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The Effect of Talent Management on Employee Performance of Service SMEs in The UK

The Effect of Talent Management on Employee Performance of Service SMEs in The UK

1. Introduction
1.1 Background of the study

Most of the businesses in the world are now SMEs. Even in the United Kingdom, almost 5.7 million businesses are SMEs, and it’s 99% of the total business of the UK (Rhodes, 2017). Furthermore, 96% of those businesses have less than 10 employees (Rhodes, 2017). So, this can be said that a significant portion of the UK’s economy is dependent on SMEs. So, the performance of the SMEs sector is very important for the United Kingdom. Besides; 17% of those SMEs are from professional service, 17% is from professional services, 5% is from restaurant and café, 5% is from education and 3% is from construction and home repair (Statista.com, 2018). So, it can also be understood that service SMEs hold the majority portion of these micros, small and medium-sized enterprises. 

These service SMEs mostly have to rely on the performance of their employees. That’s why it has become very important for SMEs to attract and retain talented employees in their company. Because; talented employees will provide greater performance than ordinary employees, that will increase the organisational performance of the SMEs. 

1.2 Problem statement 

Understanding the importance of the subject matter, many researchers have tried to find out the impact of talent management on employee performance. But, a few researchers have tried to find the impact of talent management on the employees’ performance in the SME. And; only one or two studies might have been done on this subject matter in the service SMEs in the UK. So, there is still a lot to explore in this subject matter. And so, the researcher has decided to find out the relationship between talent management and employee performance in service SMEs in the UK. 

1.3 Research Aim, Objectives and Questions 

1.3.1 Research Aim

This study’s first and foremost aim is to determine the relationship between talent management and employee performance in service SMEs in the UK. 

1.3.2 Research Objective

This study has set some objectives and tried to fulfil these research objectives throughout the entire research. These objectives are:  

  • Carefully examine the previous literature reviews related to talent management, career management, employee performance and various reward policies of SMEs. 
  • Carefully analyse the association between service SME’s talent management and their employee performance. 
  • Carefully examine the impacts of service SME’s talent management policies on employee performance, employee motivation, employee engagement and employee satisfaction. 
  • Advising imperative strategies or policies of talent management to the management of SMEs to improve their employees’ performance. 
  • Suggesting some opportunities for further studies in this subject matter to future researchers. 

1.3.3 Research Questions

Besides the research aim, the researcher will also try to answer some crucial questions in this study. These research questions are: 

  • What are the most imperative factors of talent management in service SMEs?
  • What are the most imperative factors of employee performance in service SMEs?
  • Which factor of talent management affects the employee performance most in the service SMEs? 

 

2. Literature Review
2.1 Service SMEs 

Micro, small and medium-sized enterprises are also known as SMEs. Certain characteristics differentiate SMEs from other industries. For example, the European Commission defined SMEs as enterprises where less than 250 employees work and have a balance sheet total of fewer than 43 million euros (Baublyte, 2010). European Commission has also added that SMEs turnover should not exceed 50 million euro in a year; and does so, it’s no longer an SME. Rather, it becomes a large organisation. The following table shows the categorisation of micro, small and medium-sized enterprises.

 

Fig: Categorisation of micro, small and medium-sized enterprises (Baublyte, 2010).

Service SMEs are those micro, small and medium-sized enterprises that sell their services to earn a profit rather than selling particular products. Some service SMEs can be personal services, e.g. beauty and wellness, repair of household goods; professional services, e.g. financial, consultancy, travel; restaurants or cafe; media communication or information, e.g. computer programming, telecom etc. 

2.2 Talent Management 

According to Mckinsey (1997), private companies have started to recognise that they should retain talented employees if they want to be successful. He remarked on this phenomenon as “the war for talent; and added that it is “the new reality” that companies nowadays mostly rely on their talented employees to succeed (Poochaoren and Lee, 2013). 

