Talent Management: Strategies, Processes, and Importance for Today's Workforce
Table of contents
- What is talent management in HR?
- Why is talent management important?
- How to create a successful HR talent management program
- The four best talent management models
- Best practices for implementing an effective talent management program
- Examples of talent management best practices in action
- Pulling it all together
Employee recruitment and retention are central to a business's success. What does it take to find and hold on to talented employees?
A 2022 survey done by McKinseyOpens in a new tab found that 35% of workers who recently left their jobs said that they quit because their employers didn't care about them. In addition, the majority of respondents listed a lack of career development and advancement as the top reason for leaving their jobs.
Effective talent management addresses both of these concerns, building a positive environment with engaged leadership and meaningful work. To develop strong talent management, you first need to understand what it involves, why it matters, and how to create a program that motivates workers to join your company, fulfill their potential, and stay with you for the long term.
What is talent management in HR?
Talent management refers to the processes that HR uses to recruit, develop, support, and retain an effective and engaged workforce. The goal is to improve organizational performance by bringing on and retaining top-quality talent.
Although it can encompass a wide range of practices, talent management primarily focuses on these tasks:
- Identifying gaps in the company workforce
- Finding and hiring the right people through recruitment
- Onboarding new hires
- Managing, evaluating, and rewarding performance
- Tailoring the employee experience
- Optimizing workforce planning and strategy
Talent management affects HR from every angle, requiring you to leverage a variety of resources and enhance your strategies to achieve your organization's objectives. It also addresses some of your biggest challenges in HR, including problems with retention and performance management.
Why is talent management important?
The importance of talent management ties directly to your organization's overall performance. These are some of the most favorable outcomes businesses see when they invest in their employees' well-being, development, and success.
Attracting and retaining top talent
Poor hiring decisions are expensive, with one study estimating that a single bad hire can cost $17,000Opens in a new tab on average. That number increases based on the individual's salary and the prominence of their role. Finding the right person for a position the first time thus saves your company not only money but also time and resources, which are equally valuable.
High-performing job candidates are drawn to companies that prioritize talent management, making it key to attracting and retaining effective employees. As part of your talent management program, you'll refine your approach to recruitment and find ways to identify talent gaps in your existing workforce.
The HR department uses several tools, practices, and techniques to screen the best fit for an organization. Want to know what they do? Here are 4 Ways to Attract and Retain Great Employees.
A strategic and intentional process with these components will position your company as an appealing employment option, allowing you to find high-quality talent that understands and fulfills your needs.
Driving organizational performance
Another facet of talent management is creating robust training and development for your employees. These programs empower your team to build on their skills, motivate them to continue improving and keep them engaged.
A 2021 survey done by Amazon Opens in a new tab found that 70% of workers agree that training and upskilling improved their satisfaction at work. Better employee training contributes to stronger retention, which means fewer financial losses and disruptions. Well-managed talent will also produce more consistent and higher-quality work, leading to greater profitability.
On top of those advantages, a talent management program gives you the opportunity to identify future leaders for your company. Through your performance management system, you'll observe employees' strengths and help expand on them. Up-and-coming leaders are essential to your company's market competitiveness and long-term success.
Promoting a strong organizational culture
Effective talent management fosters a positive and supportive organizational culture that emphasizes collaboration, innovation, and inclusivity.
For example, mentoring programs help employees build trust from their earliest days with the company. Using talent management tools and activities such as discussion forums, virtual meetings, and shared resources encourages employees to work together and rely on one another.
Your talent management program can also promote inclusivity, especially if you commit to hiring a more diverse workforce. Companies can offer training on issues such as unconscious bias, which can create tension and anxiety in the workplace, particularly for employees from marginalized groups.
In addition to making your business more inclusive, recruiting diverse employees with different perspectives and creative ways of thinking is vital to your organization's ability to innovate. Once you bring those people into the company, give them the training they need to build on their potential. Most importantly, create a safe space for them to share and develop their ideas and translate them into positive outcomes for your organization.
