Talent Management

What is talent management?

Talent management encompasses all HR processes and strategies to attract, develop, motivate, and retain high-performing employees. The primary aim is to drive performance through integrated people management practices. Let’s break this definition down:

• HR processes: Talent management is about a set of HR processes that integrate with each other. It goes beyond individual HR functions. A talent management strategy requires a holistic outlook on these processes to maximize its potential.
• Key focus areas: Talent management touches on all key functions of HR, including recruitment and selection, learning and development, performance management, tailoring the employee experience, rewards, and optimizing workforce planning and strategy. 
• Employee performance: The ultimate goal of talent management is to improve performance. This is best achieved by creating a system that motivates and engages employees to perform to the best of their abilities. When it’s done right, companies can build a sustainable advantage and outperform competitors through an integrated system of talent management practices that are hard to copy and/or imitate.

HR professionals are primarily responsible for leading talent management efforts. They must develop and implement talent management strategies that align with organizational goals, culture, and values. They must also identify, develop, and evaluate talent pipelines and provide ongoing training and development opportunities for employees at all levels.

Talent management, however, is a collaborative effort that requires the involvement of managers, supervisors, and executives. These individuals provide support and resources to enable the successful implementation of talent management practices.

Why is talent management important?

Here are some of the main reasons why talent management matters in an organization and can play a key role in its success. 

Driving organizational performance

Employees with the right skills and competencies in the correct positions are able to maximize their contribution to the organization, resulting in improved productivity and organizational performance.

By attracting and retaining top talent and creating a culture of performance excellence, organizations can achieve better results and gain a competitive advantage.

Attracting top talent

HR applies effective talent management strategies to help identify the specific skills and qualities they need in new hires, making the recruitment process more efficient and effective.

Boosting the employer brand

When employees feel valued, supported, and invested in, they are more likely to speak positively about their employer. This helps organizations enhance their reputation and employer brand and attract new talent.

Stronger organizational culture 

Implementing talent management practices helps foster a positive and supportive organizational culture, which boosts morale, productivity, and overall performance.

Therefore, HR professionals must prioritize talent management efforts and develop strategies that align with the company’s goals and values.

Better succession management

Effective talent management includes identifying and developing high-potential employees who will assume key roles in the organization in the future. Succession management ensures that critical positions can be filled quickly, minimizing disruptions to business operations and guaranteeing business continuity.

Promoting innovation

By challenging their employees to grow and develop, organizations create an environment where people can voice new ideas and innovate. This enables businesses to stay ahead of the competition by developing and improving their products and services.

Developing employee skills

According to the LinkedIn Workplace Learning Report, 94% of employees claimed they would remain at a company longer if it invested in their careers, while another report found that employees believe professional development is the number one way to improve the organization’s culture. 

Talent management focuses on skill transformation through training, mentoring, and coaching. By investing in employee development, employers encourage performance and career growth. This helps them not only to fill skills gaps and build a skilled workforce but also retain it.

Improving employee retention

Losing top performers is costly, both in terms of recruitment and lost productivity. Talent management practices that prioritize employee engagement, recognition, and career development help retain valuable employees and reduce turnover rates.

Enhancing agility

Businesses that effectively manage talent adapt to changing business circumstances and emerging possibilities more swiftly, which is becoming increasingly important as technology transforms the way we work.

Avoiding unnecessary costs

It can be expensive to recruit and onboard new employees. According to Gallup, hiring a new employee can cost between one-half to twice an employee’s annual salary. High turnover can also disrupt business operations and lower morale. Optimizing talent management practices can lead to significant cost savings and reduce friction.

What are examples of talent management?

Let’s look at how some companies approach talent management in practice.

World Vision

World Vision Canada is the country’s largest private relief and development agency. Their approach to work is centered around people and supported by data. They track a metric they call the “employee delight index” to understand talent health at their organization.

