Question 1

1.1. The unethical behavior in Enron became evident when the mission statement changed from being the best gas company to becoming the world’s leading energy company. Before the change, the company had a good reputation but as soon the as mission of the company changed to an area of business that the company hadn’t ever worked with before, Enron began amending the financial statements so that the financial statements that they showed to the public weren’t actually the real financial statements (the financial statements with the real figures and no alterations with them). Enron never focused on gaining the necessary skills to run a energy company and the entire company ran on strategic planning.

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1.2. The unethical behaviour evident in Enron’s treatment of employees is when Kenneth Lay forced his employees to use his sisters travel agency for all corporate travel. His sisters travel agency was more expensive than agencies that had more satisfactory service. Sherron Watkins stated in an interview that she would be stuck in a third world countries where she couldn’t speak the native languages and where she didn’t have a hotel room or with an inadequate for an airplane ticket to go back home even though she might have had paperwork that stated otherwise. When Sherron Watkins attempted to use another travel agency, after one or two reports of the expense of the travel, an email would be send be send to her, reminding her to use Kenneth Lay’s sister’s travel agency. This shows how Enron didn’t follow its value of “Respect” as the company didn’t place the wellbeing of their employees as their top priority. Another value that Enron didn’t follow is “Communication.”, the company wasn’t opening a discussion to talk about what travel agency was the best to use. If someone in the company attempted to discuss about using a different travel agency, the person was rebuffed by the company. Kenneth Lay, himself, just decided what travel agency employees must use for corporate travels.

1.3. A law was passed in 2000, which stated that states in the United States could control the switching on and off of power supply to energy such as electricity to the public. Enron, which was trading electricity, at one stage bought electricity for 250 dollars and sold it for 1200 dollars. This was allowed if the electricity was bought from another state and valid reason was given for the increase in the price of electricity. Enron persuaded the energy regulators to have more power failures and to hike up the prices of electricity. This is unethical, as they were just ripping people off their money. Enron was giving false reports as to why there was an increase in blackouts and the price increase (Enron states that they would be doing maintenance work when they had no maintenance work to do). Enron was not only lying to the public but they were also breaking the law as they weren’t buying the electricity from another state, instead they were buying it from California but they were marking it as an export.

1.4. They used a mark-to-market strategy which is legal and used by business such as banks but Enron was an organization based on energy and this was much more complicated business than banking and thus shouldn’t have used the mark-to-market strategy. Using the mark-to-market strategy meant that they recorded profits that were meant to come from long-term partnerships (i.e. profits from the future) in the present day as actual earnings thus making it seem like the company had actually received at the present day but in reality the company had not received any money. The unethical behaviour evident in Enron wrote down billions of dollars that were losses as profits as they had previously thought they would have received profits from these transactions Enron was able to hide their debt via Special Purposes Entities. An example of this is the deal Enron made with Blockbuster video where they signed a 20- year agreement to launch a new online video games to different cities. Enron estimated profits of 110 million dollars and all the executives were paid large sums of bonuses for the deal. Though after numerous projects- all of them that failed. The company made a loss through the deal, but Enron altered the numbers to make it seem like Enron actually made profits from the deal.

Question 2

2.1.
Jeff Skilling was charismatic which made many people believe his word and trust his leadership of the company. A characteristic such as charisma can be dangerous in a leader- thus in Jeff Skilling’s case as well, as each time Jeff Skilling spoke to his employees, it inspired the employs to follow his word as they trusted him and thus the employees looked up to him and gave good feedback to him and a leader can become addicted to the positive feedback from the employees. Thus this could have caused Jeff Skilling to feel as if he always had to give good news to keep getting the same positive response back as this would give him more confidence.

Greed, he acted in the best interest of the shareholders and not the company. Jeff Skilling wanted to maximize the earnings for the shareholders.

Ambition, he wanted to achieve his goals and dreams no matter what it cost him, the company and the people working for the company.

2.2.

The new mission statement was: To become the world’s leading company. This showed that both, Jeff Skilling and Kenneth Lay were arrogant. They both believed that older, stodgier companies didn’t have a chance against the new, powerful and modern Enron. They both had a lot of pride and they believed that they were more powerful and skillful than they actually were.

Question 3

In the tale of Emperor’s New Clothes, the Emperors loves fine clothing. Two con men, arrive in the Emperor’s city professing to be the greatest weavers in the world. The two men claimed that the clothing they weaved was also magical thus the clothing would not be visible to anyone who was foolish. The Emperor was thrilled to hear about the clothing that the two men could make and the Emperor pays the two men a large amount of money to make the magical clothing. The two men, then with needles that had no thread pretended to weave and sew clothing with empty looms. The Emperor sent one of his men to check on the two men who were pretending to weave and sew clothing. When the Emperor’s man checked up and registered the fact that he couldn’t see the clothing, the man doesn’t tell the Emperor that he couldn’t see the clothing as he feared that the Emperor would think the man is foolish. So the man lied to the Emperor and said that the clothing was beautiful. The Emperor kept sending different men to check up on the clothing and all the men lied to the Emperor as all the men couldn’t see the clothing. On the day of a big parade, the clothing is taken to the Emperor. The Emperor, himself couldn’t see the clothing, but he himself doesn’t want to admit that he is foolish as he couldn’t see clothing thus he dresses himself in the invisible clothing and as the Emperor walked in the parade, in front of all his people, everyone in the kingdom see the Emperor without any clothes on but his people are also afraid to say they cannot see the clothing as they would be accused of being called foolish thus they all glorified the Emperor’s clothing. Eventually, a child said, “But he doesn’t have anything on!”. At this point, everyone realized if the innocent child cannot see any clothing, then it must be true. The Emperor, indeed didn’t any clothing on. Everyone started crying out, “He doesn’t have anything on!”. The Emperor then realized that his people were telling the truth and that he indeed didn’t have any clothing on. The Emperor had to complete the parade, with everyone knowing that the Emperor wore nothing but pride.

