Learning & Teaching Fellow (retired)
Compensation And Policy
Notes on Talent Management
Talent Management is a Business Problem
Talent management describes the process through which employers of all kinds – firms, government, non-profits – anticipate their human capital needs and set about meeting them. Getting the right people with the right skills into the right jobs, a common definition of talent management, is the basic people management challenge in organizations. While the focus of talent management tends to be on management and executive positions, the issues apply to all jobs that are hard to fill.
Decisions about talent management shape the competencies that organizations have and their ultimate success, and from the perspective of individuals, these decisions determine the path and pace of careers. Talent management practices can have a crucial impact on society as well. The lifetime employment model of the post-WWII generation, for example, provided the economic stability that created middle class society.
Failures in talent management may be more recognizable than the concept itself. Those failures mean mismatches between supply and demand: Too many employees, leading to layoffs and restructurings on the one hand, and not enough talent, leading to talent crunches on the other. In India at present, it may be hard to imagine the problem of having too much talent, but the first downturn in the economy – or even in a section of the economy – will make that clear. These mismatches are among the fundamental problems that businesses and other large employers face. Over the past generation, corporations in particular seem to have lurched from surpluses of talent to shortfalls to surpluses and back to shortfalls again. The challenge employers face is to track much more closely the demands for talent to avoid both shortfalls and oversupplies.
Many observers assume that the management of talent is really about the internal development of human capital, yet the majority of vacancies in corporations now are filled from outside. They also assume that internal development practices such as executive coaching, career pathing developmental assignments, assessment centers, high potential programs, and succession planning, are something new.
These techniques and indeed, every employee development practice that seems novel now – forced ranking performance evaluation systems, 360 degree feedback programs, executive coaching, etc. – were all common in the 1950s. Except at a few very large firms, they have been scaled back and, in many cases, largely abandoned. The reason was not that these practices failed to develop talent. It was because they were too costly. And the biggest cost was the difficulty they faced in managing the unpredictability of the demand for talent.
Internal development of talent collapsed in the 1970s when business forecasting failed to predict the downturn in the economy, and the talent pipelines continued to turn out talent under the forecast assumptions of booming corporate growth. The excess supply of talent and the no-layoff policies for white collar workers caused a bloating of corporate organizations, and the steepness of the 1981 recession in the US and elsewhere led virtually all companies to back away from developing talent. Lifetime employment came to an end, and the reengineering processes cut away the development practices and staff that created talent. After all, if the priority was to get rid of talent, why would companies maintain the programs designed to create it?
We need a new way of thinking about the talent management challenge. A new framework for talent management has to begin by being clear about the goal. Talent management is not an end in itself. It is not about developing employees or creating succession plans. Nor is it about achieving specific benchmarks like a five percent turnover rate, having the most educated workforce, or any other tactical outcome. The goal of talent management is the much more general but important task of helping the organization achieve its overall objectives. In the business world, that objective is to make money.
An important part of the goal of helping the organization is to address the financial challenge associated with developing employees and recouping the investments in their development now that labor markets:
The cost of employing those workers in the initial period exceeds the value of the contribution from them as the new hires are learning what to do and how to do it. The size of the cost gap grows as development efforts expand. That investment has historically been recouped in the next period, in the shaded blue area where the value an employee produces exceeds the cost of employing them. Even though wages and employment costs are rising, the value of the employee’s contribution rises even faster, and the employer earns back a return on their earlier investment. As long as the gap between costs and contributions is bigger in this second period than in the first, then the employer makes money on the investment. At the end of an individual’s career, pension plans and other retirement programs reversed the flow of resources. During that period, the employer makes net payments back to the employees.
The problem with this approach to recouping development costs began soon after the collapse of lifetime employment for managers and executives. As described in Chapter 2, employers broke that model first by laying off experienced employees. But layoffs alone did not necessarily collapse the ability to earn a return on training and development. That happened when employers began hiring experienced talent from competitors, in part at the executive level as a means for changing the strategy and culture of their own organizations but then later as a means of avoiding the time delays and costs associated with internal development.
The flip side of hiring experienced workers is retention problems for competitors. The situation is sometimes described as an “incomplete contract” – the employer makes an investment in the employee but did not require anything in return because, historically, the employee had little opportunity to leave. Once outside hiring started, an employee’s competencies became useful elsewhere and had a market value. In fact, an employee may actually be more valuable to a competitor than to their current employer because they bring with them not only their own performance but knowledge and insight about how their old employer operated.
The competitors can pay the employee more than the current employer and still make money on the deal because they have no early investment costs to recoup. In the graph above, the market value of the employee becomes something closer to the line representing their true value to an employer. Employers then face what seems like an impossible choice: Either stay with their practices and watch their newly developed employees leave for better paying opportunities elsewhere, losing their investment in them, or raise wages up to the new market level, losing the ability to recoup the investments they have just made in their employees.
What we need to address going forward is how to make investments in development affordable, and part of that challenge involves employee retention, making it possible to at least retain employees long enough to recoup the training investments in them.
17th October 2007 From India
i hav to prepare my summer intership report on talent management in IOCL...if anybdy is having any quesionnaire or any study material regarding talent management..plz help me..
my email id is --
24th May 2009 From India, Delhi
The term talent management means different things to different organizations. To some it is about the management of high-worth individuals or "the talented" whilst to others it is about how talent is managed generally - i.e. on the assumption that all people have talent which should be identified and liberated. The mindset of this more personal human resources approach seeks not only to hire the most qualified and valuable employees but also to put a strong emphasis on retention.
Since the initial hiring process is so expensive to a company, it is important to place the individual in a position where his skills are being extensively utilized. Talent management is strategic planning on source, attract, select, train, develop, retain, promote, and move employees through the organization. Research done on the value of such systems implemented within companies consistently uncovers benefits in these critical economic areas: revenue, customer satisfaction, quality, productivity, cost, cycle time, and market capitalization.
24th May 2009 From Saudi Arabia
I have given the following response at another string.
Some of us have often repeated that people posting for questionnaires for their projects (on any topic) should first do their homework and then decide upon the aim and objectives (preferably, in consultation with the host organisation), and then prepare or seek a questionnaire to suit the aims, etc.
Please see my posts on Research Methodology, posted at CiteHr.
You may also kindly take a look at <link no longer exists - removed> <link updated to site home> ( Search On Cite | Search On Google )
Info.co.uk - talent management - www.Info.co.uk
All found by Google search at
talent management + project report - Google Search=
A retired academic in UK
24th May 2009 From United Kingdom
"Talent Management". Many of us get confused with the term, many of us believe that Talent Management is a new addition to Human Resource. As far as my knowledge is concerned, is is the revised version of "Improper Man Managing". Earlier people used to work on daily wage basis. There were no fixed salaries. So it was quite obvious to switch from one organization to other. This used to create a lot of instability in the organization...Time passed by and organizations started to realize the importance of retaining their employees. Enough of the story now... Lets get back to the point....What is Talent Management????
It is the process of preserving the interests of existing employees in the organization by providing them with proper product knowledge and rewarding them with prize and praise also making a database of new applicants who apply for a specified post for future use...
6th March 2013 From United States, Portland