The impact of management in a downsizing financial organization on the relationship between talent management programs and business strategy.

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Master Thesis

The impact of management in a downsizing financial organization on

the relationship between talent management programs and business

strategy.

Date: 31-01-2014 Student: Ivar Kruithof (10278729) Universiteit van Amsterdam Amsterdam Business School MSc. Business Studies; Strategy track First supervisor: Mr. dr. M.J.O.M. de Haas Second supervisor: Dr. W. van Eerde

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Abstract

Purpose – An increasing number of organizations are engaged in talent management. Latest theory emphasizes a direct connection between talent management and the performance of the company. Most research has been done in the circumstances of organizational growth; however much less is known about talent management in a downsizing context. What could be the differences in the contribution of management to talent management in these circumstances?

Design/ methods/ approach – A case study approach with seventeen in-depth interviews in a financial organization was considered the most appropriate for the research objectives.

Findings – As a result of the analysis, this thesis observes a positive relationship between the success of talent management and the following factors; Involvement of talents in the process of talent management and downsizing. Also, possibilities for retaining talents. Furthermore, a certain level of commitment, involvement, knowledge of talent management and business strategy of (line and senior) management is necessary. Subsequently, HRM should support and challenge management, have vision and overview. Members of the board should motivate and act as a sparring partner for talents. A lack of these different elements in a downsizing context, has a negative influence on the contribution to and success of talent management programs and the aimed alignment with the business strategy. Furthermore, the size of the organization and dedicated responsibility of talent management can be of importance as well.

Originality/value – By assessing and researching the downsizing context, this thesis leads to an insight in the role of management in talent management facing a downsizing context. Some interesting implications for practice and theory will follow.

KEY WORDS: talent management, talent management programs, alignment with business

strategy, role of management, Human Resource Management and board, downsizing, human capital, skills, attitudes and financial organization

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Acknowledgements

It would not have been possible to write this thesis without the help and support of the people around me, to only some of whom it is possible to give mention here.

I would like to thank Mr. dr. M.J.O.M. de Haas for his guidance, understanding and everlasting patience during this thesis. His knowledge and mentorship kept me sharp at all times and made sure I stayed on the tight schedule. Every question was answered quickly and properly, and feedback was given in a direct but then again a fair way.

My employer, Rabobank made it possible for me to do this study, for which I am very thankful. Also I would like to thank the members of the board for giving me the opportunity to use their network and knowledge for this thesis. I want to thank all respondents for their time and effort they took to cooperate with the in-depth interviews. Without them there would be no results and this research would not be completed. I have enjoyed the many conversations and interviews with my colleagues and appreciated the received feedback.

Above all, I would like to thank my girlfriend for her personal support and appeal to her patience at all times during the whole study Master of Business Studies. Especially since we have changed jobs and bought and renovated our new home.

And last but not least thanks to my fellow students, thank you for the cheerful two and halve years of studying together at the Business School of Amsterdam.

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4.4.2 Board ... 41 4.4.3 Research Question ... 43 5. DISCUSSION ... 44 5.1ASSUMPTION 1 ... 44 5.2ASSUMPTION 2 ... 45 5.3ASSUMPTION 3 ... 46 5.4PROPOSAL 1 ... 48 5.5PROPOSAL 2 ... 49 5.6PROPOSAL 3 ... 51 5.7RESEARCH QUESTION ... 52 6. CONCLUSIONS ... 56 6.1LIMITATIONS ... 57

6.2IMPLICATIONS FOR MANAGEMENT ... 58

6.3 IMPLICATIONS FOR THEORY ... 59

7. REFERENCES ... 61

8 APPENDICES ... 67

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“Talent is cheaper than table salt. What separates the talented individual from the successful one is a lot of hard work (Stephen King).”

1. Introduction

You are identified as a talent by your employer, congratulations! But then what does that mean? What are your perspectives as a talent and what does your employer expect in return? Are these perspectives aligned with the firm’s strategy? Development, whether it is intentional or not, is associated with growing up and getting older. When you start participating in working life as a young contester, you may be confronted with development programs or, more specific, talent management programs. Obviously, these exist for good reasons. The programs are important for the organization, especially for the alignment of the development of employees with the business strategy. Talent management is therefore of strategic importance (Ashton and Morton, 2005). The alignment with the business strategy is critical (Blass, 2007). In case of financial downsizing it is even more difficult to continue talent management programs, because of the pressure on the organization and loss of career opportunities. Despite downsizing, an organization should attempt to retain talent. The influence of management at multiple levels in the organization on talent management is still unclear. Talent management programs are implemented by managers; their support, attitudes and commitment are essential. The strategic role of managers in developing talent is until now not thoroughly investigated. Further study is needed, as well as a specification of the impact of talent-related decisions throughout the organization (Lewis and Heckman, 2006). How do these decisions fit into the alignment between talent management and business strategy in case of financial downsizing?

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My employer, the Rabobank, tries to fill in key positions throughout the organization with talent from within the organization. This talent selection and development is intended to contribute to the alignment with the business strategy. Furthermore, it must lead to competitive advantage. To achieve this, various development and talent programs are elaborated. Just as many other financial institutes, the Rabobank has decided to downsize the organization in order to keep costs in line with profitability. Management is confronted with cost reduction by reduction of headcount, by efficient job design and processes. Besides this, management is also responsible for talent management programs. It might be assumed that in a downsizing environment, the fit between the alignment of the business strategy and managing talent is at risk. This is interesting because most research has been done in the situation of organizational growth. Following the intention to explore the factors that determine the influence of managers on the effectiveness of talent management especially in a downsizing environment, my research question is:

In the context of a downsizing financial organization, what are the factors that determine the intention and possibility of managers to contribute to talent management programs that are necessary to align these programs with the business strategy?

This research question implies the following assumptions:

- Talent management will lead to development of talents in an organization.

- The success of talent management depends on the alignment with the business strategy. - When a firm adopts a strategy of downsizing, this has a strong (negative) effect on the success of talent management; managers will find it (even) harder to contribute to the success of talent management programs.