Like the Emperor, Kenneth Lay didn’t care about kingdom (in Lay’s case, Enron) but rather on his appearance. Just like how in the tale, anyone who was stupid couldn’t see the clothing was considered stupid, Enron used the same technique. Like the con men in the tale, the top executives in Enron used deception to work on people’s securities. In Enron, Andrew Fastow and his team of accountants created very complicated structures. In fact, the structures were made so complex that anyone who couldn’t understand the structure was called stupid. Jeff Skilling in particular used intimidation tactics and for those people who didn’t understand the structure, Skilling accused them of not getting it almost implying that the person wasn’t smart enough. Like in the tale, people stopped asking questions, in fear of being called stupid. Thus no one questioned Enron. A reporter who didn’t know much about finance noticed something in the financial statements and realized that the numbers didn’t add up. She spoke up about the irregularities in the article that she published (Just like how the innocent boy said that the Emperor had no clothes on). When Jeff Skilling addressed the article he explained why the reporter might have said the things she said in the article and Skilling gave a reason as to why the article was published (it was almost like he had too much pride to admit that the article was right), just like in the tale the Emperor has too much pride to admit that he couldn’t see the clothing.
Question 4

Enrons’s auditing firm, legal firm and banks were all complicit in the questionable business operations of Enron as they call knew of the fraud that was occurring and many of them were aiding in the fraud that was occurring at Enron. These firms and banks were funding (they used prepays which are basically loans but Enron included them in cash flow operation) and aiding (not alarming authorities of the irregularities) and benefitting in the side partnership deals that were occurring at Enron. The banks aided Enron to stay afloat as Enron owed the banks billions of dollars and the banks needed Enron to do well so that they could get their money back. During that time, to the public, Enron was one of the biggest companies in the United States and the company was looked up to by people and by working with such a big and powerful company as Enron, banks and these firms could also boost to their other clients about how they work with Enron. Enrons’s auditing firm, legal firm and banks were also supposed to give their opinions on complicated accounting, and legal matters yet, none of them objected to the wrongdoings of Enron.

On 23 October 2001, the day after Enron released a statement stating that it was being inquired by U.S. Securities and Exchange Commission (SEC), the partner in charge of auditing Enron’s financial statements ordered all the documents except for the basic documents of Enron to be destroyed. This is proof that Arthur Anderson was destroying all the documents so that it seemed like there was no proof of fraud that was occurring in Enron. It was further revealed that the auditors from Arthur Anderson had reviewed and approved of documents relating to Enron-related partnerships which later lead to the fall of the company. Thus it can be concluded that the audit firm did know of the fraud occurring at Enron. Arthur Anderson ceased its operations on August 2002 as on June 15, 2002, Arthur Andersen was found guilty of obstruction of justice for destroying documents connected to its audit of Enron.

Question 5

They did Insider Trading. Insider Trading is when people working or that have access to information that isn’t available to the public and trades a public company’s stock or other securities (such as bonds or stock options). It is illegal as it is not fair for investors that don’t have access to the information. Investors without access to the information are at risk of making smaller or less profits from their shares that investors who have access to the information that might have an advantage over them thus they could make larger profits from their shares.

Question 6

Both the companies- Steinhoff and Enron had charismatic leaders. Having a charismatic leader meant that employees, investors and shareholders were almost drawn to the leader and looked up to the leader thus they believed whatever the leader was telling them- not doubting that the leader might be actually lying. Both Markus Jooste and Jeff Sklling, had aided their respective companies to becoming great companies thus this further reinforces their charismatic characteristics as this meant that the employees, investors and shareholders, looked up to their leaders.

The founder of Enron, Kenneth Lay, was found to be guilty of many things that Markus Jooste and other Steinhoff directors were found to be guilty with. Some of the things they all were found to be guilty of is giving a false report such false financial statements and covering up the increasing levels of debt. Both these companies have corruption occurring at the top levels of the company.

Both the companies- Steinhoff and Enron started to make false reports slowly. Both the companies had short term goals and they didn’t think of the bigger picture. As time went by, more false reports were made and slowly all these false reports that were once small were now so much, that both the companies could no longer hide them anymore.

Both the companies stated that they agreed good, ethical accounting practices. Yet, both the companies’ boards didn’t make to make sure all the ethical standards were met. Steinhoff used the following statement from 2011- 2016,”Steinhoff has not established a formal process for obtaining assurance on ethical awareness and ethical compliance throughout the group.” This shows that the board of Steinhoff didn’t care about making sure the company was meeting all the ethical standards that companies of such great size should be compiling with. With Enron, the board members, suspended Enron’s code of ethics to support and agree with the establishment of the partnerships between Enron and its chief financial officer, Andrew Fastow. https://www.nytimes.com/2002/01/19/business/enron-s-collapse-directors-one-enron-inquiry-suggests-board-played-important.html

Both the companies’ boards had conflicts of interest in the their boards. Enron’s chief financial officer, Andrew Fastow made partnerships which conducted business with Enron (Enron’s code of conduct for its employees clearly prohibited Enron employees from obtaining personal financial gain from a company doing business with Enron. This prohibition could be waived, however, by the CEO upon a finding that a proposed arrangement would ”not adversely affect the best interests of the Company.’ Andrew Fastow was waived by this rule as the board members thought these partnerships would enable the benefit the company but in reality, the partnerships earned money at Enron’s expense. In Steinhoff, three entities that were controlled Christo Wiese, did business with Steinhoff. The entities would loan money from Steinhoff and Steinhoff would instate interest rate on these loans which they recorded as revenue.

