RESEARCH OVERVIEW

1.0 Introduction
Talent management has been an important part in HR practice, because sourcing, recognizing
and developing talent for organizations is crucial for the development and survival of
companies nowadays. A growing threat which might also prove an opportunity to HR is the
advent of Industry 4.0, which has the potential to make or break an organization’s HR
process. As blockchain is one of the new technologies gaining acceptance and widespread
use in our world as a buttress to Industry 4.0, it has become imperative for organizations to
utilize it to its advantage. One of the functions of blockchain is to safeguard employees’
personal information while applying for jobs, performing training and development and other
tasks.

1.1 Research Background

1.1.1 Talent Management

Talent management is defined as an organization's commitment to recruit, hire, retain, and

develop the most talented and superior employees available in the job market. Talent
management was first developed by McKinsey’s research in 1997, and later grew in
popularity in the coming years. Talent management is actually is made up of the work
processes and systems that are related to retaining and developing a superior workforce in
order to gain competitive advantage for a firm.

Talent management is similar to traditional HR practices but beneath the similarities lie a
few defining characteristics that makes talent management stand out on its own. A defining
characteristic of talent management is its focus on the key employee group instead of
multinational ones (Scullion et al., 2010). The main difference is talent management’s focus
on the manager's role as responsible for the life cycle of an employee within an organization,
as opposed to human capital management or performance management in normal HR
practices. Besides, talent management is a strategic process, looking at employees as a
company-wide, long-term plan closely associated with overall business goals, while HR is
more tactical.
Talent management is used as the following business strategies by organizations to recruit
and retain talented employees:

 Recruitment planning meeting

 Job description development
 New employee welcome information and introductions
 On-the-job training
 Goal setting and feedback
 Coaching and relationship building by the manager
 Formal feedback systems such as performance

1.1.2 Industry 4.0

Industry 4.0 is actually the 4th industrial revolution that has occurred in manufacturing. The
current industrial revolution represents the 4th such that has occurred in each century for the
past four centuries, from the original industrial revolution in the 18 th century to the 2nd which
occurred in the 19th century, and the 3rd which occurred in the 20th century. The original
industrial revolution focused on the discoveries of mechanizations using steam and coal, and
spawned an explosion of transport and manufacturing with such machines as the steam engine
and the first mechanized mills. The 2nd industrial revolution spearheaded the process of mass
production, which first originated with the car assembly line by Ford. The 3 rd industrial
revolution involved the development of computerization, the advancement of the Internet and
the beginnings of automation. The fourth industrial revolution meanwhile builds on the
progress started in the third by enhancing it with smart and autonomous systems fueled by
data and machine learning (Marr, 2018). Industry 4.0 is merely the present progress of the
evolution of manufacturing to suit the needs of our ever sophisticated humans, and is certainly
not the last of such revolutions.

To focus specifically on Industry 4.0, it is necessary to know in brief its characteristics,

mainly big data, 3D printing, internet of things, cloud computing, cybersecurity, integration of
systems, simulations, automations of robots and augmented reality.
Internet of Things and the cloud: Internet of Things is characterized by connected devices.
This helps people and firms be connected in real time and also helps operations, by leveraging
the insights of others using the same equipment.

Augmented Reality: Augmented reality is the blending of interactive digital elements – like
dazzling visual overlays, buzzy haptic feedback, or other sensory projections – into real-world
environments.

Big Data: Big data is a term that describes the large volume of data, both structured and
unstructured, that businesses face on a day-to-day basis. Big data is usually stored in places
like the cloud and represents the basic volume of information that helps organizations gain
and maintain competitive advantage, buttress strength, and identify opportunities.

Cybersecurity: Cybersecurity is the practice of protecting systems, networks, and programs

from digital attacks. These involves getting and using security to protect and safeguard one’s
personal information stored online from attacks such as accessing, changing, or destroying
sensitive information; extorting money from users; or interrupting normal business processes
(CISCO, n.d.).

