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What is Talent Management?

Last updated on 25th April 2023

Talent consists of those individuals who can make a difference to organisational performance either through their immediate contribution or, in the longer-term, by demonstrating the highest levels of potential. Kaplan surveyed a total of 256 respondents from a wide range of sectors about the key drivers of talent management in their organisations.

The results are as follows:

  • Retention – If we don’t do it, we lose our best people 83%.
  • Developing our people is key to our organisation’s ethos 79%.
  • Business growth – We need new leaders to grow our business 72%.
  • Offering development as part of the value proposition for new hires 43%.
  • To be honest, we have a skills gap and we’re playing catch up 16%.
  • Other 1%.
Talent management helping business growth

What is talent management?

Talent management was a term devised in 1997 and it featured predominately in a report at that time by the McKinsey Management Consultancy.

Since then, the concept of talent management has developed and there have been many definitions coined about what talent management actually is, although it is a term that has never had a rigid definition. The nearest to an official definition comes from the professional body for HR and people development, the Chartered Institute of Personnel and Development (CIPD), which is:

“Talent management is the systematic attraction, identification, development, engagement, retention, and deployment of those individuals who are of particular value to an organisation. This may be through their high potential or because they fulfil critical roles.”

In the past, talent management’s main focus was on the most talented employees in the organisation, those with a natural aptitude and/or a technical skill that explicitly contributed to the overall success of the organisation.

However, talent management is evolving and is now becoming the management and development of the entire workforce and not just high performers and those with high potentials. Organisations are seeing the potential of all levels of employee to contribute to the success of the organisation and are investing time and resources in engaging, developing and retaining all employees that are an asset to the organisation.

So, it is probably more accurate to say that talent management is the strategic process of attracting, motivating, engaging and developing employees with aptitude in order that they are retained as high-performing employees. The aim of talent management is to have the right people with the capabilities, commitment and behaviours needed for current and future organisational success.

What is the talent management model?

A talent management model is the management of an organisation’s internal and external talent pool. Talent management as a practice involves a series of processes, arranged in a systematic manner. The traditional model of talent management comprises the key HR responsibilities.

These include:

  • Planning.
  • Attracting, recruiting and selecting.
  • Talent management and development.
  • Retention.
  • Transition.

The planning stage of talent management has three key areas:

  • Understanding the organisational/business strategy.
  • Evaluation and measurement/analytics.
  • Developing a Workforce Plan.

The attracting, recruiting and selecting stage involves:

  • Developing an Employee Value Proposition (EVP).
  • Marketing.
  • Talent recruitment and selection.
  • Utilising consultants and/or freelancers.

The talent management and development stage involves:

  • Onboarding/induction.
  • Performance reviews/management.
  • Learning and development.
  • Competency frameworks.
  • Career paths.

The retention stage involves:

  • The organisational culture.
  • The remuneration strategy.

The transition stage involves:

  • Succession planning.
  • Internal mobility.
  • Retirement.
  • Knowledge management.
  • Exit interviews.

An organisation can create its own unique talent management model; however, a talent management model must focus on these complementary essential aspects, strategies and techniques which facilitate in employee retention.

Business team planning a talent management model

What is a talent management strategy?

A talent management strategy is based on the talent management model. Having a structured talent management strategy in place can help streamline people management processes.

A talent management strategy is designed to support organisations through every stage of the recruitment and retention cycle, from attracting the right talent, recruiting and onboarding, performance managing and developing talent, to engaging and retaining these talented employees as a vital part of the organisation’s assets.

Developing a talent management strategy begins by analysing the organisation’s business objectives and clearly defining what type of talent the organisation needs in order to meet its business objectives. This initial planning stage is called workforce planning. Human resource management, also known as people management, is a combination of talent management and workforce planning.

The top priority of talent management is to source the best fit candidate(s) for the roles needed by the organisation to achieve its objectives, whether that is externally through attracting, selecting and recruiting or internally through identifying and developing potential and ensuring that current talent is engaged and retained.

