The Ultimate Guide to Talent Management (+ 7 Best Practices)

People are the most valuable asset in any business, which is why leaders must work hard to attract and retain the top talent. This is where talent management comes in. The term was coined in 1997 as a small branch of HR, but since then, it has evolved, and by 2011 it became recognized as its own important business function.

Organizations must manage talent strategically if they hope to build a productive, engaged and high-performance workforce. They must align talent management with larger business goals and strategic objectives to foster a strong company culture and build their employer brand. However, talent management can often be misunderstood or lumped under the broad umbrella term of HR when it in fact requires and deserves special attention.

To help you better understand talent management, why it’s important and how to get a strong talent management process in place in your organization, we’ve put together this guide for you.

• What is talent management?
• Why is talent management important?
• 7 benefits of talent management
• The talent management process in 8 steps
• 7 talent management best practices
• Creating a talent management strategy
• What is a talent management system?
• Talent management vs. talent acquisition
• Final thoughts

What is talent management?

Talent management is the strategic process of recruiting, engaging and developing professionals, so they add maximum value to your organization. This process includes everything related to hiring, training, rewarding and retaining employees - from hire to retire.

Talent management is also an important component in an organization’s human capital management (HCM) strategy. It can be used to develop, improve or implement HCM strategies. What’s more, talent management focuses on your company’s people, particularly the day-to-day activities needed to ensure successful human capital management.

Why is talent management important?

Talent management is all about finding, hiring and then developing the right individuals. This is crucial, as today’s professionals want more from their careers rather than a simple paycheck. They want professional and personal development, recognition and the ability to learn and grow. But don’t just take our word for it; the facts speak for themselves:

• One in three workers (32%) say they need to leave their current job to move forward in their career
• Plus, more than 80% of professionals would quit their jobs for better development opportunities
• As a result of the growing skills gap, almost half (46%) of workers say if their employers don’t offer opportunities to upskill, they are likely to leave
• Finally, one in four (25%) employees leave organizations due to lack of recognition

It’s clear from these statistics that organizations must prioritize talent management to develop their employees and help them learn new skills, which is also vital for employee engagement and staff retention rates.

7 benefits of talent management

We’ve briefly touched on why talent management is crucial, but to truly understand why your company should get a strategy in place, it’s helpful to see the positive impact this can have on the business. Below, we’ve pulled together a list of seven benefits of talent management.

1. Improving your recruitment process

Finding and hiring the right people isn’t without its challenges, and as professionals’ needs and priorities change, it only gets harder. Talent management strategies are designed to ensure you have the right tools and processes in place to find the right candidates.

2. Onboarding becomes smoother

With a good talent management strategy in place, it becomes easier to onboard new employees. A smooth onboarding process helps to deliver a great introduction to the company, provide the right training and ensure the new employee is aligned with larger company goals.

3. Engaging the workforce

Through training, goal setting and development, employees recognize that they’re being offered opportunities for advancement. This helps to keep them engaged, happy and motivated and makes it easier for them to track their goals.

This is good news as companies with highly engaged employees outperform their rivals by up to 21% for profitability.

4. Increasing employee retention

High employee turnover is costly and can harm your wider company culture. However, happy and engaged employees that are given the right opportunities are less likely to leave the business, which ultimately increases employee retention rates.

5. Boosting productivity and performance

A good talent management process can be a great efficiency tool. The quicker you can onboard new employees, the more productive they can be. Plus, the better you are at managing and engaging the workforce daily, the more productive they are. This increase in productivity means employee performance is boosted, and the business performs better as a whole.

6. Developing employees within the organization

By helping your existing workforce to develop and upskill, you’re not only supporting their career, but you also ensure that they don’t fall victim to the skills gap and that your business doesn’t either. Your talent management strategy helps them to grow within the organization and move into more skilled roles that suit the needs of the business. This can also save time and money on recruiting.