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Prior to answering the research question, I will discuss these assumptions and include them in my research.

A case study approach is considered the most appropriate for the research objectives (Yin, 2009). The aim of the single case study is to obtain insights in the role(s) of managers regarding talent management programs and their alignment with the business strategy in the case of downsizing a financial organization. The case study method is chosen as it allows a more detailed, in-depth inspection of a phenomenon in its real-life settings than other approaches. Semi-structured interviews will be used as method of data collection in order to gain a rich understanding. To obtain a broader perspective and multiple perceptions I will select the interviewees from the members of the board, (senior or upper) management, line management (also team leader) and talent levels. The case study is conducted in the organization of the author. Answering the research question will lead to recommendations for theory and for managerial practice.

I expect that different management levels will have a distinctive attitude and commitment towards talent management programs, which could consequently influence the impact of these programs and the alignment with the business strategy. Alignment with business strategy could be influenced because of the different responsibility and involvement in the programs and the attention that is paid to talents. Downsizing is expected to reduce the possibilities of alignment of talent management with business strategy.

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2. Literature Review

In the Section of this literature review about talent and talent management, the principles of the development of employees as well as the major controversies concerning the definition of talent will be discussed, in order to propose a working definition of talent and talent management. Furthermore, the alignment of talent management with business strategy is set out. I will also discuss the contribution of managers to talent management programs. I will conclude the literature review with the possible influence of downsizing on talent management. This structure and my research question leads the proposed theoretical framework: TM programs Alignment with the business strategy The role of management Downsizing a financial organization

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2.1Talent

What is talent? In the literature, there are different definitions of talent, from very different perspectives. From a resource based perspective on talent management (Barney, 1995), it is often agreed that the character of talent is valuable, rare and difficult to imitate (Christiaensen et al., 2009). Talent can be seen as a personal characteristic or trait but also as an ability that can be developed (Gallardo-Gallardo et el., 2013). However, talent can also refer to a talented person.

There are some major controversies in the definition of talent and talent management. First, a distinction is made between the inclusive (‘everyone has talent’) and the exclusive view (‘few have it’) (Michaels et al., 1998). In both views, talent is a potential ability. The exclusive view distinguishes between employees who are identified as a talent and those who are not (Silzer and Church, 2009). The second controversy is between the “nature” or “nurture” character of talent (Silzer and Church, 2009). Talent is congenital (nature) or can be developed (nurture) by training and education. I will not elaborate on this controversy but will regard talent as a potential ability that can be (further) developed.

Furthermore, there is a distinction between the use of the word “talent” to define a competence or to refer to a talented person. An unique package of personal characteristics make a talented person, depending on the domain. Employees can mix and match their own package of characteristics in different ways to result in a similar potential for development. Important is not the precise mix of personal characteristics but the resulting potential. In addition to this, talent is also determined by the "context" or environment. This context contains the broader economic and social character of an organization, the sector and type of organization, as well

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as the specific needs of the organization. Therefore, talent is also the ability to respond to the specific characteristics as well as changes in the context.

In my study, I will use the word talent in the meaning of a talented person, distinguished from others (the exclusive view). A talent possesses the potential of high performance (Lewis and Heckman, 2006). This fits the operational definition of a high potential (talent) as a person who might be promoted two vertical levels in five years (Ulrich and Smallwood, 2012).

2.2Talent Management

The roots of today’s organizations and Human Resource Management (HRM) can be found in the Industrial Age, in a period of economic and social changes in organizations. HRM can be described as the discovery of the value of the human factor of organizations (Verburg and Den Hartog, 2008). HRM has evolved from servicing mass production, structures and processes, to the creation of value for the organization through human capital. Over time, employees became to be considered as the most important assets of an organization. The ongoing globalization, the ever faster technological innovations and the development of information and communication have an enormous impact on the production process, job design and the organization of work.

Training and development are essential parts of modern HRM. The primary aim of training and development of employees is to eliminate deficiencies in the required level of knowledge and skills. Furthermore, training can support changes in the organization and production processes. Training contributes to the learning environment within an organization and increases its (external) attraction. A distinction is made between traditional and modern development of employees (Verburg and Den Hartog, 2008). Traditional development

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is formalized and purely focusing on efficient and effective production. It may often appear less expensive to develop employees than to attract new employees. Modern development combines both and aims for a balance between effective training and succession for the organization, and on the other hand the modern development programs of employees, to emphasize the integration of human resource management with the business strategy (Verburg and Den Hartog, 2008). There has been a fundamental shift (a paradigm-shift) from the conventional (traditional) instructive management towards the balanced relation between the organization and the individual (Schoemaker, 2010). This could be applied to talent management as well. The focus on development of employees can increase the engagement and quality in the organization and may have other stimulating effects (Gijselaers et al., 2009).

The desire to attract and retain talent leads to the need for talent management and talent management programs. McKinsey's publication "The War for Talent" (1998) emphasizes the necessity of recruiting young, smart and ambitious professionals to contribute to organizational performance and competitive advantage. For many organizations attracting (developing and retaining) talent is a major challenge. Nowadays it appears that in spite of the need for new talents insufficient attention is given to (strategic) talent management as a strategic priority (Tucker, Kao and Verma, 2005), mostly due the lack of time and focus. This is contrary to the conviction that talent management is an importance source of competitive advantage (Collings and Mellahi, 2009). Talent management is identified as the most critical HRM topic by executives of well-known multinational companies across Europe (The Boston Consulting Group, 2013).

The concept of "talent management" has not obtained a clear meaning or explanation in the literature. Ashton and Morton (2005) stated that there “… isn't a single consistent or concise

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definition” of talent management nevertheless “good talent management is of strategic importance”. The lack of clear conceptual boundaries is emphasized by Collings and Mellahi (2009). The concept of talent management is used in many different ways and is often abused to add a “strategic” note to HRM activities such as recruiting, selection and development, without adding to the theory or practice of that activity (Lewis and Heckman, 2006).