Both Steinhoff and Enron abided by all the laws and all of the necessary listings in the areas where they conducted their business. This caused the investor and shareholders to feel like the company was in a good financial position. Thus investors and shareholders continued buying shares and investing more money in Steinhoff and Enron. Steinhoff and Enron just found loopholes in the laws which they used to their advantage.

Question 7

Some advantages of directors receiving shares in their remuneration packages is that this will create a culture of ownership amongst directors in the organization. Owning shares gives the director incentive to manage the organisation in such as way so that the share price increases thus the directors will have the same line of thought/ goals as the shareholders of the organisation. Thus the directors understand the expectations of the shareholders and will continue to pursue goals and objectives set by the board. This will enable the organization to achieve its goals and objectives without any need for continuous supervision from any external shareholders. Disadvantages are that the owners/ promotors’ percentage of ownership will get diluted and the directors may be tempted to achieve goals and objectives of the organization by unfair means by not following the laws or finding loopholes within the laws that already in place. Yes, I am very much in favor for the policy of providing, directors with company shares. There are also laws that prevent the directors from trading when the financial statements is to be released and the directors first need to get permission before they can trade shares, this shows that there are laws in place that prevent the director from insider trading.

Question 8

8.1. An asset management company is a company that invests its customers’ accumulated funds into bonds that corresponds with the stated financial objectives. An asset management company gives investors with a larger variety of investment options than if the investor had attempted to invest by themselves.

8.2. She stated that the financial statements were not clear and the financial items made no sense. She stated how the spurge on acquisitions was not underpinned by any rationality and logical thought and too out of control to be well thought out. She finally stated that the amount of debt the company was is, was out of control.

8.3. In Enron, the numbers were called the black box. Analysts didn’t know where the numbers where coming from but all they knew was the numbers were good. With Steinhoff and Enron, the analysts believed the financial statements. With both the companies, the analysts trusted the financial statements that were published by the companies and the analysts never questioned where the numbers were coming from and the analysts didn’t analyse the financial statements in as much detail as they could have, as the asset managers trusted the companies. For both the companies, the analysts believed that the companies were in good financial condition due to the positive image of the company that was created by the media.

8.4. She is challenging asset managers who are being paid large service fees (due to their high level of skills) to use their skills and to invest in safe and sound investments that are long-lasting and investments that investors will not lose their money in. I do not agree with her as these asset managers can only make decisions based on the information that is made available to them. The asset managers cannot know if the information given to them isn’t accurate as by analyzing the financial statements, the asset managers can make sense of the information given to them.

Question 9

9.1.1.The Public Investment Corporation (PIC), was founded in 1911 and it is a public asset management firm that is completely owned by the South African government, and the Finance Minister of South Africa is the sole shareholder which represents the government. Two of their major clients are Government Employees Pension Fund and The Unemployment Insurance Fund (UIF).

9.1.2. R78,55 × 360 597 881 shares = R28 324 963 550

9.1.3. R1,25 × 360 597 881 shares = R4 507 473 151,30

9.1.4. (R28 324 963 550 ? R4 507 473 151,30) ÷ R28 324 963 550 × 100= 84,09%

9.1.5. The investment company will lose their money completely. And the people who invested their money in the public investment corporation will also lose their money. Therefore people who invested money in their pension funds and unemployment funds will be affected as if their investments will have decreased a lot in value. Many people who believed that they had a good pension fund for when they retired will no be worried as they wouldn’t have the same amount of money for when they retire. People’s unemployment fund also decreased in value thus now people will now also become worried about not getting money when in between jobs, or if they suddenly get ill or if they suddenly die, the family won’t have a lot of money to live on.

9.2. Alliance Capital was Enron’s largest shareholder, with 43 million shares. Janus Capital, was Enron’s second largest shareholder, with 41.4 million shares. Both of them would have been the most effected as the both of them were the largest shareholders as they would invested lots of money and their investment is worth very little now.

Question 10

You get the impression that Marcus Jooste is self-confident. This personal value is clearly reflected in the way he conducted his business transactions. Jooste was clearly confident that he wasn’t going to get caught about all the transactions and things he did illegally. Markus Jooste comes off as a charismatic man and this is further reinforced with the examples given by the author of the article such as the amount of properties he owns and his obsession with his horses. Maintaining horses is quite expensive and the author emphasis how his horses that were living in various parts of the world raced across the world thus showing the great expensive of this and thus the image of a wealthy man is created via the examples and this further emphasis the image of a charismatic man. Jooste was a charismatic man at work as well, as his employees and the shareholders trusted him to expand the company and to create positive outcomes. This amount of stress could have Jooste to take business transactions that weren’t legal, to keep the shareholders and investors happy with the business thus his charismatic nature that is emphasis by the author are reflected in his business decisions. Jooste comes off as a man with pride. Jooste clearly values himself over others as he isn’t allowing people to pass over his beach and this is clearly shown in the way he conducts business as he valued his self being over Steinhoff’s self being. Markus Jooste has a lot of pride and this is clearly seen as he enjoys watching his horses (his possessions) winning races (this almost makes it seem like it’s an achievement for him). Markus Jooste lacks the value of responsibility. Jooste made an agreement to his neighbour that there would be a setback line of 20m yet Jooste disobeyed the agreement.

