Economy and society are continually changing, which entails a variety of influencing factors. The resulting trends constantly pose internal and external challenges to human resource management (HRM) in companies and demand continual development of HR strategies. The beginning of this thesis discusses the factors underlying the constant transformation in HRM and generating the new requirements in the recruitment and re-tention of potential employees.
Talent Relationship Management (TRM) is considered to be the current trend in recruit-ment and as an internal solution for setting the course for external challenges in HRM. In this thesis, the concept of TRM is presented as a strategic and systematic model of HRM to build and maintain relationships between employees and employers. Because TRM is still in its infancy, the literature lacks a clear and unified conception and definition of the approach. Different definitions and derivations of the literature are presented below. Fur-thermore, the current definitions are contrasted with the practical realization and imple-mentation of TRM. The elucidation of implementation strategies in practice is aimed at providing additional insight into the perception and implementation of TRM by compa-nies. Consequently, the opportunities and risks of TRM are discussed as a future recruit-ment instrument in HRM.
The relationship approach of talent relationship management is derived in the literature from customer relationship management (CRM). The third component of the work is comprised of exploring the parallels and differences between TRM and CRM with the aim of depicting future research implications.
Table of Contents
1 List of Illustrations
2 List of Tables
3 Abbreviations
4 Problem and Objective of the Bachelor Thesis
5 From Personnel Management to Strategic Human Resource Management
5.1 Human Capital
5.2 Current trends and future challenges
5.2.1 Demographic change and the "war for talents"
5.2.2 Generation Y – a demanding generation
5.3 Personnel management as a marketing task
5.3.1 Employer branding – marketing staff
5.3.1.1 Influencing factors of employer branding
5.3.2 Trends in recruitment
5.3.2.1 Active sourcing
5.3.2.2 From "post and pray" to talent-oriented recruiting
6 Talent relationship management
6.1 From CRM to TRM - term definition
6.1.1 Objectives and use
6.2 TRM in practice
6.2.1 Drivers to implement TRM in companies
6.2.2 The TRM strategy and organization
6.2.3 Target groups of TRM
6.3 Instruments of TRM
6.3.1 The talent pool – the heart
6.3.2 Channels for making contact
6.3.3 Instruments of candidate retention
7 Risks and opportunities of TRM
7.1 Risks
7.2 Opportunities
8 TRM vs. CRM – a little comparison
8.1 "Market-pull" and "technology push" – the relationship approach
8.1.1 Database support and information systems
8.1.2 Research status of performance measurement
8.1.2.1 Performance measurement in companies
8.1.3 Implications for research
9 Summary and outlook
10 Appendix
11 List of Cited Literature
1 List of Illustrations
Illustration 1: Human Capital as a component of company value
Illustration 2: Results of the structural equation model
Illustration 3: Model employee-organization relationship
Illustration 4: Age structure of the population in Germany
Illustration 5: Suitability of different recruitment channels to identify and directly address interesting candidates
Illustration 6: Proportion of hires generated through various recruiting channels
Illustration 7: Categorization of TRM processes
Illustration 8: TRM- Framework by Strohmeier
Illustration 9: TRM-Framework by Fischer
Illustration 10: Paradigm comparison classic recruiting – TRM
Illustration 11: Comparison of CRM and TRM
2 List of Tables
Table 1: Summary of studies, regarding the connection between HR systems and the company output factors
3 Abbreviations
HC Human Capital
HCM Human Capital Management
HRM Human Resource Management
HR Human Resources
EB Employer Branding
CRM Customer Relationship Management
TRM Talent Relationship Management
Ed. Editor
EOR Employee Organization Relationship
4 Problem and Objective of the Bachelor Thesis
Economy and society are continually changing, which entails a variety of influencing factors. The resulting trends constantly pose internal and external challenges to human resource management (HRM) in companies and demand continual development of HR strategies. The beginning of this thesis discusses the factors underlying the constant transformation in HRM and generating the new requirements in the recruitment and retention of potential employees.
