Talent management practice effectiveness: investigating employee perspective

Abstract

Purpose
The purpose of this paper is to enhance the theoretical and empirical understanding of the process through which talent management (TM) practice effectiveness impacts high-potential employees’ commitment to leadership competence development.

Design/methodology/approach
Structural equation modelling was utilized to analyse survey data representing a sample of 439 high-potential employees from 11 Finnish multinational corporations.

Findings
First, the authors found that the more high-potential employees perceived TM practices to be effective, the more they were committed towards leadership competence development. Next, the findings revealed that the association between TM practice effectiveness and commitment to leadership competence development operates by means of psychological contract fulfilment. Finally, the authors found that female employees possessed a stronger reaction to the effectiveness of TM practices by demonstrating higher levels of commitment to leadership competence development than male employees.

Originality/value
This study supports social exchange theory, which postulates that when organizations invest in their employees, the employees are likely to reciprocate these corporate investments in positive ways. The findings indicate that TM practices may help high-potential employees to make sense of their employment relationship and communicate to employees those attitudes and behaviours that organizations value. The authors thus advocate that in order to have the desired effect, such as for instance the increased commitment to leadership competence development, it is crucial for organizations to invest in those TM practices that are perceived as effective by employees.

Full text

Employee Relations
Talent management practice effectiveness: investigating employee perspective
Violetta Khoreva Vlad Vaiman Maarten Van Zalk
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Violetta Khoreva Vlad Vaiman Maarten Van Zalk , (2017)," Talent management practice effectiveness:
investigating employee perspective ", Employee Relations, Vol. 39 Iss 1 pp. 19 - 33
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Talent management practice
effectiveness: investigating
employee perspective
Violetta Khoreva
Department of Management and Organization,
Hanken School of Economics, Vaasa, Finland
Vlad Vaiman
School of Management, California Lutheran University,
Thousand Oaks, California, USA, and
Maarten Van Zalk
Münster University, Münster, Germany
Abstract
Purpose –The purpose of this paper is to enhance the theoretical and empirical understanding of the process
through which talent management (TM) practice effectiveness impacts high-potential employees’
commitment to leadership competence development.
Design/methodology/approach –Structural equation modelling was utilized to analyse survey data
representing a sample of 439 high-potential employees from 11 Finnish multinational corporations.
Findings –First, the authors found that the more high-potential employees perceived TM practices to be
effective, the more they were committed towards leadership competence development. Next, the findings
revealed that the association between TM practice effectiveness and commitment to leadership competence
development operates by means of psychological contract fulfilment. Finally, the authors found that female
employees possessed a stronger reaction to the effectiveness of TM practices by demonstrating higher levels
of commitment to leadership competence development than male employees.
Originality/value –This study supports social exchange theory, which postulates that when organizations
invest in their employees, the employees are likely to reciprocate these corporate investments in positive
ways. The findings indicate that TM practices may help high-potential employees to make sense of their
employment relationship and communicate to employees those attitudes and behaviours that organizations
value. The authors thus advocate that in order to have the desired effect, such as for instance the increased
commitment to leadership competence development, it is crucial for organizations to invest in those TM
practices that are perceived as effective by employees.
Keywords Gender, Employee attitudes, Employee development, Human resource management,
Employee participation, Psychological contracts
Paper type Research paper
Introduction
Academics and practitioners agree that talent management (TM) continues to be one of the
priorities for organizations worldwide, since it can represent a source of sustainable
competitive advantage in the highly dynamic and often uncertain market environment of
the twenty-first century (Cascio and Boudreau, 2016; Meyers and van Woerkom, 2014;
Vaiman et al., 2012). Building on other existing definitions, we refer to TM as one of those
HRM-related “activities and processes that involve the systematic identification of key
positions that differentially contribute to the organization’s sustainable competitive
advantage, the development of a talent pool of high-potential and high-performing
incumbents to fill these roles, and the development of a differentiated human resource
Employee Relations
Vol. 39 No. 1, 2017
pp. 19-33
© Emerald Publishing Limited
0142-5455
DOI 10.1108/ER-01-2016-0005
Received 8 January 2016
Revised 19 August 2016
Accepted 22 August 2016
The current issue and full text archive of this journal is available on Emerald Insight at:
www.emeraldinsight.com/0142-5455.htm
The authors are grateful to Hanken & Stockholm School of Economics Executive Education, and
particularly to Dr Sari Salojärvi for providing the data for this research, and to the Foundation for
Economic Education (Liikesivistysrahasto) (December 2015) for financing this research.
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architecture to facilitate filling these positions with competent incumbents, and to ensure
their continued commitment to the organization”(Collings and Mellahi, 2009, p. 305).