7. Building your employer brand

A stronger, more effective recruitment strategy can help to boost your employer brand. As can a smooth onboarding process, training and career development opportunities. This can help to attract even more talented professionals.

The talent management process in 8 steps

To help better understand the talent management process, we’ve created a step-by-step guide, covering everything from finding the right candidates to winning their loyalty and years of service.:

1. Run a skills gap analysis

The first step in the talent management process is to identify what skills you need within the organization, and this can be done through a skills gap analysis.

By understanding the kinds of candidates you need and employing workforce planning, you’ll be better prepared to start hiring and to determine future demand for people and skills.

This might also reveal that it’s more beneficial to upskill existing employees rather than to hire someone new.

2. Attract and hire the right people

Next, you need to make sure you’re targeting and attracting the right candidates. There are several steps you must take to do this, for example:

• Create targeted and detailed job adverts
• Share these on relevant platforms like job boards and social media
• Get a strong interview process in place
• Consider using personality assessments or tests

This will help you to find and hire the top talent.

3. Perfect your onboarding process

Helping new hires to settle in isn’t just important for ensuring they are as productive as possible. It’s also key for retention and morale. Employees who have a good onboarding experience are

So, when onboarding a new employee, make sure they have a tour of the workplace, tasks to get on with and training booked in. It’s also vital that they have opportunities to meet and speak with their manager regularly ask questions and give feedback.

4. Prioritize learning and development

It’s crucial that training doesn’t stop after the first month. You need to be proactive and find ways your workers can continue to learn and grow. For example, conferences, courses, industry events and taking on new responsibilities. This needs to be deeply engrained in your talent management process.

5. Hold regular performance appraisals

Employee performance appraisals give managers a chance to catch up with employees, discuss strengths and weaknesses and see if they can manage additional responsibilities. But more than this, it’s a chance for both parties to give feedback and for employees to receive recognition.

Learn more: How to Give an Outstanding Performance Review

6. Strategize for employee retention

As well as offering training and development opportunities, you need to have other strategies in place for retaining employees. You can do this through promotions, benefits, pay raises, recognition and creating a strong and positive company culture.

7. Plan for succession

By helping employees to perform their best and continue learning, they’ll be ready to replace more senior members of the team when they choose to leave or retire.

8. Exit interviews

Last but not least, if an employee does choose to leave your company, it’s important to conduct an exit interview. This allows you to find out what went wrong, see if they have any complaints, and if so, help you prevent the same issue from occurring in the future.

7 talent management best practices

The success of your talent management process hinges on the foundation of your talent management strategy. So, to get this right, you should always keep these best practices at the forefront of your mind:

1. Start at the end: As with many, you need to start with your end goals in mind. After all, you want your talent strategy to be aligned with your business strategy.

Therefore, your talent management strategy requires you to define your top goals, helping to drive decisions and identify which areas in your organization you need to focus on first.

2. Ensure organizational alignment: Talent managers should be in charge of their specific talent processes, but more than this, they need to be trusted guides and advisors when it comes to talking about talent. This requires HR teams and senior leadership to work together to ensure everyone is on board and that all goals align.

3. Know what you’re looking for: It’s vital to understand what you’re looking for in the top candidates to find the right people. This can be achieved through a skills gap analysis - as we mentioned earlier. Not only this, but understanding what you need and where the gaps are is crucial for succession planning, upskilling and promoting existing workers.

4. Create a diverse talent pool: Relying on recruitment techniques like posting on a job board is no longer enough. You must reach out to different networks to find a truly diverse and talented group of candidates.

To create a strong and diverse talent pool, you should build partnerships with multicultural associations, set up an employee referral program, remove biased language from job descriptions and consider remote hiring. 

5. Understand potential, performance and readiness: Be careful not to get confused with potential, performance and readiness, as these are not the same thing. Just because an individual shows potential to perform well, this doesn’t necessarily mean they’re ready to take on a more senior or skilled role.

Moving them from potential, to performance, to readiness takes time and development. So don’t rush this process solely to fill a position or make them feel like they’re growing. This can have damaging consequences for both parties further down the road.