Talent Relationship Management (TRM) is considered to be the current trend in recruitment and as an internal solution for setting the course for external challenges in HRM. In this thesis, the concept of TRM is presented as a strategic and systematic model of HRM to build and maintain relationships between employees and employers. Because TRM is still in its infancy, the literature lacks a clear and unified conception and definition of the approach. Different definitions and derivations of the literature are presented below. Furthermore, the current definitions are contrasted with the practical realization and implementation of TRM. The elucidation of implementation strategies in practice is aimed at providing additional insight into the perception and implementation of TRM by companies. Consequently, the opportunities and risks of TRM are discussed as a future recruitment instrument in HRM.
The relationship approach of talent relationship management is derived in the literature from customer relationship management (CRM). The third component of the work is comprised of exploring the parallels and differences between TRM and CRM with the aim of depicting future research implications.
5 From Personnel Management to Strategic Human Resource Management
"We need to get used to the idea that companies depend far more on their best employees, than good people depend on companies." (Drucker, 1999)
5.1 Human Capital
The term human capital (HC) has assumed greater importance in recent years and has changed the way we view the individual employees of a company. Accordingly, it prompts an examination of the relationship between staff and the economic success of a company, which is also reflected in the academic literature. (Birri, 2014)
Pfau and Kay (2002) were able to demonstrate the empirical evidence of the influence of quality and productivity of staff on the optimization of value creation. This fact is one reason to focus in a detailed and comprehensive way on assessing and increasing the effective value of an employee and his or her productivity as well as aiming to increase the latter. As with finance and marketing, the human resource department of a company therefore requires conceptual management. (Birri, 2014)
According Birri (2014), human capital management (HCM) represents an effective instrument for ensuring the availability of human capital and can be used as a resource to support the achievement of corporate performance targets. As a consequence, classical HRM is developing from an administrative transactional field into a long-term optimization strategy of the performance capacities of a company, with the aim to "explicitly control, monitor and communicate the positive contribution of employees to value creation and company value." (Birri, 2014)
The increasing importance of HC is prompting the debate to discuss the human factor no longer as an expense element but rather as an important intangible asset to be used strategically to optimize company value creation (Scholz, Stein and Bechtel, 2004).
According to Scholz, Stein and Bechtel (2004), HC is regarded as a component of a company's capital resources (see Figure 1). Company value is comprised of both financial and physical capital (balance sheet assets) as well as of HC, organizational capital and relationship capital. HC will thus be viewed as an intangible asset that can influence value creation.
Abbildung in dieser Leseprobe nicht enthalten
Illustration 1: Human Capital as a component of company value
Source: adopted by Scholz, Stein and Bechtel
Due to the increasing importance of HC, economists have been focusing on the empirical evidence of positive correlations between economic success factors of output and the quality of HR measures. In doing so, direct and indirect effects of HR practices are identified that affect entrepreneurial business success.
Thus, for example, Jiang, Shuo, & Shuming (2012) demonstrated in a study based on Chinese companies that there is a positive relationship between HR practices and the creativity of employees as well as the positive impact of innovation through HR measures.
Illustration 2 shows the positive correlation between HR measures such as recruitment and selection, training, reward system, job description and teamwork as well as the creativity of the employees.
Abbildung in dieser Leseprobe nicht enthalten
Illustration 2: Results of the structural equation model
Source: Jiang, Shuo and Shuming, 2012
Furthermore, Kuvaas (2008) confirmed previous research on possible links between HR practices and business sales by determining that the success of HR measures depends on the quality of the relationship between employees and company.
Illustration 3 shows the relationship model of employee and company.
Abbildung in dieser Leseprobe nicht enthalten
Illustration 3: Model employee-organization relationship
Source: Kuvaas, 2008
In the appendix Tables 1; 1.1; 1.2 and 1.3 depict a summary of studies on the economic relationships between HR systems and output factors.
5.2 Current trends and future challenges
5.2.1 Demographic change and the "war for talents"
According Schütte (2005) HC is defined as a potential that lies in an employee: "These are competences, attitudes and behavior of employees, such as their knowledge, experience, motivation, willingness to work, or even leadership skills."
In the future, however, employees with high skills and relevant experience, mature social competence and management experience will be a scarce resource (Axelrod, Handfield-Jones and Welsch, 2001).
One reason for this is the demographic change, the shrinking population density described by a projected decline in birth rate and the simultaneous aging of society. According to reports by the German Federal Statistical Office, the number of working age citizens (20- to 40-years-old) in Germany will decline, while the number of people aged 65 and older will rise.