Systems Integration: System Integration is the process of integrating all the physical and
virtual components of an organization’s system, in order that they act as one unified system
with the many components supporting each other. The physical components consist of the
various machine systems, computer hardware, inventory, etc. The virtual components consists
of data stored in databases, software and applications.

Automation of Robots: Once only possible for large enterprises with equally large budgets,
robotics are now more affordable and available to organizations of every size. From picking
products at a warehouse to getting them ready to ship, autonomous robots can quickly and
safely support manufacturers. Robots move goods around Amazon warehouses and also
reduce costs and allow better use of floor space for the online retailer.

3D Printing: This technology has improved tremendously in the last decade and has
progressed from primarily being used for prototyping to actual production. Advances in the
use of metal additive manufacturing have opened up a lot of possibilities for production.
Industry 4.0 is still in its infancy, so the full effects are not apparent. However, organizations
need to adopt it as a tool to strengthen their position in order to realize Industry 4.0's potential.
Moreover, companies also need to utilize its characteristics to grapple with issues like talent
management in order to upskill their current workforce to take on new work responsibilities
made possible by Internet 4.0 or to recruit new employees with the right skills.

1.1.3 Talent Management and Industry 4.0

In the field of HR, Industry 4.0 heralds the innovation of smart businesses and smart factories,
changing the way that HR functions in the fields of recruitment, onboarding, learning and
development, social sharing, and crowd-sourced feedback (Shamim et al., 2016).

According to Sivathanu and Pillai (2018), benefits and challenges are outlined below:

SHR 4.0 implementation challenges are:

 selecting the right set of new technological tools;

 overcoming the existing organizational culture; and
 managing multi-generational employee expectations.

SHR 4.0 adoption benefits are:

 attract, develop, and retain new-age talent;

 efficient and faster HR operations; and
 leaner HR departments.

Talent is a key resource in the development of Industry 4.0 and is needed to integrate related
technology (e.g. IoT, big data, and cloud computing). Talent is then applied to manufacturing
processes, logistics, and services (Chang and Yeh, 2018). As studies have shown that AI
systems and robots, regardless of how advance they are, do not have yet the potential to usurp
human jobs. Therefore, the need for talent in staffing organizations are as important as before,
as the disruptive technologies brought about by Industry 4.0 requires new skills and mindsets
to master them for competitive advantage.

Not only technological innovations, the industry is also witnessing changes in employee
generations joining the organizations, and it is expected that by 2020, half of the workforce
will comprise millennial or Gen Y (born between 1980 and 2000) employees. Gen Y and Gen
Z (born after 2000) have grown in the era of internet, social media, and smartphones and have
different expectations from their employers such as anytime–anywhere collaboration, instant
feedback, open culture, and data-driven decisions (Sivathanu and Pillai, 2018). As talent
requirements vary between generations, by identifying suitable talent, companies can allocate
talent development resources more efficiently; hence, identifying talent has become a major
priority.

1.1.4 Blockchain

A blockchain draws its security benefits from the decentralized nature of its nodes (i.e. the
computers that verify transactions on the blockchain). Because the ledger (record of
transactions) is public, no one can secretly make changes. And when a change is made, the
other nodes on the system all need to agree to the change before it enters the record.
Blockchain offers the independence of a decentralized database, without the need for third
party verification (Vara, Prieto, Prieta & Corchado, 2018; Banerjee, 2018; Kaijun, Ya, Linbo,
Chi, & Nieuwenhuyse, 2018). In a blockchain system, nobody owns the database but each
members of the network has their own copy of data that allowed the each member to verify
their own copy of data by matching their data from other members. It provides a way to
preserve an indelible record of transactions that have happened. Therefore, with the existence
of blockchain system in talent management, HR staff are able to eliminate the employment of
third party agencies or certifying agents in providing verification services when hiring
potential individuals (Banerjee, 2018; Koetsier, 2017). Hence, elimination of third party
agencies helps greatly in reducing cost, speeding up business processes and employee
recruitment and training which would largely benefit talent management in organizations.

