Thinking about the role of TM architectures in creating and capturing value raises the question of whether there may be other ways in which TM architectures may add value to organisations. A review of the literature brings to the surface two more value processes to which TM architectures may contribute, namely value leverage and value protection.
To understand how TM architectures may enable organisations to leverage the value created by talent resources, I turn to the dynamic capabilities literature to develop my argument and develop the third proposition of this research. The concept of ‘dynamic capabilities’ (Teece et al., 1997, Eisenhardt and Martin, 2000) has emerged from the RBV (Barney, 1991, Peteraf, 1993, Penrose, 1996), which in itself has been an influential theoretical development for understanding how competitive advantage is achieved and sustained over time. Teece and Pisano (1994) use the concept of dynamic capabilities to refer to the sources of competitive advantage. They emphasise two key aspects:
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THE VALUE OF TALENT MANAGEMENT ARCHITECTURES TO MULTINATIONAL COMPANIES 1. the shifting (i.e. dynamic) nature of the environment, and
2. the key role of 'adapting, integrating and reconfiguring' organisational skills, resources and functional competencies (i.e. capabilities).
The dynamic capability literature suggests that an organisation can leverage the value of its resources (be they tangible, intangible or human resources) by engaging in activities which create, modify and extend its resource base (i.e. acquisition, innovation, entrepreneurial, knowledge management) (Helfat, 2007). Dynamic capabilities have been defined as “the capacity of an organization to purposefully create, extend or modify its resource base” (Helfat, 2007, p. 1). They are internally built by firms rather than bought. They are path-dependent processes or routines which are embedded and employed in order to reconfigure the firm’s resource base (Makadok, 2001, Winter, 2003, Sirmon and Hitt, 2003).
Central to dynamic capabilities is the reconfiguration of the firm’s resource base. Accordingly, it is argued that dynamic capabilities comprise four processes: first the reconfiguration (i.e. transformation and recombination) of the firm’s assets and resources; second, leveraging (i.e. replicating, extending and deploying) processes, systems or resources which are operating in one area of a firm to another area; third, learning, which is the ability to effectively and efficiently perform tasks and learn from mistakes; and finally the integration and coordination of assets and resources to create a new resource base (Bowman and Ambrosini, 2003, Ambrosini et al., 2009).
For this research, I am interested in understanding how the process of ‘leveraging’ is understood in the literature and how it may be imported into the TM debate to explain how TM architectures may enable the leveraging of a firm's value creation resources (i.e. talent
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resources). Lichtenstein and Brush (2001) argue that owning resources and bundling them to develop capabilities is not sufficient for value creation; instead, firms need to leverage and extend their capabilities to ensure a continuous process of value creation. Similarly, Miller et al. (2002) argue that a firm's resources and capabilities are of no value unless they can be extended to create more value and superior returns.
The process of leveraging is therefore critical for the maintenance of value creation. As outlined earlier, the process of leverage is seen in relation to a firm’s ability to replicate a process or system which is working well in one part of the organisation in another part, or the ability to extend a resource by deploying it in new domains (Ambrosini et al., 2009). Similarly, Sirmon et al. (2007) refer to leveraging as “the application of a firm’s capabilities to create value for customers and wealth for owners” (p. 277), which involves the processes of mobilising, configuring and deploying the firm's capabilities and resources. Thus the leveraging of resources in itself is critical, in that even when the firm owns and effectively bundles them to develop value-creation capabilities, the firm is unable to recognise the value created unless it effectively leverages and uses its resources and capabilities in the marketplace (Lichtenstein and Brush, 2001). Part of leveraging is a firm’s ability to mobilise its idiosyncratic capabilities – the intent of such mobilisation is to identify the capabilities needed by the firm and design the capability configurations required to exploit such capabilities in a way which that will enable the continued creation of value. (Hamel and Prahalad, 1994) argue that mobilising a firm's capabilities requires continuous adjustment to ensure that the appropriate capabilities are available for sustainable value creation.
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al., 2007); instead, firms need also to consider the coordination of capabilities, which Sirmon et al. (2007) describe as the effective and efficient integration of mobilised capabilities to create the capability configurations which result in the implementation of leveraging strategies. The goal of coordinating capabilities is to integrate them in ways that make it difficult for competitors to imitate (Chatzkel, 2002). The final process is the deployment of the integrated capabilities to realise the value which has been created by the firm’s value-creating resources. In conclusion, the coordination and deployment of the firm’s capabilities are vital to the implementation of leveraging strategies (Sirmon et al., 2007).
In addition to the dynamic capabilities and strategic management literature, there have been a number of discussions in the TM literature which implicitly describe the process of value leverage. The impact of TM architectures on value leverage is implicitly referred to by several scholars. For example, Sparrow et al. (2010) argue that value leverage requires firms to invest in appropriate TM practices which enable them to:
a) build on their current talent capabilities,
b) manage the knowledge of their talent resources in ways that lead to the achievement of strategic outcomes;
c) respond to talent shortages and recognise organisational capabilities which are central to the business model.
In this context, Andreas, Annie and Michael (2007) suggest that the process of value leverage involves those activities which leverage knowledge assets in the organisation (i.e. talent resources) and link them to associated work functions across the organisation where they are needed to enable the sustainable creation of value. They also suggest that leveraging value
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includes those activities that improve the efficiency and effectiveness of existing value-creating resources such as structuring talent resources, managing talent knowledge and transferring it across the organisation to generate new ideas, and creating a collaborative and creative culture to effectively manage talent. Sirmon et al. (2007), argue that organisations can leverage the value of their talent resources by mobilising, coordinating and deploying their capabilities. This involves developing talent capabilities and configuring them to exploit market opportunities, diffusing talent knowledge and transferring it through the organisation, and deploying talent within the organisation in a way which enhances their maintainability.
To think about how TM architectures may enable the leverage of value, I, therefore, present the third proposition of this research and suggest that:
RP3: value is leveraged when a firm’s TM architecture enables it to extend, mobilise (replicate), integrate and deploy the capabilities of its value-creating talent resources.
3.4.4 How May Talent Management Architectures Enable the Protection of Value?