Enhancing agility and innovation
Creating a more agile organization that can adapt quickly to changes in the market is critical for any business that wants to survive unexpected disruptions and upheaval. You never know when you'll face the next surprise, whether it's a global health crisis, war, or natural disaster.
Embrace agility in HR. Discover actionable insights to adapt quickly and effectively in today's changing landscape.
A company with a culture that promotes continuous learning is better prepared to adjust when these kinds of events occur. Through your talent management program, you can address skill gaps in advance so that employees are ready to pivot when the market, technology, and customer expectations evolve.
You can also use a talent intelligence platform to collect data and target necessary changes in your workforce, such as determining which roles might need to encompass new responsibilities to adapt to shifts in the market.
Improving the overall employee experience
Talent management can create a more positive employee experience at every stage, from onboarding through professional development.
Findings from the study reveal organizations that deliver a positive employee experience through human workplace practices like recognition, empowerment, and feedback, see a significant impact on return on assets and return on sales.
Organizations with a better employee experience see greater productivity, sales, and engagement. As a result, helping employees nurture the skills that will drive their success is beneficial for everyone.
For example, offering feedback and coaching helps workers find their strengths and identify a fulfilling career path. Rewarding their accomplishments and prioritizing their well-being helps them stay healthy, happy, and motivated. Employees with these characteristics will feel inspired to work harder and will develop a greater sense of loyalty to your company.
How to create a successful HR talent management program
Some businesses don't invest in their talent management programs because they aren't sure where to begin. These steps will help you establish a strong foundation that you can continue to build upon.
Identify strategic business priorities
The first step in developing your talent management process is understanding your company's strategic priorities. Think of short and long-term goals because they will both influence the success of your program and your organization's performance. Aligning your talent management efforts with your business priorities ensures that HR initiatives drive the outcomes you want to achieve.
Define key components of your strategy
Breaking down the core components of your talent management strategy makes it easier to understand what you want to accomplish and how you can make it happen. For example, rather than taking a broad perspective of your program, break down your organization's plans for recruitment, employee development, performance management, and succession planning.
Once you understand them separately, you can bring together each of these elements to support your overall goals, ultimately driving a holistic approach to managing talent. For instance, your performance management has a direct impact on employee engagement, work quality, and productivity, all of which are critical to your organization's objectives.
Establish roles and responsibilities
The team responsible for your talent management might include HR professionals as well as managers, recruiters, and other employees. Clearly defining their roles and responsibilities is crucial. Determine who will serve as leaders and how other team members will support them in designing and implementing your strategy.
This ensures that the right people have the responsibilities that are the best match for them and know exactly what they should be doing at any given time.
While these individual roles are vital, the talent management team can only function if there's cross-functional collaboration and leadership involvement. This ensures that the team stays aligned and accountable and that the process remains on track throughout every stage of your program.
Implement supporting systems and technology
The growing role of technology in human resource management also extends to your talent management program. As you develop your strategy, identify and implement the HR technologies and systems that will streamline your processes. They might include talent management software and analytics tools, which offer you a deeper look into your employees, their performance, and what's lacking in your current team.
Features like automation, data tracking, and real-time insights help optimize various aspects of your talent management program, including recruitment, performance evaluations, and employee development. For example, software that allows you to track your team's progress through a training program makes it easy for you to identify areas that might require additional explanation or employees who need extra support.
Set measurable goals and KPIs
To ensure that your talent management process is working as it should, you'll need to establish clear, measurable goals and key performance indicators (KPIs) from the outset. Some of the metrics you might track include:
- Employee retention
- Engagement
- Performance
- Employee satisfaction
- Talent mobility
These data points allow you to evaluate your strategy and pinpoint areas for improvement objectively.