By 2030, the population of Germany is predicted to be 77 million. This represents a 5.7% decrease in population compared to 2008. Illustration 4 highlights the demographic shift. The proportion of people of working age will decline by approximately 15% (7.5 million), while the age group of people aged 65 and older will increase by 33% (16.7 million), which means that in 2030 the number of people aged 65 and older will exceed the number of those who are working age (see Illustration 4). This forecast is the basis for public debate on the consequences for the economic competitiveness of Germany. (Statistisches Bundesamt, 2011)
Abbildung in dieser Leseprobe nicht enthalten
Illustration 4: Age structure of the population in Germany
Source: Statistisches Bundesamt, 2011
"The competition of the future will be decided in the HR markets." (Sprenger, 2010)
Thus, researchers are certain that it will become increasingly difficult to adequately identify and recruit qualified staff, a wide spread and much discussed phenomenon dubbed the war for talent.
Axelrod et al. (2001) updated the view on this trend in 1997 with a study in which the researchers surveyed 6,900 managers from 56 large- to medium-sized businesses in the US. The study shows that 89% of respondents confirmed the war for talent at the time and that it was becoming more difficult to find qualified personnel. Only 7% of respondents agreed with the statement that the problem is the continuous availability of qualified personnel. The reasons for the lack of qualified personnel are demographic and social trends (Axelrod, Handfield-Jones and Welsch, 2001).
The war for talent in the US is synonymous with professional and managerial shortages in Germany (Weitzel P. et al., 2015).
Another result reported by the Centre of Human Resource Information System (CHRIS), University of Bamberg, with the support of Monster Worldwide Germany GmbH focuses on the long-term view of future recruitment activities by small- and medium-sized German companies. Based on a survey of 1,000 medium-sized companies, the report confirms that the demographic shift and the consequent skills shortages are the main external trends for recruitment (Weitzel P. et al., 2015).
This again emphasizes the need for HCM and integrated approaches that reduce the risk of low availability of qualified personnel and the loss of quality and that retain company employees over the long term. The issue here is not limited to monetary incentives, but also focuses on measures and the creation of conditions that are attractive to the employee over the long term. (Birri, 2014)
5.2.2 Generation Y – a demanding generation
Global companies that are in a highly competitive environment must not limit what they view as future challenges to the demographic shift and the resulting technical and management shortages, because in addition to the challenges mentioned an additional task is becoming a central concern for companies. Generation Y1, Generation X2 and baby boomers3 are widespread terms in this context, whereas these generation designations are not standard terms in the academic literature.
The focus of the discussion in this context is Generation Y. A variety of literature from different disciplines is engaged in researching the characteristics, behaviors, traits and attitudes in order to align corporate HR strategies with the future generation. (Gatiiria Gitonga , Kilika and Obere , 2016); (Winter and Jackson, 2014); (Twenge, Campbell, Hoffman and Lance, 2010); (Catano and Hines, 2016)
The academic literature contains the empirical evidence showing the generational gaps between employees of Generation Y, Generation X and Baby Boomers. The focus is on the attitude toward work and free time, whereby the desire for leisure competes with the desire for monetary compensation. Both factors have a high priority, which creates challenges for recruitment and management. (Parment, 2013)
While the work style of older employees is characterized by a dominant moderation of business meetings, detailed protocols and in-depth analysis, younger employees are more defined by independently choosing to cope with work, the use of modern communication channels and a cooperative management style in flat hierarchies. A manager of the older generation earns respect if he or she can convince through competence and readiness to communicate instead of authority. (Ivanova and Hauke, 2008)
In addition, young people of the next generation will be described as a potential group with an efficient and morally acceptable way of working. Regarding the achievement of goals, the young employees are success oriented and have a very flexible work attitude. This work attitude can only be effective if the pro-social environment is geared to the needs of young employees. This requires direct communication with management as well as maintaining continuous relations to management and work-life balance. This describes a demanding Generation Y, which poses a major challenge for management with regard to its existing norms and values. (Winter and Jackson, 2014)
To gain a future comparative advantage and become competitive on the market, the values and work preferences of the younger generation must be identified and attended to by, inter alia, HR strategic measures. In this case, the implementation of further development strategies for young employees could be conducive to prepare future management on the executive level. This is how companies can acquire and retain young employees with a strong technological affinity and a very high level of performance. (Gatiiria Gitonga , Kilika and Obere , 2016)
In addition, management has to prepare for a demand-oriented approach to the younger generation. Measures and new channels have to be used to specifically address the generation in order to attract them and to retain them in the company. (Parment, 2013)
5.3 Personnel management as a marketing task
5.3.1 Employer branding – marketing staff
The demographic shift, social trends, generational shift and the increasing importance of HC are sufficient motives for companies in a global competition to adopt measures that make it possible to acquire suitable staff and to retain them in the company over the long term.