However, there are a number of flaws in the design of blockchain technology. A stark
weakness is that all public blockchains are vulnerable to 51 percent attacks. 51 percent attacks
is when hackers produces more than 50 percent of a blockchain’s computing power. Thus, by
majority control the hackers become the network majority and can assume control of the
entire blockchain, allowing them to perform disruptive actions like preventing other
participants from creating blocks, or even preventing transactions altogether.
 Another flaw is contract enforceability through blockchain usage. A signature
characteristic of blockchain is its ability to cut out the middleman, thus slashing costs and
increasing security when undertaking complex transactions. But given that smart contracts
made through bloakchain are pure computer code, scholars, firms and policymakers find it
highly debatable about whether they meet the definition of a contract in the traditional sense.
At the very least, firms need to make sure all smart contracts made with employees and
applicants need to have a very clear dispute resolution process attached, in order to prevent
unnecessary lawsuits.

1.2 Problem Statement

Nowadays privacy is an important concern for organizations, who face enormous pressure to
safeguard their employees’ personal information. It is a widely known fact that companies
have used the personal information of employees and applicants, or sold them to third party
firms. Some of the most sensitive information is contained within a firm’s HR files. Much of
the information detailed in employee files is helpful or necessary for operations, ensuring that
employees are compensated in a timely manner and that all reporting is completed according
to legal requirements. However, this same information is valuable and tempting for hackers
and thieves.
Security breaches can be devastating to a company’s employees and can sully a
company’s reputation. Additionally, new privacy laws under the Personal Data Protection Act
2010 (PDPA) which came into force in Malaysia in 2013 with the objective of protecting the
personal data of individuals with respect to commercial transactions (PWC, n.d.). It is of the
greatest concern to organizations to adopt proactive stance in order to keep employee data safe
and secure.
While an HRIS already comes with certain security measures in place, adopting
blockchain may prove to be an effective way of keeping those data secure, and ensuring there
is no element of fraud in employee data.
Hence, blockchain as a conduit of Industry 4.0 is needed to safeguard the information of
employees, either potential or current. To highlight one of the characteristics of Industry 4.0,
cybersecurity, blockchain is seen as a way of protecting the personal information employees
and applicants contained within HR databases and systems.
Literature Review

A study on Industry 4.0 and the need for talent in Taiwanese companies by Chang and Yeh
(2018) found that talent is a key resource in the development of Industry 4.0. However, scholars
have not considered talent from the viewpoint of companies having previously focused on micro
factors like individual employee behavior. They attempt to address this omission by using a
multiple case method to analyse companies’ need for talent and its acquisition. They find that
companies need talent in the areas of lean management, the Internet of things (IoT), cloud
computing, and big data as those are potential disruptors caused by the advent of Industry 4.0,
which can potentially change the way HR works. They also prove that Industry 4.0
implementation does not affect job numbers; however, companies must adjust their talent
development practices.

A reason why Industry 4.0 is changing the way talent management works is pointed out
by Sivathanu and Pillai (2018) that an organization would require a successful SHR 4.0 strategy
to cope up with Industry 4.0 transformation challenges. In their article they argue that in order
for an organization to utilize Industry 4.0 better, it needs to invest in emerging technologies such
as Big Data and AI, which will automate most of the HR processes resulting in efficient and
leaner HR teams. They also mention that in order to attract younger talent, HR needs to invest in
smart mobile apps along with AR/VR which will facilitate remote interactions between teams.
Moreover, organization structure and leadership style would need to be changed in order for
efficient SHR 4.0 implementation that would allow HR departments to play a more strategic role
in the overall organization growth. Building on the literature is Sparrow and Makram (2015),
who used the concept of talent philosophy and a theory of value to classify talent management.
Their core meaning of the preceding is that that talent management is the combination of
systems, processes and practices developed and implemented by an organization to ensure talent
is managed effectively. They identified four talent management philosophies, mainly talent
management as the categorization of people, talent management as the management of positions,
talent management as the identification of strategic pool and management if human assets as a
collective, and the presence of key practices. They then simplify it back down to a theory of
value, based on four separate value-generating processes (value creation, value capture, value
leverage and value protection). All in all, they attempt to address the base concept of talent
management as a process conducted by organizations to provide value to employees through the
four philosophies above.

