This chapter focuses on six key areas that are affecting recruitment and retention: (1) technology, (2) social media, (3) big data, (4) HR technology and information systems, (5) globalization, and (6) demographics. It begins with a brief review of changes in each of these areas and how they are affecting work. Then we consider how these same changes are affecting recruitment, recognizing that in the age of the Internet and social media, recruitment is, by definition, global. In a concluding section, we offer research-based suggestions regarding what managers can do to maximize the retention of talented employees that they want to keep.

Chess is a game of strategy. Chess strategy consists of setting and achieving long-term goals during the game – for example, where to place different pieces – while tactics concentrate on immediate maneuvers. The initial phase of the game is called the opening, usually the first ten to twenty-five moves, when players develop their armies and set the stage for the coming battle. Opening strategies, many with colorful names such as the Bird’s opening, the Benko defense, or the Sicilian defense, have been developed over many years. Some of these are more aggressive than defensive, but, by the end of the game, the effectiveness of a given strategy, and the tactics used to execute it, become clear as one player captures the opponent’s king and declares “Checkmate.”

In business settings, a basic question about strategy is how a firm will compete and defend itself against outside threats. The effectiveness of its strategy may be measured on a number of dimensions, such as sustainability, profits, competitiveness, and growth. Does it meet the needs of multiple stakeholders, such as shareholders, customers, suppliers, employees, and communities? If not, in the extreme, the analog to “Checkmate” in the game of chess occurs when a firm declares bankruptcy, or otherwise abandons a particular product or service offering, most often due to a lack of market demand for it.

Previous chapters have explored fundamental issues associated with strategy in general, and HR strategy in particular (Chapter 1), features of the external environment that underpin business and HR strategies (Chapter 2), and the multiple levels of HR strategy and its connections to the organization and to the surrounding environment (Chapter 3). This chapter focuses more explicitly on mitigating, managing, and optimizing human capital risks, and then incorporating these considerations into HR strategy. The risks associated with managing talent are becoming more and more obvious to decision makers, as the following sections illustrate. We begin our treatment by considering a 2011 report from the Boston Consulting Group and the World Economic Forum that focuses on global talent risks.

These risks comprise looming talent and skills scarcities that threaten the strategic initiatives of companies and governments everywhere. The report proposes seven responses to global talent risks – blueprints for action on how to attract, move, develop, diversify, and retain talent. They are as follows.

1. Introduce strategic workforce planning: model the labor supply and demand for different job families to understand current and future imbalances and to develop strategies for addressing them.

2. Ease migration: innovative, points-based migration systems and “migration-friendly” branding by governments and companies are necessary to attract the right talent globally.

3. Foster brain circulation: develop strategies to turn brain drains into brain gains as students and professionals come home to apply skills learned abroad.

4. Increase employability: increase employability – of the current as well as the future workforce – through education systems that include practical and theoretical skills, lifelong learning, and upskilling.

5. Develop a talent “trellis”: talent development is key to ensuring a sustainable pool of highly skilled people. Focus on evolving from career tracks to a trellis, building the skills required for the jobs of tomorrow and offering vertical and horizontal career and education paths.

6. Encourage temporary and virtual mobility: do this through short-term work or study in another location (temporary mobility). A networked world enables virtual mobility, allowing individuals to carry out their professions regardless of their locations.

7. Extend the pool: this can be done by tapping into the skill sets of women, older professionals, the disadvantaged, and immigrants. Easily available childcare, flexible work schemes, mentoring and advisory roles, together with improved options for licensing and recognizing credentials, are solutions to the barriers that these groups face.

This book is about human resource (HR) strategy – the decisions, processes, and choices that organizations make about managing people. It is designed as a primer for students in master of business administration (MBA) or HR programs, as well as for HR and organization leaders and general managers. It aims to provide an overview of the elements of human resource plans at the strategic, operational, unit, and functional levels.

It is more than that, however. A unique aspect of this book is that we have incorporated a consistent perspective that human resource or human capital strategy is also about risk optimization and management. It is difficult to consider any arena of management without attention to risk, and this is especially true in the arena of human capital. Integrating risk into human resource strategy is a less traditional way to approach the topic, but an increasingly uncertain world demands such a perspective.

Not only is it important to incorporate risk more explicitly into the framework of human capital strategy, but also, we believe, doing so will enhance and extend the paradigms of human capital planning in new and useful directions, producing a unique perspective for leaders inside and outside the HR function. We will have much more to say about risk optimization and management in later chapters. The purpose of this opening chapter is to explore some of the fundamental ideas that underpin organizational strategy in general, because organizational strategy is the foundation of human resource strategy.