To support employee development, World Vision Canada has launched Agile 101. This program provides immersive training during onboarding, as well as agile tools and role-based training. The goal is to foster self-empowerment in learning rather than imposing a rigid structure. This approach enables individuals to be more adaptable and better equipped to handle any challenges that may arise.

The organization also aims to grow 80% of leaders from within with its performance and development program, “You Matter.”

Hyatt Hotels

With more than 120,000 colleagues across 875 hotels in over 60 countries on six continents, the Hyatt talent management team aims to provide a superior talent experience that would bring purpose to life for every colleague and potential candidate, ultimately benefiting every guest and customer in their hotels worldwide.

They developed and implemented a talent philosophy and mapped it onto a playbook. With a clear framework in place, they were able to optimize their HR processes, tools, and systems globally, eliminating inconsistencies and fragmentation.

A UK insurance company

Burley Consulting collaborated with a top UK insurance company to help them identify and nurture the talent required to thrive in a digital context while also managing the workforce needed to lead their business today. As a solution, Burley built a bespoke business simulation to give high-potential staff and future business leaders the experience of leading the company by embracing digitalization opportunities.

After a simulated three-year period, the hands-on program enabled the insurance company to identify employees who were eager to embrace digitalization. In the end, they managed to strike a balance between nurturing talent and delivering on current business goals.

Walmart

As the world of work began to shift and become increasingly digitized, Walmart recognized a need to create and recruit from new talent pools. In 2011, they acquired a huge mass of digital skills by purchasing a social media company, which became the hub of the retailer’s digital technology division – WalmartLabs. 

Mercy Health

Feeling the pressing need for healthcare workers, Mercy Health Hospital partnered with community colleges to create a paid apprenticeship program for medical assistants. This aimed to meet the talent needs and offered students the opportunity to learn on the job and make money. 

Talent management terms and concepts you need to know

Here are some of the most frequently used talent management concepts and how they can help your organization’s talent management strategy.

Talent management model

A talent management model helps you navigate and optimize your talent management process by visualizing its elements.

The AARRR model (Acquisition, Activation, Revenue, Referral, Retention), also known as the Pirate Metrics model, is a popular framework that typically outlines the various stages of the customer journey. It can also be applied to talent management to help HR professionals envision the employee journey within the organization.

There are five key stages of the AARRR model in talent management:

• Acquisition: In the beginning, HR professionals focus on attracting and sourcing top talent for the company.
• Activation: The next stage is to activate your candidates by selecting your new employees and then onboarding them. 
• Revenue: Getting your employees to bring maximum value to your organization.
• Referral: Leveraging current employees to be brand advocates and refer potential candidates who fit the organization’s culture and values through a rewards program. 
• Retention: Retaining top talent by providing them with meaningful work, opportunities for growth and development, and a positive work environment.

By focusing on each stage of the talent management model, an organization can build a strong workforce to succeed in today’s competitive business environment.

Talent management framework

A talent management framework is an outline or structure that addresses each area of talent management in an organization and details activities that HR can carry out within each area to maximize effectiveness. You can think of it as a talent management plan customized to the reality of your organization. 

A formal talent management framework can serve as a useful checklist when creating or updating your talent management strategy and executing processes. It can help HR professionals focus on the most impactful talent management practices that drive the most value for the company, which leads to greater long-term success.

A typical talent management framework may include the following areas:

1. Talent strategy and planning
2. Talent acquisition
3. Employee performance management
4. Training and development
5. Succession planning and identifying
6. Total rewards

It’s important to note that while beginning with a sample talent management framework is helpful, it must be tailored to fit your unique business, needs, and employees in order to be most effective.

Talent management software

Talent management solutions, such as talent management software or a dedicated talent management platform or system (TMS), help automate repetitive tasks, streamline processes, and offer valuable data on your current talent management strategies.

A talent management system has various features, allowing you to manage job postings, onboard new employees, oversee compensation and benefits, track employee performance, and generate data-rich reports that help you improve your talent management and succession planning over time.