Lewis & Heckman (2006) point out that talent management is not thoroughly grounded in research. Talent management can refer to the individual level, the level of the HRM-subsystem and to the organization as a whole (Thunnissen, Boselie and Fruytier, 2013). Talent management in the organizational context is seen as a method to retain talent by grounding the selection and development of employees on the potential of these employees to grow (Gijselaers et al., 2009). From this overview of the literature it follows that dominant practices in the talent management approaches are activities to identify, attract, recruit, develop and retain talent (Ulrich and Smallwood, 2012; Collings and Mellahi, 2009; Cappelli, 2008). Researchers have pointed at the necessity to be more explicit about the talent management assumptions and perspectives (Thunnissen, Boselie and Fruytier, 2013). Talent management can also be defined as the effort (formal and informal) which is invested in talents in addition to the usual employee facilities (Boudreau and Ramstad, 2007). Providing these opportunities for development has a positive effects on the attraction and motivation of talents (Van der Sluis, 2008).

Having discussed the definition of talent and the concept of talent management I will continue with describing talent management practices and programs. Many organizations have shaped their talent management through instruments such as performance management or competence management and have bundled these instruments in talent management programs (Boudreau

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and Ramstad, 2007). Blass (2007) identifies three dimensions of talent management: the definition of talent, the methods to develop talent and the structures and systems to support talent management. Besides the definition of talent, the selection of talent and the development programs, also the familiarity of members of the organization with the talent management programs as well as the quality, influence and status of the programs are factors that determine the effectiveness of talent management. Talent management commonly includes developmental programs such as training, education, mentoring, networking, traineeships, job rotation and (explicit) career planning (Blass and April, 2008). Ashton and Morton (2005) add focus: knowing which jobs make a difference, making sure that the right people hold those jobs at the right time. From a talent point of view feedback is an important factor to ensure continuous development (Gijselaers et al., 2009). According to Vaiman and Vance (2008) the following attributes for the development of talent are important: investing in training and development, caring about individuals, offering different opportunities, variety in daily work, dynamic approach, informal culture, and rewards and promotions based on performance. These attributes should be part of talent management programs.

Notwithstanding the lack of a consistent definition and theory, talent management has become a key management issue and HRM is moving towards the strategic perspective (Thunnissen, Boselie and Fruytier, 2013). I will use the definition of talent management of Boudreau and Ramstad (2007) as a working definition that suits my study: “Talent management consists of identifying, attracting, developing and retaining talented employees (the exclusive view) by offering them specific programs that are aligned with organizational goals”. Part of the structures and systems of talent management are the development of a talent pool, career paths and reviews and measurement of talent (Heinen and O’Neill, 2004). This working definition and statements provide the basis for Assumption T1;

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The first assumption is, that talent management according to the working definition of Boudreau and Ramstad (2007) will lead to development of talents in an organization.

In the next Sections, I will discuss the contribution of management to the effectivity of talent management programs. A key requirement for effective talent management is a close alignment with the strategy of the firm (Vaiman, Scullion and Collings, 2012).

2.3Talent Management and alignment with business strategy

Different organizations try to achieve different strategic objectives with their talent management programs. (Lewis and Heckman, 2006). This strategic perspective determines the way in which the talent management program is designed, implemented, and put into operation (Blass, 2007). Talent management should contribute to the overall firm performance (Collings and Mellahi, 2009) or to an increase in the competitive advantage of the organization (Lewis and Heckman, 2006). To be successful, the talent management strategy must be aligned with the organizations business strategy

In this study I will investigate alignment as it shows through the links between talent management programs and strategy, the consistency of talent management with the business strategy and an understanding by management how talent management and strategy are related (Chenhall, 2005). In firms that adapt a downsizing strategy (Heinen and O’Neill, 2004), alignment may be at risk; downsizing may limit the facilities and opportunities of talents. However, alignment remains a blurred concept that is difficult to understand and measure (Chan et al., 1997) and the bottom line contribution is still unclear (Janse van Rensburg and

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Roodt, 2009). Aligning talent management with the business strategy is a frequently unmet challenge (Heinen and O’Neill, 2004).

An important aspect of aligning talent management with the business strategy is the sorting effect of identifying, developing and retaining talent for future needs. This can be achieved by a broad organizational involvement, systems and structures that are integrated with HRM processes and by a shared responsibility of management (Heinen and O’Neill, 2004). The alignment and shared responsibility regard the contribution of managers at different levels of management and HRM (Schoemaker and Geerdink, 1991). Taken together, alignment between talent management and the business strategy can be studied by comparing talent management objectives and content with organizational objectives and by investigating the degree that managers and talents understand the talent management programs to be aligned with strategy (Janse van Rensburg and Roodt, 2009). This leads to Assumption A1:

The second assumption is therefore, that the success of talent management depends on the alignment with the business strategy.

I expect that the knowledge of talent management programs and the business strategy has an effect on the extend these are aligned and are rated differently per management level. Before describing the different roles of managers, the downsizing context is set out in the next chapter.

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2.4Downsizing

Until the bankruptcy of the bank Lehman Brothers on the 15th of September 2008, it was thought that banks could not go bankrupt. Most economic theory and research is concerned with situations of organizational growth, not with downsizing (Feldman, 1995). Virtually every sector has faced downsizing challenges in time of a crisis (Cameron, 1994). Just as many other banks the Rabobank is subjected to downsizing in order to keep costs in line with today’s altering economic environment and declining profits (Rabobank, 2013).

Downsizing is practiced by reducing the size of the organization’s number of employees, which may be supported by technological improvements in processes and product designs, or advances in information technology and information management which are reducing labor requirements (Vollmann and Brazas, 1993). Organizational downsizing in my research refers to a set of activities, undertaken by the management of an organization and designed to improve organizational efficiency, productivity and competitive advantage by reducing headcount and other costs and by improving processes (Cameron, 1994).