Notwithstanding the magnitude of TM, organizations continue to face severe difficulties in
keeping high-potential employees committed and satisfied (Beamond et al., 2016). It is not
surprising thus that both academics and practitioners have become increasingly interested in
studying the attitudes of this type of employee (Farndale et al., 2014; Meyers and van
Woerkom, 2014; Swailes and Blackburn, 2016). However, although the significance of TM
practices has been widely acknowledged by both scholars and practitioners (Björkman and
Mäkelä, 2013; Hartmann et al., 2010; Thunnissen, 2016), there has been limited research on the
association between the effectiveness of TM practices and high-potential employees’attitudes
and behaviours (Hartmann et al., 2010). This may be a serious omission for several reasons.
First, TM practices (also sometimes referred to as developmental activities or leadership
development activities) are priority practices widely used by many organizations for the
development of high-potential employees (Hartmann et al., 2010; Khoreva and Vaiman, 2015;
Thunnissen, 2016). TM practices can be defined as demanding assignments that expand the
capacity of high-potential employees to perform global leadership roles in the future
(Björkman and Mäkelä, 2013). TM practices may fulfil high-potential employees’needs and
generate favourable attitudes and behaviours that can result in superior performance
(Kuvaas, 2008). Second, TM practices can facilitate greater commitment by high-potential
employees to the organization and increase their motivation to work hard to support
organizational effectiveness (Lee and Bruvold, 2003). Next, TM practices allow high-potential
employees to become more agile, which is necessary in order to compete in a modern
unpredictable business world and expand high-potential employees’capacity to be effective in
leadershiproles and processes. Finally, these practices fulfil the need for organizations to meet
their future requirements for high-potential human capital (Collings and Mellahi, 2009).
Yet, lack of effective TM practices may lead to failed assignments and significant financial
costs (Yan et al., 2002), or to high-potential employees shying away from developmental but
high-risk activities (Björkman and Mäkelä, 2013). This may indicate missed opportunities for
both high-potential employees and their employers.
Commitment to leadership competence development among high-potential employees is
central to the overall competitiveness of organizations; it may also lead to better leadership
and superior performance (Collings and Mellahi, 2009). With a commitment to leadership
development, high-potential employees tend to compete for higher positions, develop their
knowledge and skills and thus strengthen the overall organizational effectiveness
(Björkman et al., 2013). Even though commitment to leadership competence development
has been found to be a vital antecedent of positive organizational outcomes in previous
empirical research (Björkman et al., 2013), there have not been any studies, to the best of our
knowledge, which have focussed on the association between TM practice effectiveness and
commitment to leadership competence development among talented employees.
Against a background of the discussion above, the aim of this study is to examine the
association between TM practice effectiveness and high-potential employees’commitment
to leadership competence development. In line with other scholars (e.g. Nishii and Wright,
2008), we believe that the causal chain between TM practice effectiveness and high-potential
employees’attitudes may be more complex than previously thought simply because
high-potential employees are likely to perceive, value, and react to these practices differently.
Research models were thus encouraged to contain appropriate controls, perhaps going
beyond those that are typically used and to consider more explicitly alternative
explanations. Particularly, several studies have suggested that since psychological contract
(Rousseau, 1995) between employers and employees is changing, and high-potential
employees worldwide are becoming less loyal (e.g. Hartmann et al., 2010), the role of
psychological contract fulfilment needs to be investigated in TM research.
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In addition, gender inequalities in recruitment, retention, and career development were
suggested to prevent female high-potential employees from achieving equal outcomes at work
as similarly to male high-potential employees (Tatli et al., 2013). The interplay of TM and
gender studies were recommended as a fruitful avenue for future studies (Böhmer and
Schinnenburg, 2016; Tatli et al., 2013). Thereby, in this study, in line with social exchange
theory (Blau, 1964), we investigate the mediating role of psychological contract fulfilment in
the association between TM practice effectiveness and high-potential employees’commitment
to leadership competence development and the moderating role of gender in that association.
Building on social exchange theory (Blau, 1964), the study makes several contributions to TM
literature. First, the study investigates high-potential employees’perceptions of TM practice
effectiveness and their attitudes towards it. Rather than investigating TM practice effectiveness
through the assertions made by supervisors, we focus on high-potential employees’perceptions
of TM practice effectiveness (Boxall et al., 2011; Paauwe, 2009). Second, rather than assuming
that all employees are subject to the same HRM-related practices, we focus on identifying the
target employee group in the examined organizations and on TM practices designed particularly
forthisemployeegroup(Boxallet al., 2011). The target group for this study is defined as high-
potential employees that multinational corporations (MNCs) estimated to be potential top
managers/management team members in the year 2020, based on an explicit formal talent
review process. Finally, in this study, we investigate both mediators and moderators. We study
the factors that connect TM practices to high-potential employees’attitudes that have largely
remained a void (Chang, 2005). By highlighting the intervening function of these intermediary
factors, we aim to provide a deeper understanding of the TM process.