Tafti, in his 2017 research, helps to put these abstract terms in more layman terms in his
definition of what actually is talent management. To him, talent management includes a
complete set of processes, mainly talent acquisition, talent development and talent retention in
order to identify, employ and manage individuals to implement business strategy successfully.

1. Talent acquisition: talent acquisition is the process of identifying, attracting

and evaluating top talents by using assessment and development centers.

2. Talent development: after identifying potential talents, training programs are

presented to develop their competencies.

3. Talent retention: one of the problems that organizations usually face is that
developed and trained talents are attracted by competitors. Therefore, retaining
systems to preserve talents is one of the main components of talent
management systems.

To understand how talent management has influenced the way HR operates in these
dynamic times, the challenges and opportunities of talent management must be outlined. Collings
(2014) noted that a combination of global mobility and global talent management can help
multinational enterprises to be successful. Other important variables influencing those are human
capital, social capital and dynamic. Barriers to success are listed agency and bounded rationality
theories. The agency theory is formed when the goals and interests of global firms are not
aligned, which will result in key managerial personnel not applying effective management of
talent for the company, but focus instead on self-serving reasons. Another main barrier is the
bounded rationality theory, whereby decision-makers classify talent using extremely complicated
processes which are beyond the comprehension of most managers, forcing them to make
decisions based on insufficient amounts of information.

References

Collings, D. A. (2014). Integrating global mobility and global talent management: exploring the
challenges and strategic opportunities, Journal of World Business, 49 (2), 253-61.

Chang, Y. H., & Yeh, Y. J. Y. (2018). Industry 4.0 and the need for talent: a multiple case study
of Taiwan’s companies. International Journal of Product Development, 22(4), 314.

Heathfield, S. (2019). What is talent management really about? Retrieved from

https://www.thebalancecareers.com/what-is-talent-management-really-1919221

Marr, B. (2018). What is industry 4.0? here's a super easy explanation for anyone. Retrieved
from https://www.forbes.com/sites/bernardmarr/2018/09/02/what-is-industry-4-0-heres-a-
super-easy-explanation-for-anyone/#5dfc92f69788

PDPA (n.d.). Personal Data Protection Act. Retrieved from

https://www.pwc.com/my/en/services/assurance/pdpa.html

Price, D. (2018). 5 big blockchain issues: security, privacy, legal, regulatory, and ethical.
Retrieved from https://blocksdecoded.com/blockchain-issues-security-privacy-legal-
regulatory-ethical/

Riersema, D. (2018). The latest on hris data, security, and privacy. Retrieved from
https://www.hrispayrollsoftware.com/hris-data-security-and-privacy/

Scullion, H., Collings, D.G. & Caligiuri, P. (2010). Global talent management. Journal of
World Business, 45(2), 105-8.
Sivathanu, B., & Pillai, R. (2018). Smart HR 4.0 – how industry 4.0 is disrupting HR. Human
Resource Management International Digest, 26(4), 7–11

Sparrow, P. R., & Makram, H. (2015). What is the value of talent management? Building value-
driven processes within a talent management architecture. Human Resource Management
Review, 25(3), 249–263.

Tafti, M. M., Mahmoudsalehi, M., & Amiri, M. (2017). Critical success factors, challenges and
obstacles in talent management. Industrial and Commercial Training, 49(1), 15–21.