Just as every organization, The Rabobank needs employees who endorse the values of the organization. These employees need to be committed to the client and to the organization (Rabobank, 2013). This commitment can be at risk by downsizing, when more effort is needed to offer career perspectives (Feldman, 1995). Despite these efforts, employees (and thus also talents) can experience deteriorating career opportunities as a result of downsizing and changes in employees’ attitudes are likely to occur (Feldman, 1995). Negative attributes associated with organizational downsizing are for example: lack of leadership, loss of trust and restricted communication (Cameron, 1994). Most studies on talent management describe (ample) opportunities for individual development in the context of organizational growth;

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not of a downsizing organization (Feldman, 1995). What is the impact when a firm adopts a strategy of downsizing?

Downsizing may suppress important attributes of talent management, such as investment in training and development, offering different opportunities, variety in daily work, and rewards and promotions based on performance (Vaiman and Vance, 2008). Different methods and strategies of downsizing have different effects on employees. For instance, downsizing may be left to general attrition or may be targeted at specific organizational parts. In this research, the focus is on the effect of downsizing on talent and talent management. The organizational choice can weaken or strengthen the position of talents and have effect on the morale, trust and productivity (Cascio and Wynn, 2004). It is therefore important for an organization and a responsibility for managers to involve employees and offer talents the opportunity to participate in the process (Cascio and Wynn, 2004). Conditions must be right for the employees to support this involvement and top management should lead by example. In addition to that involvement, communication and retaining talents is essential for the organization and for continuing alignment with the business strategy.

How exactly does downsizing effect the time, involvement and effectivity of talent management programs? It might be assumed that in a downsizing environment, the fit between the alignment of the business strategy and managing talent is at risk. From my discussion of this question in the last Section follows the Assumption D1 en D2:

The third assumption is, that when a firm adopts a strategy of downsizing, this has a strong (negative) effect on the success of talent management (D1); and that managers will find it (even) harder to contribute to the success of talent management programs (D2).

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2.5Research Question: the role of management

Most talent management processes and systems are the joint responsibility of HRM and line management. This responsibility is important for the effectiveness of the implementation of talent management programs and performance (Minbaeva and Collings, 2013). Evidently, managers play an important role, but the precise character of the role a manager may have in talent management and the alignment with the business strategy has not been researched. To study this role, analyses at multiple levels of management and of the impact on talent management programs is necessary. In my study, I will describe different actors: having a role in the practice of talent management (Collings and Mellahi, 2009): line management, senior or upper management, members of the board and HRM.

2.5.1 HRM

An organization may intend to support the business strategy by investing in talent management programs. However, if organizations do not acquire and develop the necessary talent and if those strategies are not successfully managed and implemented, then investments will not lead to the desired returns (Heinen and O’Neill, 2004). Wherever talent management is positioned in the organization, talent management processes need to fit with other HR processes and policies such as recruiting, selection, workforce and succession planning, career development, development planning and talent reviews, and performance management (Garrow and Hirsh, 2008; Farley, 2005). Translating strategic goals into workforce needs, linking people to profit, and effectively managing talent are key to improving business performance (Farley, 2005). To make HRM practices more than isolated acts, managers and HRM should share the same vision and goals (Bowen and Ostroff, 2004), partnership and flexibility (Guest, 2001). A consistent HRM policy which is aligned with the business strategy is required for successful talent management (Ashton and Morton, 2005). HRM should provide support to line managers

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(Guthridge et al., 2008) as an effective trainer, coach, and facilitator (Farley, 2005). The role of line management will be discussed next.

2.5.2 Line management

The relationship between line management and HRM is complex, ambiguous and dynamic because of the increasing HRM responsibility assigned to line managers (Larsen and Brewster, 2003). Line management (including team leaders) is responsible for day to day business and is therefore the first liaison regarding talent management. Line managers are often primarily responsible for operational HRM tasks such as recruitment and selection, performance management and training and development. As most HRM practices rely on line management action or support (Purcell and Hutchinson, 2007), it is unclear what role is left for the HRM department (Gilbert, De Winne and Sels, 2011). Often, there is a gap between what is formally required by HRM policy and what is actually delivered by line managers (Purcell and Hutchinson, 2007). Line managers often perceive the HRM department to be ineffective, to be overly regulatory, procedural and to be out of touch with business realities (Whittaker and Marchington, 2003). Closer collaboration by HRM and line managers is positively associated with (future) firm performance (Sanders and Frenkel, 2011). Line managers need well designed HRM practices (facilitated by HRM) to use in their talent management activities such as coaching, guidance and career opportunities (Purcell and Hutchinson, 2007). In order to achieve and to operate line management should be aware of and have knowledge of talent management possibilities (Blass, 2007). Managers with well-developed talent management capabilities in identifying and assessing talent, providing effective feedback and coaching, and encouraging talents have greater impact on the effectivity of talent management (Heinen and O’Neill, 2004; Gijselaers et al., 2009). Line managers however struggle with HRM responsibilities due to issues of time, capabilities and lack of senior management

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support (Whittaker and Marchington, 2003). But line management has probably the most important role: talent spotting, providing development opportunities, performance management, giving feedback, coaching and supporting employees who carry the burden of expectations once they are labelled as talent (Garrow and Hirsh, 2008). However, according to Martin and Schmidt (2010) line managers should not solely be responsible for talent management, it should be shared with senior management and members of the board.

2.5.3 Senior management

It is imaginable that line management does not transmit the articulated values of top management, but reflects the ‘informal’ culture or day to day practices of the organization (Purcell and Hutchinson, 2007). Talents are a long term corporate asset and should be treated like one. Line managers are mainly short term focused and are not always willing to share their talents (Thunnissen, Boselie and Fruytier, 2013). The way in which line managers enact these practices or activities will be influenced by their leadership behavior and that of senior (including upper) management (Bowen and Ostroff, 2004). Senior managers report talent management as a strategic priority, yet (some) line managers are reluctant towards talent management processes. Furthermore, top management should provide a transparent vision on talent management (Blass, 2007). According to Martin and Schmidt (2010), the progress of talent management practices should be reviewed at least annually within different levels of management. This is the responsibility of senior management. An advantage of these talent-review sessions is the increased calibration (or adaption) between management levels (Heinen and O’Neill, 2004). The most important task of senior management is making talent management a critical part of organizational culture, and encourage all levels to be involved in the talent management process (Tarique and Schuler, 2010).