Human resource strategy occurs in a context that exists at different levels. HR departments and human capital decisions exist within organizations, which exist within competitive and social environments. Chapter 5 shows how human resource strategy must address questions such as how the HR department’s activities produce the necessary results at the levels of individuals, groups, and organizational units, how those results affect the organization’s execution of processes, and how that execution, in turn, produces sustainable strategic success in the competitive and social environment.

This chapter describes the key considerations, issues, and components of human resource strategy that characterize the environmental, organizational, and functional levels of context. Human capital permeates and affects every aspect of organizations, so leaders must understand the contextual levels of HR strategy to achieve a better formulation and evaluation of their HR strategy. Understanding the context of HR strategy is also important because it helps to define the appropriate contribution of the leaders and managers who serve different organizational roles in the HR strategy process. For example, the executive heading the HR department plays a significant leadership role in HR strategy, and usually defines and is accountable for executing the HR strategy processes. Other functional executives on the leadership team, such as the chief financial officer or chief operating officer, play a collaboration role in human capital strategy, but do not drive the HR strategy process.

Can you use standard dimensions of risk management to determine and evaluate the pivotal elements of an organization’s talent strategy? Terry Gray and Matt Hankes, two human resource and organization effectiveness leaders at Cargill, have done just that. Recall from earlier chapters the dimensions of risk that were described by the Committee of Sponsoring Organizations, shown here as Figure 6.1.

Notice the front face of the cube, and its list of elements for addressing risk: objective setting; event identification; risk assessment; risk response; control activities; information and communication; and monitoring. At Cargill, decisions about human resource management strategy, programs, and policies are framed in terms of their impact on strategic risk factors, particularly when it comes to internal controls. Cargill already used the COSO framework for its risk management, so the framework provided a natural way to connect human capital strategy and decisions to the larger organizational risk objectives. Cargill HR leaders used several elements of the COSO framework to help their non-HR leaders better understand the impact of HR.

For example, regarding the “control environment,” the Cargill HR audit process notes that it depends on integrity and ethical values, commitment to competence, management philosophy and operating style, organization structure, and authority and responsibility assignments. Leaders consider that these things are directly affected by factors such as unrealistic performance targets, the bonus structure, poor segregation of duties, excessive decentralization, and insignii cant or unpublicized penalties for improper behavior. The process asks a simple question: “Is HR involved in any of the above?” The answer is “Of course,” and this sets the tone for a deeper dialogue about how investments in people can create organization and talent outcomes that are pivotal to Cargill’s most vital risk issues.

Among the choices and results of HR strategy are which people to “put on the field,” “when and where they play,” and “getting them to play together.” Today, the people who work for an organization may come from down the street or from across the sea. Moreover, they may be physically co-located or only “meet” virtually. “Getting them to play together” has never been more challenging, especially when the game is being played on a field and in a context that includes changing fan preferences, changing rules and regulations, global franchises, and the technology that enables, records, and broadcasts the game. In this chapter we identify some of the challenges that businesses face in today’s world. Our objective to is identify key forces and trends that are helping to shape how business is transacted, and how it will be transacted in the future, with particular emphasis on forces and trends that have implications for how strategy and human capital connect. Let us begin by considering two mega-trends: the effects of globalization and technology on organizations. Figure 2.1 illustrates other aspects of the external environments of organizations that we discuss in this chapter.

While the second author was working with a mining company to improve its human capital planning, the company discovered that it faced a shortage of mining engineers, and rising turnover among its existing engineers. The company was making do with the engineers it had, which meant giving every mine the necessary engineering attention it required, but nothing more. To do this, the company had to rotate mining engineers across the mines at a faster rate than if it had been fully staffed. Consequently, these mining engineers were constantly on the move, under more pressure, seeing their families less, and traveling far more than if the company had a full complement of engineers.

Could talent planning address this? Should the talent strategy be framed in terms of HR costs, activities, processes, headcount projections, or something else? We turned to another vital asset – the trucks that haul ore and other materials around the mine. Suppose that a mine optimally needs four trucks, which allows each truck to be driven at the optimal speed, keeps wear and tear at optimal levels, and allows optimal maintenance. Truck “health” is measured relentlessly, including real-time speeds, lubricant deterioration, tire pressure, running hours, etc. Could a mine manager make do with only three trucks? Yes, if he or she allows the trucks to run a little faster, allows them to depreciate more, and delays maintenance. Indeed, this would probably even save money – in the short run. Yet, all these measures ensure that mine managers never do this. They are held accountable for optimal truck usage, not short-run expedience.