What is Talent Management? Learn Why It’s Important with HRMorning’s Guide

Managing talent could be the most important part of human resources professionals’ jobs.

But what is talent management to HR? It’s about managing people, processes and everything that makes them effective — an all-encompassing role centered on human capital.

More specifically, talent management includes meeting organizational needs from the point you bring the right talent on board and keep them engaged to the point you help them develop their careers and transition into retirement.

What is Talent Management for HR?

“People will always fundamentally choose to succeed over failing when given the means and opportunities to do so,” says Jason Lauritsen, author of Unlocking High Performance, on HRMorning’s podcast Voices of HR. “So we need to understand what people need. What drives performance. What obstacles are in the way. And we need to get those obstacles out of the way so that people can do the work.”

HR wants to be effective every step of an employee’s journey. And here’s why: Companies with effective talent management programs — that means a formal plan — will more likely outperform competitors.

People will always fundamentally choose to succeed over failing when given the means and opportunities to do so. So we need to understand what people need. What drives performance. What obstacles are in the way. And we need to get those obstacles out of the way so that people can do the work.

Jason Lauritsen, author of Unlocking High Performance

When you put talent first — the people who do the work, achieve the goals and build the culture — you help your organization gain an edge in everything from profit and product development to reputation and industry recognition.

Why is Talent Management Important?

But why is talent management important these days? The top six reasons are:

• Strategic alignment: Effective talent management practices help you align the workforce with organizational goals, enhancing innovation, adaptability and competitiveness. Ideally you hire the right talent at the right time for the right roles.
• Employee engagement: When you manage talent well, you can boost engagement, productivity, and employee satisfaction. When employees are happy and committed, they will help drive organizational success.
• Employee retention. When you focus on career and personal development, you’ll keep top talent and cut turnover costs.
• Adaptability and efficiency. With an effective talent management strategy, you gain a skilled and agile workforce that can respond quickly to changes and opportunities in your industry.
• Positive company culture: With a talent management strategy, you can create and support an environment that attracts top talent and encourages existing employees to stay and thrive.
• Succession planning: Ideal talent management ensures you maintain a skilled pipeline of employees and leaders so you minimize leadership gaps and create smooth transitions.

Creating a Talent Management Process

As with anything in HR, you need a process to get talent management right. Also, as with anything in HR, there’s no one-size-fits-all approach to effectively manage your human capital.

But McKinsey researchers found that there are three common practices that have the biggest impact on the effectiveness of a talent management process:

• rapidly allocating talent to the right places at the right time
• leadership being involved in fostering a positive employee experience, and
• having an HR team that is strategically minded.

Simply put, the most effective talent management process is an ongoing organizational strategy to get the best employees and keep them happy.

Succeeding through the 10 stages of talent management will take commitment, but the payoff is worth it.

1. Strategic Planning

Every process needs a plan. In yours, you’ll want to identify gaps that lie between your workforce planning strategy and your human capital realities. From there, it’ll be important to formulate job descriptions for key roles to help guide how, where and when you source, select and develop a workforce plan.

Equally important, you’ll want to ensure your talent strategy and initiatives align with your business strategy. Perhaps you can line up existing (or new) Strengths, Weaknesses, Opportunities and Threats analysis (SWOT) for HR and the organization to be sure you’re headed in the same direction.

2. Recruitment

Based on your plan, you’ll want to decide if you should fill roles from within the organization or from external sources. Either way, identify the talent pools you need to tap to find top talent. To attract a healthy flow of applicants, use job portals, social networks and referrals. Consider reaching beyond the usual networks to more unique talent pools such as military veterans, formerly incarcerated, retirees, and the neurodivergent community.

This is where your employer branding is important, too. You want to ensure your reputation is intact on those job portals and social networks. While you can’t prevent negative reviews, you can respond to negativity with resolutions and/or data to refute fake assessments. Goodwill toward people who have negative things to share goes a long way in building a better employer brand.

3. Acquisition

In your talent acquisition process, you’ll likely want to use analysis tools, pre-screening questionnaires and skills tests to narrow the pool of candidates to start.

From there, try written tests, interviews, group discussions and possibly a closer look at any information on the candidate that’s publicly accessible to get a more well-rounded picture of the person through your hiring process.

When you make job offers, be prepared to be flexible. Candidates often have different ideas of the ideal work situation. If you can, start with a pencil and sign with a pen.

4. Onboarding and Orientation

The first step in creating a positive employee experience is creating a positive onboarding and orientation experience. Those first days are critical to giving new hires the right impression of the company culture and setting their expectations on everything from performance to outcomes.

Some best practices for successful onboarding and orientation:

• Preboard. Send welcome gifts and/or recorded messages from soon-to-be new colleagues and bosses. Limit paperwork, as new hires aren’t being paid yet and shouldn’t have to get bogged down in filling out forms

• Be prepared. Hand them everything they’ll need to get started — ID badges, forms, tech tools, handbooks and resources to help — the first day.