Question 11

By Marcus Jooste attending the parliamentary hearing, his pride would ‘be going away’ as he would be loosing his self-esteem and thus this would affect the self-confidence he has in himself. By attending the parliamentary hearing, he would almost be admitting to doing something wrong, the image of a charismatic man is damaged. Jooste doesn’t value integrity. He isn’t being honest about what he did, instead he is shying away from people finding about the truth. Jooste isn’t loyal. The reason his lawyers gave for him not attending the parliamentary hearing was that as he was no longer part of Steinhoff, he was not required to attend the hearing. This shows that Markus Jooste doesn’t value loyalty for a company he lead for many years. Markus Jooste doesn’t show responsibility for his actions by not coming to the reviews.

Question 1

1.1 Critically analyse the research findings on high potential employees in the article.

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The article highlighted the importance of identifying and developing high potential employees based on scientific evidence reviewed by the authors. The article further emphasizes the importance of following a simple process to identify high potential employees to increase the chances of success for the HiPo intervention program. According to the article there is a direct relationship between financial success of the organization and the availability of high potential employees within the organization, this point is further supported by Pareto principle whereby “the top 20% accounts for 80% of organizational output”.

Throughout the article high potential employees are referred to by different names such as top talent, top employees, top performers and star performers. The article did not attempt to differentiate top performers from top employees; however, there is subtle difference. In the article high potential employees or top talent are defined as the vital few who account for the biggest portion of organizational output. Clearly the success of any organization is linked to few employees at the top who drives the performance. The question has to be asked if this narrative will be allowed to carry on, clearly if processes and interventions are put in place to drive the organizational success within all ranks of the organization, then organizations will be more successful and sustainable. That would eventually develop a capable workforce in the long run, instead of having the selected few at the top to carry the burden for the organization success.

The article indicated that high potential employees are force multipliers, because they have positive influence on the other team members. The ripple effect of having a top employee on the team is estimated to increase team effectiveness by 5-15%. This effectiveness translates into higher productivity of the team with high potential employee in the mix.
In light of the fact that high potential employees are important for the overall success of organizations, then the there is a strong case for organizations to identify, invest and develop these employees. The process of identifying employees for HiPo intervention program is equally important, hence before an organization embarks on the identification it must first clearly define “potential for what?” according to Adams (2011:8) there are four generally accepted definitions for potential which can guide organizations to ensure alignment with business goals and objectives:
• Potential to move into specific senior management roles,
• Potential to move two levels or more levels higher within the organization,
• Potential to take on a broader scope of responsibility and leadership roles, and
• Consistently high performance level.
It must be noted that all the four definitions focuses on the future and that brings a challenge because future success of the current high potential employee is not 100% guaranteed, hence abilities, attitudes and drive together with past work experience and performance must be also be considered. However, with coaching and targeted development, the odds of success are increased.

Furthermore, the article argues that individual career success is not a key indicator for a high potential employee and the evidence to support this argument is because there are top leaders who have attained individual career success but cannot engage and positively influence their teams or subordinates. This is the case because one of the key indicators for high potential employees is social skills which are crucial for establishing and maintaining cooperative working relationships. Therefore, it is essential that HiPo interventions place emphasis on predicting which employees are likely to become key drivers of organizational performance by using measurable qualities as indicators of potential.

Scientific research has identified three general markers for potential that should be used to identify high potential employees and these generic markers are: ability, social skills and drive. According to the article these three generic markers for high potential employees cut across all fields and industries and can be fairly identified and measured. To be classified as a high potential an employee has to be skillful and knowledgeable to perform critical tasks in their current job and possess social skills which will enable him or her to manage others and have ambition to want to succeed and achieve more. Adams (2011:8) also outlined three dimensions that should to be used to identify high potential employees and to some degree these dimensions are very similar to the three general markers indicated in the article and they are: foundational, growth and career dimensions. Berke (2003:20) stated that “a key element among high potential employees is the ability to learn continuously and adapt to new challenges and in unfamiliar circumstances”, this statement shares sentiments as expressed in the article since drive is one of the mentioned measurable qualities for high potential employees.

There are various assessments that organizations can use to further uncover the employees who will succeed if placed in the HiPo intervention program. Adams (2011:8) advises that these assessments should be aligned to the organization goals and objectives. Some of the common assessments to be used before finalizing the HiPo intervention list include knowledge, skills, abilities and attitudes. Since the HiPo intervention involves spending company money, it must be well planned and thorough in the selection and the assessment methods must aligned to the desired outcome of getting the best employees.

Since HiPo intervention program is usually for selected few, organizations have to be careful when implementing high potential employees’ identification process not to isolate other employees who might not make the cut to the HiPo programs. If this is not handled with a level of maturity, it might have negative influence on the people not selected for the HiPo intervention program. There is also a concern over the transparency in the organizations regarding publishing the list with of HiPo intervention (Berke, 2003:19).

It is a fact that not all high performing employees in the organization aspires to be the top leader of the organization; therefore there should be different categories for high potential employees such as high professionals and the article only focused on the top leaders. Berke (2003:21) encourages organizations to rather have a pool of talent and develop pipelines at many organizational levels and that they should feed both laterally and upward. According to Tavis (2018:8) HiPo intervention should also be less about the vital few who are on their way to the top and be about assisting the entire workforce to thrive and contribute to the success of the organization.