Development of hypotheses
TM practice effectiveness
Social exchange theory provides a useful lens for understanding how perceived TM practice
effectiveness may generate positive high-potential employees’attitudes. The theory
suggests that when organizations invest in their employees, they are likely to reciprocate
these corporate investments in positive ways (Björkman et al., 2013; Cropanzano and
Mitchell, 2005). The empirical evidence, based on the concept of social exchange and the
norm of reciprocity, also suggests that inducements, such as positive and beneficial actions
directed at employees by the organizations, create conditions for employees to reciprocate in
positive ways (Settoon et al., 1996).
In line with social exchange theory, we argue that TM practices provide an arena for
high-potential employees to reciprocate in positive ways. TM practices may influence
how high-potential employees perceive and react to organizational signals; they can,
intentionally or unintentionally, send signals that high-potential employees interpret and make
sense of to form an understanding of desired reactions (Collings and Mellahi, 2009). Overall, the
goal of designing and implementing TM practices is to structure it in a way that leads to
increased cognitive skills relevant to the job and/or the organization, increased task productivity,
and increased contextual behaviours of high-potential employees (Collings and Mellahi, 2009).
Hence, when organizations invest in their high-potential employees by getting them involved in
TM practices, high-potential employees can reciprocate this investment by committing to
leadership competence development. In order to do so, employees may look for TM practices
which they perceive to be the most effective (De Pater et al., 2009; Khoreva and Vaiman, 2015).
Since commitment to leadership competence development represents one of the
desired high-potential employees’attitudes to TM (Björkman et al., 2013), we suggest that
when high-potential employees undertake TM practices offered by organizations and
perceive them to be effective, they will return this organizational investment in a form of
increased commitment towards leadership competence development. In other words,
high-potential employees are unlikely to reciprocate in a form of increased commitment to
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leadership competence development unless they perceive TM practices to be effective.
Therefore, we expect:
H1. TM practice effectiveness is positively related to commitment to leadership
competence development.
Psychological contract fulfilment
Although scholars agree that TM practice effectiveness is likely to be associated with
positive high-potential employees’attitudes (Chang, 2005), the causal chain may be more
complex than previously thought, since high-potential employees are likely to perceive,
value, and react to TM practices differently. Within the psychological contracts literature,
these dynamics have been studied in terms of employee perceived inducements and
employee-felt obligations to contribute to the organization (Rousseau, 1995).
Psychological contract reflects employee perceptions of the rules of the exchange
relationship between the employer and the employee, as well as the resources that are
exchanged. Psychological contract describes what employees believe they owe to their
employer and what they believe they are owed in return (Dulac et al., 2008). In essence,
psychological contract indicates the nature of organizational inducements and the
behavioural criteria upon which they are provided (Shaw et al., 2009). Psychological contract
fulfilment can significantly impact an array of employee attitudes and behaviours such as
job satisfaction, organizational commitment, turnover intentions, and actual turnover and
performance (Rousseau et al., 2011).
TM practices can convey the employer’s future intentions, which suggest future
opportunities for high-potential employees. High-potential employees who perceive that the
organization has invested in the employment relationship may feel an obligation to repay
the investment (Cole et al., 2002). Furthermore, given the prevailing notion of reciprocity,
such signals can impact the way high-potential employees feel about and behave towards
the organization through the psychological contracts they create (Rousseau, 1995). To the
extent that high-potential employees perceive that qualities and behaviours that reflect their
development are valued and rewarded, they may have an incentive to align their behaviours
and develop desired qualities.
Following the logic of social exchange theory, it seems reasonable to assume that TM
practice effectiveness may not be enough for reciprocity. High-potential employees may
need not only to perceive TM practices to be effective, but they also would need to agree
with the values and logic behind those TM practices, namely, in terms of fairness and
appropriateness (Chang, 2005). Psychological contract fulfilment may encompass this
alignment in terms of TM practice fairness and appropriateness (King, 2016; McDermott
et al., 2013). Hence, the association between TM practice effectiveness and commitment to
leadership competence development may depend on psychological contract fulfilment.
In light of this discussion, we hypothesize:
H2. Psychological contract fulfilment mediates the association between TM practice
effectiveness and commitment to leadership competence development.
Gender
Some attention has been paid to studying the moderators in TM (Paauwe, 2009). Moderated
relationships, theoretically, assume that the impact of one variable on another variable differs
depending upon the level of a third variable (e.g. employee background). Indeed, employee
background may influence the way employees collect, process, store, and use information
from their environments (Shaw, 1990). The association between TM practice effectiveness and
high-potential employees’attitudes may also involve the concept of moderation.
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Although we recognize that male and female employees are more similar than different,
they may react differently to particular TM practices (Böhmer and Schinnenburg, 2016).
