Talent Management Strategy: Building Competitive Advantage

Introduction to Talent Management

Talent management is a major requirement for organizational success within a competitive market environment. By definition, talent management refers to the application of integrated techniques tailored to enhance workplace productivity by developing improved procedures for attracting, developing, retaining, and deploying individuals who possess the expertise and abilities needed to meet present and future business requirements. According to current research, 85% of human resource managers identify the establishment or sustenance of their organization's ability to compete for talent as the single greatest difficulty in workplace management (AberdeenGroup Inc., 2005). Efficient talent management, without a doubt, offers one of the most vital points of strategic leverage available to organizations today.

HR's Role in Talent Management Strategy

Human resource (HR) assumes several positions as a primary owner of talent management, with the role of talent driver being the most significant. HR leads the way for the company to function as a unified entity, positioning talent management as central to organizational success. In its role as a business partner, HR works closely with the CEO, senior executives, and the board to ensure that all parties are dedicated to talent management efforts. HR also plays a major role as a talent management facilitator, giving special consideration to the manner in which organizational culture encourages talent development (Dell & Hickey, 2002).

In general, HR's role entails communicating the talent management vision throughout the organization and maintaining familiarity with competitive dynamics within the industry. Moreover, HR bears responsibility for establishing a practical and integrated strategic approach to talent management — the bigger picture — in addition to managing vital data such as tracking turnover rates and identifying the factors that influence employee retention (Lockwood, 2006; Dell & Hickey, 2002).

In order to incorporate talent management into all aspects of the organization, HR also holds an important position in facilitating change. To support this, HR engages in four core talent management activities: performance management, recruitment, organizational planning, and leadership development (Walker & LaRocco, 2002). In this role, HR addresses four specific risks to the business: (1) risk of vacancy — protecting key business capabilities by concentrating on scarce skills and position fit; (2) risk of readiness — accelerating leadership development and offering broad corporate exposure to high-potential employees; (3) risk of transition — preventing the loss of key talent by selecting successors with strong leadership expertise and recruiting for organizational capability; and (4) risk of portfolio — maximizing strategic talent leverage by focusing on senior management commitment to performance and the establishment of clear standards (Lockwood, 2006).

Effective HR leaders adopt a holistic strategy toward talent management. It is essential to develop clear expectations and to maintain open communication throughout the talent management process. When HR explains to both management and employees the importance of talent management — how it functions and what advantages it offers the organization and its participants — talent management practices are more likely to be perceived as a fair and transparent process (Burke, 2005).

Effective talent management practices and policies that demonstrate commitment to human capital lead to more engaged employees and reduced turnover. Employee engagement has a significant influence on productivity and talent retention. The workers who are most dedicated perform 20% better and are 87% less likely to leave the organization. Furthermore, the foundation of an engaged workforce is built upon the depth, quality, and authenticity of communication from HR and senior management, as well as the overall quality of management itself (Lockwood, 2006). The manager's role as the most critical facilitator of employee dedication — both to the job and to the organization — cannot be underestimated. When implemented properly, programs that encourage talent management also support employee engagement, including work-life balance initiatives, performance management systems, compensation programs, flexible scheduling, compressed work schedules, and many others (Burke, 2005).

Recognition and compensation also help both to retain talent and to enhance performance. A Carlson/Gallup study on employee engagement and business outcomes found that workers who were fully satisfied in the workplace were four times more likely than dissatisfied workers to have a formal evaluation process in place and to receive regular recognition for their work. An additional 82% of respondents indicated that recognition motivated them to perform better (Burke, 2005). Companies have increasingly implemented both formal and informal recognition programs; however, to be most effective, organizations must communicate consistently with employees about these programs.

Effective employee engagement is a fusion of tangible and intangible elements; it promotes an environment of stimulation, learning, development, and recognition. Recent research has found, however, that fewer than one in five workers were highly engaged, approximately one-fifth of the workforce was actively disengaged, and roughly two-thirds were only moderately engaged. The level of disengagement varies depending on work experience factors such as increased workloads, limited developmental opportunities, and similar conditions (Lockwood, 2006).