In conclusion, the argument for high potential employees being responsible for the success of their organizations is supported by other multiple research sources. The high potential employee attributes indicated by different articles share a common thread and this thread includes cognitive ability, social skills and ambition. Social skills have a direct impact on the ability of a high potential to positively influence team members. Ambition or drive is what enables a high potential employee to keep moving forward and carry the entire team even when challenges exist. The article and other research articles on high potential employees have built a strong case for organization to invest on high potential employees’ intervention programs.

1.2 Discuss the value of a talent management strategy to your selected organisation.
1.2.1 Introduction

In order to adequately address the value of talent management strategy in a familiar organization, talent and talent management will be explained in details to lay the background leading to talent management strategy. It is important to note that before there is a talent management; there must be talent to be managed, so it is from this background that there was a need to explain talent and talent management. The value of talent management strategy will be discussed using six components of talent management.

1.2.2 Talent and talent management literature overview

Fitzgerald (2014:7) defined talent as “those individuals who can make a difference to organizational performance either through their immediate contribution or, in the long term, by demonstrating the highest levels of potential”. It should be understood that talent means different things to different organizations; however, a broader definition like the one above provide an essential guidance to an organization looking to craft its own definition that will be embraced by everyone in that particular organization. This is crucial since talent is something specific to each organization because it is directly linked to the success or failure of an organization. In addition, talent definition should be based to the organizational goals and objectives since talent is responsible for execution of the organization strategy.

According to the talent formula in Figure 1, there are three components that make up talent in an individual and they are competence, commitment and contribution. The talent formula is important because it provides key components which HR Professionals should consider and look for while searching for talent for their organizations in order to acquire the right talent according to the business needs. For organizations to attain overall success, they should harness the skills of individuals in line with business objectives so that the individual can be committed.

Figure 1: The talent formula (Fitzgerald, 2014:8)

Talent is considered to be a primary driver of success for any organization more than capital, because it is responsible for executing the business strategy (Hasan, Khalid, Cheema, Hassan and Afzal. 2014:124). Even in tough economic times, organizations with key talent are able to survive and even thrive because of the commitment and contribution of its talented employees. Fitzgerald (2014:6) also stated that, it will be difficult for organizations to execute their business strategies without having the right people in the right place at the right time with the required skills. For organizations to succeed and be competitive in the ever changing business environment and labor market, it is therefore crucial to focus on talent management. Figure 2 shows all the components of talent management aimed at driving company success through talent.

A comprehensive definition of talent management is given by Fitzgerald (2014:11) as: the systematic attraction, identification, development, engagement, retention and deployment of those individuals who are of particular value to an organization, either in view of their ‘high potential’ for future or because they are fulfilling business/operation-critical roles. From strategic point of view, talent management is mainly concerned with four activities recruitment, performance management, leadership development and compensation. Talent management strategy should be integrated with the organization strategy to achieve strategic objectives.

The achievement of strategic objectives will only be possible when there is a clear understanding and linkage between strategic goals and the key competences required. The key competences provide a competitive advantage by differentiating an organization from its competitors (Scott-Jackson, 2015:1). According to Nojedeh and Ardabali (2015:5) talent management is used for sourcing, selecting, screening, retention, development, and deployment of the talented workforce with analysis and planning as adhesive ingredient.

1.2.3 Status quo of talent management strategy of a familiar organization

The talent management strategy document of a familiar organization was approved by the Executive Committee on 22 April 2013 for a period 2013-2019. The talent management strategy takes into account both the organization’s strategy and human resources strategy documents which are also for a period 2013-2019, showing alignment of the three important strategy documents. This section will explore the talent management practices of a familiar organization by providing an overview of its talent management strategy document. According to the company policy document a high potential employee is referred to as key talent, meaning “that employee whose skills are critical to the business and who therefore undergo targeted strategies to engage and retain him/her”. The talent management strategy document of a familiar organization includes talent management framework, strategic imperatives and talent management initiatives. Figure 2 provides a summary of a talent management framework of a familiar organization.

Figure 2: Talent management framework (familiar organization)

The talent management framework comprises of six interlinked components and they are: talent definition and leadership model, talent strategy and planning, source and diversify, assess and accelerate development, engage and affiliate, and embed HR excellence platform.

The talent definition and leadership model covers how talent is defined in the organization and behavioral leadership expectations for talent. This component of talent management is primarily concerned with entrenching talent management culture in the organization from top management all the way to line managers. The key input to talent strategy and planning are the strategic business and people management goals. According to the organization, strategic workforce planning and succession planning are the sub-components of talent strategy and planning. In addition, strategic workforce planning identifies future differentiated talent needs based on strategy which enables the closing of gaps through identifying required initiatives. The organization had been using succession planning to ensure a strong succession pipeline for critical and priority positions.

In order to ensure a robust and seamless recruitment process for high potential employees, the organization relies on the source and diversify component of the talent management strategy. The source and diversify is aimed at attracting high potential employees through employer branding which is underpinned by the organizational values. The company had worked to improve its recruitment process by leveraging multi sourcing channels such as: e-recruitment, social networks and recruitment agencies websites to attract high potential employees. The company aims to provide exceptional on-boarding experience for new employees to ensure they quickly settle in on the new roles.

The assess and accelerate development component of talent management strategy includes identifying, reviewing and selection of talent groups based on pre-determined criteria. The development of the identified talent comprises training programmes as well as assignments and exposures to accelerate development of the future leaders in the organization. The company’s intention to retain high potential employees is reinforced by the engage and affiliate component of the talent management strategy and it includes financial and non-financial means.

