Peter Drucker, a business management theorist and writer, famously said that an organization's most valuable asset in the 20th century was production equipment, but that in the 21st century, workers would be the most valuable asset to organizations. And his ideas ring true: Canadian companies, like those in the U.S., commonly recognize labour costs as a significant expense.
The following article will present an end-to-end view of talent management, its relevance, benefits, various processes, and, finally, the strategy an organization can leverage to activate its talent effectively.
Table of Contents
What is talent management?
Talent management describes activities organizations use to attract, retain, and develop employees to successfully maximize productivity and keep overall costs down. Besides recruiting candidates with excellent skills and experience for a position, providing these candidates with learning and professional development opportunities, room to grow within the organization, and rewarding their contributions are all examples of talent management.
Talent management takes place every day in every sector. For example, a hair salon chain may want to branch out to include various spa services, such as manicures, pedicures, and facials. The owner may want to further expand the business model to include a retail component, by selling salon products such as hair spray, shampoo, and face cream, as well as jewellery and fashion accessories. To begin this expansion and transition, the organization will need a talent management plan to train existing staff on how to deliver the new products and services they will be offering. It was also need a plan to hire new, qualified, and suitable candidates in order to achieve positive results from expanding the business.
Why is talent management important?
Talent management is significant to businesses as it helps to identify the most talented, skilled, and experienced people working in the company or organization. These employees serve as an example to others in sharing their skills and knowledge while demonstrating the company's core values.
Businesses that take the time to recruit and develop the right talent tend to be innovative and drive profitability. In contrast, companies that do not train and manage their people are often less likely to retain employees and can negatively impact client satisfaction, profitability, and the growth of the organization.
What does talent management include?
To optimize a talent strategy and develop a successful talent management system, the following are common components an organization must consider developing:
- A solid plan - One that outlines the specific skills and experience that can ultimately drive positive results for the business. It may go beyond into details about what it takes to succeed.
- An effective, detailed recruitment process - Posting position descriptions on the most effective websites and carrying out the interview processes are some of the first steps to finding the right candidates to represent the company's brand in the most effective manner
- Onboarding - New employees need to be introduced to the company, its key players, their team members, and the company culture. This can be important to help a new employee feel comfortable and welcomed.
- Training and development - Even if the candidate has experience in the role for which they were hired in your organization, they will still need training on company procedures and methods. While employers may expect self-sufficiency, and employees often like to pride themselves as problem-solvers, it is important that new hires are given the necessary tools and guidance to support development in their role.
- Performance management – Along with formal (usually annual) performance reviews, regular check-ins and chats with team leaders or managers help employees build on strengths and improve on weaknesses. This dialogue creates a venue for both positive reinforcement and constructive criticism and can help improve employee retention and success in meeting business objectives.
- Compensation and benefits – Monetary benefits can be a key reason for accepting or declining a job offer. However, candidates may value and consider other perks and benefits (such as the option to work at home, club memberships, or employee discounts) when deciding whether to accept a job offer or not.
- Succession planning – Once you have recruited and hired your talent, their future with the company must be taken into consideration. Over time, be it a lateral move, transfer, promotion, retirement, or resignation, having a solid plan to help employees reach their new role reduces the risk of disruption to the long-term health of an organization. This also enables employees to feel empowered and have higher job satisfaction, knowing there is an opportunity for them to advance in their careers and take ownership of certain areas of responsibility within the organization.
Benefits of talent management
Organizations thrive when they offer a working environment that is appealing to in-demand talent. Maintaining a talent pipeline is also a key factor in backfilling open roles should employees unexpectedly leave. This helps ensure that open positions can be filled quickly, with minimum impact on business operations. Of course, it may be beneficial in some cases to retain skilled employees as it can be more cost-effective than recruiting and training new talent.
What is the talent management process?
There are seven steps in the talent management process:
- Recruiting – sourcing talent
- Hiring – selecting the right candidate and making an employment offer
- Professional development – providing development resources to the employee for optimal performance
- Team member engagement – retaining talent and identifying potential risks of departure
- Performance management – monitoring performance and collecting data to aid decision making
- Team member recognition – competitive compensation and rewarding excellence
- Succession planning – helping employees advance within the company
Talent Management Strategy
Companies often want an optimized talent strategy to drive results. Once talent is acquired, adapting to workplace culture is an important factor. Employees are more likely to remain with the company when they are happy and experience a sense of belonging.
Important factors to consider when developing a talent management strategy are providing opportunities and a support system for growth. This can help employees see and experience progression opportunities and feel confident in pursuing them. This can also be achieved by recognizing individuals' strengths and challenging them to apply their skills in new ways.
Hiring diverse talent is also a key strategic tool to open your talent pool to new skills, ideas, and perspectives.
Strategic compensation is crucial. Employers must be equipped with real-time, industry and geographical-specific compensation data in order to attract and retain the best talent.
Using reliable and current talent management software is an efficient and accurate way to incorporate a talent management strategy that will assist in all of the necessary steps to recruit, hire, develop, compensate, and retain in-demand talent for your company.
Talent management planning and best practices
Talent management can sometimes come with certain risks which organizations should be ready to remediate. Such challenges could include inaccurate data, silos with little collaboration between business units, and biased decision making. The following may help overcome these and other such challenges:
- Determine metrics and make decisions based on data. Gather and use current and accurate data such as pay gap analysis, benefits, and workplace sentiment.
- Be technically savvy and up to date. A talent management system is an effective tool for recruiting, hiring, managing, and rewarding in-demand talent.
- Create a high-performance culture. Encourage professional development and offer competitive compensation, rewards, and promotions to motivate employees to be productive and deliver their peak performance.
- If necessary, outsource payroll and HR. Business owners and senior management have full calendars. When these tasks are managed by a trusted vendor, tasks like running payroll or posting job openings can help decision-makers stay focused on growing and managing their business.
Frequently asked questions
What is a talent management system?
Talent management software can streamline talent processes. Features of talent software include onboarding new hires, tracking employee performance, learning management, compensation management, and succession planning.
Why create a talent management system?
It can be important for staff to feel recognized for their work, which means understanding how they can grow their skills, knowledge, and therefore, careers. A talent management system can provide business owners and managers with the tools to understand their employees’ aspirations and identify how their skills and experience can be developed and supported. It can also help ensure plans are in place to meet current and future workplace needs.
What is the difference between talent management and talent acquisition?
Talent management handles the life cycle of the employee while they are employed with your company, from hiring to resignation, termination, or retiring, while talent acquisition focuses on the sole aspect of recruitment.
How often should a talent management system be evaluated?
After an initial meeting to establish a talent management system, it can be reviewed and revamped as necessary, usually every six to twelve months.
How can talent be evaluated?
- Define objectives
- Choose metrics
- Collect and analyze data
- Identify gaps and opportunities
- Implement and monitor actions
What is a talent management framework?
It is the plan for how a business will execute its talent strategy. This includes the steps of recruiting, hiring, learning management, team member engagement, performance management, team member recognition, and succession planning.
Learn More
Recruiting, hiring, learning & development, compensation, and succession planning – can all fall under talent management, and these can be important for a business’s success. Talk to us about your talent management challenges, and we’ll walk you through the solutions we offer — including how companies like yours use them. Call 866-622-8153 start a quote.
This guide is intended to be used as a starting point in talent management and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax advice or other professional services.