Align with company culture and values
Some companies falter because their talent management practices don't align with the larger organization's values. When an employee completes onboarding or training, they experience culture shock, discovering that the atmosphere of the workplace is drastically different from their initial perception.
This disjointed transition can result in higher turnover rates, lower motivation, and lacking engagement. A cohesive employee experience, on the other hand, helps you move employees smoothly from recruitment to retention.
Regularly review and adjust
Even companies with highly successful talent management programs have to continuously review and adjust their strategies. This is the only way to ensure that your approach remains relevant and effective as the market and the candidate population change.
As part of this process, you can collect feedback from employees and applicants, analyze performance data, and adapt to changes in business goals or workforce needs. For example, Gallup's survey on hybrid workOpens in a new tab shows that in an era when more than half of eligible workers want a hybrid work environment, many companies have made adjustments to their expectations for remote and on-site attendance.
The four best talent management models
Developing or refining a talent management program is an intensive process that becomes less overwhelming when you start with a framework. Many businesses rely on these four talent management models to guide their practices.
The AARRR model (Acquisition, Activation, Revenue, Referral, Retention)
Also known as the Pirate Metrics model, the AARRR model's original purpose was to conceptualize the customer journey, but some businesses also apply it to the employee journey. In this model, employees undergo five stages of employment:
- Acquisition: attracting and recruiting talented job candidates
- Activation: choosing employees to fill specific roles and onboarding them
- Revenue: training and developing employees so they reach their full potential and bring the greatest benefit to the company
- Referral: asking existing employees to serve as brand advocates who refer outside talent for positions in your organization
- Retention: retaining skilled workers by offering them fulfilling work, engaging training and development opportunities, and a welcoming work environment
This model provides a structured approach to maximizing employee value at every step of the employee life cycle, helping you build a stronger and more lasting workforce.
The traditional 5-stage talent management model
The five-stage model is similar to the AARRR model, but it features slightly different stages:
- Strategic workforce planning: establishing your goals
- Attraction: developing and using strategies to attract talent
- Onboarding: creating effective onboarding and preparing employees to grow within the company
- Retention: maintaining employee engagement
- Transitioning: supporting employees who want to advance within and outside of the company and holding effective exit interviews
As the stages reflect, this model emphasizes smooth transitions and knowledge transfers between employees, helping your organization to navigate changes within the workforce.
The integrated talent management model
As the name suggests, the integrated talent management model focuses on bringing together an array of HR processes, including:
- Recruitment
- Onboarding
- Performance management
- Learning and development
- Succession planning
This model recognizes that HR teams, organizational leaders, and recruiters have historically worked independently of one another. The model encourages an interconnected approach that improves retention, provides more actionable data, and paints a clearer picture of the entire employee experience.
The modern talent management model
The modern talent management model emphasizes building a diverse workforce and fostering an inclusive environment. It recognizes that a workplace that values and respects all employees, regardless of their backgrounds, is more productive and promotes higher morale.
As such, businesses using this model should take an intentional approach to recruitment, seeking ways to attract diverse candidates and taking advantage of HR industry trends like technology and data analytics to support decision-making.
Best practices for implementing an effective talent management program
Every organization is unique, so there's no one-size-fits-all solution to talent management. However, these proven best practices will help you create a successful talent management program that supports prospective and existing employees, as well as your organization as a whole, by enhancing employee engagement and achieving alignment with company goals.
Prioritize diversity and inclusion in the workforce
Making diversity and inclusion a core tenet of your organization and your talent management strategy can improve organizational performance and enhance the employee experience. Aim to make intelligent, informed decisions when hiring and recruiting and recognize that diverse teams are critical to innovation. Research has foundOpens in a new tab that having a diverse workforce in healthcare settings improved patient outcomes, financial performance, and adaptability to change.
Foster an employer brand to attract top talent
Prospective employees are drawn to companies that are known for having a solid culture and values, and you can convey that message by building your employer brand. This makes it easier to fill positions with high-caliber candidates and retain them over time.
