Talent management seeks to attract, identify, develop, engage, retain and deploy individuals who are considered particularly valuable to an organisation. To be effective, it needs to align with business goals and strategic objectives. By managing talent strategically, organisations can build a high-performance workplace, foster a learning climate in the organisation, add value to their employer brand, and improve diversity management.
For these reasons, people professionals consider talent management to be among their key priorities. The CIPD Profession Map also recognises Talent Management as one of the special knowledge areas within the people profession and sets out the expected standards to follow.
This factsheet looks at the changing context of 'talent' and 'talent management' and it’s compelling benefits. It outlines the features of a talent management strategy, including aligning to corporate strategy, inclusive versus exclusive approaches, involving the right people, and the talent management loop.
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What is talent management?
There are many definitions of the term ‘talent’ and organisations may prefer to use their own interpretations. That said, it’s helpful to start with a broad definition and, from our research, we’ve developed a working definition for both ‘talent’ and ‘talent management’:
Talent refers to individuals who can make a significant difference to organisational performance. This may be through their immediate contribution or, in the longer-term, by reaching their highest levels of potential.
Talent management is the systematic attraction, identification, development, engagement, retention, and deployment of those individuals who are of particular value to an organisation. This may be through their high potential or because they fulfil critical roles.
Many organisations are broadening their definitions, looking at the ‘talents’ of all their staff and working on ways to develop their strengths (see ‘inclusive versus exclusive approaches’ below). At its broadest, then, the term ‘talent’ may be used to include an organisation’s whole workforce.
The interpretations emphasise that it’s not enough just to focus on attracting talented individuals. Managing, developing, and retaining them as part of a planned talent strategy is equally important.
Talent management programmes can include a range of activities such as formal and informal leadership coaching and or mentoring, secondments, networking events and opportunities to meet board-level individuals or directors.
Talent management has evolved from being associated solely with recruitment into an essential management practice, covering many areas such as organisational capability, workforce and succession planning, individual performance and development. Our 2020 Resourcing and talent planning survey report recommends:
- Take a strategic approach to workforce planning informed by data and evidence
- Increase efforts to develop and update internal skills focusing on internal mobility
- Increase focus on flexibility and work-life balance by explicitly offering flexible working arrangements
- Ensure more diversity when recruiting through rigorous, and consistent procedures and by training all hiring managers
- Assess your internal capability and resource around recruitment technology to ensure it meets the needs of your organisation and provides a fair and inclusive candidate experience.
- Take a comprehensive, data-based approach to improving all your resourcing decisions
Benefits of talent management
There are compelling benefits in taking a strategic approach to managing talent. In the future, work will present many new challenges, for example as automation and AI replace more routine roles, the labour market for highly-skilled people tightens, and more flexible and hybrid ways of working emerge following the COVID-19 pandemic. Organisations will need to focus even more on developing rather than buying-in their people.
A tailored, organisation-wide talent management strategy provides a focus for investment in people and puts managing talent high on the corporate agenda. It can also contribute to other strategic objectives, including:
- Creating meaningful work and growth opportunities for staff.
- Building a high-performance workplace.
- Contributing to inclusion and diversity.
- Encouraging continuous learning.
- Adding value to the ‘employee value proposition‘.
- Accessing people analytics for better business decision making.
- Increasing productivity.
Features of a talent management strategy
A clear organisation-wide strategy will allow the talent management strategy to align closely with business objectives.
Creating a talent management strategy starts with workforce planning, a process of analysing the current workforce and capability to determine future workforce needs. It looks at the workforce supply and demand, current demographics, predictions for skill shortages or surpluses, the labour market and workplace trends. CIPD members can find more on workforce planning, including identifying skills needs to support business strategy, in our Workforce planning practice guide.
The workforce plan will help focus and prioritise talent management activities and typically include:
- Recruitment (talent acquisition).
- Building talent 'pools'.
- Succession planning.
- Life-long learning.
- Leadership development.
- Career management.
- Performance management.
- Employee engagement.
- Employee retention.
Lastly, but often forgotten, it’s important to analyse the return on investment – evaluating the results of the talent management process in terms of business outputs, succession pools, staff turnover and productivity, compared with its costs.
Inclusive versus exclusive approaches
Some organisations use an exclusive focus, in which talent management focuses specifically on key or high-potential individuals. Recently, organisations have been adopting a more inclusive approach through a ‘whole workforce’ focus. Often, a blended approach is used in practice, by working to engage and develop all employees, while focussing on a particular core group or groups of employees.
Regardless of the approach, it’s crucial to be fair and consistent in all talent management processes. For example, not ‘joining-up’ talent management programmes with diversity policies and activities can mean an organisation fails to benefit from accessing and developing talent from the widest possible pool.
Involving the right people
It’s important to include the right stakeholders in developing the talent management strategy and associated activities. Senior leaders and managers need to be actively involved in the whole process and make it a top priority.
Selecting participants for formal talent schemes (sometimes referred to as leadership programmes) is key. Our research shows that structured selection processes increase the perceived value of talent programmes and participants’ motivation to perform. For those not selected, the negative effects of being ‘passed over’ are not as harmful as might be feared, particularly if individuals are given sensitive, practical feedback and opportunities for ongoing strengths-based personal development.
Sometimes participants express frustration that the career development opportunities they expect do not come immediately. It’s therefore important to set the right expectations and once candidates have completed a talent programme, it's important the maintain an ongoing dialogue, for example through ongoing networking opportunities or more structured meetings.
Visible senior-level support is a must. A ‘talent panel’ is a useful way to keep directors and senior management involved, especially when it has representatives from across the organisation. Line managers are responsible for managing individuals’ performance and for identifying and developing talent in their own areas, but they should also be encouraged to see talent as organisation-wide rather than a local resource.