Integrated talent management

Integrated talent management refers to a holistic approach to managing an organization’s employees. It aligns multiple HR functions to work cohesively toward the overarching goals of talent acquisition, retention, and development.

The objective is to ensure that talent management processes like hiring, onboarding, developing employees, and succession planning work together rather than in isolation, promoting a seamless employee experience that drives organizational effectiveness and strategic success.

Talent lifecycle

The talent lifecycle, also known as the talent management lifecycle, refers to the entire journey of recruiting and retaining the right people, developing them and their careers within the company, and helping them fulfill their potential. 

Here are the talent lifecycle stages:

1. Recruitment
2. Orientation
3. Engagement
4. Learning and development
5. Offboarding and outreach

HR plays a significant role in this cycle as it is their job to facilitate the talent management lifecycle. When the talent lifecycle is effectively managed, it leads to happier and more motivated employees (and therefore perform better) and, ultimately, a thriving organization.

Talent management strategy and process

Now that you understand the basics and importance of talent management, how can you develop an effective talent management strategy that benefits your people? Here’s a summary of talent management best practices to follow when creating your organization’s strategy.

Clarify organizational goals and strategic priorities

What is the organization focused on achieving this month, this year, and over the next five years? Understanding the business’s priorities enables you to guide HR talent management efforts in the right direction.

Your talent management strategy should always align with organizational goals and support them. Remember to make it feasible and in line with your industry, location, and budget. 

Review your employee life cycle

Take a closer look at every stage of your employee life cycle and identify the areas that need improvement, then rank these in order of importance. Below are some examples of what to consider:

• Sourcing and attracting talent: Are you attracting enough of the right candidates to your job postings? Do you need more targeted advertisements? Do you need to branch out where you look for candidates to grow your talent pool? 
• Selection: Are you selecting the right candidates for your vacancies, or are you hiring people who aren’t a good fit for your company’s values and culture? Structured interviews and work assessments can help you pinpoint your top candidates.
• Retention: Maybe you have no problem attracting and hiring top performers, but you struggle to keep them. Retaining your best talent should be a key priority. By compensating them adequately, nurturing their development, and rewarding good work, you can deliver a strong employee experience, hold on to your best employees, and motivate them to perform at their best. 
• Promotion & succession planning: You should identify your top performers and give them new challenges and responsibilities to keep them engaged and motivated at work. You also need to empower them to develop the skills they need to move to the next level within the company. Do you know who these employees are? Do you have a list of potential replacements for the key roles in your organization?
• Offboarding: Do you have an exit interview in place for all departing employees that helps you learn why people leave and what could have made them stay? This will provide valuable information that identifies your mistakes so that you can improve and retain your high-potential employees. 

Refine HR processes & workflows

The next step is to design the supportive processes and systems needed to carry out your talent management strategy. This may mean redesigning your current HR workflows.

For example, you might need to:

• Refine your recruitment funnel
• Improve your onboarding procedures so they effectively welcome and integrate new employees into the company’s culture and vision
• Create new development programs for employees to build skills that are integral to your strategy
• Streamline your performance management workflows so they reflect and support the business’s strategic goals.

Clarify roles and responsibilities

Create a strategic HR or talent management team to take the lead in designing and implementing your talent management strategy.

Use a RACI matrix to clearly define each person’s role and the tasks they are responsible for. This will ensure that all key areas of your strategy are covered and that the most qualified person is managing the right areas. 

Focus on training, development & performance management

Do you regularly offer employees the chance to learn new skills or develop existing ones? Do employees feel that the organization cares about their career growth? Training your employees so that they are equipped with the skills to perform at the highest level now and in the future is an investment in the company’s success and integral to a successful talent management strategy. 

However, you must track employee performance to ensure your learning and development initiatives are working.

