Businesses are always on the lookout for competitive advantages. In a volatile marketplace, the measures an organization takes to distinguish themselves from the competition are decisive.
But, whether it’s by developing innovative new products or creating lead generating marketing campaigns, there’s one common factor all companies need to get ahead: a talented workforce.
The most important asset of any company is its employees. But the ability to attract, develop and retain the right talent for the job is becoming increasingly difficult. The modern workforce is adapting to an ever changing environment. With new industries, government measures, and the rise of remote working options, the traditional work-life model is slowly becoming outdated.
There’s no doubt about it, to retain and nurture your company’s most important asset, you need a strong talent management strategy in place.
We’ve compiled an easy to follow guide for managers, human resources managers, and professional coaches to understand what talent management is and steps to take in order to create a framework for their own talent management strategy.
What is talent management?
Every business has goals and objectives they wish to achieve, and the successes and failures of these goals rely on the performance of its employees. With that in mind, it’s no secret why an organization will try to hire the best individuals capable of fulfilling the responsibilities that each role requires.
This may seem straightforward, even obvious, but finding the right employees suitable for specific roles and able to perform them at a consistently high level for your business, is not. That’s where talent management comes in.
Talent management is the strategic HR process that enables a business to attract, develop, motivate, and retain employees to perform at a consistently high level for the benefit of the organization. It’s a key fulcrum of human resources strategy, and critical to the performance of a company.
What is talent?
In a nutshell, talent is an employee with high-potential. This means that an employee exhibits certain characteristics that show their managers and/or employers that they possess the potential to develop and grow in their role and help the company meet its objectives.
High-potential employees that are identified as “talent” typically have one or more of the following qualities:
- expertise in a specific field or area relevant to an organization;
- a specific set of valuable experiences;
- a form of intelligence that is crucial for the company (we sometimes speak of “high intellectual potential”, emotional intelligence, etc.);
- one or more valuable soft skills, such as leadership and creativity.
Is talent management really that important?
To put it simply, yes.
Talent management is absolutely vital to an organization, and it can be the differentiator between success or resolute failure. A business essentially consists of two core ingredients – the activities, or core actions of the business, and the individuals who manage and develop them.
If the individuals are not capable of managing the business’ activities, the business will undoubtedly fail – but that’s just the bare minimum.
Talent that is recognized, cultivated, and continuously rewarded for high performance will be more likely to work at their peak performance, stay within the company, and seek to move up the ladder as they evolve and develop their potential further.
In fact, according to Boston Consulting Group’s Global Leadership and Talent Index:
- Effective talent management is directly correlated to the financial performance of a company. Companies that are leaders in talent management had a turnover that was 2.2 times higher and profits that were 1.5 times higher than companies with poor talent management.
- Also, the ROI of talent management immediately translates into concrete results for a company’s performance. It also has a positive effect on general well-being at work, as talent that are given opportunities to grow and develop are more engaged.
The results from the BCG study exemplify the role that talent management plays in an organization. Not only does talent management yield positive results in the performance of the company, but it also generates satisfaction and positive well-being for employees. And as the results indicate, these two indicators often go hand in hand.
In that vein, the primary role of talent management is to create a motivated workforce who will stay and mature within your company, and contribute to its ongoing development. When talent management is executed effectively, and is inimitable to the organization, it can cultivate a sustained competitive advantage over the competition for years to come.
Is talent management different from talent development?
As we’ve discussed, talent management is an organization’s process to hire the right people and provide them with the opportunities to develop their potential – essentially, it’s a strategy to foster a high-performance workplace in which employees enjoy working.
Talent development, on the other hand, is focused on the means and methods involved in the overarching talent management process. By that we mean, how a company develops their employees’ abilities and potential, through the provision of various learning opportunities and tools to advance their skills and careers.
For example, companies that provide executive coaching to high-potential employees are contributing to their talent development, while simultaneously fostering a work environment that keeps them engaged, learning, and performing at a high level.
What are the key components of talent management?
We’ve described talent management as a strategy and a process of HR, and as such, it’s made up of many elements and components that are integrated together to foster a high performance work environment that is mutually beneficial for the company and its employees.