Female employees continue to face greater barriers to advancement than their male
counterparts (i.e. glass ceiling). In order to succeed in their careers, female employees may thus
spend the same commitment (as male employees) on undertaking various TM practices, but
they might expect fewer benefits from their efforts. In addition, earlier studies have shown
that male employees tend to support HR practices to a greater extent than female employees,
perhaps because on average, female employees work fewer hours than male employees
(Altonji and Spletzer, 1991). In a similar vein, in a study of male and female executives, Lyness
and Thompson (2000) found that mentoring was more strongly related to career success of
male managers than of female managers. Likewise, Boatwright and Egidio (2003) revealed
that female employees sought feedback to a lesser extent than their male colleagues, in part
because of their own lack of confidence about the nature of the results likely to be obtained,
and in part because of their unwillingness to impose on others’time. Finally, Brammer et al.
(2007) suggested that HR practices were of a lower salience to female employees in their
evaluations of the organization they worked for than for male employees.
Consistent with previous empirical research, we expect male and female high-potential
employees to differ considerably in their perceptions of TM practice effectiveness. Male
high-potential employees are suggested to show stronger reactions to TM practice
effectiveness by demonstrating higher levels of commitment to leadership competence
development than female high-potential employees:
H3. Gender moderates the association between TM practice effectiveness and
commitment to leadership competence development, so that the relationship is
stronger for male than for female high-potential employees.
Method
Participants and sample
The data for this study were obtained in the context of a large-scale project on TM entitled
“Leadership 2020 Talent Survey”. The project was designed and conducted in cooperation
between Hanken and Stockholm School of Economics Executive Education. The largest Finnish
MNCs were invited to participate in the project. The selected MNCs were required to exhibit
superior business performance and reputation as employers. The selected MNCs also needed to
have formal yearly corporate TM systems in place. Eight MNCs joined the project in 2012 and
five joined in 2013. Two MNCs participated in the study in both years. Altogether, 11 Finnish
MNCs took part in the survey and delivered a sample based on a target group definition:
high-potential employees the corporations estimated would be potential top managers/
management team members in the year 2020 based on an explicit formal talent review process.
The target group of high-potential employees received an invitation by e-mail to take
part in the survey, which they completed online. A cover letter explaining the purpose and
scope of the project accompanied the online survey, assuring respondents of anonymity and
stating that participation in the project was voluntary. Two reminders were sent by e-mail
during the data collection period. During the first year, the responses numbered 330
(response rate 56 per cent), and during the second year, they numbered 109 (response rate
69 per cent). We combined both measurements, creating a total sample of n¼439.
We explored differences between the two years by adding time of measurement as a
covariate in all analyses. The detailed statistics are reported in Table I.
Operationalization
TM practice effectiveness. Based on the previous empirical research of Björkman and Mäkelä
(2013), we operationalized TM practice effectiveness by asking the respondents to indicate
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how effective they believed the following TM practices were: “Moving to new positions (for at
least one year) in other countries”,“Moving to new positions (for at least one year) in other
division/business unit”,“Moving to new positions (for at least one year) in other functions
(e.g. service, sales, HR, finance)”,“Doing shorter term job assignments in other countries
(for 2-12 months)”,“Doing shorter term job assignments in another division/business unit
(for 2-12 months)”,“Doing shorter term (for 2-12 months) job assignments in other functions
(e.g. service, HR, finance)”,and“Working on cross-boundary (borders, functions, business
units/division) project assignments alongside regular job”. The questions were rated on a
seven-point Likert scale (from 1 ¼not at all to 7 ¼to a great extent).
To ensure that the respondents participated in the examined TM practices, they were
given the option to check the appropriate column if they had personal experience of
the examined practices. To be included in the study, the respondents needed to have
personal experiences of at least half of the practices. No one was removed from the study
using this criterion suggesting that they all participated in a substantial number of the
examined TM practices.
Commitment to leadership competence development. Based on the previous research of
Björkman et al. (2013), we operationalized the respondents’commitment to leadership
competence development by asking them to rate the extent to which they had made the
following commitments to their employer: “To seek out developmental opportunities that
enhance my value to my employer”,“To build skills to increase my value to my employer”,
Category %
Organization size
o5,000 employees 45.4
5-10,000 employees 27.3
W10,000 employees 27.3
Industry
Industrial machinery and services 45.5
Financial services 18.2
Pharmaceutics 9.05
Public-service provider 18.2
IT services 9.05
Gender
Male 66.9
Female 20.8
Age
1p30 2.4
31-35 15
36-40 21.8
41-45 15
46-50 8.4
51+4.2
Organizational tenure
0-6 months 1.6
7-12 months 3.6
1-2 years 18.4
3-5 years 30.5
6-10 years 17.8
10+years 15.2
Notes: n¼439, sums may not amount to 100 per cent due to missing values
Table I.