• Make introductions. Let them meet and mingle with the people they’ll interact with most.

• Establish a shared vision for success. Talk about what they can expect from you and what you’ll expect from them — and all the resources available to get it done.

• Answer questions. Create time for their questions and your answers within the first few days — as inquiries will surely come up.

5. Performance Management

The best way to be certain employees perform well and thrive is to set clear performance expectations throughout their career. Employees and their direct supervisor should meet throughout the year to give and receive feedback. Ideally, they should do at least two performance reviews a year, peppered with several check-ins. That’s when they can review and adjust performance expectations.

For consistency, you might want to invest in tools and processes to monitor employee performance regardless of their role. When you collect data on performance — plus ask questions to find out what makes individual employees tick — you can make better workforce decisions.

6. Development and Training

Front-line managers will be the first point of contact for training needs. Train them to identify training needs and employee potential so it aligns with your development initiatives.

You’ll want to make learning and development resources and career development opportunities consistently accessible and valuable. Plus, those resources will need to be relevant to employee expectations, needs and goals. It’s also important because when you develop employees to grow within your organization, you build retention, equip employees with the right skills and improve employee engagement.

It starts with an effective onboarding program that is designed to help employees settle in. From there, offer regular opportunities to build skills, aptitude and proficiency. Even better, give employees counseling, coaching, mentoring and job-rotation opportunities to grow.

7. Employee Engagement

You want to keep current employees happy and teams connected throughout their career with you. While development and training will do part of the work in improving employee performance, managers have the greatest impact by focusing on employee engagement.

Give managers resources to keep employees’ work meaningful. Also, provide teams with the ability to connect professionally and personally. Even better, invest in engagement tools that help spot potential retention risks and ways to retain top performers.

8. Talent Retention

While it should go without saying, effective talent management requires managing compensation equitably. You want to provide benefits and perks that reflect your employees’ motivations, needs and passions. That may look different for different employees, so keep those as varied as possible.

From there, you want to recognize and reward performance that exceeds expectations. Similarly, effective rewards and recognition look different to every person. So the top priority is to offer different forms of rewards and recognition to keep people engaged and improve employee retention.

Finally, work with other leaders to create a positive work environment. Carrot-and-stick management styles don’t work well by today’s standards. Build a better environment through development, positive reinforcement and collaboration.

9. Leverage Talent Management Systems

The good news is you don’t have to go it alone when it comes to talent management. There are a bevy of learning and talent management systems that can help HR teams of any size handle the work.

AI and automation have already had an impact on the ability of HR departments to recruit and streamline hiring processes. And you can increasingly use data analytics for talent insights and performance review effectiveness.

Regardless of the type of systems you use — or intend to use — keep in mind these three best practices from ADP.

• Make decisions based on data. As long as you have reliable and timely data, you can resist the urge to “go with your gut.” Instead, you can decide on strategic talent initiatives, such as pay equity and workforce diversity.
• Lean into technology. Despite the unknowns with AI, it’s proving to make it easier to source talent, assess skills and qualifications, onboard new hires, manage employee strengths and identify top performers.
• Maintain oversight. At the same time, remember the concept of garbage in, garbage out. You still need to maintain HR oversight to be certain you add the right data to receive the best answers.

10. Succession Planning

Succession planning is critical throughout employees’ careers because it shows them you care about where they’re headed and how they can succeed throughout their lifecycle. It also allows them to reach their highest potential.

Work with employees to create succession plans that allow them to advance their careers when openings become available. You might even build their career paths to align with the anticipated evolution of the organization, which helps you avoid disruptions. That will help employees feel they’re part of the bigger whole.

Finally, plan for the end of their careers by offering retirement benefits, creating transition plans and doing exit interviews to create a full, positive journey.

Ethical and Legal Considerations

As with nearly everything in HR, talent management comes with ethical and legal considerations at every juncture in employees’ journeys within your organization — from talent acquisition to departure.

When it comes to ethical considerations in performance management, you want to stay focused on fairness, equity, transparency, accountability and respect for privacy and confidentiality. Why?

• Fairness ensures that evaluations and actions are free from bias
• Equity provides all employees with the same opportunities
• Transparency involves open communication about performance expectations
• Accountability holds both employees and managers responsible for their roles in the process, and
• Respect for privacy and confidentiality is essential to maintain trust.

When it comes to legal considerations, you’ll want to be aware of:

• anti-discrimination laws that protect individuals from discrimination based on characteristics such as race, gender, age, religion, disability, or national origin. You’re required to provide reasonable accommodations for employees with disabilities and promote equal opportunity in performance evaluation and rewards, and
• privacy regulations that govern the collection, storage, and use of employee performance data, requiring informed and voluntary consent from employees and clear communication about the purposes and use of such data. Retention and disposal policies must be established to comply with data protection laws.

But remember: Legal issues are potential lawsuits and can run the gamut. You’ll want to work with in-house counsel or an employment law attorney to make sure you stay compliant.