Talent management is a widely researched subject in this current world because of its significance. Lewis and Heckman (2006) have described mainly three types of research happening on talent management: talent management functions as a typical HRM practice, its relationship with employee management and HR forecasting, and talent management’s generic entity. 

Different researchers have shown different factors of talent management based on their findings. For example, Dr Murthy (2010) has advocated creating a talent pool, reviewing and assessing performance and talent requirements etc., as important parameters of talent management. On the other hand, some researchers said there are four key factors of talent management: talent development, performance management, recognition and rewards, and recruitment (Lenka, 2017). The following table shows the sub-factors of these factors of talent management. 

 

Fig: Factors of Talent Management (Lenka, 2017)
2.3 Employee Performance

Organisations’ benefits or losses can be directly linked with the performance of employees because employees’ performance always has some financial and non-financial consequences (Anitha, 2014). Various parameters are used to evaluate the performance of the employees in an organisation. These parameters are mainly selected based on the nature and characteristics of that particular organisation (William, 2010). According to Apeyusi (2012), there are 16 key factors of employee performance, i.e. cost-effectiveness, creativity, productivity, quality, quantity, punctuality, honesty etc. But, William (2010) has only emphasised three factors: engagement, communication, and productivity of the employees.  

Several researchers, e.g. Kacmar et al. (2003) and Yrel et al. (2002), have shown that if the employees can communicate with their co-workers properly, they become more efficient in maintaining work-life balance, which increases the performance of the employees. The productivity of the employees means that they are cost-efficient and creative in the workplace. And; the most engaged employees in the workplace tend to commit fewer mistakes, which also helps to increase their job performance (Kikoito, 2014). 

Thus employee performance is very important for companies; many researchers have advocated that companies should evaluate the performance of the employees fairly and carefully. According to Jacques (1961), if the employees’ performance evaluation process is not fair, motivation factors, e.g. reward and recognition etc., do not impact the performance of the employees properly. 

2.4 The relationship between talent management and employee performance

Various studies have shown the relationship between talent management and employee performance. For example, Mangusho, Murei and Neelima (2015) have shown four key factors of talent management, e.g. talent retention, talent attraction, learning and development and career management, have a significant relationship with employee performance. 

 Talent retention is considered the most crucial factor in talent management. Zikmund (2000) has said that talent retention can ensure high–quality services to clients. The retention rate of the organisation’s employees is highly dependent on their satisfaction level. Many researchers have also said satisfied or happy employees are more productive. So they can deliver a higher level of customer service which can be beneficial for the service SMEs. 

Armstrong (2006) has indicated several talent attraction factors: recruitment and selection and employer branding. That study also said that if the employees are attracted to their jobs, that positively impacts their performance. Jobs are attracted to the employees when they possess challenges, a better work environment, opportunity, flexibility and honour (Oehley, 2007). 

One of the major factors of talent management is learning and developing. In 2006, a CIPD survey showed that around 94% of the employees of the organisations believe that effective talent management can help the organisation achieve its goals. And; that study also indicated two main objectives of talent management, which are improving the potential of the individuals and training them to be future senior managers. But, these two objectives cannot be fulfilled without the learning and development component of talent management. On the other hand, Byham et al. (2002) argued that if the organisation doesn’t know what they want from their future senior leaders, it cannot train and use the full potentials of its employees; thus, the performance of those employees are never over the top. 

Finally, suppose the employees can see further career establishment of his/her current job position. In that case, their urge to excel in their job is more than others, significantly influencing their job performances. This is why career management for the employees is also an important issue of talent management. Both formal and informal activities, e.g. job rotation, job enrichment, career progress ladders, workshops etc., are handled carefully in career management (Allen, 2005).

 

Based on the above discussions following hypothesis are taken: 

H1: Talent retention has a positive assertion with employee performance of service SMEs. 

H2: Talent attraction has a positive assertion with employee performance of service SMEs.

H3: Learning and development have a positive assertion with employee performance of service SMEs.

