Produced in partnership with Hays, this report examines organisations’ resourcing and talent planning strategies and practices
Talent management seeks to attract, identify, develop, engage, retain and deploy individuals who are considered particularly valuable to an organisation. By managing talent strategically, organisations can build a high performance workplace, encourage a learning organisation, add value to their branding agenda, and contribute to diversity management. For these reasons, HR professionals widely consider talent management to be among their key priorities.
This factsheet looks at the changing context of 'talent' and 'talent management' and the strong business case for addressing it. It outlines the features of a talent management strategy, including corporate strategy alignment, inclusive versus exclusive approaches, involving the right people, and the talent management loop. The factsheet also touches on implementing an effective strategy and the talent strategies needed to meet future challenges and opportunities.
HR professionals have an important role to play in providing support and guidance in the design and development of approaches to talent management that fit the needs of the organisation. They need to understand the key challenges facing the organisation in attracting, recruiting, developing and retaining talented people to meet immediate and future strategic objectives and business needs. It is also important to develop and signpost career opportunities for all employees and creative strategies for unleashing employee potential.
What is talent management?
Wide variations exist in how the term ‘talent’ is defined across differing sectors, and organisations may prefer to adopt their own interpretations rather than accepting universal or prescribed definitions. 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 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 who are of particular value to an organisation, either in view of their ‘high potential’ for the future or because they are fulfilling business/operation-critical roles.
These interpretations underline the importance of recognising that it’s not sufficient simply to focus on attracting talented individuals. Developing, managing and retaining them as part of a planned strategy for talent is equally important, as well as adopting systems to measure the return on this investment.
Many organisations are also now 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 encompass the entire workforce of an organisation.
Expansion of talent management
The concept of talent management was once solely associated with recruitment but has in recent years evolved into a common and essential management practice covering a multitude of areas including organisational capability, individual development, performance enhancement, workforce planning and succession planning. More information can be found in our factsheets on recruitment, workforce planning, succession planning, performance management and reward and pay.
Our 2015 Resourcing and talent planning survey indicates that talent management is a key priority for CEOs with half of respondents confirming that this is the case within their organisation. According to our 2015 Learning and development survey, nearly three fifths of employers deploy talent management in their organisations. Talent management programmes may include a range of activities such as formal and informal leadership coaching, networking events and board-level and client exposure.
The business case for talent management
The business case for taking a strategic approach to talent management is strong and persuasive. CEOs as well as HR directors are now likely to number talent management among their key priorities. In our 2015/16 HR Outlook survey both HR and non-HR leaders included talent management in their top five lists of current and future organisation priorities. Our research demonstrates that the increased interest in talent is driven by a mix of external supply issues and internal organisational demands, such as increasingly competitive global markets, skills shortages, demographic trends and corporate governance and business strategy.
To gain competitive advantage, organisations need to develop a strategic approach to talent management that suits the business and gets the best from their people. A tailored, organisation-wide talent management strategy 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.
In 2010, our research among organisations that operate distinct talent management programmes (or pools) for key high-level or high-potential staff, focussed on participants’ experiences and perceptions of being ‘talent-managed’. The findings, reported in The talent perspective: what does it feel like to be talent-managed? clearly illustrate the positive results that can be achieved by talent programmes, with a large majority of participants agreeing that membership of such programmes has positively impacted on their engagement at work.
Features of a talent management strategy
Our research report Talent: strategy, management, measurement (part of our Talent forward series) provides a number of overall insights to consider when setting up and developing talent strategies, for example the need to develop processes to track the performance and progress of those identified as talent. Key issues when developing a strategy include:
Alignment to corporate strategy
Ensuring that the talent strategy is closely aligned with the corporate strategy must be a priority. Strategic analysis from the business perspective, including internal and external trends, should feed into an HR forecast, which can help shape an organisation’s tailored approach to talent management. More information on workforce planning to meet current and future business needs, including identifying skills needs for key or specialist resources to support business strategy, can be found in our guide Workforce planning practice.
Inclusive versus exclusive approaches
Some organisations adopt an inclusive approach to talent management creating a ‘whole workforce’ approach to engagement and talent development. Others develop a more exclusive focus, segmenting talent according to need, that is, the talent management process specifically relates to key or high-potential individuals.
Often a blended approach is used in practice, with attention paid to the engagement and development of all employees, but with special focus given to a particular core group or groups of employees.
Regardless of which approach organisations adopt, fairness and consistency must be applied in all talent management processes, alongside diversity and inclusion considerations. Not ‘joining-up’ approaches to talent management programmes with diversity policies and activities, can mean an organisation fails to reap the benefits of accessing and developing talent from the widest possible pool.
