CIPD - Talent management: an overview

Recruitment and talent management

July 2008

This factsheet gives introductory guidance. It:

explores the changing context and business case for talent management
provides definitions of ‘talent’ and ‘talent management’
details features of a talent management strategy
examines key messages from CIPD research
includes the CIPD viewpoint.

The changing context and business case

The modern debate around talent management began at the end of the 1990s when McKinsey produced a report The war for talent¹ underlining the importance of a ‘talent mindset’. The consequences of the McKinsey approach have been widely criticised for pandering to large egos and have even been blamed for the downfall of Enron². In spite of such criticisms, the concept of talent management has evolved into a common and essential management practice and what was once solely attached to recruitment now covers a multitude of areas including organisational capability, individual development, performance enhancement and succession planning³. More information on these can be found in our other factsheets.

The business case for taking a strategic approach to talent management is strong and persuasive. CEO’s as well as HR Directors are now likely to number talent management among their key priorities. Our research⁴ demonstrates that the forces driving the increased interest in talent are a potent mix of external supply issues and internal organisational demands as illustrated in figure 1 below.

Figure 1: Demand, supply and context factors for talent management

In order for organisations to gain competitive advantage they need to develop a strategic approach to talent management that suits their business and gets the best from their people. The value of a tailored, organisation-wide talent management process is that it provides a focus for investment in human capital and places the subject high on the corporate agenda. It can also contribute to other strategic objectives, including:

building a high performance workplace
encouraging a learning organisation
adding value to the employer of choice and branding agenda
contributing to diversity management.

A strategic approach to talent management can therefore provide a host of tangible benefits that cross over into other areas of the HR function.

Some definitions

Organisations find greater value in formulating their own meaning of what talent is than accepting universal or prescribed definitions and there are considerable differences in how talent is defined across different industries and sectors. That said, it is helpful to start with a broad definition and from our research CIPD have developed, a working definition for both ‘talent’ and ‘talent management’:

Talent consists of those individuals who can make a difference to organisational performance, either through their immediate contribution or in the longer-term by demonstrating the highest levels of potential.
Talent management is the systematic attraction, identification, development, engagement/ retention and deployment of those individuals with high potential who are of particular value to an organisation.

This definition underlines the importance of recognising that it is not enough to just attract individuals with high potential. Developing, managing and retaining those individuals as part of a planned strategy for talent is equally important, as is adopting systems to measure the return on this investment.

For more details of our talent management work, see our Research projects pages.

Visit our talent management research page

Features of a talent management strategy

Key features of a talent management strategy include the following elements.

Alignment to corporate strategy

Ensuring that the talent strategy is closely aligned with the corporate strategy must be a priority. In developing a talent strategy, both internal and external factors should be taken into account, including those detailed in figure 1 above. Strategic analysis from the business perspective should feed into an HR forecast which can help shape an organisation’s tailored approach to talent management.

Often organisations are at different stages of talent management strategy development. Our research suggests that for a number of organisations there was a desire to progress through the stages highlighted in figure 2 making the transition to a more formal, strategically-integrated approach.

Figure 2: Stages of development of talent strategy

Inclusive versus exclusive approaches

Some organisations adopt an inclusive approach to talent management creating a ‘whole workforce’ approach to engagement and talent development, while others develop a more exclusive focus segmenting talent according to need.

Regardless of which approach organisations adopt, fairness and consistency must be applied in all talent management processes. Diversity considerations must also be built-into talent management processes to ensure that organisations are able to draw from the widest pools of talent possible.

Involving the right people

Careful consideration needs to be paid to involving the right stakeholders in the talent management strategy. Clearly, HR specialists have an important role to play in providing support and guidance in the design and development of approaches to talent management that will fit the needs of the organisation.

Visible senior-level support is a must and a talent panel is a useful means of ensuring the involvement of Directors and senior management, especially when it has representation across the organisation. Additionally, line manager support is important at every stage of the process. Line managers must take responsibility for managing performance, identifying and developing talent in their own areas but also need to be encouraged to see talent as a corporate rather than a local resource - see our factsheet on the HR role of line managers.

Go to our factsheet on The role of front line managers in HR

Participants on talent management schemes are also important stakeholders in the process and should be consulted and asked for feedback in shaping development processes.

Focusing on the talent management loop

It is also important to focus attention on the four areas of the talent management loop, detailed in figure 3.

Figure 3: The talent management loop

Attracting talent

The ability to attract external talent depends upon how potential applicants view the organisation, the industry or sector it operates in and whether they share the values of that organisation. The creation of an attractive employer brand is an important factor in attracting external talent. Where needed, lower financial rewards can be countered with alternative benefits and employer values such as social responsibility.

Developing talent

Talent development should be linked to other learning and development initiatives. Appropriate learning and development interventions are required at relevant stages in a career path for talented individuals to achieve their maximum potential. Developing talent needs informal as well as formal learning interventions. These interventions will include conventional development activities but there is also the opportunity to use creative alternatives such as talent coaching and mobility.

Managing talent

Active steps, plans and activities are needed to retain and engage talent required for the future health of the organisation. Investment in management, leadership and other development activities will positively impact on talent retention. Organisations should develop a performance culture where individuals take responsibility for the continuous improvement of business processes and their own skill development.

Tracking and evaluating talent management

Evaluation of talent management is difficult but necessary to ensure that the investment is meeting organisational needs. Evaluation requires both quantitative and qualitative data which is valid, reliable and robust.

Key research messages

Our latest research Talent: strategy, management, measurement⁴ provides a number of overall messages that transcend organisational boundaries:

A successful approach is based on an agreed, organisation-wide definition of talent and talent management. Such definitions form the springboard from which both talent strategy and talent management processes can be launched.
In addition, a language for talent management activities that is understood by all the parties in the employment relationship is a strong requirement.
A proactive, strategic approach to talent management offers considerable organisational benefits in terms of developing a pool of talent as a resource to meet identified needs.
Support for talent management must flow from those at the very top of an organisation and cascade throughout.
Engaging line managers from an early stage is critical to ensure that they are committed to organisational approaches to talent management.
Talent management can be used to enhance an organisation’s image and supports employer branding in the labour market as well as a providing a means of enhancing employee engagement to improve retention.
Talent management activities should be developed with other HR policies and practices for a joined-up approach. Developing talent may be based on a blend of informal and formal methods.
Processes must be developed to track the performance and progress of those identified as talent.

A final conclusion was that talent management was a dynamic process that has to be continuously reviewed to ensure that organisational requirements are still being met in the light of changing business priorities. Ultimately, organisational success is the most effective evaluation of talent management.

CIPD viewpoint

The current uncertain economic climate makes the effective and strategic management of talent more not less important. It is likely that whatever the economic backdrop, organisations will continue to prioritise recruiting scarce talent and identifying, developing and managing talent throughout the business.

HR specialists have an important role to play in providing support and guidance in the design and development of approaches to talent management that will fit the needs of the organisation. They need to have a proper understanding of the challenges facing the organisation in attracting, recruiting, developing and retaining talented people to meet its immediate and future resourcing needs.

References

HANDFIELD-JONES, H. and AXELROD, B. (1997) The war for talent survey. McKinsey Quarterly.
GLADWELL, M. (2002) The talent myth. The New Yorker. 22 July.
MCCARTNEY, C. and GARROW, V. (2006) The talent management journey. Research reports. Horsham: Roffey Park Institute.
TANSLEY, C., TURNER, P. and FOSTER, C. (2007) Talent: strategy, management, measurement. Research into practice. London: Chartered Institute of Personnel and Development. Available at: ttp://www.cipd.co.uk/bookstore

Talent management: an overview