As a process of a company’s HR, talent management encompasses a wide range of features including employee engagement, performance management, compensation, but, ultimately, talent management pivots around five key components:
- Attracting external talent
- Identifying internal potential talents
- Developing talent
- Retaining talent
- Measuring your talent engagement effort
This list is by no means exhaustive, but it amounts to what we believe are the most integral elements or steps of the talent management process, and knowing them will set you and your organization up to implement a talent management strategy of your own.
The 5 steps of talent management
Before we dive into the five steps of talent management, it’s important that you understand what you want to achieve with it and set up a framework to develop your strategy.
Having a framework is a must
For an impactful talent management strategy, it’s necessary to make sure that every aspect of the company is taken into careful consideration. This includes aligning the strategy with the company’s chief objectives, its culture, and policies. With this in mind, it’s wise to strategize with the HR department, the company executives as well as the managers involved in the process.
To start off on the right foot, you should ask yourself relevant questions to build your framework, such as:
- What are the priorities for the growth of the company?
- What specific skills or expertise do we need, and why?
- What are my objectives in terms of recruitment?
- What budget do we have? To recruit? To call on training and professional coaching services? Individual coaching, collective coaching?
- What tools should we use for identifying talent, recruiting, monitoring mobility, and providing information from the field?
Once you have the answers to these questions, you can jump start your talent management strategy.
Step 1: Attracting talent
According to the Conference Board’s 2016 survey of global CEOs, almost a third of senior leaders say that finding talent is their “most significant managerial challenge.” There are many reasons for this, and a scarcity of great talent is chief among them. This means organizations are directly competing with one another for the best talent around – a veritable war for talent.
How can HR and recruiters adapt to make their company more appealing and attract the right hires? One tried and true method for making your organization more appealing is: employer branding.
Employer branding is a company’s reputation as a place to work, and how appealing it is to prospective talent; it’s more or less your employee value proposition. This is the offer that a company puts on the table – what an employee will get in return for working there.
The workforce is getting younger, and millennials are due to make up 75% of the workforce by 2025. So your employer branding needs to play to this crowd, and appeal to young talent through the right communication mediums.
Building an effective employer branding strategy takes effort, but it’s worth it. Here are a few options to explore as you build your own unique employer branding:
- Increase your presence on social networks
- Make use of recruitment platforms and events dedicated to employment and employment opportunities
- Show off the offers geared towards improving the quality of life within the company (meals, spaces and relaxation time, appointment of a Chief Happiness Officer, etc.). Well-being at work plays a very active role in attracting and retaining talent
- Provide easy access to training and collaboration tools
- Demonstrate that professional development is encouraged and provided
- Have a company policy for flexible working hours and agile working methods
- Create a robust encouragement, constructive evaluation, and reward systems
- Personalize the candidate experience
Step 2: Identifying talent in the workplace
Great leaders and managers are continuously on the lookout for up and coming talent and take the initiative to understand how best to unlock that potential for career mobility. But without clear guidance on what your organization is looking for, managers are left to identify talent based on hunches. This can often lead to bias and the failure to identify potential before it’s too late.
To overcome this, leaders and HR often use talent assessments to identify high potential employees primed for professional development. Dr. Tomas Chamorro-Premuzic is regarded as a leading international authority in psychological profiling and talent management, and he ascribes these criteria to help leaders with their talent assessment:
- Set clear criteria for promotion that define explicitly what behaviors, achievements and KPIs you equate to high potential.
- Use objective and reliable methods to assess performance and be transparent about everybody’s output.
- Provide developmental support for those who fail to meet targets despite trying – potential can be trained and boosted.
These criteria help leaders uncover the diamonds in the rough by using data to support their findings – a much more transparent method than simple performance analysis. While data analytics play an important role, identifying high-potential employees includes even more elements to measure employee performance and potential ability.
These individuals must be assessed on their ability to think strategically with vision and imagination; possess the necessary social skills to manage themselves, deal with pressure and handle adversity; have an innate drive to achieve, and are eager to take on more responsibility.