Descriptive statistics
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and “To make myself increasingly valuable to my employer”. The questions were rated on a
seven-point Likert scale (from 1 ¼not at all to 7 ¼to a great extent).
Psychological contract fulfilment. This was measured using three items taken from a
six-item scale developed by Robinson and Morrison (2000) to capture a measure of
high-potential employees’perceptions of how well their psychological contracts had been
fulfilled by their employer. Tekleab et al. (2005) reported Cronbach’sαof 0.83 for the
three-item scale which was taken from the original scale of Robinson and Morrison (2000).
Thus the same shortened measure was adopted in our study. Answers were provided on a
seven-point Likert scale (from 1 ¼do not agree to 7 ¼agree entirely). The respondents were
asked to indicate their level of agreement on how well their employer (corporation) had
fulfilled the promises it had made to the employee. The following items were applied:
“All the promises made by my employer during recruitment have been kept so far”;“I feel
that my employer has fulfilled the promises communicated to me”;“So far my employer has
done an excellent job of fulfilling its promises to me”. Cronbach’sαwas 0.95.
Gender. This was measured as a dummy variable (1 ¼male, 0 ¼female) and controlled
for in all analyses.
Control variables. Research has indicated that older employees, having built up more
stable psychological contracts, may react differently to psychological contract fulfilment
than younger employees (Epitropaki, 2013). Additional variance may be introduced by the
respondent’s educational background and length of organizational tenure indicating
differences in current capabilities, which can influence the need for further development.
We thus added four control variables to our model: age (1¼≤30 years, 2 ¼31-35 years,
3¼36-40 years, 4 ¼41-45 years, 5 ¼46-50 years, 6 ¼51+years), education (1 ¼Bachelor,
2¼Master, 3 ¼Doctoral), organizational tenure (1 ¼0-6 months, 2 ¼7-12 months, 3 ¼1-2 years,
4¼3-5 years, 5 ¼6-10 years, 6 ¼10+years), and participation year (1 ¼2012, 2 ¼2013).
Strategy of analysis
Our main research questions concerned the direct and indirect effects between TM practice
effectiveness, commitment to leadership competence development, psychological contract
fulfilment, and gender. To examinethese effects, we used the software programme Mplus. This
programme allows modelling latent variables, which provide an estimate of the association
without measurement error (Kline, 2005). We thus applied a latent model identification
procedure suggested by Kline, where the sample was first divided in two random halves.
We then performed an exploratory factor analysis (EFA) on one-half of the sample, and
attempted to confirm the best solution with a confirmatory factor analysis (CFA) on the second
half of the sample. In doing so, we establish the most robust solution while controlling for
measurement error in the latent constructs (see Little, 2013, for a full discussion).
In the first EFA, we included all the items of TM practice effectiveness. The advantage of
using EFA in Mplus is that missing data are estimated using full information maximum
likelihood, which provides more robust estimates of missing data than list wise deletion or
mean-supplementation methods (Muthén and Muthén, 1998/2012). We evaluated the
solutions based on the four criteria given by Kline (2005): eigenvalues (solutions with values
above 1 are preferred), low cross-loadings, significant and high (i.e. W0.40) loadings to one
latent factor per item, and model fit. The model fit was evaluated according to Little’s (2013)
criteria, with the comparative fit index (CFI) W0.90, the root mean square error of
approximation (RMSEA)o0.05, and the standardized root mean square residual o0.05.
The solution provided with the acceptable result according to these criteria was
subsequently modelled in the second half of the sample with the CFA using the effect coding
method (Little, 2013). In effect coding, each indicator is constrained to be equal to other
indicators giving them equal weight. We evaluated the CFA by using the model fit statistics
specified above, and by judging the factor loading based on their significance and size of the
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regression weights. In sum, we created a latent variable of TM practice effectiveness by first
performing the EFA on the first half of the sample, followed by the CFA on the second half
of the sample. We performed the same procedure for psychological contract fulfilment and
commitment to leadership competence development, thus creating three latent variables.
Next, we created a structural regression model (Kline, 2005) where the three latent
variables were combined[1]. A graphical representation of the model we hypothesized and
finally tested is shown in Figure 1. We used the entire sample for this step. H1 concerned the
positive association between TM practice effectiveness and commitment to leadership
competence development. We thus specified a direct path from TM practice effectiveness to
commitment to leadership competence development. In H2, we expected that psychological
contract fulfilment would mediate the association between TM practice effectiveness and
commitment to leadership competence development. To examine this hypothesis, we specified
two additional paths: one from psychological contract fulfilment to commitment to leadership
competence development, and another from TM practice effectiveness to psychological
contract fulfilment. To be able to examine the indirect effects, we estimated bias-corrected
bootstrapped intervals (t¼10,000) of the indirect effect of TM practice effectiveness on
commitment to leadership competence development via psychological contract fulfilment.
