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Internal and External Sources of Talent

Related to inclusive and exclusive talent perspectives is the relative importance that the organization places on acquiring new talent from internal or external sources. Sometimes, a review of existing talent within the MNC will reveal that there is no good fit between what is available and what is required; in such cases, external hiring is obviously necessary. Sometimes, however, an internal search will suggest that suitable talent is in fact presently available within the organization and that promotion, transfer, or some other forms of internal redistributions might be appropriate. Clearly, there is no single perspective that is optimal; most organizations will utilize both, albeit intuitively preferring and stressing one. External hiring or internal mobility decisions are not always the binary choices dictated by logic: They represent deeply held perspectives that the organization and its HR function hold about talent, how it is developed, and how it is retained.

Internal Sources of Talent Looking toward external sources may be the only reasonable alternative for organizations that do not possess—or do not believe that they possess—the talent they desire. External sources might provide a solution, but the decision to recruit new talent from outside the organization begs the question of why that talent is not available internally. The answer might be straightforward and reasonable: a novel situation, an unprecedented talent requirement, or a similar unexpected event. However, the reflexive reliance on external talent can indicate an implicit HR philosophy of how talent is developed, cultivated, matured, and mobilized within the organization.

Historically, organizations have tended to underappreciate their internal talent sources. More recently, there has been growing interest in the possibilities of internal cultivated and redistributed talent [42]. Increasingly, MNCs are recognizing that talent and innovation are not necessarily location-specific and that they can draw upon the diversified portfolio of talent that they manage [43]. As Cantwell and Zhang [44] note, because talent is ‘in part location-specific as well as firm-specific, the MNC has come increasingly to draw upon a diversified locational portfolio of capabilities’ (p. 46).

This requires MNCs to recognize the talent diversity and richness that they can presently access; still, talent diversity per se is not necessarily an advantage. The organization has to ensure that it has already selected, recognized, and cultivated the appropriate talent that it needs, or believes it will need, within these pools of diversity. Further, once it is recognized that talent is not location-specific, the MNC needs to create ways of mobilizing and directing it toward the purposes and places where it might be optimally utilized [45, 46].

External Sources of Talent The hiring of non-organizational candidates provides an injection of talent that is believed to be lacking in the organization. It gives the organization an opportunity to appropriate talent that it considers valuable, which has been developed in other organizations, and which is now available in the external labor markets [47, 48]. But, in times of uncertainty, external hiring is associated with a number of inherent risks: asymmetric information, the subsequent suitability and long-term performance of the individual, and his/her possible failure to adapt successfully to the new firm [49]. Nevertheless, many organizations— depending on the industrial sector and the nature of the position—find that external sources of talent offer flexible, convenient, ‘just-in-time’ solutions for their needs. Organizations may also search for external talent without the intent of permanently incorporating it in their structures. The growing externalization of labor and the changing nature of work and employment—outsourcing, co-employment, freelancing, and independent contracting—have significantly challenged the traditional assumptions about the ‘ownership’ of talent and the ways in which it is utilized [50-52].

 
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