The UK Think Tank, The King’s Fund, featured an example of talent management strategy in this case study:

“Boots UK, the high-street pharmacy-based health and beauty retailer, recently decided to position its pharmacists more front-of-shop in health care consultancy roles. To achieve this, the company appraised the skills and attributes needed in these roles and have changed how it recruits its pharmacists; whereas previously it focused on people who had highly technical knowledge it now focuses on people who have communication, consultation and relationship development skills.”

An organisation may decide upon a strategy to hire in top talent rather than take time to develop existing employees or to hire specialists with potential and develop them, or to “grow their own”, developing the existing workforce to be able to carry out future business plans or a combination of all or some of these strategies.

Whichever strategy the organisation chooses to follow, an effective talent management strategy needs the leadership and managers at every level of the organisation to be committed to developing talent. The board and senior leaders need to ensure that talent strategies are aligned to the business strategy and objectives.

The identification and development of “high potential” talent has been and always will be an important strategic tool. However, an inclusive talent management strategy considers the development of all employees, a strategy that can have significant benefits to both employer and employee, as the performance of an organisation does not rest simply on the number or quality of “high flyers”.

What is the talent management process?

The talent management process usually follows the talent management model. It is how an organisation organises the management of its people, how it selects employees, how it hires them, and how (or if) it trains and develops them, motivates them, performance manages them, and dismisses them.

It can be broken down into the following:

What skills does the organisation need?

Determine what kinds of people the organisation needs and what requirements they should fill. Consider if it would be possible to train or develop existing employees to avoid the need to hire anyone new.

Attract the right people

Hiring great talent starts with attracting great talent; the employee value proposition and employer branding is an important component here. Target advertisements and use a variety of media and recruitment strategies to attract a wide selection of prospective candidates. Plan interviews and appropriate assessment tools such as tests, assessment centres and personality assessments to identify the best person for the role and/or for the talent pipeline.

Onboard and organise work

This starts with an effective onboarding/induction programme where new employees are familiarised with the work and culture of the organisation. It is important to clearly communicate the organisation’s vision, culture and the role accountabilities as soon as possible to new employees so that they fully appreciate how they are contributing to the organisation’s success. Research has shown that employees who have had an effective onboarding programme are 69% more likely to remain with an organisation after three years. The first three months of employment are critical to determining if an employee will remain with an organisation and if they will be engaged and productive whilst they are employed, so this is why the proactive management of the probation period is so crucial.

Developing talent

Performance management processes are critical to realigning talent with the job requirements, culture and overall strategy of an organisation. Performance reviews and regular one-to-one “catch-up” meetings are helpful for clarifying expectations and also initiating and formalising development opportunities. Talent development can include, for example, professional education, leadership development, technical development, team building or team development awaydays, secondments, project work, coaching, job rotation and on the job development. An organisation needs to decide upon the focus of its development strategy, whether it is on critical roles or employees who are high performing and with high potential, or whether it includes all employees. A competency framework can start to develop talent for succession planning, it supports the retention of employees, can also provide measures for performance and creates clear pathways for all employees to have other opportunities to develop based on their situation and the organisational needs. It also makes the process of development and selection fairer and more objective. Organisations also need to consider how and where best to utilise the skills of key employees within different areas of the business by identifying where any skills gaps lie and what skills current employees already have. The organisation should put strategies in place to provide the flexibility for talent to move freely about the organisation, either sideways into similar roles or upwards into more senior roles.

Retaining talent

Development is an aspect of retention, but it also includes other employee retention and reward strategies such as renumeration, benefits, organisational culture, working environment and conditions. Talent management involves the strategic use of recognition and rewards, and is crucial to retaining top talent. Development, remuneration and culture serve as incentives for retention especially if an organisation is too small for transitioning opportunities such as promotion. Providing career support for staff, and supporting their professional development, is just one of the ways in which an organisation can help to engage its employees; all employees should be made aware that there are opportunities for them to develop and grow. It is important to realise the full potential of all employees.


