People Strategy

What Is Talent Management and Why Does It Matter?

Talent management, the strategic work to hire and retain the right people, should play a role throughout an employee’s entire lifecycle with a company — from their recruitment to their exit interview. With it, companies can be intentional about whom they hire and how to keep those employees motivated. Without it, they risk costly high turnover and building a company with the wrong employees who may only hold back growth.

“It’s a constant process that involves attracting and retaining high quality employees, developing their skills — and the biggest and hardest thing — continuously motivating them to improve their performance,” said Jacob Darr, President at Jacob Darr Associates, which specializes in recruiting and HR training and consulting.

When thoughtfully executed, talent management is the responsible and effective way to ensure employees are productive, said Belinda Wee, PhD, Associate Professor at the College of Business at Husson University in Maine.

“If you don’t have the right talent, how are you going to stay in business and make a profit?” said Wee, who spent years working in HR and management at luxury hotels.

Here’s how talent management should follow an employee throughout their tenure with your company — and why it matters.

The Phases of Talent Management

1. Recruitment: Sell the position.

Talent management begins with finding the right people for the job, including creating job descriptions that capture the requirements of their respective roles, along with the company’s voice and culture, explained Darr. “We need to sell the company and sell the position,” he said.

Building on that, Wee recommended developing job descriptions by a committee that includes the person currently in the role, their manager, and HR.

At the same time, employers should ask themselves what skills the employee will need to support the company’s growth plans, said Jonas Bordo, CEO and cofounder of Dwellsy, a rental listing service. “Look for people who have not just done the thing you’re hiring for but [also] bring other expertise that might fill a need down the line,” Bordo advised.

From there, it’s about sourcing. Instead of relying on the glut of resumes from job search portals, Darr’s team reaches out to potential candidates on LinkedIn, for example, who might work at comparable companies and hold positions with job descriptions similar to those of the roles they’re looking to fill.

According to Wee, the interview is key, too. As part of the evaluation, she advised coming up with a shopping list of must-have qualities. For example, for an administrative job, this might include things like emotional intelligence and an understanding of the company’s culture.

And don’t forget to consider internal candidates when hiring. “You can find a star,” Wee said.

2. Retention: Support and celebrate.

Once you’ve hired great candidates, this process doesn’t stop. The work to retain and prepare employees for the next step in their careers, a critical piece of talent management, takes effort and requires the full support of leadership and a clear plan forward, Bordo said. He recommended the use of HR business partners — employees who are assigned to departments and work directly with managers on talent management strategies such as retention — so managers can focus on their other work.

“This is the person you call when you want to recruit someone or have a talent conversation. This will be the person who will call you to talk about an exit or promotion,” Bordo explained. “This is going to be the person more actively thinking about your team’s needs than you are, so that you can be a fabulous manager.”

At the management level, supervisors should have a curiosity about their direct reports as individuals, and learn about what drives them and what their aspirations are, Wee said. Signs that they might want more responsibility include when they ask for tuition reimbursement for an academic program or regularly volunteer for extra work. When they start looking for ways to expand their knowledge or skills, find out what their goals are, she said.

Additionally, always publicly celebrate promotions, anniversaries, and jobs well done, Wee advised. When the workforce knows that good work and growth are valued, staff morale and loyalty can soar.

Companies must also ensure that managers have the emotional intelligence to not worry that they’ll lose their own competitive edge when an employee does well. In some cases, managers may hold back successful direct reports because they’re fearful that they may leave the team or company, or surpass them in skills and accomplishments. It’s another reason to promote and encourage career development and movement within a company, Wee said.

3. Exit: Let go of the false disloyalty narrative.

Unfortunately, it may be the norm that as soon as an employee gives notice, their manager and the company stop caring about them and simply move on. Perhaps you’ve experienced this if you’ve ever felt invisible in the weeks you wrap up your work after resigning. But talent management plays a role here, too. Let go of the faulty idea that a departing employee is betraying the company, said Bordo.

Conversely, when an exit is gracefully managed, that employee may be more inclined to return when a new role opens up, Bordo said.

Wee recommended having a neutral party conduct exit interviews in a private space outside of the usual office setting, where the employee may be more comfortable to talk freely. Ensure the interview remains confidential, she said, so employees aren’t fearful that they’ll ruin their chances for a future return if they raise concerns.

Simply celebrating an employee’s new job elsewhere can also go a long way toward establishing goodwill and boosting the potential for that employee to eventually return with new skills and knowledge, Bordo said.

Bordo recommended keeping a database of people who have left a company and staying in touch.

“Once they depart, you have a natural pipeline of people who might be interested in coming back,” he pointed out.

Why Talent Management Matters

Talent management programs can be costly, requiring upfront costs for implementing a new software platform or hiring HR roles. For some, the return on investment may be hard to see. That’s why Bordo said having patience is key.

“One of the challenges is that it’s tempting not to invest in this because the costs are immediate and the gains are long-term,” he said.

But it’s worth it. Here’s why.

1. It saves money.

Satisfied employees are less likely to leave, leading to lower turnover costs. Companies can also save when building compensation packages. Overpaying for top talent is a common practice, but it doesn’t necessarily yield a long-lasting employee, Bordo cautioned. However, with a robust talent management strategy, employers can offer the market rate because people are eager to work for an employer that cultivates their talents and encourages growth.

2. It allows for strategic staffing.

Especially now, as businesses look to furlough employees or lay them off during the COVID-19 pandemic, they need to be strategic about their staffing decisions. Companies should avoid scenarios where managers cut workers only based on their immediate needs right now, potentially stymying business plans for a future quarter or losing skills required for strategic pivots as the pandemic continues.

“In that environment, you need really thoughtful long-term planning around talent,” Bordo said.

3. It’s good for business.

Without talent management strategies in place to ensure employees are motivated to do their best, workers can become apathetic. And their apathy can extend to their work product, how they represent their employer on the job, and how they treat customers. Once product quality, customer service, and company reputation plummet, it can be difficult to recover.

“The worst is sometimes your customers are affected and the quality is not up to standard,” Wee said. “Your reputation and goodwill are spoiled.”

For Darr, talent management comes down to the right kind of leadership.

“As a leader of a business, I’m in the business to make money and profit,” he said. “But as a part of that, every leader should want to make their employees happy and blossom. If not, they should not be a leader.”

Putting talent management practices in place may be costly and take time, but the results can pay dividends and lead to a satisfied, engaged workforce that’s eager to tackle projects and find ways to grow within the company.

“When talent management is done well,” Darr said, “it creates a motivated workforce who will stay with your company for the long run.”