What is talent management and how does it bring value to your organization?

The term talent management was coined by David Watkins of Softscape in an article published in 1998. Ever since, it has been used widely by human resources specialists across the globe.

In simple words, talent management is about attracting, hiring, identifying, developing, and retaining talent in the organization. Managing and retaining talent enables organizations to efficiently cope with rapidly changing business surroundings.

In 1997, the term war for talent was coined by Steven Hankin of McKinsey & Company, as the majority of organizations were facing a scarcity of talented employees. Today, organizations are still engaged in an ongoing battle to attract and retain talented employees.

This battle takes the front seat for many organizations. Talent management practices help employers meet the crucial need for highly talented employees — a need that is especially acute given the dynamic and fast-paced business landscape.

Here are the top reasons why talent management is essential and why organizations need to invest in it:

Ability to attract top talent: With strategic talent management, you can build a sustainable and attractive employer brand that attracts your ideal talent and, in turn, offers higher levels of business performance and business results.

Engaged employees: When there’s a reasonable talent management procedure in place, employees feel more satisfied at work, which raises retention rates and ensures that the organization can meet its operational needs.

Improved business performance: By investing in talent management, you can motivate employees to attain business goals, improve the customer experience, and boost business performance.

Better understanding of employees: Employee evaluations reveal to management the progression needs, career ambitions, likes and dislikes, capabilities, strengths, and weaknesses of employees. Thus, it becomes easier to see what inspires employees, facilitating the job enrichment process.

Better professional development decisions: Employee development calls for learning, training, progression planning, performance management, and more. Talent management enables the organization to understand what types of development to invest in and what that investment will yield.

There are several components on which HR managers need to work if they want to be on the winning side in the war for talent.

Human capital is gaining more importance in a more sophisticated business environment and among knowledge-based industries. However, in the long run, having a competitive advantage through the development of human resources is a challenge for organizations.

Defining employee job roles and using different channels to attract employees is crucial. Unfortunately, most companies are not successful at sourcing highly talented people for their organization, and only a few have a robust talent pipeline. According to a LinkedIn report, only 30% of companies can fill a vacant role within 30 days.

To attract talent, companies should focus on several key areas including organizational culture, employer brand, the talent management approach itself, and activities for organizational development of talents, which may include training opportunities, succession planning, flexible compensation systems, and career opportunities.

A talent pool is a group of employees considered to have high potential and be high performers, making them candidates for promotion. The trend towards establishing internal talent pools is growing.

Talent pools can be developed in different forms. Pools can be managed through activities such as project-based work, special assignments, and internal recruitment. In another form, you can create different talent pools according to different competency profiles, which entails different career paths and development strategies.

After companies have attracted and identified the most valuable people, the next challenge is developing them to increase their capacity and performance. Although many companies promise superior development opportunities, sustaining this commitment over the long term is difficult.

Talent management processes include nurturing and developing the necessary skills to meet future business needs. Development activities include on-the-job training opportunities, career management, succession planning, coaching, mentoring, and leadership development.

Once talent development is part of the organization’s strategy, key people are developed for key positions, ensuring the company’s competitive advantage.

Training is fundamental in talent management, recruiting, hiring, career development onboarding, performance management, succession management, and leadership. To improve internal talent and employability, you have to provide training and development activities.

HR leaders should design individual talent management programs by taking into account the future needs of positions and the desired level of talent within the organization.

Career management is the process of enabling employees to understand and develop their skills and career interests. A-players have high expectations and want to experience new challenges. If they don’t have that opportunity, they’re likely to leave the organization.

An important contribution to career development is retention strategies. Talent management and career planning complement each other. In a talent management system, talents have individual career plans and expect the organization to help them navigate their career path.

Intense competition and leadership shortages increase the importance of leadership development programs. One of the best ways to develop leaders is to integrate talent management processes with leadership development programs.

According to a study by AIHR, leadership development is one of the most effective talent management strategies. To evaluate the leadership potential of individuals, a performance-potential matrix is commonly used.

Success in acquiring and retaining human capital reduces the cost of acquiring new employees on a continuous basis.

To build effective retention strategies, HR managers should include the following characteristics while creating a workforce management plan:

• Performance management
• Succession planning
• Advancement opportunities
• Competitive compensation practices

Performance management helps organizations to clarify an employee’s role and ensures employee development in areas that correlate with the business’s interests. Moreover, offering rewards to employees based on their performance can result in more effective performance management.

However, organizations should be careful in selecting an effective system or tool to measure and evaluate an individual’s potential and future capability.

The terms talent management strategy and succession planning are often conflated. Although there are similarities between the concepts, differences exist. The components of strategic talent management include identifying key positions, developing an internal talent pipeline, and retaining employees.

Likewise, succession planning includes hiring and replacing key people for key positions. While talent management evaluates all incumbents for different positions at different levels of the organization, succession planning focuses on executive positions. In succession planning, organizational sustainability is closely associated with the success of executive positions within the organization. Hence, the focus of succession planning is on developing future leaders.

By contrast, talent management is concerned with short-term development and long-term success. In talent management, the number of incumbents within talent pools is not restricted by the number of key positions.