Do you have the right performance management practices and policies in place that contribute to better performance for all employees at all levels? Many companies (including Adobe and Deloitte) are opting for a more continuous performance management approach (check-ins or touchpoints) rather than formal quarterly performance reviews.

Ensure your strategy is inclusive

Remember to be inclusive at all stages of your talent management strategy. From personalization learning and development opportunities to accommodate different learners to including different employee groups in your strategy who may often be overlooked, such as remote or part-time workers.

If you want a truly strong and empowered workforce, your talent management practices have to support a multitude of needs.   

Track relevant metrics to measure effectiveness

Once you have defined what success looks like for you within your talent management strategy, you can decide on the metrics you want to track that will help you measure how effective your processes are.

Below, you will find common talent management metrics you can use.

With this information, you can make well-informed, unbiased, data-driven decisions.

Leverage technology

A fundamental part of talent management planning today is focused on utilizing the new technologies available to enhance and streamline your processes. This is a great time to invest in your HR tech stack and use talent management software. 

Review and refine your strategy

A combination of relevant metrics, employee feedback, and emerging market trends should be used to regularly review your strategy and make improvements. This will ensure that your talent management plan is always effective and aligned with business objectives.

Talent management best practices

A successful talent management strategy is a dynamic and continuous process that requires a strategic, thoughtful implementation. A well-implemented strategy grounded in best practices becomes essential for staying ahead of the curve and achieving long-term success.

Following talent management best practices helps organizations not only enhance their operational efficiency but also create a motivated, high-performing workforce that drives sustained growth and success.

Here are some best practices to take your talent management strategy to the next level:

Talent management initiatives

In today’s job market, employees choose to join and remain with a company for reasons that go far beyond a lucrative compensation package.

More than ever, employees want to work for an organization whose values, goals, and social impact align with their own personal values and desired impact. Innovative talent management initiatives allow businesses to create a work environment that resonates with the personal and professional aspirations of their employees.

Here are some emerging talent management initiatives, along with examples of companies that are implementing them.  

New work arrangements

The pandemic forced a huge change in work expectations between employees and employers and brought work-life balance and flexible arrangements to the forefront.

More than ever, employees expect at least someMore than ever, employees expect at least some flexibility in their work arrangements, such as flexible working hours or a hybrid approach. Therefore, organizations have had to shift their work arrangement policies to accommodate more flexible working arrangements that still allow them to access this talent pool of workers.  

Microsoft conducted research that found many employees are productive outside of traditional 9-5 work hours. Following this, they introduced the Triple Peak Day which gives employees the flexibility to change their working hours based on their other commitments and still work during a period of peak productivity.

For example, an employee who has children can work from 9 a.m. until 2 p.m., then collect their children from school and spend the afternoon with them, and continue working after dinner from 7:30 p.m. until 10:30 p.m.  

Technology-empowered solutions

As technology evolves rapidly, talent management practices are advancing, too. Talent intelligence and insights are becoming integral to designing talent management initiatives throughout the employee life cycle. This includes the creation of talent-matching technologies, internal talent marketplaces, opportunity platforms, and AI-based coaching.

For instance, Cellular Sales, Verizon’s premier retailer in the U.S., uses an AI-guided learning and training platform to improve the performance of its employees. Employees who are highly active on the platform achieve over 50% more handset sales.

Enhancing the talent experience

Providing talent with new opportunities to gain skills, knowledge, and experience during their careers helps improve the organization’s overall performance and drives engagement and job growth. For this reason, more organizations are implementing talent exchange programs and talent sharing.

ICMA’s management talent exchange programs allow organizations to nominate high-potential employees and match them to assignments in other cities or districts that aim to “stretch” them. The organization that has nominated an employee will typically receive an employee from another agency in exchange for its own.

Talent management analytics

Talent management analytics is the practice of analyzing data to make better talent decisions. In the past, managers and leaders could only rely on their personal perspectives and instincts to make talent decisions and hope they were right. But today, this approach is far too biased and risky to gamble with your greatest asset – your people. 