Information technology (IT) tools are at the core of embedding HR excellence platform to manage an end-to-end talent management program in the company. Both performance management and 360-degree feedback are conducted on HR SAP system. The organization talent management strategy provides a direction on talent acquisition, development, succession planning, performance management and retention high of potential employees as highlighted on the talent management framework above. The talent management strategy of a familiar organization is also supported by human resources policies such as capacity building, strategic workforce planning, recruitment and selection, performance management, on-the job training and bursary policy.

1.2.4 The value of talent management strategy to the familiar organization

Figure 3 shows the components of talent management and these components are crucial to understanding why organizations need to have a talent management strategy for its success and sustainability. The talent management components indicated on Figure 3 below is similar to the ones on talent management framework presented on Figure 2 above from a familiar organization. The components include attraction, retention, succession planning, development, deployment, engagement, and career planning and performance management.

The value of talent management strategy is measured by how it propelled the organization to achieve its business objectives through the acquiring and utilization of talent. The familiar organization has realized positive financial outcomes, business growth and organizational culture has improved through the implementation of the talent management strategy. The value of talent management to a familiar company will be discussed using six components of the talent management in the following paragraphs.

Figure 3: The component parts of talent management (Fitzgerald, 2014:12)
1. Attracting top talent: talent management strategy adds value to the organization by ensuring the organization is able to attract top talent. The attraction of top talent to an organization is closely linked to the image of the organization both externally and internally. The ability of the company to attract top talent through its employer brand reduces recruitment costs. The implementation talent management strategy had resulted in financial performance and growth in the last five years of a familiar company.

2. Talent retention: talent management strategy is also concerned with retaining top talent it attracted in the first place by ensuring a wonderful on-boarding experience for the talent. Furthermore, a well-structured talent management strategy also ensures retention of the existing top talent by ensuring continuous engagement. The ability to retain key talent contributes to lowering recruitment costs and ensures sustained business performance (Fitzgerald, 2014:16).

3. Employee development: employee development is an important aspect of talent management strategy since it is linked to creating talent pipelines to meet future business goals and objectives for the organization. Employees identified for development opportunities are more engaged and motivated to deliver exceptional performance (Bethke-Langenegger, Mahler and Staffelbach, 2011:526).

4. Succession planning: talent management strategy adds value to the organization by ensuring a continuous flow of top talent to fill critical positions enabling the business to operate smoothly even during leadership transitions. The company with strong talent management competencies always have a succession pipeline for critical and priority positions (Bethke-Langenegger et al, 2011:526).

5. Performance management: talent management adds value to the organization by ensuring line managers plan, direct and improve the performance of employees through performance appraisals to achieve strategic objectives of the company. Increased employee and organizational performance can be realised when performance management is implemented as per the company’s talent management strategy. Performance management ensures continuous engagement with the rest of the workforce, fostering communication and transparency. Performance management is used to identify development gaps for each employee and required intervention implemented to close performance gaps (Amos, Ristow, Ristow and Pearse, 2008:286).

6. Career planning: talent management strategy enables organization to identify future human resource requirements in line with business strategy and then seek potential employees and provide them with specialize knowledge and development opportunities.

1.2.5 Conclusion

Effective implementation of talent management strategy could make an organization to realize the impact on financial outcomes, impact on organizational outcomes and impact on human resources outcomes. These three important outcomes cover the major business objectives which could be attained with a well-structured and well executed talent management strategy. The impact on financial outcomes is related to organization’s net profit margin, return on assets and return on equity. The impact on organizational outcomes is related to increased operational excellence, increased productivity, employee satisfaction, employer brand and attractiveness. Talent management strategy has enabled the familiar company to create segmentation of talent pools for more efficient management and better tracking. The familiar company still needs to improve on effective communication and implementation of its talent management strategy.

Question 2

Provide recommendations on the possible steps to acquire and retain high potential employees for your selected organization, with specific reference to the recruitment, selection and rewarding of such employees.

2.1 Introduction

The theory of recruitment, selection and rewarding will be discussed in this section followed by the talent acquisition. The status quo of a familiar company regarding its practices on recruitment, selection and rewarding of high potential employees will also be discussed. The recommendations for acquisition and retention taking into account the current trends in HR will be done.
2.2 Recruitment

Recruitment is about attracting a pool of potential candidates from which the ideal candidate can be selected and this has to be done cost effectively (Amos, Ristow, Ristow and Pearse, 2008:115). Recruitment is an element of talent acquisition and it includes sourcing, screening, interviewing, assessing, selecting, hiring and onboarding. The need for recruitment may arise as a result of a new position created in a company or vacancy due to retirement or resignation. The recruitment process involves preparing job descriptions, specifications, profile, developing advertisement, deciding sources of recruitment, deciding whether inside and outside the company and the process is guided by the company recruitment and selection policy (Armstrong,2006:409).

2.3 Selection

Selection is the process of selecting the most suitable candidate from the pool of candidates recruited. The selection process involves screening and shortlisting applications, interviewing, testing, assessing candidates, offering employment, obtaining references and preparing contracts of employment (Armstrong, 2006:409). The selection process is also guided by the company recruitment and selection policy. The selection process should be rigorous and professional as it determines who join the organization.
2.4 Rewarding/compensation

According Armstrong and Murlins (2007:3) compensation is the remuneration an employee receives for his or her contributions to the organization. Compensation has a direct influence on the quality of people who apply and get hired in the organization. It is also linked to the performance level, motivation and retention of the workforce. Compensation is indeed one of the most critical influences on the quality of work or services delivered and effectiveness of employees.

