Skilled managers are rare, and dramatic skill gaps are opening up within companies. Fortunately, there is an antidote to this HR apocalypse: talent management. We reveal how you can successfully use this approach to attract, develop, and retain qualified employees. Without any risks or side effects.
Talent management may sound like a hip, new HR process – in fact, it goes right to the heart of a key problem in the current labor market. Because there is, quite literally, a lack of talent. The baby boomers are slowly reaching retirement age, and younger generations simply have too few skilled workers to fill the gaps.
Capable managers, already in short supply, now need to be courted even more assiduously – otherwise they may end up in charge of your fiercest competitor.
In addition, the values and requirements of generations Y and Z differ. Companies that offer neither a good work-life balance nor opportunities for further development struggle to retain millennials.
In the future, talent management will be an important part of an HR manager’s daily work. So, let us take a closer look at the concept.
Talent Management – Just a Hip Way of Saying HR?
Not quite. Talent management is, in a sense, a child of HR. It is younger, far less experienced, but much more innovative and not so set in its ways. While both disciplines are about managing employees, talent management is much more focused on filling important key positions in companies.
Talent management is a holistic corporate strategy that aims to attract, develop, motivate, and retain high-performing employees over the long term.
What Exactly Does That Mean?
- Talent management is strategically oriented and geared toward overarching corporate objectives. HR, on the other hand, is more concerned with operational activities and day-to-day business.
- Talent management concentrates on individual high achievers while HR encompasses the entire workforce. The HR department gathers important information, e.g. from performance analyses, feedback meetings, and exit interviews, so that the Talent Management Team can identify training needs and draw up succession plans.
- Talent management concerns itself with improving company performance. Processes from core HR areas are harnessed to achieve this – from the recruitment process to employee retention.
The disciplines go largely hand in hand, often overlap, and thus complicate a universal definition of talent management. In addition, the term has only existed since 1998, meaning that talent management is still in a state of flux.
However, the key tasks and core areas of talent management are quite clear.
Finding, Supporting, Retaining: Central Talent Management Disciplines
1. Finding Talent
To track down potential talent, talent acquisition managers follow two lines of inquiry. Externally, the usual recruitment initiatives are set in motion: job advertisements containing a clear requirements profile or analyses of applicant potential. Employer branding is also part of this, because talent managers want to increase the attractiveness of the employer and attract interesting candidates.
But young and talented individuals could also be found within the company itself. Performance reviews and appraisals are good ways to identify them.
2. Supporting Talent
This is where talent development initiatives come into play. Training and development can be offered in order to develop employees into outstanding specialists and managers. Of primary importance are concrete target agreements and a watertight development plan. Mentoring can also be part of a development program.
Develop Employees With Personio
Help employees realize their potential – for lower employee turnover and higher motivation levels:
- Make feedback meetings transparent and efficient.
- Record performance goals and measure progress.
- Document annual feedback meetings clearly and simply.
By the way: Retaining talent starts with the onboarding process. That is why Personio accompanies and supports you through every stage of the employee cycle.
3. Retaining Talent
This task is the ultimate discipline of human resources management, because employee loyalty only goes so far nowadays. But a few talent relationship management initiatives and tools can help: In order for a company’s top talents to feel that they are in good hands over the long term, the following are required:
- An appreciative corporate and management culture and a good working environment.
- A close match between personal goals and corporate goals.
- Development opportunities for the employee.
- Rewards for good performance, such as financial incentives or promotions.
Talent management is now one of the most important HR management disciplines. At least in theory. In a survey conducted by the market research institute Statista in 2018, only 20% of managers saw talent management as an HR priority. Talent management has enormous potential – if it is used correctly.
A Successful Talent Management Strategy in Just Three Steps
Only 5% of company employees who were surveyed in 2018 as part of a McKinsey study reported effective talent management processes and a noticeable increase in company revenue. Of these 5%, however, 99% said they had outperformed all competitors.
The best talent management results are achieved by companies that …
- who deploy talented individuals to projects and teams based on the skills required,
- whose HR Teams had specifically ensured positive employee experiences, and
- whose HR Teams worked strategically.
So, the secret recipe for a successful talent management strategy is to be agile, positive, and strategic:
How do you quickly assign talented individuals to strategically prioritized projects? By making talent management a managerial task. Make sure you have management backing at the highest level and that all managers are kept in the loop on talent management strategy.
Happy employees not only perform better but are also likely to stay longer at the company. Ensure that employees feel they are in good hands from the first point of contact in the application process – targeted talent relationship management initiatives, such as regular feedback meetings, can help. Give employees career prospects and development opportunities that suit them, and make your team feel valued.
A strategic approach is absolutely essential. Before simply hiring people, you should set precise goals and ask yourself the following questions:
- What are the company’s objectives? Which skills are needed to achieve these goals? What are the key positions?
- What talents do we already have in the company, and where are the skill gaps?
- What processes and initiatives do we need to set in motion in order to attract employees with the necessary qualities? How can we distribute the roles here?
- What methods can we use to objectively determine whether a candidate has the desired characteristics?
- What talent management tools can we use to attract, support, and retain employees in a targeted manner? What could induce employees to leave the company?
- How do we measure whether our initiatives are successful? Which indicators are relevant for us?
Eight Talent Management Practices
- Employer branding: Strengthen your employer brand, for example through your social media channels or with the help of likable videos and amusing campaigns. For a guide, see this page.
- Candidate experience: Ensure a positive applicant experience – good reviews on employer portals are gold.
- Referral programs: Talented individuals tend to know each other. So, introduce a program where employees can recommend friends and acquaintances for jobs.
- Onboarding: As well as providing new employees with important information on the company and their position, give them an understanding of the corporate culture. This is quite simple with Personio’s onboarding software.
- Employee engagement: Establish a feedback culture in the company and find out what moves your employees.
- Development: Provide training programs and make sure your employees can develop professionally and personally.
- Performance management: Measure employee performance, e.g. with Personio’s HR analytics.
- Succession planning: Build a talent pipeline with promising candidates to quickly close any emerging skill gaps.
Risks and Side Effects: Treat Talent Management With Care
Although it has been hopelessly underappreciated so far, talent management is the key factor that can help companies stay competitive over the long term, given the changing environment in the labor market. This does not mean that HR managers suddenly have to divide their employees into “has potential” and “solidly mediocre.” On the contrary.
The impact of this kind of subdivision on employees has not yet been scientifically investigated. However, research results from other disciplines suggest the ‘Pygmalion effect’ is a risk. People can develop into the images others have of them – both positive and negative.
To ensure that a large part of your team does not fall short of what it could achieve, you should also maximize preexisting potential. Create a business environment in which your entire workforce can reach its full potential. Only in this way can a culture of excellence develop.
Talent Management With Personio
Personio helps you to find, retain and development employees – for a smooth talent management process.