Leading-edge companies, including Google, Best Buy, Sysco, and Starbucks, have all adopted the approach of analyzing employee data to boost productivity, engagement, and retention and increase their competitive advantage. And for good reason. Research by Bain & Company has found that the productivity of organizations that invested in talent analytics was 40% higher than those that didn’t. 

Talent management metrics and dashboards are integral parts of talent management analytics. Let’s explore these in more detail. 

Talent management metrics

Here are some of the most frequently used talent management metrics.

• Talent mobility: This metric helps you monitor the mobility of your employees internally and externally. You can measure the rate of internal promotions and lateral moves and track external departures, calculating the percentage of employees moving within and out of the organization annually.
• Talent turnover: Tracking turnover in your talent pool helps you see the percentage of high future potential talent you’re losing, which can be compared over time. 
• Talent distribution: Demographic variables such as age, gender, and nationality can give you a better overview of your talent distribution so you can create better talent strategies and focus your efforts where they’re most needed. 
• High-potential talent: Knowing what percentage of your employees are HiPos and who these employees are helps you retain your best people and nurture them as part of your succession plan.
• Employee engagement: Measuring employee engagement through surveys provides insights into job satisfaction, commitment, and motivation, which are key indicators of overall employee wellbeing and performance.
• Cost per hire: This measures the total cost of hiring a new employee, including job ad placements, sourcing costs, and the time of managers and recruiters interviewing all candidates for the role. 
• Time to hire: This metric is the number of days from the moment a candidate enters the recruitment process until the moment they sign their contract of employment. The longer your time to hire is, the more likely you are to miss out on top candidates. 
• Time to full productivity: A new hire will always take time to settle into a new role before they reach full productivity, and this metric measures how long that takes. The more effective your onboarding process is, the shorter this time is likely to be. 
• Training spend: You can track the total financial investment in training programs per employee annually, including external courses, internal workshops, and e-learning.
• Exit interviews: Exit interviews and questionnaires offer you qualitative and quantitative information that can help you determine why your talent is leaving and what you can do to prevent this.

Talent management dashboard

A talent management dashboard is a customizable tool that enables recruiters and hiring managers to effectively select and manage talent. 

It is built on five pillars:

1. Recruitment
2. Performance management
3. Succession planning
4. Learning & development
5. Compensation management

These pillars help HR professionals gain a comprehensive overview of their talent pool, which improves their communication efforts and ability to plan for the future. 

A typical talent management dashboard has five functions:

1. Reporting: Provides an overview of the entire talent pipeline from recruitment to outflow. 
2. Performance management: This allows you to measure employee performance to get the most out of your workforce and use this data to find new talent that aligns with your organization’s culture and goals.
3. Engaging with talent: Offers supporting data and information to initiate discussions with employees related to career growth, development, and training needs.
4. Learning and development: Depending on the potential and performance of an employee, different learning and development opportunities can be offered. For example, an employee with high growth potential might be sent to train as a manager, while employees who perform well but lack growth potential would be best concentrating on on-the-job training.
5. Talent pipeline: Knowing who your star players are and their potential allows you to build a talent pipeline to have a replacement plan for the top business functions. This is imperative if you want to retain knowledge and experience in the business and prevent open vacancies and disruption.

Talent management trends

Here are the current and emerging trends impacting talent management, which you should consider when designing and executing your strategy.

1. Defining a clear talent philosophy is a must

Is everyone in the business referred to as talent or just a specific group of high performers? If it’s the former, inclusive career practices that foster advancement are important. If it’s the latter, talent segmentation activities that recognize these different groups are essential. There is no right or wrong, but clarifying your talent philosophy allows you to develop the right solution for your organization and unique needs. 

Starbucks has pinpointed its baristas as critical to the business’s success as they directly shape the customer experience. Therefore, this talent segment is important to manage, and the company has a focused development strategy to upskill and retain these employees.