People professionals have an important role to play in providing guidance and support when designing and developing approaches to talent management that fits the organisation’s needs. HR is also perceived as playing a critical role in facilitating talent pools and programmes and in maintaining their momentum.
If organisations choose to implement formal selection processes for talent pools, HR teams also have a major role in ensuring the selection criteria are applied consistently. They should also make sure there’s a learning strategy for those not accepted onto a programme.
Focusing on the talent management loop
There are six main areas of the talent management loop: attraction, identification, development, engagement, retention and deployment.
The ability to attract external talent depends upon how potential applicants view the organisation, the industry or sector in which it operates and whether they share the organisation’s values. Creating an attractive employer brand and employee value proposition is an important factor in recruiting external talent.
Business critical roles must be identified first – these are leadership and specialist roles that, if unfilled for any length of time, could leave the organisation vulnerable. The process of succession planning helps many organisations prepare potential leaders to fill key positions from within.
The next step is identifying talented individuals within the organisation. There are various ways to do this but it’s often based on past performance and future potential, with a view to developing ‘talent pools’ of individuals who could step into business critical roles when they arise. A robust performance management process is a way to identify talent early.
TTalent development should be linked to other learning and development initiatives including informal as well as formal learning interventions. Find out more on learning and development strategies that reflect business objectives.
Participants on talent management programmes tend to value coaching and mentoring, and networking particularly highly, especially the opportunity to meet and engage with senior people in the organisation.
Secondment is the temporary movement or ‘loan’ of an employee to another part of the organisation. As flatter management structures become more usual, traditional promotion opportunities through a series of line management roles are limited. Secondments offer valuable career development opportunities and are increasingly used as part of talent management programmes. They also help organisations to be agile and flexible by expanding capability, skills and knowledge across the business.
Employees who have good quality jobs, some autonomy in how they work, see a clear link between their role and organisation objectives, and are well-managed, will not only be happier, healthier and more fulfilled, but are also more likely to perform well. This mutual gains view of motivation and people management lies at the heart of employee engagement.
Investing in development activities will reduce employee turnover and improve talent retention. Reward and recognition can also be retention tools. The reward strategy should offer a good mix of rewards. It might include incentives, rewarding contribution to success and acknowledging an individual’s value to the organisation.
Deployment is using the workforce in the most effective and efficient way. It’s best used as part of workforce planning, longer-term investment in skills and development, and with a supportive mobility policy. Organisations must understand where their skills gaps lie to plan the training required and deploy identified talent with job rotations, skill enhancement opportunities, additional qualifications, leading on special projects, and secondments to aid progression and growth. For example, in a global organisation which constantly looks to hire teams to work in different locations, the greatest learning experiences might come from challenging assignments, international re-location or secondment opportunities.
Tracking and evaluating talent management
Evaluating talent management is difficult, but necessary to ensure that the investment is justified. It needs both quantitative and qualitative data that is valid, reliable and robust. One measure could collate employee turnover and retention data with those who have been selected to participate in talent management programmes.
There’s more in our factsheets on people analytics and workforce reporting. Our report, Managing the value of your talent: a framework for human capital measurement, part of the Valuing your Talent research programme, offers a diagnostic tool to assess how an organisation’s human capital is measured.
Ultimately, organisational success is the most effective evaluation of talent management.
Books and reports
CAMPBELL, V. and HIRSH, W. (2014) Talent management: a four-step approach. Brighton: Institute for Employment Studies.
COLLINGS, D.G., MELLAHI, K. and CASCIO, W.F. (eds.) (2019) The Oxford handbook of talent management. Oxford: OUP.
FROST, S. and KALMAN, D. (2016) Inclusive talent management: how business can thrive in an age of diversity. London: Kogan Page.
HIRSH, W. (2015) HR essentials: effective talent and succession management: a framework for thinking about your own approach. Brighton: Institute for Employment Studies.
TAYLOR, S. (2021) Resourcing and talent management: the theory and practice of recruiting and developing a workforce. 8th ed. London: CIPD Kogan Page.
TURNER, P. and KALMAN, D. (2014) Make your people before you make your products: using talent management to achieve competitive advantage in global organizations. Chichester: Wiley.
Visit the CIPD and Kogan Page Bookshop to see all our priced publications currently in print.
BASKA, M. (2020) Covid renewing employers’ focus on internal talent pools, research finds.People Management (online) 20 November.
COLLINGS, D. (2018) Talent management: dispelling some myths. Human Resources. May. pp44-46
GLAISTER, A., KARACAY, G., DEMIRBAG, M. and TATOGLU, E. (2018) HRM and performance: the role of talent management as a transmission mechanism in an emerging market context. Human Resource Management Journal. Vol 28, No 1, January. pp148-166. Reviewed in In a Nutshell, no 75.
HIRSCH, W. (2018) Talent management that fits. HR Magazine. June. pp42-44.
MAYO, A. (2018) Applying HR analytics to talent management. Strategic HR Review. Vol 17, No 5. pp247-254.
ROPER, J. (2015) What do we mean when we talk about talent? Human Resources. June. pp26-31.
SWAILES, S. (2020) Responsible talent management: towards guiding principles. Journal of Organizational Effectiveness: People and Performance. Vol.7, No 2. pp221-236.
CIPD members can use our online journals to find articles from over 300 journal titles relevant to HR.
Members and People Management subscribers can see articles on the People Management website.
This factsheet was last updated by Giorgia Gamba Quilliam: Digital Learning Portfolio Manager, Profession Core Themes, CIPD
Giorgia designs, develops and manages learning content at the CIPD, including digital courses, factsheets, podcasts and web content. She was instrumental in developing the first ever fully digital qualification delivered in partnership with AVADO, which won both a Training Journal and a Learning Technology award in 2016.
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