost. These developments are accompanied by the fact that talent management is becoming increasingly important. Talent management covers the acquisition, development and retention of talent as well as the planning of related activities in a company. (Young) employees inside and outside a company who are sufficiently qualified to fill positions that are critical to success in the company are referred to as talents.

Current challenges for talent management

Before we discuss the current challenges of talent management in India, I would like to mention an area in which India - compared to many other nations - definitely does not face any challenges: an aging workforce. Rather, according to a Census India report (2010), the workforce between the ages of 15 and 50 will increase from around 58 percent in 2001 to more than 64 percent in 2021. The average age of the Indian population is also remarkable: in 2020 the average age will be 29 years; this is significantly lower than, for example, in China and the USA with 37 years, in Western Europe with 45 years and in Japan with 48 years.

1. Gender diversity as a talent management barrier: Traditionally, women in India are almost exclusively responsible for bringing up the children and looking after members of the extended family. Even today, this is often accompanied by discrimination against working women in India. Nevertheless, the number of women employed is continuously increasing, which makes new solutions in the area of ​​talent management necessary.

2. Social structures as a talent management barrier: The social structure also influences the working world in India. The caste system is still very influential in India. It is true that up to 50 percent of the places in universities and vocational schools are reserved for members of lower social classes. Apart from the fact that this regulation is highly controversial on the part of members of the upper classes, social class differences reappear at the latest in situations in which members of lower classes are appointed as managers for members of higher classes.

3. Rapidly rising compensation as a talent management barrier: Compared to companies in Europe, the dimensions in which Indian companies are hiring can almost be described as dramatic. According to the Ma Foi Randstadt Employment Trend Survey (MEtS), around 1.6 million new jobs were created in 2011, almost 30 percent more than in 2010. The front runners are healthcare (around 250,000), gastronomy (around 160,000) and real estate industry (around 130,000). The Tata Group alone hired more than 40,000 new employees. This need for employees from domestic and foreign companies was accompanied, for example, by an increase in remuneration of around 13 percent. This represents a comparatively strong increase with an inflation rate of 5.5 percent.

4. Extremely low employee loyalty as a talent management barrier: In particular, foreign companies with branches in India are confronting challenges with poor employee retention and international labor migration. In order to counter the barriers of talent management in India, it is necessary that companies operating in India fundamentally rethink their approach. In addition, companies should take greater account of the cultural characteristics of the Indian working population. In particular, six central areas of activity for talent management in India can be identified (Figure 1).

illustration 1

Fields of activity of talent management

Various factors play a role in talent management in India.

Sustainable improvement of talent management in India

Gender Diversity Management: This helps ensure that the potential of female employees is used more effectively. As part of talent management programs, discrimination against female employees in the workplace as well as social discrimination based on family traditions must be counteracted. The company Google provides its employees with taxis on demand so that they can get home at short notice in the event of family emergencies. Boehringer Ingelheim allows working mothers to take other mothers with them on business trips in order to counteract their social exclusion. In India it is still problematic when young women travel alone.

Use of social media to communicate with talents: It is estimated that around 72 million people in India will use social media in 2014 (Indiblogger 2009). An important key of talent management in India is seen in the use of social media. As Figure 2 shows, people in India make more than average use of the possibilities of mobile communication; It looks similar with Internet communication. Due to the strong need for networking among Indian people, great potential is seen in the use of social media. Possible areas of application of social media in the context of talent management are discussed in the article by Stock-Homburg / Özbek-Potthoff / Wagner (2012).

Figure 2

Use of mobile connections

Number of registrations of mobile phone connections in India (based on United Nations Statistics Division 2011).

Creating mobile work opportunities: In Germany, making the place of work more flexible is often equated with working from home, mostly performed by female employees. In India, a restriction to working from home is problematic for a number of reasons: Firstly, working from home means “de-wetting” those affected. This aspect is to be weighted much more heavily in India than in Germany, for example, since society is defined to a large extent by its networking between social groups. For female employees, there is also the fact that they - mostly living in large families - cannot pursue their professional activities from home due to family obligations. It is therefore not surprising that in a recent study by the Bayer Group of 150 female employees, 70 percent of those surveyed refused to work from home.

So how could the place of work in India be made more flexible? One conceivable solution is revealed with a view to Korea. This country shows some parallels to India - despite some culturally strong differences to India; only two of them are mentioned at this point. In Korea, masses of employees commute up to several hours to their workplace every day. In addition, the Korean population is more technologically networked than any other nation - we see a similar situation in India. A government-sponsored workspace program recently launched in Korea, which offers flexible workplaces in residential areas, could also be used in India. As a result, people would be more flexible in terms of time, would travel less and would still be connected.

Dealing with cultural peculiarities of Indian employees: When it comes to talent management, Indian companies have a clear advantage over European companies. Indian leaders are typically more emotional than Western leaders. The strict adherence to rules and procedural regulations restricts the creativity of Indian top talents and additionally reduces their loyalty to the company. However, this requires a systematic identification of high-potential Indian talents. Here, too, international companies operating in India often reach their limits due to a lack of knowledge of Indian culture.

Generating strong networks between talents: Similar to the American model, companies and universities should promote networks of talent. Due to the collectivist culture in India, it can be assumed that the connections between the members of the networks of employees in India are even stronger than comparable networks of employees in Europe. Such networks can at least partially counteract the above-average fluctuation.

Differentiation between high potential and high performers: Due to the shortage of specialists and managers in India, it is important that performance management is not limited to talented and experienced top performers. Rather, holistic performance management requires that so-called question marks and low performers are included. The enormous population growth in India does not only bring opportunities: with an illiteracy rate of around 40 percent (compared to around one percent in many European countries such as Germany, France, Italy and the Netherlands), the gap between rich and poor is widening . If India wants to maintain high growth, companies must also consider ways of dealing with the low-skilled. One could think, for example, of their own educational institutions, in which less qualified but high-potential workers can be re-qualified.

Summary and Outlook

The starting point of this contribution was the question of what challenges India faces in talent management and what measures companies operating in India can take to meet them. At first glance, some measures sound similar to measures that are suitable for companies operating in Germany. However, their design is sometimes very different, such as the consideration of cultural backgrounds for the advancement of women and the flexibility of the place of work. This article is intended to provide food for thought on how to successfully shape talent management in India.

Due to the special framework conditions, many innovative approaches are being developed in India, which - albeit modified - could enrich the talent management of western companies. In addition, a more intensive examination of the question of what western-oriented companies can learn from Indian companies is seen as promising. Because: there is a reason why India is one of the growth nations of the 21st century.