This involves strategies such as succession planning which is a proactive measure and takes into account the amount of time required to develop talent for a particular role. In order to keep talent within an organisation, it must have a strategy and processes in place that allows for internal mobility. Transitioning also includes the exit strategy and it needs to involve a strategy for maintaining knowledge within the organisation. The exit process is a great way of collecting data and feedback from talent about what they think would strengthen and continuously improve the organisation as far as culture, processes and anything else they wish to comment on.

Why is talent management important?

An organisation can only perform as effectively as its employees perform; after all, it is the employees who principally establish and maintain the work culture, accomplish the organisation’s plans, goals and objectives and achieve the organisation’s mission and core values.

When the right talent pool is selected by an organisation, employees bring the necessary skills and experiences that align with the organisation’s purpose. Acquiring the best talent for an organisation’s overall culture and objectives can ensure that the organisation maintains sustainable advantage.

Ongoing talent management is vital for keeping the employees happy, engaged and motivated to succeed, as employee engagement, satisfaction and motivation are essential components of employee retention. Establishing and implementing an effective talent management strategy that cultivates these components will promote a positive work environment of employees who continue growing with an organisation. By nurturing talent and placing people in the right places, at the right time, organisations can ensure they develop effective teams.

Talent management is important to all organisations as bad recruitment decisions, and employees who are unproductive or disengaged, impact upon the efficient performance of the organisation, which can have both a financial cost and possibly a reputational cost on the organisation.

Employee training to learn secondary skills

What are the benefits of talent management?

By having a clear understanding of the talent and performance levels needed by the organisation to achieve its business objectives and future vision, talent management helps the organisation prepare a future-ready and skilled workforce. It not only improves team productivity and employee satisfaction but also helps in talent retention which can be an immense cost saving to organisations.

A report from the Financial Services Skills Commission (FSSC) and PwC UK has found that financial services firms could save up to £49,100 per employee when they reskill an employee, compared to hiring someone new with the relevant skills. Reskilling a financial services employee costs on average £31,800, while the “redundancy and rehire” approach carries an average cost of £80,875, the data revealed.

Employee turnover costs are high in all business sectors, not only in financial services, and these costs adversely affect an organisation’s budgets. There are not only the recruitment costs of hiring new replacement employees to consider, but there are also the hidden costs such as decreased productivity and reduced engagement, not only from the employee who is leaving but also from team members who are impacted by the departure.

Talent management has a significant impact on employee motivation and productivity. According to Gallup, utilising the skills and strengths of employees can make them “six times more likely to be engaged at work, 8% more productive and 15% less likely to quit their jobs.”

Skills building and developing is one of the significant benefits of talent management. Encouraging employees to build multiple secondary skills not only improves employee motivation, it also helps enhance their deployment potential within the organisation.

Organisations that invest in talent management have a competitive advantage when it comes to attracting and hiring new talent. Compensation and benefits are not the only factors that attract prospective employees to an organisation.

Aspects such as development opportunities, interesting and varied work and employee empowerment, all components of talent management, are often highlighted in top talents’ job requirement surveys as essential criteria when they are considering an employee value proposition (EVP) and the “employer brand”.

A strong “employer brand” is as necessary as strong organisational branding, as it promotes loyalty, enhances reputation, is good PR and tells employees that they are valued. Communicating this “employer brand” and emphasising the organisation’s talent management strategy provides an opportunity to attract candidates who are more likely to be top performers, engaged and a good cultural fit.

What is resourcing and talent management?

Despite the COVID pandemic, the job market is particularly buoyant and highly competitive for employers who are aiming to resource the top talent for their organisation. According to recent figures from the Office for National Statistics (ONS), job vacancies in the UK have reached another record high of 1,298,400. Identifying and selecting the right resourcing strategies for an organisation that can help attract the best candidates to the organisation to increase the talent pool can be a challenge.