Organizations are guided by compensation policies to create a system of rewards to meet the needs of the employer and employees (Amos, Ristow, Ristow and Pearse, 2008:310). The total compensation consists of direct compensation and indirect compensation and it emphasizes the importance of considering all aspects of compensation as an integrated. Elements of total compensation include base pay, pay depending on performance, competence or contribution, employee benefits and non-financial rewards are linked together (Armstrong and Murlins, 2007:12).

2.5 Talent acquisition

According to Koltin Consulting Group, talent acquisition can be defined as “a strategic approach to identifying, attracting, and onboarding top talent to efficiently and effectively meet dynamic business needs”. Talent acquisition is strategic, because it is aligned to the organization’s business strategy and it ensures that the organization gain a competitive advantage by ensuring the acquisition of high potential employees. Koltin Consulting Group stated that, “strategic talent acquisition integrates the entire pre-hire stages of the employee lifecycle-from creating the job requisition to onboarding a new hire in a way that engages candidates and drives business outcomes.”

In addition, talent acquisition is a continuous process regardless of the company hiring requirements. The ability to acquire and retain high potential employees has undoubtedly given some organizations a competitive edge over competitors and had ensured continued business success. Organizations expecting to retain high potential employees need to understand the factors impacting the retention of these employees. Letchmiah and Thomas (2017:2) in their research paper highlighted the following factors impacting the retention of high potential employees:
• Organisational culture and values
• Self-actualization
• Leadership
• Communication
• Work-life balance
• Reward and recognition
High potential employees who share the same values and norms like that of the organization are more likely to remain with their employer due to shared common values and ideals. Again, high potential employees are always looking to achieve a certain level of self-actualization and if they are not learning, and advancing themselves to keep up with the competition they will not remain with the organization. Credible and ethical leadership that reflects organizational culture and values is paramount to retaining high potential employees (Letchmiah and Thomas, 2017:2).

In addition to exemplary leadership, effective communication underpinned by openness and honesty where high potential employees are constantly reminded of their positive contribution to the organization can foster commitment of high potential employees and increases their retention. It is also critical that high potential employees are able to achieve a work-life balance. Lastly, high potential employees should be compensated equitably and if there is a room for career advancement they will be retained (Letchmiah and Thomas, 2017:3). According to Greer (2003:33), equitable compensation is important for employee retention and increased retention also occurs with performance-based compensation, pay incentives, and benefits that are valued by employees.
2.6 Status quo of a familiar company on recruitment, selection and rewarding

The familiar company has a recruitment and selection policy which was reviewed in October 2017. The purpose of the recruitment and selection policy is to outline the principles guiding recruitment and selection of candidates, ensure legal compliance and non-discriminatory practices and also to ensure competent and suitable qualified candidates meet current and future organizational staffing needs. The policy clearly states all the recruitment and selection processes and procedures with all the required annexures.

The organization currently uses e-recruitment, recruitment agents, emails and faxes as means of recruitment channels. The recruitment and selection policy applies to both internal and external candidates. The recruitment and selection policy allows for special appointments for internal high potential employees. The special appointment refers to as an executive appointment and is applicable to levels from senior manager to general manager (Level E to B). Under executive appointment the normal recruitment and selection procedures are not followed. The executive appointments had been done for employees who had been identified as key talent and undergone targeted development.

The performance management policy provides guidelines regarding compensation and reward for management employees. Its purpose is to improve organizational performance by aligning individual outputs to organization strategy and business objectives through the use of a balanced scorecard framework. Also to ensure managers and supervisors are held accountable for the performance of their subordinates. The final score on performance management influences the percentage of the annual salary increase and payment amount of incentive bonus to management employees.

Findings regarding recruitment and selection as well as rewarding in a familiar company include not leveraging the power of social networks for recruitment. The selection process relies only on interviews. The company does not have a retention strategy document. The company prefers a blanket percentage for managers’ salary increase, an issue for high performing employees.

2.7 Recommendations for recruitment, selection and rewarding of high potential employees

The recommendations to acquire and retain high potential employees take into account current practices at a familiar company. The recommendations below aim to address the findings related to recruitment, selection and rewarding to bring improvement to the acquisition and retention of high potential employees.

2.7.1 Recommendations for recruiting high potential employees

1. Manage employer brand: the company should increase the efforts to building a stronger employer brand that will attract, motivate and retain both existing and potential employees (Botha, Bussin and de Swardt, 2011:4). The employer brand should communicate the organization’s values, systems, policies and behaviours.

2. Create and manage candidate relationship: since talent acquisition is a proactive and continuous process the organization should create and manage relationships with potential candidates ahead of the position being available in the organization, this can be achieved through online channels, like LinkedIn.

3. Build online talent community: a talent community is a database with active prospective employees that have been grouped into different segments which are targeted to receive emails with job openings. Online talent communities provide a talent pipeline for the organization to draw from when the position becomes open. The talent community should be used to keep prospective employees engaged and also to create a better image of the organization amongst targeted group.

4. Prepare a detailed recruitment plan: a comprehensive recruitment plan should be prepared to ensure quality of the recruitment process and minimize recruitment costs. Update job descriptions to reflect new requirements as well.

2.7.2 Recommendations for selecting high potential employees

1. Assembly an inclusive interviewing panel: this is to ensure any biasness is removed from the interview process and ensure a thorough interview to confirm the overall suitability of the candidate takes place.

2. Use selection tests: for high potential employees assessments should include: ability test, aptitude test, work sample and psychological test. The assessments are to ensure only the best candidate gets the top job.

3. Take a long view: the long term view selection is to ensure that the new employee will fit with organizational values and culture and also check for the motivation and potential to develop further in the organization.