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2.5.4 Board

An organization’s chief executive officer should be committed to talent management and hold managers directly accountable to ensure that they have the right talent in their teams (Heinen and O’Neill, 2004; Hughes and Rog, 2008). However, members of the board lead but not do directly manage (Hughes and Rog, 2008). They should oversee the talent management strategy. HRM, in turn, should be made responsible for facilitating and executing the strategy (McGee, 2006). Besides ownership and vision, making time for mentoring and engaging in talent management is important as well (McGee, 2006). So by positioning talent management at the top of the organization and from there dispersing it to the other management levels, talent management is made a management, not solely an HRM initiative (Ashton and Morton, 2005). If members of the board maintain a focus on talent management, the rest of the organization will follow (Vaiman and Collings, 2013). Board members with a talent mindset make talent management a top priority for themselves and their management teams (Michaels, et al., 2001).

In the ideal world, all actors serve this general organizational interest and do not have their particular needs, views and goals (Thunnissen, Boselie and Fruytier, 2013). However, I expect that different management levels will have different attitudes and commitment towards talent management programs, with a different impact on the programs and on the alignment with the business strategy because of the involvement and responsibility in the programs, the responsibility for and their relationships with the talents.

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2.5.5 Proposals

These expectations provides the basis for Proposals 1, 2 and 3 that form part of my research question;

Proposal 1: In a downsizing context, talents want to be involved by management and

management has the need for opportunities to retain talents for the organization.

Proposal 2: Different management levels will have different attitudes and different

commitment towards talent management.

Proposal 3: The support of talent management by managers is influenced by their

engagement with business strategy, their knowledge of and involvement in talent management programs, the commitment of the board to talent management and by the support of HRM.

Research question: In the context of a downsizing financial organization, what are the factors that determine the intention and possibility of managers to contribute to talent management programs that are necessary to align these programs with the business strategy?

Having formulated the research question and having identified the dependent and independent variables that would help us answering the questions, I will continue with describing my research methods.

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3. Data Measures and Research Method

3.1Strengths and limitations of qualitative research

Considering the research question and assumptions of this study and the actors involved in talent management programs, it is important to determine the right research philosophy. A qualitative research method is best suited to answer the research question (Gephart, 2004). Qualitative research addresses questions about how social experience is created and given meaning (Denzin and Lincoln, 2000). Qualitative research starts from and returns to words, talk, and texts as meaningful representations of concepts and focusses on depth and detail (Pratt, 2009). Qualitative research provides insights in order to really understand the perspectives of participants that are difficult to produce with quantitative research. The focus of the interpretive perspective (exploring instead of (hypothesis) testing) differs from the opposite focus on variables and hypothesis testing used in quantitative methods. In quantitative research lies the focus on the reliability of the results. There are some limitations on qualitative research, interpreting data and analyzing it can be quite difficult (Pratt, 2009). However, qualitative research can contribute to theory and practice by providing mostly unique, memorable, socially important aspects for examining and interpreting processes (Denzin and Lincoln, 2000).

Qualitative research is a methodological choice, a case study refers to the unit of research to be studied. A case study approach was considered the most appropriate for my research objectives, to gain in-depth insight into the how and why’s instead of how many (Yin, 2009). A case study is an in-depth exploration from multiple perspectives of a phenomenon in a “real life” context. Because a case study is considered to be less rigorous and less systematic than other forms of research it is also sometimes criticized as “being somewhat of a weak sister” (Berg, 2009). However, case studies are the appropriate method for generating understandings

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of an empirical phenomenon that may develop existing theory (Berg, 2009). The case study as part of a qualitative research method is an effective tool to clarify interpersonal aspects in organizational and managerial processes and relationships related to business strategies (Yin, 2009).

3.2 Research Design 3.2.1 Research setting

The aim of the single case study is to get insights into the role of management regarding talent management programs and their alignment with the business strategy in case of downsizing a financial organization. I will use semi-structured interviews as data collection method in order to gain a rich understanding. An organizational case study is conducted within the organization of the author. Before describing the collection and analysis of data, I will explain the character and context of this organization.

3.2.2 Rabobank Amstel en Vecht

Rabobank Amstel en Vecht in Amstelveen (The Netherlands) is a stand-alone local branch, part of the Rabobank Group. Currently there are working 225 employees; the effects of the current downsizing operations are not yet clear. The Rabobank is a cooperative bank with a stabile strategy. This strategy is built on two pillars. Rabobank is committed to being and remaining market leader in the Netherlands in all financial markets. The bank also aims to position itself globally as the worldwide Food & Agri bank (Rabobank, 2012). To maintain this position the Rabobank focusses on maintaining and expanding current clients, reducing costs and investing in the quality of the employees.

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In the current downsizing policy the Rabobank applies the principles of representative reduction (Rabobank, 2013). When determining redundancy, employees within a group of interchangeable jobs are divided in different age groups. In these groups, tenure is decisive. As a rule, representative reduction leaves no room for selection according to qualitative measurement of the performance of employees. Management does however have the possibility of excluding a maximum of 15 percent of the employees within an age group from representative reduction, based on the quality of these employees as established by performance management in the last three years.

Rabobank has formulated three essential values that guide the direction of the firm as well as the performance of employees and the development of talents: participation (making a contribution towards the sustainable development of the economic living and working environment of our customers and members), advisement (because of the centralization and automation of a wide range of business processes, the majority of our workforce will be made up of advisors) and virtualization of customer services (Rabobank, 2013).