Using employer branding (EB), companies are thus trying to profile themselves as attractive employers and distinguish them from competitors. This involves the development of an attractive employer brand by means of strategies directed both internally and externally. (Schumacher, 2014)
In EB the relevance of prospective and current employees is very high and is derived from resource-based approaches. The employee is regarded here as a sustainable competitive advantage. (Moroko and Uncles, 2008)
Different definitions of EBs are found in the academic literature.
Martin and Beaumont (2003) define the term as "employer brand as a generalized recognition for being known among key stakeholders for providing a high quality employment experience, and distinctive to organizational identity which employees value, engage with and feel confident and happy to promote to others." EB must therefore function in a comprehensive way.
The "internal attitude" of the company must match the external presentation. Here, the company must develop and monitor strategies that are aligned to existing and potential employees. (Schumacher, 2014)
Analog to marketing, it is necessary to construct an attractive character image of the employer. The focus is on the design of a brand identity and a brand value proposition. "It represents the (...) value to be provided with respect to the external target group." (Meffert, 2015)
Thus, the employer proposition must match the needs of this target group in order to make the employer highly attractive (Schumacher, 2014).
Consequently, EB is directed both to the external recruitment of potential candidates as well as the retention and development already employed staff (Meffert, 2015), which requires precisely matched employer branding strategies in recruitment ( "attract"), in employee motivation ( "motivation") and employee retention ("retain") (Tower Perrin, 2004).
5.3.1.1 Influencing factors of employer branding
In the academic literature, there are some studies that deal with the factors influencing EB.
For example, the results of the study by Kucherov and Zavyalova (2012) support the claim that a strong employer brand offers companies economic benefits such as lower employee turnover and greater investment in training and development of employees. The authors point to internal hiring practices, training programs and highly efficient incentive programs as common measures actively integrating employees in decision-making and management processes.
Results from the study by Collins and Stevens (2002) show that highly qualified job seekers in a tight job market behave in a similar manner as a consumer in an already saturated market. This emphasizes the symmetrical behavior between the brand value of a product and the brand value of the employer. According to the authors, marketing managers should work more closely with HR managers in order to acquire such important employees.
In this context, the authors point to behavioral similarities in the use of recruitment measures. Successful recruitment measures such as public relations, word-of-mouth and advertising in the course of EB have a positive impact on the perception of the employer brand (Collins and Stevens, 2002).
5.3.2 Trends in recruitment
Because the illustrative realization that marketing-oriented approaches should be successfully implemented and executed in HRM, research is focusing on additional strategic and systematic approaches that can be derived from marketing and transferred to recruitment (Strohmeier, 2013). In this way, recruitment is being transformed from a reactive to a proactive discipline (Trost, 2012).
5.3.2.1 Active sourcing
The term active sourcing is not precisely defined and delimited in the academic literature. Dannhäuser (2015) defines active sourcing as "proactive candidate search". Here, the term "sourcing" is derived from materials management, whereas in human resource management the focus is on the person involved and the relationship with him or her.
Proactively addressing sought-after candidates should be employed to build and maintain personal networks for companies and individual relationships with interested candidates in order to actively address candidates if necessary and when there is an urgent need for staff and thereby to acquire them for the company. (Dannhäuser, 2015)
As with the marketing, one must identify and use various channels for direct communication. The report of an annually conducted empirical study by the Centre of Human Resources Information Systems (CHRIS) at Bamberg University shows results from a survey of the top 1000 companies in Germany. Illustration 5 shows the use of different channels of the active approach by their human resource management (Weitzel P. et al., 2015). Important to note here is the high use of talent pools and personal networks. Chapter 6.3 offers additional explanations on this topic.
