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 consider talent management to be among their key priorities.
This factsheet looks at the changing context of 'talent' and 'talent management' and the compelling benefits of 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.
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What is talent management?
Wide variations exist in how the term ‘talent’ is defined across different 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 underpin 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.
Talent management programmes can include a range of activities such as formal and informal leadership coaching and or mentoring, secondment, networking events and board-level and client experience.
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.
There seems to be a renewed emphasis on talent management, with over half of CEOs prioritising it and increasing talent management budgets. Our Resourcing and talent planning survey 2017 indicates that organisations anticipate greater focus on developing in-house talent and an increase in retaining rather than recruiting talent, and investing more time and effort in the quality of candidates.
The benefits of talent management
There are compelling benefits in taking a strategic approach to talent management. CEOs as well as HR directors are now likely to number talent management among their key priorities. In our 2016/2017 HR Outlook survey both HR and non-HR leaders included talent management in their top three list of current and future organisation priorities – two points up on our previous year’s survey. 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, corporate governance, business strategy and to improve productivity.
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 provides a focus for investment in human capital and places managing talent 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
- accessing human capital data to aid better business decision
- increased productivity levels.
Features of a talent management strategy
A clearly defined and communicated corporate strategy will pave the way for a talent management strategy closely aligned to 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 demographics, skill shortages or surpluses, the labour market and workplace trends, such as automation. 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 determine appropriate talent management activities. These sit within HR and include:
- recruitment (talent acquisition)
- building talent pools
- succession planning
- life-long learning
- leadership development
- career management
- performance management
- employee engagement
- employee retention.
Lastly, and often forgotten, it’s important to analyse the return on investment – evaluating the results of the talent management process in terms of business outputs, staff turnover, and productivity compared with its costs.
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 the workforce plan forecast. Once gaps have been identified between the workforce required for the future and what is available in the market, a workforce plan will help identify necessary action areas. This level of accumulated internal data, once analysed, can help shape an organisation’s tailored approach to talent management.
Inclusive versus exclusive approaches
Some organisations develop an exclusive focus, segmenting talent according to need, that is, the talent management process relates specifically to key or high-potential individuals. A recent trend has seen organisations adopt a more inclusive approach creating a ‘whole workforce’ focus on engagement and talent development. 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
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 talent management process and make recruitment, succession planning, ongoing development, and retention of key employees their top priority.
Selecting participants for formal talent schemes (sometimes referred to as leadership programmes) is key. Our research shows that the existence of structured selection processes increases the perceived value of talent programmes and the motivation of participants to perform. For those not selected, the negative effects of being ‘passed over’ are not as detrimental as might be feared, particularly if individuals are provided with sensitive, practical feedback with opportunities for ongoing personal development.
Once participants have completed a talent programme, there’s a need to maintain dialogue with and between these individuals, for example through 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 directors and senior management are involved, 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 an organisation-wide rather than a local resource.
HR specialists have an important role to play in providing support and guidance in 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 additionally has a major role to play in ensuring 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 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 values of that organisation. The creation of 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 preparing future potential leaders to fill key positions.
The next step is to identify talented individuals within the organisation. There are various ways of doing this but it’s often based on past performance and future potential with a view to developing ‘talent pools’ to step into business critical roles when they arise. A robust performance management process involving regular '1-to-1's with managers is valuable tool in early identification of talent.
Talent development should be linked to other learning and development initiatives including 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 and mentoring, and networking particularly highly, especially the opportunity to meet senior people in the organisation.
Secondment is the temporary movement or ‘loan’ of an employee to another part of the organisation, or another organisation. It’s widely recognised as valuable for both employee and organisation development. As flatter management structures become more common, traditional opportunities for promotion through a series of line management roles are limited. Secondments offer career development opportunities and are increasingly used as part of talent management programmes. They also provide organisations with the chance to develop their skills base and share knowledge within the business.
Employees who have good quality jobs and are managed well, will not only be happier, healthier and more fulfilled, but are also more likely to perform well, driving productivity, better products or services, and innovation. This mutual gains view of motivation and people management lies at the heart of employee engagement.
Investment in development activities will reduce employee turnover and positively impact talent retention. Reward and recognition can also be a retention tool. The reward strategy should ensure a good mix of rewards is available to appeal to both intrinsic and extrinsic motivational priorities. It might include recognition incentives, rewarding contribution to success and acknowledging an individual’s value to the organisation.
Deployment is most effective when 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/training, additional qualifications, leading on special projects, and secondments to aid progression and growth. For example, in a global organisation constantly looking to hire teams to work in different locations, the greatest learning experiences might come from challenging assignments, international re-location or secondment opportunities.
Future talent strategies
Evaluating talent management is difficult, but necessary to ensure that the investment is meeting organisational needs. It requires both quantitative and qualitative data that is valid, reliable and robust. One method could involve the collation of employee turnover and retention data for key groups such as senior management post-holders or those who have participated in talent management.
More on measuring the value of human capital can be found 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 research 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.
Books and reports
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.
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.
ROPER, J. (2015) What do we mean when we talk about talent? Human Resources. June. pp26-31.
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 Ally Weeks.
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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