Employees under 35 year with a higher education may be regarded as talent when they are appraised as talented, ambitious, have at least a good assessment of their skills over the last three years and have career prospect (potential). Besides personal development inventory and programming, Rabobank Amstel en Vecht has developed a talent management program called De Tafel van Amstel en Vecht. This talent platform aims for personal development of the talents by facilitating and motivating various extra development activities. By offering this platform the Rabobank tries to develop their talents, ensuring talents’ contribution to the organization and retaining talents for the organization. The final responsibility of De Tafel van Amstel en Vecht lies with the chairman of the board and HRM has a supportive and

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coordinating role. Furthermore the chairman is supported by other members of the board and they are jointly responsible for the vision and strategy of the local branch. Each member of the board is responsible for a different division (General, Control, Private Banking and Corporate Banking) and senior management of every division is responsible for translating vision and strategy into policy and reports to a member of the board. Line management is responsible for the daily operational management tasks, being operational affairs (ensuring an adequate planning, organization and support of the projects and services, organizing the work load and monitoring intermediate results) and HRM activities (holding job interviews, personal development inventory and programming, and coaching and motivating employees for achieving the targeted output).

3.2.3 Participants and characteristics

Data were collected from interviews with 17 Dutch employees (three females and fourteen men) working at Rabobank Amstel en Vecht (an average age of 38,9 years with a range from 25 to 50 years). Their educational background is business oriented, from business studies to register accountant. At the time of the study, the participants have worked an average of 10,4 years at Rabobank Amstel en Vecht (with a range from 1 to 28 years) and have on average a tenure of 2,3 years in their current job (ranging from 1 to 7 years) The demographics of the participants/ interviewees is shown below. The organization chart and specific tasks of the participants are explained in the Section about the context of the organization. In the results section I will refer to a member of the board as director, a senior or upper manager as senior manager and line management as line manager.

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Characteristics

Employee Participants Demographics for Gender, Age, level of Education, name of the Organization, years in that Organization, Function within that organization, years in that Function and level.

3.2.4. Description of research instrument(s), data collection and procedures

In order to avoid problems defining the unit of analysis (the nature of the context that is examined), to get a broader perspective and multiple perceptions, I have selected my respondents from the board of directors (four persons), senior or upper management (nine persons), line management or team leader (twelve persons) and talent level. Also important to note is that I am currently working at the same branch and I am acquainted with each of the respondents. To limit bias, I selected highly knowledgeable interviewees who view the phenomenon from different perspectives (Eisenhardt and Graebner, 2007). All the interviewees have recent knowledge about the research question (by doing this transferability or external validity is reached). The propositions are practical and of direct importance for managers, the interpretivist perspective is very relevant (the situations presented in the study are not only complex but also unique and therefore create a unique social phenomenon and understanding of behavior of the social actors, which is an important aspect of the interpretivist research method).

Ge nde r Age Education Organization Yrs in O. Function Yrs in F. Le ve l

Female 25 HBO Rabobank 2 Call center services 2 Talent

Male 33 Msc Rabobank 1 Compliance officer 1 Talent

Male 31 HBO Rabobank 8 Accountmanager MKB 2 Talent

Female 25 Msc Rabobank 1 Intern Accountmanager 1 Talent

Male 32 HBO Rabobank 13 LM Private Banking 1 LM

Male 38 HBO Rabobank 13 LM Insurance 1 LM

Male 43 HBO Rabobank 15 LM call center 1 LM

Female 33 HBO Rabobank 5 LM development pool 2 LM

Male 38 Msc Rabobank 2 LM MKB 2 LM

Male 44 Msc Rabobank 1 Manager Control 1 MT

Male 33 HBO Rabobank 10 Manager Private Banking 2 MT

Male 50 HBO Rabobank 28 Manager Corporate 5 MT

Male 45 Msc Rabobank 7 Manager HRM 7 MT

Male 49 Msc/MBA Rabobank 12 Chairman 1 BOARD

Male 45 Msc Rabobank 18 Chairman Corporate 2 BOARD

Male 48 Msc/MBA Rabobank 12 Chairman Control 4 BOARD

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I derived my interview questions from the theoretical background of the research question and assumptions. I used the same interview format for all respondents with some minor adjustments for each category. The seventeen interviews were semi structured and contained the following elements: introduction, background of the respondents, transition for exploring the constructs, key questions regarding the assumptions, proposals and my research question, probing questions, standard (obligatory) and closing questions. The answers to the standard questions were scored on a five-point Likert scale (ranging from none, hardly, moderate, strong and very strong). These outcome variables, detailed in the chart on the pages 30, 33, 34, 35 and 38, represent the average outcome for each level and show the different attitudes towards talent management, alignment with the business strategy, role of management in a downsizing context (the numbers 1 up to including 5) are corresponding with the answers none, hardly, moderate, strong and very strong). The outcomes are analyzed, explained and combined with the assumptions and proposals. Included subjects in the interviews were; demographical data, talent management, business strategy, role of management and downsizing context. The interview questions are included in appendix A. Preceding the 17 interviews, I conducted 2-3 exploratory interviews with respondents from different categories to test my questions and approach. This has led to some minor changes of my questions. The interviews were tape-recorded and transcribed literally (by audit trail, dependability is reached). In establishing an audit trail, clear documentation of all research decisions and activities is provided to examine both the process and product of the inquiry, and determine the trustworthiness of the findings (Malterud, 2001). The interviews took 30 to 60 minutes and were held face-to-face in the offices of the participants so that they would feel at ease. It was agreed that all respondents would remain anonymous; the transcripts and the Sections results, discussion and conclusion were anonymized to protect the privacy of the interviewees. The transcripts were coded, sorted per subject and analyzed using “common sense”.

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3.3Analytical Strategy

Analyzing data is the heart of building or extending theoretical insights from case studies, but it is both the most difficult and the least codified part of the process (Eisenhardt, 1989). Data analysis follows the general guidelines of inductive qualitative studies (Yin, 2009). Analysis is a process of selection, interpretation, and abstraction of data (Patton, 2005). The transcripts (about 150 pages) were coded by highlighting in color coding schemes per question which gives a clear insight in the relevant data from the interviews. A first impression of the results is reached by a quantitative approach. The qualitative approach seeks to provide a structure and order and to identify key events and patterns among the participants (Lofland, 1971). I proceeded from highlighted coding to creating categories, making and identifying linkages in the data in order to create the theoretical story line. The story line is illustrated by statements of the interviewees in order to determine the intention and possibility of managers to deliver the contribution to talent management programs that is necessary to align these programs with the business strategy. This provides insights into the phenomenon and reflections of the key aspects of the study (Patton, 2005).