Abbildung in dieser Leseprobe nicht enthalten
Illustration 5: Suitability of different recruitment channels to identify and directly address interesting candidates
Source: Weitzel P. et al., 2015
5.3.2.2 From "post and pray" to talent-oriented recruiting
In addition to the different scenarios in other recruitment channels to actively approach potential candidates, more and more companies are following the approach of positive candidate experience (Barbedette , 2005).
Accordingly, companies are turning more and more from conventional recruitment channels to selecting proactive and interactive forms of initiating contact with potential candidates. This is confirmed by the study of the Centre of Human Resources Information. In Illustration 6 it is clear that in 2014 around a quarter of all job hires in medium-sized German companies were generated by the company's own website. By contrast, measures such as print media and job posting on Internet platforms are continually decreasing in importance (Weitzel P. et al., 2015).
Abbildung in dieser Leseprobe nicht enthalten
Illustration 6: Proportion of hires generated through various recruiting channels
Source: Weitzel P. et al., 2015
The measure of public advertisements in trade publications or online platforms, representing the classic passive recruitment process, is described in the field as "post and pray." When a vacancy opens up, job advertisements in different channels are activated and the company "hopes" for a good candidate. (Dannhäuser, 2015)
Given the current trends in recruitment, one can conclude that conservative procurement measures will not be successful in the future. In order to attract qualified staff, active engagement in recruitment must be implemented in order to identify talents before a possible vacancy (Dannhäuser, 2015; Trost, 2012).
Thus the potential employee is the focus and not the vacancy to be filled. In doing so, the employee is seen as a company-internal customer who is identified, obtained and retained over the long term by using marketing-oriented approaches for the company (Stotz, 2007).
Modern marketing theory approaches are moving away from behavioral viewers of the buyer and granting increasing attention to new approaches in the context of the relationship marketing. Here, the focus is on lasting customer relationships and the importance of ongoing interaction between companies and customers. (Meffert, 2015)
Consequently, academic research is increasingly concentrating on deriving recruiting measures from modern marketing approaches. The next chapter offers additional explanations on this topic.
6 Talent relationship management
6.1 From CRM to TRM - term definition
Academic research has already pushed the need for further development and retention measures for the existing workforce into the focus of HRM. Nevertheless, the acquisition and retention of new employees for international companies is an essential part of human resource management in order to ensure the secure own advantages in competition. Furthermore, it was explained that a trend is emerging that is moving away from traditional recruiting. Future labor market conditions pose new demands on recruitment and require new ways of recruiting (Fischer, 2011).
The analog of customer relationship management (CRM) is talent relationship management (TRM) and represents an additional transferable marketing approach to recruitment in order to procure potential employees (Strohmeier, 2013).
The roots of TRM are anchored in CRM (Strohmeier, 2013; Fischer, 2011; Stotz, 2007; Trost, 2012).
CRM forms an essential instrument in relationship marketing and is defined by Reinartz, Krafft and Hoyer, 2004 "as a systematic process to manage customer relationship initiation, maintenance, and termination across all customers-contact points in order to maximize the value of relationship portfolio."
CRM includes a set of tools from information technology to build and maintain relationships between customers and companies (Rogers M. , 2005) in order to increase customer satisfaction and loyalty (Kumar and Shah, 2004) and achieve an improvement in company performance (Krasnikov, Jayachandran and Kumar, 2009).
The transfer of these approaches of relationship management to HRM is a clear trend that is gaining increasing recognition from companies (Strohmeier, 2013; Stotz, 2007; Fischer, 2011).
While CRM is a much-discussed topic in economics and in the academic literature, the exploration of TRM is only gradually gaining traction (Strohmeier S. , 2013).
[...]
1 Generation Y: born between 1985 -2000
2 Generation X: born between 1970-1985
3 Baby Boomer: born between 1955- 1970 (Parment, 2013)
- Citation du texte
- Katharina Beck (Auteur), 2016, Talent Relationship Management as a Future Recruiting Tool in the Human Resource Management, Munich, GRIN Verlag, https://www.grin.com/document/1247476
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