Finally, according to H3, gender would moderate the association between TM practice
effectiveness and commitment to leadership competence development, so that the
association is stronger for male than for female employees. We examined this hypothesis by
creating an interaction effect between gender and TM practice effectiveness. The interaction
effect was then used to predict commitment to leadership competence development, while
controlling for all main effects. All effects in the model were centred. We explored the
interaction effect by plotting the effect using Aiken and West’s (1991) procedure.
Results
Table II shows the descriptives of all variables used in this study. To keep consistent with
the analyses used to test the specific hypotheses, the means, standard deviations, and
correlations were estimated in Mplus.
In all solutions, the one-factor solution had the best model fit. Models with a two-factor
solution did not have a significantly ( pW0.10) better model fit, supporting the one-factor
model fit (Table III). Moreover, the eigenvalues were higher than 1.00, the cross-loadings
were non-significant, and each item loaded significantly ( po0.001) and highly ( pW0.88) on
Independent variables
TM practice
effectiveness
Psychological
contract
fulfilment
Commitment
to competence
development
0.003
–0.123**
0.040
0.102**
0.163**
0.211***
–0.220**
Gender
Mediator/moderator Dependent variable
Notes: The indirect effect of TM practice effectiveness on
commitment to leadership competence development via psychological
contract fulfilment was = 0.012, p= 0.01. **p<0.01; ***p<0.001
Figure 1.
Final model results for
structural regression
model with
standardized
regression weights
and correlations
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one latent factor. Thus, the one-factor solution received most empirical support. As this is
also consistent with the theoretical expectations, we retained the one-factor solution.
We subsequently examined the one-factor solution with CFA (Table III). All model fit
indices supported the one-factor solution. Thus, we proceeded with the models where the
items were used as indicators for a one-model fit.
We combined CFA in one single model using the entire sample to examine the three
hypotheses. Results are shown in Table IV and Figure 1. According to H1, TM practice
effectiveness was positively associated with commitment to leadership competence
development. This hypothesis was supported, even when controlling for effects of gender,
age, education, organizational tenure, and participation year.
According to H2, psychological contract fulfilment mediated the effects of TM practice
effectiveness on commitment to leadership competence development. Table III shows that
the indirect effect of TM practice effectiveness on commitment to leadership competence
development was mediated by psychological contract fulfilment. H2 was thus supported.
H3 posited that the effect of TM practice effectiveness on commitment to leadership
competence development was moderated by gender. We tested this hypothesis by entering
the interaction between gender and TM practice effectiveness while controlling for all main
effects. Findings in Table IV show that this interaction effect was negative and significant.
We explored the interaction effect by plotting it, as shown in Figure 2 (see Aiken and West,
1991, for details). A simple slope analysis showed that both slopes for male (s¼2.01) and
female (s¼0.84) employees were significant ( po0.05). However, in contrast to our
Variables MSD 1 2 3 4 5 6 7
1. Organizational
tenure 1.412 0.843
2. Education 5.103 1.212 −0.037
3. Age 3.834 1.412 0.287*** −0.083**
4. Participation year 1.247 0.421 −0.340*** 0.109** −0.288***
5. Commitment to
competence
development 2.984 1.109 −0.118** −0.080* −0.084** −0.051
6. Psychological
contract fulfilment 5.086 1.138 −0.094** 0.004 −0.019 0.061 0.186**
7. TM practice
effectiveness 5.344 1.067 −0.100** 0.025 −0.032 −0.018 0.242** 0.099*
8. Gender 0.763 0.419 −0.005 0.109** 0.055* 0.132* −0.082* 0.040 −0.216***
Notes: All two-tailed tests. All means, standard deviation, and correlations were obtained by maximum
likelihood estimation in Mplus. *po0.05; **po0.01; ***po0.001
Table II.
Estimated means,
standard deviations,
and correlations
between latent and
observed variables
χ
2
df CFI RMSEA SRSMR
EFA TM practice effectiveness 253.905 20 0.991 0.011 0.041
EFA psychological contract fulfilment 3.129 1 0.990 0.012 0.010
EFA commitment to competence development 1.932 1 0.990 0.031 0.031
CFA TM practice effectiveness 190.29 20 0.993 0.022 0.030
CFA psychological contract fulfilment 4.003 1 0.992 0.021 0.021
CFA commitment to competence development 2.821 1 0.991 0.032 0.034
Structural regression model 517.51 146 0.910 0.041 0.049
Notes: The EFA’s were performed on one randomly selected half of the sample (n¼220) and the CFA’son
the other half of the sample (n¼219). The structural regression model was performed on the entire sample
Table III.