Having described the research setting and methods, I will continue with describing my findings and results.

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4.

Results

The findings are presented according to the constructs talent management, alignment with business strategy, downsizing and the role of management. Within the results of each construct, it is specified which participant gave which answer/ contributed to which result.

4.1 Talent management

Talents are generally speaking moderately satisfied with talent management, whereas one of the talents is slightly more positive. The different levels of management are slightly more satisfied with talent management than the talents. However, line management is less undivided than senior management about the satisfaction with talent management. There is a clear difference in the degree of satisfaction between both management groups (moderate) and the members of the board (strong).

In general, all participants support the importance of talent management; sixteen out of seventeen acknowledged the contribution of talent management to the development of talents. Some of the elements of talent management and programs that are mentioned by the participants and considered important are: developing skills, sharing of knowledge and experiences, intern- or traineeship, teambuilding, feedback, support, individual responsibility, challenging, structure, goals and budget. Striking, was the absence of factors such as culture

0 1 2 3 4 5 TM satisfaction TA mean LM mean MAN mean DIR mean

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and rewards. However, the effectiveness of talent management within the Rabobank is seriously questioned. A senior manager explained; “talent management is not bad, I am glad the Rabobank created a platform, but that is as far as it goes”.

Only eight out of the seventeen participants observed that talent management, as defined by my working definition derived from Boudreau and Ramstad (2007), leads to positive development of talents in an organization (Assumption T1). One of the line managers emphasized “that budgets, workshops, activities, events, teambuilding and insights in talents’ progress lead to development of talents in the organization”. A director confirmed that talent management programs have a clear contribution. He especially mentioned the triggering and sparring parts of talent management. Four participants questioned this contribution. Three participants thought it leads to positive developments under the right circumstances. There is no significant difference in thoughts about the contribution of talent management between the different levels of management, besides a bit more skepticism among the line managers.

A line manager hesitated whether talent management leads to development of talents, mainly because of the ad hoc and reactive approach of talent management within the Rabobank. Two out of four talents saw De Tafel van Amstel en Vecht as the most explicit form of talent management within the Rabobank, but this program is still looking for opportunities to develop talents. Two of the participants did not see any contribution or did not know whether talent management leads to development of talents. Furthermore, there is a difference between my working definition of talent management and the definition given by Rabobank Amstel en Vecht (regarding the definition of talent and specific programs that are aligned with organizational goals). Eight out of the seventeen participants did not know the exact definition

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of determining talent given by the organization. Strikingly, none of the talents were aware of this definition of the Rabobank.

4.2 Alignment with business strategy

Each of the participants acknowledged the importance and purpose of the alignment of talent management with the business strategy, in practice there are some different opinions and views. One of the talents stressed that “positioning talents in the right team, in which they can give a meaningful contribution, is of vital importance”, she believes this deserves more effort. One of the directors strengthened this by “if as an organization you fail to invest in the development of your talents you have really missed out on an important strategic topic”. The senior manager HRM stated that “good development of talents leads to achieving goals of the organization. This also means that you should analyze the efforts in talent management and link these to the strategic goals”. A line manager confirmed that alignment prevents performance of organizations falling into mediocracy but the positive effects may be limited by rules and regulations of the organization. The senior manager HRM confirmed “that, eventually, the goal of talent management is to realize the organization’s strategy”.

There are significant differences between the talents and the line management participants on the one hand, and senior management and board level participants on the other. Six of the talent and line management participants thought there was none or hardly any alignment of talent management with the business strategy within the Rabobank, whereas just one of the senior managers agreed (with this absence of alignment with the business strategy). Line management - the first to enact the business strategy - was slightly more negative about the alignment than the talents. Four members of senior management and board level found a strong alignment, whereas none of the talents or line managers found this strong alignment.

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The board, which has primary responsibility for business strategy, experienced the strongest alignment with business strategy.

Everybody supports the importance of the alignment of talent management with the business strategy. However, the alignment of talent management within the Rabobank is not satisfactory. One director, pointed at the importance of development of organizations through development of talents but that he confirmed that within the current practices of the Rabobank, this is not yet aligned with the business strategy. Bearing in mind the assumption that the success of talent management depends on the alignment with the business strategy (Assumption A1), five participants did not see a clear link between talent management and alignment with the business strategy within the Rabobank. Two out of four senior managers stated that “talent management can be a part of the bigger strategy but it is hard to see a link and eventually they concluded that the two are separated”. The other twelve participants reported that success depends on whether the organization has a long term vision, in which talent development for a new generation of employees is available or can be developed. One of the talents added “in this context, you have to check which puppets do I have in which position, and which puppets do I see growing in which ways”.

0 1 2 3 4 5

TM aligned with strategy

TA mean LM mean MAN mean DIR mean

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4.3Downsizing

There is a strong score on impact of downsizing on talent management. Talents and board find the impact of downsizing equally strong, whereas one line manager is even more impressed with the impact and two of the senior managers thought there is only a moderate impact instead. One director said “employees or talents you want to retain have to leave the organization and employees you would rather see leaving, will stay”. On the other hand, his colleague director stated “downsizing at first spoils the opportunities of talent and talent management but will eventually offer new opportunities”. Most of the participants confirmed the persistence of talent management, however the final form is still unclear.

Summarizing, a majority of fourteen participants confirmed loosing talent in a downsizing context. All the participants confirmed at least a moderate or strong impact of downsizing on talent management and agreed that when a firm adopts a strategy of downsizing, this has a strong negative effect on the success of talent management (Assumption D1).