6. Put the right people in the right positions: Talent management is all about putting the right people in the right positions. At times, this can mean prioritizing selection over development. So, although internal promotions are great, not everyone can be developed to the correct standard quickly enough, particularly for more skilled or senior roles.

So, in some cases, it’s about finding the right person for the job and hiring for the right skills. By assessing these crucial areas at the time of hire, you’re likely to save money on training and development further down the line.

7. Technology doesn’t equal talent management: Lastly, believing that a new piece of software can (and will) provide a full talent management system is farfetched. Simply splashing out on loads of new tools and technologies won’t work. Yes, these tools are valuable, but they must be backed up by a strong strategy and a good plan. The human element is crucial at this stage. Technology alone isn’t enough.

Creating a talent management strategy

People are the key to achieving your organizational goals. As such, having a strong talent management strategy in place is crucial. This allows you to get maximum value from the individuals and the workforce as a whole. This can be achieved by:

Identifying your business goals

In order to create a talent management strategy, you must first make sure your employee’s needs are in line with the company’s objectives. This means identifying your company’s goals early on to set the foundations.

Conducting a skills inventory 

Conducting an inventory of the skills you already have within the organization will help to identify gaps, as well as recognize any expertise that’s being underutilized.

Looking for upskilling opportunities

Determine where there are opportunities to upskill employees to make them more productive. You should also look out for those who could be reskilled to be utilized in other areas of the business. 

Trying experimental learning options

Moving away from traditional training to more experimental methods can excel your development strategies. For example, techniques such as role-playing, using real-life case studies and mentoring sessions can make training more engaging.

Developing talent coaches

One of the most effective forms of talent planning is identifying those within your organization that possess the skills you want to develop in others. You can then establish them as talent coaches to share their knowledge with others.

Recognizing employees for the right reasons

Recognizing employees is important, but it’s better to promote a culture where they’re recognized for mentoring others and sharing their expertise, rather than simply working on their own. This helps to foster an environment of talent development and leadership.

Implementing succession planning

At some point, important team members will inevitably leave, and you don’t want their skills and expertise to go with them. By getting careful succession planning in place, you can ensure others are equipped with the knowledge to rise through the ranks and seamlessly transition into those roles.

Measuring your success

One of the most important ways to keep developing your talent management strategies is to gather data and feedback and assess your successes and failures. This way, you can make adjustments accordingly.

What is a talent management system?

We briefly mentioned talent management systems (TMS) above - but what are these? Put simply; these are integrated software platforms designed to support the various aspects of your talent management process. This includes aspects such as recruitment, onboarding, professional development, performance management and succession planning. 

By integrating all of these different HR modules, these tools can support the entire talent lifecycle. This makes it much easier to manage, all from one place. Some of the other key benefits of talent management systems include:

• A centralized system for collecting data from all talent management activities
• A way to align recruitment strategies with larger business objectives
• The ability to improve onboarding, retention strategies and opportunities for development
• Better engagement between managers and employees, particularly as a way of managing processes such as reviews, rewards and promotions

And these are just a few reasons that you should consider talent management systems as a part of your strategy.

Talent management vs. talent acquisition

HR can be guilty of having lots of terms and ideas that sound very similar, for example, talent acquisition and talent management. But as this guide draws to a close, it’s important to understand that these are two different things. In fact, talent acquisition comes first and is a part of the talent management process.

The key difference is that while talent acquisition is all about the process of hiring candidates with the right skills, talent management is what follows. That is the process of onboarding, training, developing and nurturing employees to keep them satisfied, engaged and loyal to the business.

Final thoughts

People are your company’s biggest asset, and if not cared for and nurtured properly, they’ll look for better opportunities elsewhere. So, if you’re ready to make your talent management strategy a priority this year, let this be your guide.

Using our step-by-step techniques and our best practices, you can begin to get the right plans, processes and systems in place to create and execute a great talent management strategy.