H4: Career management has a positive assertion with employee performance of service SMEs.

2.5 Conceptual Framework

Based on the above hypothesis, the following conceptual framework has been designed. It illustrates how the independent variable, i.e. talent management, talent attraction, learning and development and career management, can affect the dependent variable, which is employee performance. Sub-factors of both these independent and dependent variables are also shown in this diagram. 

 

Fig: Conceptual Framework (Mangusho, Murei and Nelima, 2015)
3. Methodology
3.1 Research Philosophy

The philosophy of the research mainly establishes the researchers’ viewpoints about the study. Various types of research philosophies are adopted by the researchers based on their requirements. There are mainly four popular types of research philosophies, and in this study, the researcher has chosen the positivism philosophy. Positivism philosophy is also the most popular among the research philosophies. Because; this philosophy helps the researchers with external and objective focused output. This philosophy also provides the idea that only the observed fact and data can provide the true output. Another reason behind the popularity of this philosophy is that it can categorise social activity or another phenomenon very easily. 

This study has adopted positivism philosophy because it provides evidence and objective meaning to the study. Since this study aims to find out the true impact of talent management on employee performance, objective meaning and evidence are required to investigate the issue. 

3.2 Research Approach

Research approaches refer to the mechanism of testing the process of building new theories or previous theories in the study. Two popular research approaches are the deductive approach and the inductive approach. The inductive approach helps the researcher to create new theories. For example, the researcher already knows the true impact of the independent variable on the dependent variable; but the researcher tries to determine the reasons behind those impacts. In this research, the researcher has taken the deductive approach. Because; in this deductive approach, the researcher tries to evaluate the theories established by previous empirical studies. Here, the researcher tries to test hypotheses of talent management affecting employee performance, and these hypotheses are taken based on empirical studies. 

3.3 Research Method

Two popular categories of research methods are the qualitative method and quantitative method. Researchers use this method based on their requirements. The quantitative method provides reliability to the study, whereas the qualitative method provides validity. For this reason, the researcher has chosen both the quantitative and qualitative method for this study. 

The qualitative method provides more validity to this study because it will help the researchers evaluate the subjective outcomes of the impact of talent management on employee performance. And subjective outcomes are considered more valid than objective outcomes. 

On the other hand, the quantitative method will provide more reliability to this study because this method will help the researcher gather more data from the sample since collecting the quantitative data is easier. And quantitative data also provides an objective output that can be generated by universal mathematical or statistical analysis. So, because of the bigger sample size and universal analysis system of quantitative data. 

3.4 Research Strategies 

 The planning of data collection procedures is known as a research strategy. There are many research strategies, e.g. ethnography, grounded theory, survey, archival research, case study, experimental and quasi-experimental. Among all these experimental strategies is considered to be the most accurate. It has one control group and one experimental group. Here, the experimental group is exposed to all kinds of interventions or treatments, whereas the control group is not exposed. But conducting an experimental strategy is very costly and time-consuming. 

So, in this study, the researcher has chosen the survey strategy. Because; with survey strategy, the researcher can collect both quantitative and qualitative data from the employee and management of the service SMEs very efficiently and quickly. So, a survey strategy can be a very effective tool for this strategy, and it’s also very accurate. 

3.5 Sampling Method 

The researcher will choose the random sampling method for the quantitative data collection to reduce the biases. Data from the 10 different service SMEs will be collected for this study. And; the researcher plans to collect survey data of at least 100 employees from those SMEs about their experience of talent management and performance. 

The researcher plans to conduct non-probability sampling for qualitative data collection. Here, the researcher will interview 5 HR managers of 5 different services SMEs to collect their views about the impact of talent management on employee performance. 