2. Talent management needs to become more proactive

Reacting to changes and problems as they arise in real time often leads to short-sighted thinking and poor decisions. However, anticipating future problems and then preparing scenarios for them allows businesses to respond more thoughtfully and appropriately.

Data and technology have transformed HR practices, including talent management, and must be leveraged to make informed decisions. 

Microsoft has used data and technology to recruit and redeploy skills and advance its talent management practices. It offers early career programs today, which aim to nurture the talent that the organization will need in the future.

3. Transcend maturity models

Striving for predefined levels of maturity in talent management is an outdated approach. To move into the future, organizations must adopt talent management strategies that deliver business impact rather than reaching the benchmark. 

For example, Apple drives innovation and creativity by frequently shifting teams, ditching predefined career paths, and often changing the roles and responsibilities of its employees. This approach has led to higher levels of innovation and performance.  

4. Be mindful of the human experience

Every talent decision has an impact on the career experience of every candidate and employee. Knowing this, we can design talent management practices that deliver the greatest positive impact. 

At Booz Allen Hamilton, an alumni program harnesses the value of returning talent. They partner with learning providers to build future-ready skills. In addition, their redeployment and referral programs manage and support careers while simultaneously creating access to talent. Together, this creates a strong employer brand that is supported by the lived employee experience. 

Improving the experience of your candidates and employees helps you retain top talent, boost productivity, and maintain a strong employer brand. 

5. Compliance and security of talent data

As the emphasis on data protection grows, HR professionals must ensure talent data is secure and changing legal requirements are met. This ensures the business remains compliant while building trust and loyalty amongst your candidates and employees. Regularly assessing and upgrading safety measures will be increasingly important.

For example, do you have a policy on how your HR employees can utilize public AI models to analyze data?

6. Remote and hybrid work models

Owl Labs’ U.S. hybrid work report found that people want more flexible working arrangements and feel more productive, balanced, and loyal to their companies when they have them. In fact, 62% of those surveyed claim they would rather take a pay cut of 10% or more to keep their flexible working arrangements rather than have them taken away.

While the pandemic accelerated flexible working options, the post-pandemic world has not seen a reduction in the demand for remote and hybrid work. Not only can employees find greater work-life balance and reduce travel and childcare costs, but organizations can access a wider talent pool, diversify the workforce and save on office costs by facilitating this growing demand. 

Talent management certification

There are numerous certifications you can obtain within the field of talent management. AIHR’s Talent Management Certificate Program is an entirely online, self-paced program that allows you to learn at your own pace and around your current responsibilities. It takes a total of 25 hours, which can be completed over 10 weeks by studying for 2.5 hours per week. 

In this program, you will learn:

• How to proactively manage the talent pipeline to support business continuity
• Methods to identify, develop, and engage tomorrow’s leaders
• How to use talent data and reports to optimize talent management practices
• Earn your certificate with the capstone project by completing a real-world case

As an AIHR member, you will also receive: 

• Hands-on learning: You can access simulated scenarios to apply your learnings. That will make it easier to transfer your new knowledge and skills into your job.
• A resource library: With templates, playbooks, guides, and extra tools, our HR resource library offers you on-the-job support with practical resources that are free for you to use.
• A personal coach: Every full-access member will be assigned a personal coach to help you reach your learning goals and succeed in your career. 
• Access to our community: You will gain access to our community of 25,000+ ambitious HR professionals from all over the world, where you can share ideas, participate in discussions, and network. 
• Live events: Our weekly live events help you stay up-to-date with emerging HR trends.
• Accredited education: AIHR has partnerships with the HRCI, SHRM, HRPA, and many other local HR organizations. All our courses are globally recognized. 
• Skill assessments: Future-proof your skill set by taking assessments to determine what you’re missing and then bridge your skills gaps. 
• Career center: Our career mapping and feedback tools help you plan out your career path and fast-track your growth.

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