Your performance management and employee recognition programs are central to this effort. Consider including them in your job descriptions, online company profiles, and social media posts, and highlight them when interviewing job candidates.
Another effective strategy is to develop an employee referral program that rewards workers for successful referrals. Finally, remember that happy and engaged employees are more likely to speak positively about your company in public, which is another vital way to strengthen your employer's brand.
Want to know how to strengthen your employer brand? Try these 10 ways social recognition can strengthen your employer brand.
Ensure continuous performance management
A 2023 survey done by SHRMOpens in a new tab found that almost half of companies in the United States give employees annual or semiannual reviews, and 7% offer no feedback at all. While an annual review is better than nothing, it also allows errors to become habits and slows the employee's growth.
In contrast, ongoing performance management helps employees stay aligned with organizational goals at all times. It addresses weaknesses and strengths as they develop, ensuring that the employee has a full understanding of their responsibilities and the company's expectations before their actions create problems.
Align talent strategy with business objectives
Your talent management strategy should directly align with the broader goals of your organization. In addition to creating a more consistent representation of your business, this alignment also helps drive overall company performance. As a result, your talent management team and organizational leaders can work together to accomplish key priorities and achieve long-term success.
Use data and analytics to inform decisions
While you might base some talent management decisions on general principles and a broad understanding of your company's requirements, it's also essential to leverage innovations in HR, including data and talent analytics.
Foster a culture of feedback and recognition
To remain engaged and invested in their work, employees need a feedback-rich environment with regular constructive input from leadership. According to a report from GallupOpens in a new tab, employees who receive authentic recognition are five times more likely to feel connected to the company's culture and four times more likely to feel engaged. Workhuman's Conversations® platform makes it easy to collect and request continuous feedback, giving employees a place to reflect on their growth and plan for their development.
Examples of talent management best practices in action
The concept of talent management may seem relatively straightforward, but it's not always easy to visualize it in practice. These talent management examples of real-world companies with successful strategies can help resolve those uncertainties.
Talent management at World Vision
World Vision CanadaOpens in a new tab puts employee satisfaction front and center in their talent management. They use an "employee delight index" to see how employees are responding to their workplace environment. They also launched a training program with agile tools to promote self-empowerment and encourage ongoing development.
Salesforce's focus on diversity
Salesforce has made an ongoing commitment to diversity and inclusion by increasing its representation of under-represented populations. As a result, they've seen an increase in employee engagement and satisfaction, as well as improved business outcomes. Salesforce recently reached a goal of having 50% of its U.S. workforceOpens in a new tab identifying as an underrepresented group.
Hyatt Hotels’ approach to talent management
Hospitality company Hyatt HotelsOpens in a new tab has increasingly focused on employee engagement, striving to empower, recognize, and include team members of all kinds. They've developed a learner app so employees can access resources and courses at any time, expanded their on-the-job training, and introduced mandatory inclusive leadership programs for managers.
Walmart’s talent management strategy
Walmart takes a skills-based approach to talent management, recognizing that an employee's value lies in their experience, not just in holding a degree. Their talent strategyOpens in a new tab focuses on developing current employees into new roles within the company, and they introduced a "career explorer" to educate workers about potential roles based on their interests, skills, and goals.
Pulling it all together
Effective talent management is at the heart of thriving companies with strong productivity and performance. To enhance your operations and develop an engaged and motivated workforce, create a program that centers around continuous feedback, diversity and inclusion, data-based decision-making, and alignment with your overall business goals. This approach has the potential to transform your HR strategy, allowing you to recruit the best possible talent, offer them opportunities for growth, and keep them on board long into the future.
About the author
Ryan Stoltz
Ryan is a search marketing manager and content strategist at Workhuman where he writes on the next evolution of the workplace. Outside of the workplace, he's a diehard 49ers fan, comedy junkie, and has trouble avoiding sweets on a nightly basis.