3.6 Ethical Consideration

The researcher will try to ensure that no respondent of this study is harmed physically or mentally because of this research purpose. First, the researcher will ensure that all the respondents participate in this research voluntarily and voluntarily. And; the respondents will also be made well-aware of the aspects of this study. Second, the researcher will also not pass the participants’ data to the third party without their permission. Finally, the researcher will keep the respondents’ data with high security to avoid leakage. For example, the data will be password protected in the cloud storage system.

 

4. Access to Primary and Secondary Data

The researcher needs to possess some resources to collect the primary and secondary data from the study respondents. So; the researcher’s access to these resources and data collection techniques of both primary and secondary data is discussed below: 

4.1 Secondary Data 

The secondary data are empirical studies, journals, articles, and books, etc., material. Collecting secondary data is comparatively cheap and easier. Previously, researchers needed to go to the public library to collect secondary data. But now, in this study, the researcher can collect the secondary data sitting at home. For this, the researcher will only need to have access to the personal computer and internet connection. And so, the researcher will be able to download all the secondary data online.  

4.2 Primary Data

Collecting primary data from the respondents is comparatively difficult and time-consuming. Here, the researcher will also need a computer, internet access and a mobile phone. Furthermore, the researcher will also need the consent form of the voluntary respondents and the authentication letter of the study to collect the primary data. Both survey questionnaire and interview will collect primary data. 

4.3 Survey Questionnaire

The researcher plans to collect the respondents from the employees of service SMEs through a Google questionnaire. It is a lot easier and cheap. The researcher will forward the Google form link to the voluntary respondent via email or social media platforms. Google form will also help the researcher to collect a lot of responses in the shortest possible time. The researcher plans to survey at least 100 employees through this Google form. 

4.4 Interview

The researcher will select 5 HR managers from the different service SMEs and try to have an appointment via email or telephone. Authentication letters of this study may need to get their appointment. The researcher plans to ask at least 10 questions about talent management and employees’ performance. The researcher will use the voice recorder of the mobile phone to record the whole conversation so that nothing is missed. 

4.5 Data Analysis 

The researcher plans to analyse quantitative data by SPSS software and Microsoft Excel. And; he also plans to analyse the qualitative data, i.e. interview by thematic analysis. 

 

 

 

 

 

 

 

 

 

References

Allen, D.G. (2006). Do organisational socialisation tactics influence newcomer embeddedness and turnover? Journal of Management, 32, 237-256.

Anitha, J., 2014. Determinants of employee engagement and their impact on employee performance. International journal of productivity and performance management, 63(3), p.308. 

Baublyte, D., 2010. Talent management: Myth or Reality in Today’s SMEs: A study into the importance and use of talent management within small and medium-sized enterprises. 

Kikoito, J.N., 2014. Impact of Reward Systems on the Organizations Performance in Tanzanian Banking Industry: A Case of Commercial Banks in Mwanza City 

LENKA, M.F.N.U. (2017),” Talent Management: a burgeoning strategic focus in Indian IT industry “, Industrial and Commercial Training, Vol. 49(4) pp. 3-13

Mangusho, Y.S., Murei, R.K. and Nelima, E., 2015. Evaluation of Talent Management on Employees Performance in Beverage Industry: A Case of Delmonte Kenya Limited. International Journal of Humanities and Social Science, 5(8), pp.191-199. 

Oehley, A. (2007). The development and evaluation of a partial talent management competency Model. Unpublished thesis. Stellenbosch. University of Stellenbosch. 

Poochaoren, O., Lee, C. (2013), “Talent Management in the Public Sector A Comparative Study of Singapore, Malaysia and Thailand”, Lee Kuan Yew School of Public Policy, pp. 1-31

Rhodes, C., 2017. Business statistics. Briefing paper, 6152.

Statista.com (2018). UK: SMEs industry sectors 2018 | Statistic. [online] Available at: https://www.statista.com/statistics/701574/monthly-sme-industry-sectors-uk/ [Accessed 9 Oct. 2018].

William, A.N., 2010. Employee motivation and performance. Mikkeli University of Applied Science, Finland. 

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