Build a Robust Talent Management Strategy

You don’t want to just build a talent management strategy — you want to build one that can thrive. The good news: Many of your existing HR strategies play into top-notch talent management. The key is to regularly review your practices and adapt for the times.

Here are five of the most critical elements in talent management and tips to continually improve each:

• Create a best-in-class onboarding process. First impressions impact employees’ entire careers. Nothing can be left to chance in those first few days. Create a seamless process with checks and balances.
• Showcase your company culture. Build your culture image around these questions: What do we offer that other companies don’t? What makes ours a delightful place to work? What keeps employees committed to our company? How do we celebrate employees and successes? Regularly review these questions, as culture evolves.
• Provide development opportunities. We emphasize the importance of the training and development. Ensure your development opportunities are multi-faceted. Include technological skills, soft skills, career advancement opportunities, networking opportunities, education and personal development.
• Recognize and celebrate employee success. Make recognition and rewards an inclusive part of your talent management strategy. Give employees, supervisors and top-level executives tools to dole out praise and recommend material rewards.
• Build a positive reputation. When you build and maintain a positive reputation as an employer in your industry and community — through quality work, ethical decisions and exemplary leadership — you will recruit and retain good people.

Strategic Talent Acquisition

Successful talent management starts with acquiring the right talent. That can’t be done without a solid talent acquisition plan that aligns with current and ongoing business goals.

You don’t want to just think about fulfilling open, existing or newly created roles. The best talent strategy anticipates future needs, keeping in mind the business goals and how your services, products and customers will evolve.

To that, here are best practices for building your talent acquisition plan. You can get more in-depth, practical advice on each element in our talent pipeline guide:

• Plan it. The biggest reason for a specific talent pipeline plan: When you show stakeholders a plan, they’ll get on board quickly and give you the resources you need to set up and nurture it.
• Create a candidate profile. Consider demographics, personal and professional goals, and the specific skill set required for key roles. But be careful of hiring from all the same background. Avoid “culture fit” and go with “culture add.”
• Grow your brand. Try creating a careers page that’s informative, accessible and attractive. Don’t just tell potential hires what your company is like — show them.
• Find candidates. Use a variety of tactics to find talent: in-person events on your site and in diverse communities, former employee networks, social networks (but be sure you personalize connections), industry organization, chambers of commerce, etc.
• Create an internal succession plan. Build a program that helps you identify employees with potential to transition into leadership so you cut the risk of knowledge or skills gaps when others leave.
• Nurture the pipeline. Keep in touch with those in your pipeline where they hang out — social channels, industry organizations, your network or right at work.
• Optimize the pipeline. Regularly ask: Is there a way to make things more efficient? Have our needs changed? Is there a new technology to try? How are we performing compared to the last review?

Enhance Performance Management

Talent management and performance management go hand in hand. When you help employees perform at their best, you ensure you have the right talent in the right place working at optimal levels.

So you want to maintain a consistent performance management process. Ideally, it has informal and formal elements that include coaching, mentoring, training and continual feedback.

Front-line managers play the most critical role in performance management as they usually see, direct and give feedback on day-to-day work.

While performance management is in its own HR category, you’ll want to ensure yours aligns with organizational and talent management goals. Breaking it down, performance management should include these six elements.

• Establish performance standards. Employees might have a say, but this is a leadership function.
• Communicate performance standards. As they evolve, you’ll want to always include the why behind standards.
• Measure performance. This will include quantifiable metrics and qualifable observations. Employees need to understand how their performance is measured. You might want to show employees how they grade against the best talent (without naming names).
• Compare performance to standards. Share the data points and observations with employees in advance of discussions.
• Discuss the appraisal with employees. You want to do formal performance reviews at least twice a year. Ideally, managers and employees meet informally more regularly to cover concerns, recognize accomplishments, coach and connect personally.
• Implement action. Regardless of performance and appraisal, current employees will do best if they walk away from any performance management event knowing the next steps — whether that’s toward improvement, change or continued success.

Create Positive Employee Experiences

Every organization will have different ideas on the experience it wants employees to have. And every employee will have different expectations for their experiences. So there’s no universal code on positive employee experiences.

But what’s universal is the need for positive employee experiences. They have a direct impact on employee satisfaction. When employees are engaged and happy, they perform better, stay loyal and lift up those around them.

Fortunately, we have multitudes of ideas on how to improve the employee experience and engagement through mentoring, coaching, teambuilding, motivating and beyond. You’ll find those here, here, here, here, and here.

Bottom line: Talent Management Leads to Organizational Success

Effective talent management is the backbone of company culture, goal achievement and organizational success.

You’ll want to stay focused on strategic planning, spot-on recruitment, planned onboarding, focused performance management, robust development and retention efforts. With a robust talent management plan, you can expect improved employee experiences, heightened engagement, smooth succession planning and competitive advantages.