Involving the right people
Careful consideration needs to be paid to involving the right stakeholders in developing the talent management strategy and associated activities.
A key initial consideration for employers is how to select participants for formal talent schemes. Our research shows that the existence of structured selection processes serves to increase the perceived value of talent programmes and the motivation of participants to perform. For those not selected, by contrast, the negative effects of being ‘passed over’ are not as detrimental as might be feared, particularly if individuals are provided with sensitive and practical feedback.
Once participants have completed talent programmes, there is a need to maintain dialogue with and between these individuals, by means such as ongoing networking structures, as sometimes participants express frustration that the career development opportunities associated with the talent management process do not immediately materialise.
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. Line managers must take responsibility for managing performance and for 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. Find out more in our factsheet on the role of line managers in HR and L&D.
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. Our research shows that HR is 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 additionally has a major role to play in ensuring that the selection criteria are applied consistently, as well as developing a planned strategy for those who are not accepted to be part of the programme.
Focusing on the talent management loop
There are four main areas of the talent management loop: attracting, developing, managing and evaluating talent.
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 values of that organisation. The creation of an attractive employer brand is an important factor in recruiting external talent. See more in our employer brand factsheet.
Talent development should be linked to other learning and development initiatives including both informal as well as formal learning interventions. See more about developing a strategy that reflects business objectives in our learning and development strategy factsheet.
Participants on talent management programmes tend to value coaching, mentoring and networking particularly highly, especially according to our research, the opportunity to meet senior people in the organisation. Read our coaching and mentoring factsheet.
Investment in management and leadership development will positively impact on talent retention. The process of succession planning in particular helps many organisations in identifying and preparing future potential leaders to fill key positions, while secondments may also play a useful role. See more in our factsheets on succession planning and secondment.
Tracking and evaluating talent management
Evaluation of talent management is difficult, requiring both quantitative and qualitative data that is valid, reliable and robust, but necessary to ensure that the investment is meeting organisational needs. One method could involve the collation of employee turnover and retention data for key groups such as senior management postholders or those who have participated in talent programmes - see our factsheet on employee turnover and retention.
Find out more on how employers can measure the value of human capital in our factsheets on human capital and HR analytics. Our report Managing the value of your talent: a new framework for human capital measurement, part of the Valuing your Talent programme, offers a diagnostic tool for business professionals to use to assess how they measure human capital in their organisation.
Ultimately, organisational success is the most effective evaluation of talent management.
Future talent strategies
It’s vital that organisations not only respond to current talent challenges but actively anticipate future challenges and opportunities and develop pipelines of talent for the future.
Together with a range of expert collaborators, CIPD has explored what strategies organisations need to adopt in response to current and future macro and micro challenges. Our six part Talent Forward series examines a range of themes including talent clusters, the new global talent realities and talent measurement insight.
CAMPBELL, V. and HIRSH, W. (2014) Talent management: a four-step approach. Brighton: Institute for Employment Studies.
FROST, S. and KALMAN, D. (2016) Inclusive talent management: how business can thrive in an age of diversity. London: Kogan Page.
TAYLOR, S. (2014) Resourcing and talent management. 6th ed. London: Chartered Institute of Personnel and Development.
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.
COLLINGS, D.G. and MINBAEVA, D.B.(2013) Seven myths of global talent management. International Journal of Human Resource Management. Vol 24, No 9, May. pp1762-1776.
FERNANDEZ-ARAOZ, C. (2014) 21st century talent spotting. Harvard Business Review. Vol 92, No 6, June. pp46, 48-56.
GALAGAN, P. (2015) Trends & tides in talent development. TD (Talent Development). Vol 69, No 10, October. pp28-33.
OPER, J. (2015) What we talk about when we talk about talent. Human Resources. June. pp26-31.
WILKINS, D. (2013) What you need to know about post-recession talent management. Workspan. Vol 56, No 1, January. pp33-34,36-37.
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Members and People Management subscribers can see articles on the People Management website.
Ally Weeks: HR Consultant
Ally is an HR practitioner with 20 years UK and international experience within small, medium and large blue chip businesses. A subject expert in talent management, succession planning, workforce planning and recruitment, Ally is currently an HR consultant and trainer for the CIPD and lead tutor for the Level 7 RTM (Resourcing and Talent Management) programme. She advises clients on integrating learning activity with wider commercial issues and the strategic direction of their organisation. Ally is highly adept at determining the most appropriate delivery methods, including online learning, and is experienced in 'hands on' training delivery. She also advises on monitoring the impact of learning interventions.
More recently she has focussed on writing content for CIPD’s online digital Certificate qualifications and Future of HR in partnership with Avado. She speaks at CIPD branch events and conferences on attracting talent, resourcing strategies and trends, strategic workforce planning and new learning technologies.
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