What Is Talent Management and Why Is It Important?
First, let me start by explaining that a lot of times executives, and some HR leadership fail to recognize that performance and potential are two completely different dynamics that get often confused when companies are trying to hire new talent or possibly promote their current talent for new roles within their organizations. In fact, today’s leaders cannot assume that their current top performers are the next potential talent in the industry for future purposes.
Certainly, high performers may master their specific job task at the moment, but the “potential” challenge is going to be how well they will adapt to future role changes, and the ambiguity that may follow with that new role and their current skills capability.
Unlike performance, individuals showing potential are identified by how well they adapt at accomplishing new tasks quickly and effectively while learning new roles quicker than their peers.
After all, performance keeps businesses running optimally at the moment, but it’s potential that helps run the future state of the business and that’s what’s needed to bring companies to the next level. Besides, employees who have potential have the ability to grow and take on more responsibilities in the future. In short, performance keeps the business moving, while potential makes the business prosper, grow, and mature.
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In fact, this is where the dynamic changes to potential rather than performance. In his book on Strategy-Driven Talent Management, Silzer and Dowell, (2009) explains that Executives and human resource personnel need to be better trained at accurately assessing talent to identify both potential and behavior rather than just judging by past performance because they will need to predict and envision whether a person will be successful in the long-term or not in future new roles.
In the same way, they will need to take into consideration the fact that before moving existing talent into future positions that assessment measures must be taken whether these individuals will continue to be able to perform and grow in their new roles as they did in their past roles. In particular, consider how likely they are to develop and be successful in rapidly learning, adapting, and growing into these future roles (Silzer, & Dowell, 2009).
In the same way, Church and Rotolo, (2013) explain in their benchmark survey of large corporations that multi-source assessment tools are a great way for organizations to make decisions about their potential talent and performance identification within their talent pools; help aid in succession planning; and drive behavior change for those selected individuals. In addition, they emphasized that not one specific tool is perfect, but that in using many feedback assessment tools the common end result should point to the same conclusion.
In fact, they found specifically that the constant feedback from executives and their peers using 360-degree feedback surveys were successful in almost 70% of the organizations researched. The 360-degree feedback survey helped executives make important decisions regarding their talents potential and performance measurements towards predicting future behavior. Similarly, they also discussed the importance of making these surveys specific to their own needs, challenges, and business strategies (Church, & Rotolo, 2013).
Likewise, Dries, Vantilborgh, & Pepermans, (2012) explain the role of learning agility and career variety in the identification and development of high potential employees. Their research found that in order to help identify talent in high potential individuals those individuals needed to succeed in a variety of other roles while being subjected to tough or difficult conditions other than their current limited job tasks and their past performance alone. In fact, those select employees needed to have a high agility for continuous learning they had to be willing and able to learn new competencies.
Nevertheless, they emphasized that management in the past have always depended on current job performance to identify high potentials, but have failed because not all high performers are high potential individuals. In brief, they emphasized the need for a learning agility assessment in their development and identification of high potential individuals, in order for organizations to sustain their competitive advantage (Dries, Vantilborgh, & Pepermans, 2012).
Equally important, is Campbell & Smith’s, (2010) article on High-potential talent: A view from inside the leadership pipeline. These two researchers found that an overwhelmingly 96% of survey participants said that both engagement and commitment were very high on their list for developing potential employees to be motivated to perform above and beyond their specific job duties. More importantly, they explained the vital role that their employee’s experiences and perspectives play in identifying potential talent from within the companies talent pipeline.
In fact, they believe that when companies invest in talent management to include both career pathways and support for their high potential employee developments that those processes help identify the next steps needed to advance leadership potential and performance within the organization. All the while, building employee engagement, commitment and loyalty to their organization that results in an overall business advantage (Campbell, & Smith, 2010).
Nevertheless, because it’s such a financial challenge to attract, develop, and support talent management policies for companies today, I believe it’s vital for organizations to have in place retention initiatives, tools, and resources to help avoid any such loss of their high potential employees intellectual knowledge, skills, and abilities. Besides, there is a high cost of turnover for companies when employees leave for career advancement elsewhere.
Surprisingly, Frey, & Stechstor, (2007) found in their double round of survey interviews of twelve senior human resource experts from large and medium multinational companies that in the first round of the survey, most companies had no real retention management policies or initiatives in place and that their attitudes towards retention management strategies varied greatly from some who thought it was critical to the success of the company, to some who didn’t think retention tools were necessarily important at all (Frey, ; Stechstor, 2007).
Subsequently, in the second round of survey questionnaires, collected from those same HR experts who were asked to then rate three specific categories of retention management tools that were deemed to be most important to them when possibly implementing them in their own retention policy strategies. The categories for the initiatives for retention were labeled as:
- ‘Optional’, or
As a result of the data collected, in the first group of ‘must have’ employee retention tools HR management of those twelve organizations thought that performance-related pay, constant feedback, culture and developmental career opportunities were the highest priority for retention of high potential talent. Next, they thought that the second most important tools for retention that should be in the ‘optional’ group were listed as job rotation, retirement benefits, coaching, and mentoring. Finally, in the third ‘trend-setting’ category the tools that they thought were good for future retention strategies were stock options, working from home, and specific job tailoring (Frey, ; Stechstor, 2007).
In sum, the value of investing in employee training and development can help an organization in many ways. Namely, by having the ability to run a business leaner and more importantly, by helping to diversify the talent and potential that already exists within the organization. Certainly, when companies invest in their employee development and talent management policies it motivates employees to perform at their best, while at the same time offsetting costs associated with high employee turnover, and retention of skilled labor.
All in all, in these difficult economic times when businesses are cutting costs and headcount, identifying and assessing high potential employees can help management move workers around to different areas of the business and run a leaner and cost efficient process. Finally, a company with good employee development also attracts loyal and motivated individuals. Simply put, businesses must have employees who are knowledgeable in more than one skillset to remain competitive.
Altogether, training, assessments, and education help ensure that employees have the skills needed to perform their business needs. Therefore, when you invest in your employee’s aspirations and abilities, it improves your business performance, efficiency, loyalty, and profit. In other words, the ROI on employee talent development is one of the best long-term investments that a company can make.