2.7.3 Recommendations for rewarding high potential employees

1. Conduct salary survey: conduct regular salary surveys to know what the market is offering for a similar position and offer a competitive salary package to increase retention of the high potential employee.

2. Compensation: compensate high potential employees equitable to ensure their retention.

3. Performance based salary increase: annual salary increase for high potential should be based on individual performance and avoid blanket salary increase percentage.

4. Offer non-monetary rewards: the non-financial rewards include providing individual development, providing learning opportunities in terms projects and assignments, promotion opportunities and growth in the company. This has a positive effect on employee satisfaction and retention.

2.8 Conclusion

The financial success of many organizations and their sustainability in the business environment is linked to the acquisition, development and retaining of high potential employees. In light of the fact that the success and competitiveness of organizations is dependent on the availability of high potential employees within the top leadership ranks, it is more important that clear guidelines are in place to assist organizations when it comes to recruitment, selection and rewarding of high potential employees. It has been found that some organizations use retention bonuses as much as 15% to keep their high potential employees. The familiar organization does not have a retention strategy and this has affected its ability to do counter-offers and had let high employees leave the organization as a result.

Question 3

Discuss the importance and benefits of pursuing an integrated, strategic human resource development approach for your selected organisation.

3.1 Introduction

This section focuses on the theory of strategic human resource development (SHRD) and also explores the current SHRD practices at a familiar company. The importance and benefits of pursuing SHRD will be stated and briefly discussed. The recommendations for pursuing integrated SHRD will also take place and conclusion will be done.

3.2 Strategic human resource development literature overview

Strategic human resource development (SHRD) can be defined as a coherent, vertically aligned and horizontally integrated set of learning and development activities which contribute to the achievement of strategic goals. Whereas human resource development (HRD) is defined as a process of developing and unleashing expertise for the purpose of improving individual and teamwork processes, and organizational systems (Garavan and Carbery, 2014:24).

According to Garavan and Carbery (2014:24) SHRD “is concerned with the long-term development of human resources in organizations; it is a shaper of business strategy in addition to its role in strategy implementation; it emphasizes learning for the purpose of performance; it utilizes a multiplicity of strategies to facilitate performance, learning and change in individuals and organizations; and it is continuously aligned with the strategic goals of the organization”. This quote provides all the major characteristics of SHRD which separates it from HRD.

Furthermore, SHRD adds value to the organization by enhancing core competences in individuals which are required for business performance and is also responsible for developing skills and competencies which will differentiate the organization from its competitors. According to Garavan and Carbery (2014:31) SHRD facilitates a culture of learning; a commitment to performance improvement and a capacity of strategic engagement. Rothwell and Kazanas (2003:349) argued that SHRD should prepare employees through development to enable them to move with the organization as it changes and grow. This means individual employees become change agents for group learning and organizational learning.

3.3 Status quo of a familiar organization regarding integrated SHRD

The familiar company has a human resource development (HRD) department which is responsible for all the training and development initiatives. The outcome of both performance management and 360-degree feedback provide inputs on the annual training and development plans. Each employee submits annual individual development plan (IDP) which include compliance training and development needs approved by the line manager. The HRD department receives an approved annual training budget from all other departments. It is responsible for tracking actual completed training and reporting on a monthly basis. It can be said that the organization is currently on ad hoc SHRD and systematic SHRD because it has limited involvement when it comes to shaping the organization strategy. The organization is focused on training more than strategically developing employees in line with organizational goals and objectives. However, some employee development initiatives such Chief Executive nurturing programme has gain momentum over the years. Its success is not clearly documented to provide the evidence it has had in the developing and accelerating career progress of the employees.

3.4 Importance and benefits of pursuing an integrated SHRD approach

The importance of SHRD is to assist organizations to improve performance and profitability by emphasizing the utilization of human capital knowledge, skills and abilities to meet business goals (Alagaraja, 2013:74). Another important consideration for SHRD implementation is that it can lead to employee retention by ensuring employees develop core competencies required by the organization for career progression (Alagaraja, 2013:90).

The organization and its employees benefits from the implementation of SHRD because it provides alignment of training and development initiatives with the company’s mission and strategic goals as a result the skills, knowledge, learning ability and motivation of employees is enhanced by the continuous growth within the organization. In addition, the importance of practicing SHRD is that it supports the employees with skills and knowledge that will be required by the organization in the near future and this is so because it is aligned to the organizational goals and always scanning the business environment. (Garavan, Costine and Heraty, 1995:6).

3.5 Recommendations for pursuing strategic human resource development

1. Provide customised and personalized learning interventions: the learning intervention should be to address issues raised during performance management.

2. Utilize new technology to encourage self-managed learning: utilization of e-learning as example where employees can learn specific topics as per their skills gaps and interests.

3. Ensure employees are aware of development opportunities: effective and open communication, use company email and social networks for wide coverage.

4. Ensure managers and peers are supportive of learning: encouraged formal and informal mentorship programmes.

5. Develop the capabilities for employees to apply learning: assign employees to projects where they can apply the new skills.

3.6 Conclusion

The overall objective of pursuing SHRD is to ensure that both the organizational strategy and business objectives are integrated to ensure continuous development of human resources to achieve organizational success. The SHRD also ensures the company continuously scans the business environment to proactively respond to the changes in the market and technological advances and leverage the use of human capital. The need to align development initiatives to organizational mission and objectives ensuring the organization has at all times skills, knowledge and capacity to meet business objectives is at the heart and mind of SHRD. SHRD requires all stakeholders such as top management, line managers and employees play an active in the development of human capital and organization development.

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