Originally published - June 13, 2008
So, what is talent management, anyway?
When I think of talent, I think of musical and artistic talent: stage performers, actors, and singers. I think of Star Search, Canadian Idol, and America’s Got Talent.
When I think of talent management, I think of talent agencies and talent scouts. But talent management reaches far beyond Hollywood’s casting couch and the doors of Motown’s recording studios.
Talent management is the process of developing and retaining current employees, and of recruiting and attracting highly skilled workers for your business.
Talent management may also be referred to as human capital management (HCM), human resources information systems (HRIS), or human resources management systems (HRMS)—and it’s something that every growing business should know about.
While talent management emerged in the 1990s, the term was originally coined by McKinsey & Company in 1997. Since then, it has been adopted by scores of businesses looking to improve the processes of tracking and managing their employee talent.
Why Is Talent Management So Important?
One of the biggest challenges businesses face today in the area of human resources (HR) is the recruitment and retention of skilled talent. According to 2007 HR Trends Report: People to Profitability—answered by more than 500 executives of small and medium sized companies—talent management is the greatest business concern after revenue.
People are the most important resource in today’s global economy. And whether companies are willing to admit it, at the end of the day, it’s their people that are going to make the difference to their bottom line. To remain competitive in today's job market, employers need to know about their employees—what they're doing, what their skills are, how they're progressing, and where they fit in the business’s future. As such, companies need to integrate talent management into their wider business strategy.
When it comes to managing talent, HR and talent managers definitely have their work cut out for them. In order to deliver results that will positively influence their organization, these managers must develop and implement an integrated talent management strategy or plan.
A successful talent management plan must flow seamlessly from strategy to practice, putting effective techniques into efficient practice.
What Are the Two Key Challenges?
1. Employee Recruitment and Retention
Recruiting and retaining the “best and brightest” requires more than just offering fringe benefits and signing bonuses. Managers must be ready and willing to help their current employees develop the skills that will prepare them for higher-level roles. The search for the best and the brightest can be a constant and costly battle, so companies need to find more imaginative ways to keep their best people.
Don’t lose the skilled talent your organization needs to your competition. Understanding which employees have the greatest value in particular business areas will enable you to create an effective workforce plan. Having a workforce plan will help determine whether you have the right type and number of employees with the right skills to meet the demands of your business.
2. The Global Workforce
Globalization has changed the face of business. While most organizations have adapted their operations to this new reality, too many are falling behind in developing HR strategies, policies, structures, and services that support their global operations. To create a truly global workforce, companies—especially organizations that operate on an international level—must incorporate a talent management strategy throughout their global environment.
In order to stay competitive and maintain an effective and stable workforce, organizations have to change their hiring, retention, and workforce management strategies throughout the global enterprise. This will help them to keep their candidate pipeline full for future growth.
To this end, a talent management strategy can be invaluable in developing a unified corporate philosophy for attracting and retaining much-needed talent across the globe.
What Systems Are Available to Help Manage Talent?
By now you have a better understanding of the importance of talent management. But even the best talent management strategy can’t stand alone; it requires the help of a system that can automate core HR functionalities while making crucial employee data easily accessible to the users who need it. In order to control costs and gain the most from the organization’s resources, the system must be able to bring key talent management and such HCM processes as performance management, workforce planning, skills management, succession planning, recruiting, and resource scheduling together into one unified solution.
Enter integrated talent management (ITM).
An ITM solution is comprised of several applications designed to help organizations improve their recruiting and hiring processes. These processes include performance management, succession planning, and workforce planning, and may include several other modules, depending on the solution. ITM can often be adapted to meet industry-specific challenges, such as those in the health care, education, or financial services fields.
ITM solutions are primarily delivered as hosted software—i.e, software-as-a-service (SaaS)—but they are also available as on-premise software.
Some of the benefits of ITM include the following:
provides managers the tools they need to accomplish their recruitment and retention goals
handles large-scale hiring and terminations
integrates comprehensive employee data into one unified system
identifies which employees qualify as successors for key positions
enables the creation and management of a talent pool that is based on performance appraisals and career goals
Skilled and talented employees are hard to come by. Retaining the best people can also be a challenge—especially if you’re a small business competing against larger firms that can often offer better salary packages and fringe benefits.
But talent management is not just about finding the right candidate for the job. That individual must be nurtured and given ample opportunity to develop and grow with the company.
Conversely, companies that neglect to manage their talent effectively end up paying the price. And companies that tolerate employees who continually underperform—especially in the area of management—can pay the highest price of all.
A winning talent management strategy combined with a comprehensive talent management system will help ensure you have people with the right skills, in the right place, at the right time. It also ensures that you’re not letting your “star” performers get away. After all, your people are your most important asset. Letting them walk out the door is like shooting yourself in the corporate foot.
For more in-depth information on HR and talent management, please read P.J. Jakovljevic’s Thou Shalt Manage Human Capital Better. Or if you want a lighthearted read on the subject of HR, read my blog post Human Resources: No Laughing Matter.