There are a variety of recruitment methods that an organisation can use to source potential talent, both externally and internally from the pool of talent that may already exist within the organisation. Organisations will often use external recruitment when they do not have the appropriate or available internal resources to fill the vacant role.

There are benefits to externally resourcing such as:

  • Bringing in fresh perspectives, ideas and interest.
  • Sourcing specialist or difficult to find skills in a competitive job market.
  • Opening the organisation up to a larger pool of talent.
  • Keeping current employees in critical roles.

External resourcing methods might include:

  • Headhunting.
  • Social media.
  • Recruitment consultancies and agencies.
  • Organisation’s own website and on spec applications.
  • Referrals and networking.
  • Press and media advertising.
  • Job fairs.
  • The university “milk round”.
  • External secondments.

Internal resourcing from the existing workforce can have a number of benefits such as:

  • It is greatly motivating for current employees as it provides development and progression opportunities, which increases engagement and loyalty.
  • The organisation knows internal candidates and they know the organisation.
  • It can be cost and time effective.

Internal resourcing methods might include:

  • Promotions.
  • Succession planning.
  • Internal secondments.
  • Redeployment of redundant employees.
  • Transfers.
  • Offering permanent contracts to temporary, fixed contract or freelance workers.

It should be remembered though, that if a vacancy has been filled internally, that may leave a gap in the vacated role and resourcing externally may still need to be done. Most organisations will need to use a variety of resourcing methods to widen the talent pool, to retain knowledge and skills and also to gain new ideas and fresh perspectives.

Differences between talent acquisition and talent management

Talent acquisition and talent management are part of the same process; there are, however, differences in their purpose. Talent acquisition focuses on finding qualified, skilled, experienced employees who are able to “hit the ground running” in the organisation, whereas talent management focuses on retaining employees and developing their skills so that they are able to take on either additional or new responsibilities.

Talent acquisition and management are both crucial to an organisation’s business operations. The talent acquisition process is important because it ensures the organisation is hiring the right people and matching potential candidates’ skills and experience with its specific needs. It enables an organisation to access employable candidates when it needs new talent and also can provide a fresh perspective and new ideas to help energise an organisation.

Talent management benefits the organisation by focusing on creating long-term employee relationships and maximising the value that talent brings. It helps employees develop their professional skills through learning, experience, training and development which enhances employee engagement, motivation and loyalty, which can reduce turnover and recruitment costs.

For most organisations it is not a case of either or, but a combination of utilising both talent acquisition and talent management depending upon the needs and priorities of the organisation’s business objectives.

Retail worker

Who would use talent management?

Attracting and retaining the right talent can be difficult for any organisation irrespective of its size or the sector that it is in, particularly as the employment marketplace has become more and more competitive recently.

So talent management is an important business strategy for a wide variety of organisations including, but not limited to:

  • Retail.
  • Manufacturing.
  • Transport.
  • Education.
  • Healthcare and social care.
  • Central and local government.
  • Technology.
  • Business services.
  • Charity and no for profit.

Responsibility for talent management should not just lie with HR but should be shared with the rest of the organisation. Talent management should consider all individuals in an organisation. It should cover the development they require, the value they bring and the position(s) that best suits their skills currently and into the future within an organisation and/or elsewhere in their career journey.

Final thoughts

When organisations create positive workplace environments for their employees through talent management, then those employees become more productive, more engaged, more skilled and less likely to leave. Additionally, organisations who invest in talent management will develop an attractive employee value proposition which will appeal to top talent looking for their next opportunity.

About the author

Evie Lee

Evie Lee

Evie has worked at CPD Online College since August 2021. She is currently doing an apprenticeship in Level 3 Business Administration. Evie's main roles are to upload blog articles and courses to the website. Outside of work, Evie loves horse riding and spending time with her family.

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