Model fit indices for
exploratory factor
analyses, confirmatory
factor analyses and
structural regression
model
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expectations, the effects of TM practice effectiveness on commitment to leadership
competence development were significantly stronger ( po0.05) for female employees than
for male employees. H3 was thus not supported.
Finally, we explored whether the effects we found depended on the corporation the
respondents belonged to, as it might be conceivable that in some MNCs TM practice
effectiveness has a larger impact on commitment to leadership competence development
than in other MNCs. The same may hold true for the mediation and moderation effects.
We tested this assumption by examining the interaction effects between MNC on the one
hand, and both independent variables, the interaction term, and the mediating variable, on
the other. All interaction effects were non-significant (βo0.01, pW0.10).
Discussion
The global economy generates a competitive environment that is becoming progressively
more dynamic and uncertain for organizations in general and MNCs in particular.
95% confidence
intervals
Standardized
parameters SE
Lower
bound
Upper
bound
Gender →Commitment to competence development −0.003 0.048 −0.082 0.077
Age →Commitment to competence development −0.100* 0.049 −0.298 −0.011
Organizational tenure →Commitment to competence
development −0.101* 0.043 −0.256 −0.021
Participation year →Commitment to competence development −0.104* 0.042 −0.234 −0.012
Education →Commitment to competence development −0.074 0.065 −0.263 0.043
TM practice effectiveness →Commitment to competence
development 0.211*** 0.043 0.043 0.452
Psychological contract fulfilment →Commitment to competence
development 0.163*** 0.012 0.021 0.215
TM practice effectiveness →Psychological contract fulfilment 0.102* 0.049 0.012 0.481
Indirect effects mediation
TM practice effectiveness →Psychological contract
fulfilment →Commitment to competence development 0.012** 0.002 0.002 0.060
Moderation
Gender ×TM practice effectiveness →Commitment to
competence development −0.123*** 0.019 −0.223 −0.060
Notes: *po0.05; **po0.01; ***po0.001
Table IV.
Structural regression
model with mediation
and moderation
effects
TM practice effectiveness
Female employees Male employees
Commitment to leadership competence
development
8
6
4
2
0
Figure 2.
Interaction effects
between TM practice
effectiveness with
gender on
commitment to
leadership competence
development
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Employees who can cope effectively with this complex, vibrant, and often uncertain global
environment are crucial for future organizational effectiveness and sustainable growth
(Caligiuri and Tarique, 2009). These employees are commonly known as high-potential
employees. In line with calls for literature and empirical studies in the field of TM to pay
specific attention to high-potential employees, this study examines the antecedents of
commitment to competence development among this group of employees. Specifically, by
applying social exchange theory, we investigated whether TM practice effectiveness
resulted in increased levels of commitment to competence development among high-potential
employees. Additionally, we analysed whether psychological contract fulfilment had a
mediating role, and gender –a moderating role, in this association. The model was tested on
a data set comprised of 439 high-potential employees from eleven Finnish MNCs.
Our findings suggest that the more high-potential employees perceived TM practices to
be effective the more they were committed to leadership competence development. This
finding is in line with social exchange theory, according to which, inducements such as
positive and beneficial actions directed at employees by the organization create conditions
for employees to reciprocate in positive ways. This finding also indicates that TM practices
may help high-potential employees to make sense of their employment relationship and to
communicate to employees those attitudes and behaviours that organizations value.
Our results also reveal that the association between TM practice effectiveness and high-
potential employees’attitudes is more complex than typically assumed. Specifically, in line
with social exchange theory, our findings demonstrate that it is through the fulfilment of
psychological contract that high-potential employees become more committed to leadership
competence development in response to TM practice effectiveness. This finding leads to the
conclusion that TM practice effectiveness shapes high-potential employees’interpretations
of the terms of their psychological contract, and signals the kinds of attitude that are desired
and rewarded within the organization. High-potential employees may not only need to
perceive TM practices as effective but they may also need to align with the values and logic
behind those TM practices, whereas psychological contract fulfilment may embody this
alignment in terms of TM practice fairness and appropriateness (King, 2016).
Finally, we found that female high-potential employees possess a stronger reaction to
TM practice effectiveness by demonstrating higher levels of commitment to leadership
competence development than male high-potential employees. As Tatli et al. (2013) pointed
out, female employees are less likely than male employees to compete for higher status roles
as female employees shy away from competition and male employees embrace it. Female
high-potential employees might thus consider that their talent remains less visible and
under-valued (Acker, 2006), and thus express a stronger reaction to TM practice
effectiveness. This finding also validates the argument made by both Nishii and Wright
(2008) and Nishii et al. (2008) that a meaningful variability exists within organizations in
terms of employee perceptions of and reactions to HR practices, and that ignoring the
differences among employees and generalizing all types of employees may damage our
ability to understand the process through which HR practices become associated with
employees’attitudes.