0 1 2 3 4 5 Impact of downsizing on TM TA mean LM mean MAN mean DIR mean

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There is at least a strong score on impact of downsizing on the role of management. Approximately each level of participants thought the same about the impact. A majority of eleven out of seventeen participants mentioned a strong impact, whereas the other six even mentioned a very strong impact on the role of management. A line manager said “as a line manager I am barely able to lead and use talent management in a downsizing context”. One of the senior managers added “in this circumstances, are you guided or do you lead?” This quote emphasized the importance of opportunities for managers to practice and contribute to talent management. One of the directors explained the squeeze “instead, a lot of time is spent on the underperformers, so when do you spend time on talents?” But in contrast with the sought strong focus on talents, management also should addressing concerns with underperformers. The senior manager HRM confirmed “management can end up in a nasty split being held to rules and legislation, and searching for a new perspective for talents”. A senior manager explained “… it is hard to stretch then again being held back”. This confirms assumption D2, when a firm adopts a strategy of downsizing, managers will find it (even) harder to contribute to the success of talent management programs. Some participants even experienced this as a late wake-up call.

0 1 2 3 4 5

Impact of downsizing on MAN

TA mean LM mean MAN mean DIR mean

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Some participants questioned the way and principles of reducing employees within the organization. The Rabobank applies the principles of representative reduction (Rabobank, 2013). However, management has the possibility of excluding a maximum of 15 percent of the employees within an age group from representative reduction, purely based on the quality of these employees. The quality of these exceptional employees will be measured by performance management scores over the last three years. This instrument is the only possibility to retain quality instead of just reducing the numbers of employees (quantity). Not every participant has knowledge of the exact principles and possibilities for excluding (thus retaining) talents. According to the senior manager HRM downsizing is limited to the quantitative principles of representative reduction. All the participating talents (four) observed this as well and recognized the potential risk that the talents may have to leave the organization. The line managers supported this, but prudently tried to use the employee programs for developing and moving talented employees to other positions and to retain talents. Senior management supports line management in believing that quality, thus talents, should be retained within the organization. This is illustrated by one of the senior managers; “the design of the organization does not fit anymore, therefore reducing numbers of employees (quantity) is a necessity, while bearing quality in mind”. In this case, members of the board are well informed, and willing to promote and stimulate the possibilities within the principles of reducing employees. This is illustrated by one of the board members; “be aware of the quantity issues but instead of accepting being pushed into a corner by the principles of representative reduction, look at the possibilities for retaining quality and thus talents”. Furthermore, the participants emphasized the role of management for retaining talents by starting the discussion with each employee, determine talent and creating opportunities for these talents.

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Considering the first proposal that in a downsizing context, talents want to be involved by management and management has the need for opportunities to retain talents for the organization, the participants were asked about their opinion about the downsizing context and their needs. Although every participant in this study calls for opportunities to retain talents, not every participant is aware of having the possibility to exclude a maximum of 15 percent of the employees. One of the line managers explained the urge for opportunities; “talents are not sufficiently protected in the downsizing context”. Furthermore, the contrast between quality or quantity in employee selection is emphasized by almost every participant. Due to the impact of downsizing on talent management, talents are anxious for losing their jobs nevertheless also want to be involved in the process of downsizing. This is illustrated by one of the talents: “I think that you should inform and protect your talents in the process of downsizing”. Another talent calls for transparency and involvement in the progress of downsizing.

4.4Research Question: Role of management

Talents and senior management thought almost equally about the contribution of management to talent management. Both groups were inclined to assume a strong contribution of management. One of the senior managers experienced the strong contribution of management by recognizing, confirming, facilitating and coaching talents. A talent mentioned “my manager gives me advice and coaching at an individual level and he has facilitated an internship at another organizational unit”. Line management thought their contribution only moderate, whereas board members thought their contribution is very strong. One of the line managers stated “that talent management activities are too limited” and another line manager confirmed “that the manager is too much focused at his or her own team instead of on the broader talent management program”. And a senior manager confirmed that within the current practices of the Rabobank “there is still is some work to do”. On the other side, two out of four directors

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experienced a (very) strong contribution of management to talent management by “recognizing, facilitating, challenging and investing in talent”. Another senior manager confirmed “management contributes to talent management by acknowledging, setting objectives and practicing talent management”.

Participants were asked what role, attitude and commitment (different) management levels have towards talent management (the second proposal). All participants reported different roles for line management, HRM, senior management and board level. Line management is seen as operational, and as the primary point of contact for talent and talent management by thirteen participants. Furthermore the participants reported a role in signaling, identifying, facilitating (for example practice or internship), coaching, stimulating as well as a sparring partner. Striking in this study is that three out of four members of the board acknowledged no difference between line management and senior management, however just one line manager and one senior manager agreed on this statement.

0 1 2 3 4 5 MAN contributes to TM TA mean LM mean MAN mean DIR mean

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4.4.1 Management (line and senior)

Most participants reported that the field and opportunities of talent management should be created by senior management. Senior management should provide an overview of talents’ potential and development plans with a long term focus. However, this is also dependent on different factors on the side of the (line) manager. The first factor is: attitude of the managers (participation and affinity with/ interest in talent management and stimulating others) and their relationship (attitude) with the talents. A line manager specified this by “my role as a line manager is getting more important for retaining talents by knowing what drives my talents”. One of the talents recognized this as well “it is very important that the line manager identifies talents and will make the transition of talent management and development towards senior management”. This involvement (attitude) is stressed by one of the talents “the manager should be well informed about the own division and about the development of the talents in this division. One of the senior managers confirmed this by “yes, I am personally involved and feel responsible for talent management; that is my drive for developing talents” (attitude). Another senior manager explained “that is the informal point of view, I will back up a talent more than just another employee”. In contrast, a line manager and a senior manager HRM pointed at the somewhat defensive role of (line) management. The second factor regards the skills (coaching, giving feedback and supporting talents) of the manager. One of the talents explained “The manager should speak or give feedback to the talent about further steps in his career, coaching about the different paths a talent can choose and how the manager will contribute to the career path of a talent, for example by offering courses and internships or other supporting facilities”.

The impact of management in a downsizing financial organization on the relationship between talent management programs and business strategy.

Master Thesis