Step 3: Developing talent
Nobody comes off the assembly line as a finished product. Once you’ve identified your high-potential employees, the next phase of talent management is to invest in their professional development.
Professional development is an investment on the part of the company, its managers and leaders, to help talent develop and acquire new skills. This is integral for their career mobility and their performance within the organization.
The last thing you want to do is let your employees stagnate, and lose interest in their work. Professional development ensures they stay motivated!
The best way to provide professional development for your high-potential talent is to make it a part of your talent management culture. For leaders, in particular, leading the charge of the organization’s talent development, there are many investments that they can make to help their talent grow:
- Invest in professional coaching to improve skills, and help employees work in ways that enable them to thrive within the organization.
- Act as a mentor by being a role model for them to learn from your dedication to your own development.
- Build processes that support development.
Reinforce shared values of the company so that the employee feels connected and motivated to help the company grow.
Step 4: Retaining talent
After you’ve gone through all the trouble to attract, identify, and develop your talent, the last thing you want to happen is for that talent to pack up their bags and leave. Retaining talent is an urgent process for HR in any organization.
Talent retention is a strategic HR objective to ensure that talented employees stay, by providing an optimal and positive work environment that promotes engagement and shows appreciation to employees for their efforts.
It is important for an organization to retain talent because it can lead to myriad organizational issues, but also cost the company and affect its bottom line. Going through the process of recruiting, hiring, training and developing new employees slows an organization down, prevents growth, and costs money.
So how can you make sure you retain your talent?
Let’s begin with the obvious – your company should be a great place for employees to work and to feel happy working there. By that we mean creating a culture and environment that takes into consideration your employees’ work life balance and overall well-being.
Creating a culture that employees enjoy working in involves many factors. Your organization should provide:
- The opportunity to gain new skills and varied experiences, be it through training or mentoring, or access to tools that can help them succeed.
- Offer work flexibility and personalization so that their abilities are optimized for performance.
- Providing an open ear, allowing employees to vent their worries and concerns and feel that their voices are heard and have an impact in the decision making.
- Acknowledge their successes and efforts for the company, so that they feel appreciated as a valued member of the company.
Step 5: Measuring your talent management
At the end of the day, you’re running a business, and that implies every action or decision that you take has to be measured and weighed so you can assess its viability and impact. Talent management is no different. It’s an investment – a critical one, certainly – and it must be measured so that it can be modified and improved upon to help your business.
Talent management involves the capricious element of human behavior and interactions, which means it can be difficult to measure, but there are metrics that can help synthesize that data and provide valuable measurements to assess your efforts.
Here are the key metrics, tools, and indices you can use to analyze the effectiveness of your talent management:
- Adopt reporting tools that are specific to the human resources department, such as HRIS software – Human Resources Information System
- Measure the evolution of the company’s turnover over time – employee loyalty and motivation to work
- The number and quality of candidates for job openings offered, which measures the attractiveness of the company and the effect of your employer branding
- The dynamics of employee applications as they pertain to your internal developments
- The presence and evolution of situations of discontent such as burn-out, conflicts, resignations, dismissals – solid indicators of well-being or dissatisfaction at work
- Feedback obtained by managers from their teams, and by human resources departments from all employees
- The evolution of the perception of the employer brand outside the company
- And finally the economic performance of the company as a whole, measured after the implementation of the talent management strategy.
A final word on talent management
Talent management is an essential process for every organization. When implemented correctly it enables a business to perform at high levels, helping them outmatch their competition and scale. It’s a never ending process, and one that HR and management must constantly improve upon, and adapt to the changing work environment and marketplace.
Always remember that it is a process, and it involves the entire business to succeed. Once you have identified your goals for talent management and set up a framework to implement it, you have to follow the five key steps to proceed appropriately.
- Attract the right talent
- Identify potential talents within your organization
- Help them develop so they can succeed for themselves and for the organization
- Support them so that you retain their abilities and skills
- And make sure you measure your efforts so you can course correct or iterate on what works
It’s not astrophysics, but it does require effort! Use this guide well, and refer to it often – it will be your benchmark for building your own talent management strategy!