Practical implications
The results of this empirical study should be of interest to practitioners. Perceived TM
practice effectiveness was found to positively relate to high-potential employees’
commitment to leadership competence development. We thus advocate that in order to
have the desired effect, such as for instance, the increased commitment to leadership
competence development, it is crucial for organizations to invest in those TM practices that
are perceived as effective by employees. Organizations should keep communicating the
availability and effectiveness of TM practices.
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Since the degree of psychological contract fulfilment was found to be a good predictor of
such an essential attitude as the commitment to leadership competence development, it can
provide valuable insights into why TM practices achieve (or do not achieve) organizational
goals. Organizations should pay closer attention to the fulfilment of psychological contract
as well as focussing on TM practices themselves. Doing so may help organizations to shed
some light on the problematic areas that are not viewed as problematic by organizations but
are perceived as such by high-potential employees.
Finally, we also found that female high-potential employees possess a stronger reaction
to TM practice effectiveness by demonstrating higher levels of commitment to leadership
competence development than male high-potential employees. In practical terms, this
finding indicates that female high-potential employees might be more sensitive to
opportunities for professional development offered by organizations than their male
counterparts. Although the intuitive explanation of this finding can be that female
high-potential employees have a greater appreciation for the availability of developmental
opportunities than male high-potential employees, we assume that organizations should not
take it for granted that male and female high-potential employees differ in their attitudes.
Instead, organizations should minimize the difference in the perceptions of male and female
high-potential employees towards TM practice effectiveness in order to increase
commitment towards leadership competence development among both male and female
high-potential employees. By communicating more thoroughly the value of TM practices to
both male and female high-potential employees and encouraging them to undertake
developmental initiatives, organizations can make best use of the talent available to them.
To do this, they need to encourage, motivate, and develop their high-potential employees
regardless of gender.
Limitations and future research
Employees, and especially high-potential employees, play a central role in organizations.
Uncovering mediators, moderators, and outcomes in the management of these employees
may enable us to identify the current trends within TM, and hopefully, avoid tension in the
future. Our study provides foremost insights into the underlying process by which TM by
means of TM practices becomes reflected in desired high-potential employees’attitudes.
The results of this study must be interpreted cautiously. It is possible that some of the
reported results are inflated by single-source response bias. However, there are several
reasons to suggest that response bias may not be a significant concern here. First, the
construct of TM practice effectiveness was conceptually distinct from the construct of
commitment to leadership competence development. Second, this was supported by the
results of both EFA and CFA, which were reported previously. Next, recent literature has
suggested that single-source response bias is not as prevalent as scholars assumed (e.g. Nishii
et al., 2008) and is seldom a severe enough issue to invalidate research findings. The seemingly
frequent criticism of self-reported data are somewhat exaggerated, since there is rather little
evidence that single-source response method alone is sufficient to produce biases (Spector,
2006). Finally, our study examined high-potential employees’perceptions of TM practice
effectiveness and their attitudes towards it. We thus questioned high-potential employees
themselves and considered them a relevant source for the information targeted. Nevertheless,
future research may consider applying other measures of high-potential employees’
perceptions and attitudes in order to overcome the risk of single-source response bias.
Another limitation refers to thequestion of causality. A frequently cited problem with most
of the research on HRM and TM and its outcomes is that it is difficult to be confident about the
cause and effect relationship (Guest, 2011). For instance, the longitudinal study by Schneider
et al. (2003) challenged the standard assumption that satisfaction, perhaps resulting from good
HRM, leads to higher performance and concluded that the opposite direction of causality is
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also feasible. In a similar vein, high-potential employees who are committed to leadership
competence development may be provided with further developmental opportunities. Future
longitudinal research designed to examine the evolving nature of TM practices over time may
thus be beneficial. In addition, future research may investigate other mediators (e.g. perceived
organizational support, perceived status, organizational identity), and other high-potential
employees’attitudes (e.g. citizenship behaviour, turnover intentions, absenteeism) in order to
provide a more profound understanding of the TM process.
Finally, considering the external validity of the findings of our study, it should be
mentioned that our sample consisted of only Finnish MNCs, and the employee group in
question were high-potential employees. We call for future research on organizations from
other countries and on other categories of employees to examine whether there are any
contextual limitations to the generalizability of our results.
Note
1. We also tested an alternative mediation model, as suggested by Kline (2005). Specifically, when
using TM practice effectiveness as mediator, with psychological contract fulfilment as
independent variable and commitment to leadership competence development as dependent
variable, the model fit was unacceptable and worse ( χ
2
¼1245.31, df ¼146, pW0.0001;
CFA ¼0.67, RMSEA ¼0.235, SRMR ¼0.321).
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Corresponding author
Violetta Khoreva can be contacted at: violetta.khoreva@hanken.fi
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