The primary challenge and opportunity for HR, working in partnership with senior management, is to strengthen employee engagement. Building engagement requires strong leadership, a sense of shared purpose, clear accountability, and opportunities for individual growth. To engage employees more effectively, organizations must work to motivate individuals and instill a sense of pride, passion, and mission (Throop, 2005). Ultimately, employee engagement and talent retention are significantly shaped by organizational culture.

Key Components: Identifying, Assessing, and Developing Talent

A successful talent management strategy begins with selecting the right individual for every position. Hiring decisions carry inherent risk; however, recruiting the right person based on reliable information can minimize that risk and increase the likelihood of success. Each person possesses distinct talents and skills — for example, some individuals tend to be more reserved while others interact easily and confidently with others (Lux, 2013). Effective selection begins with identifying the specific skills required for the role. Evaluating candidates' competencies against those requirements increases the probability of success for all involved (Lockwood, 2006).

Placing a reserved individual in a role requiring substantial interpersonal interaction will lead to frustration and, ultimately, impede performance. While individual circumstances always vary, people exhibit personality tendencies that indicate where they are likely to thrive and where they may encounter difficulties. Capitalizing on the alignment between a person's natural strengths and the demands of the role improves job performance significantly (Lux, 2013).

The capability-based assignment (CBA) technique compares the skills, knowledge, and behaviors — whether developed or acquired — of a candidate against the organizational strategy, objectives, and mission in order to identify the person best suited for a given position. CBA requirements are grounded in the organization's mission and the nature of the business. Some of these requirements are broadly applicable while others represent highly specialized competencies (Nagra, 2011). CBA is currently one of the most widely used tools among senior leaders and HR professionals for identifying past and present performance. For example, joint efforts between senior management and HR in implementing CBA will:

Conclusion

Whereas labor shortages were the primary workforce challenge of an earlier era, modern organizations are confronted with a shortage of talent, and demand for skilled individuals continues to increase. Talent pools and their management have therefore become a primary strategic priority for companies and nations alike; economists have similarly noted that identifying talented individuals — among the most valuable assets in the global economy — has grown increasingly difficult.

Talent management is a genuinely productive business strategy for organizations that approach it as a long-term commitment. It is something that most, if not all, organizations should actively pursue. Talent management has become a top priority for many companies, and the success of leading organizations is directly tied to how effectively they identify, develop, and deploy talent. Talent identification and development — collectively referred to as talent management — is the process by which an organization identifies employees capable of assuming leadership positions in the future. This approach emphasizes building talent pools with strong leadership capabilities. However, organizations should prioritize talent management across all employees, not only high-potential individuals, and should hold middle managers accountable for the development and retention of their teams. Thriving organizations recognize their talent management needs because they have designed and executed practical, integrated talent management plans aligned with their broader organizational strategy.

References

AberdeenGroup Inc. Human Capital Institute. (2005). Retaining talent: Retention and succession in the corporate workforce. Boston: Author.

Alma'aitah, M. A., Al-Shalabi, F. S., & Aljamal, W. H. (2013). Talent management and competitive advantage: The moderating effect of knowledge integration. International Journal of Computer Applications, 66(11).

Burke, M. E. (2005, March). 2005 reward programs and incentive compensation survey report. Alexandria, VA: Society for Human Resource Management.

Dell, D., & Hickey, J. (2002). Sustaining the talent quest. New York: The Conference Board.

Lockwood, N. R. (2006). Talent management: Driver for organizational success. SHRM Research Quarterly.

Lux, J. (2013). Talent management: It goes way beyond recruiting. Rural Cooperatives, 80(6), 18–38.

Morton, L. (2005). Talent management value imperatives: Strategies for execution. New York: The Conference Board.

Nagra, M. (2011). Human capital strategy: Talent management. U.S. Army Medical Department Journal, 31–37.

Throop, M. (2005). Fueling the talent engine: Finding and keeping high performers, a case study of Yahoo! Inc. Alexandria, VA: SHRM Foundation.

Walker, J. W., & LaRocco, J. M. (2002). Perspectives: Talent pools — the best and the rest. HR: Human Resource Planning, 25(3), 12–15.