The focus on talent management is inevitable, given that, on average, organizations spend more than a third of their revenue on employee wages and benefits. An organization’s only real competitive advantage is effectively recruiting, retaining, deploying, and engaging talent at all levels. Moreover, technological changes and skill shortages worldwide have made us aware of this mental shift. Whereby hierarchy no longer automatically comes before professional abilities. So organizations realize that they must have the best talent to succeed in the increasingly competitive and increasingly complex global economy. Besides, organizations also realize that their focusing on talent management as a critical resource to achieve the best possible results.
Components of Talent Management
Talent management is a necessary process that ensures organizations have the correct number and quality of employees to meet their current and future business priorities. Talent management covers all significant aspects of the employee ‘life cycle’ (selection, development, succession, and performance management). Critical components of highly effective talent management also include follows:
- A clear understanding of the organization’s current and future business strategies.
- Identify critical gaps between existing and required talent to drive business success.
- A sound talent management plan designed to bridge talent gaps. It should also be integrated with strategic plans and action plans.
- Accurate hiring and promotion decisions.
- Link individual and group goals to the organization’s goals, and provide clear expectations and feedback for performance management.
- Develop talent to enhance performance in current positions and prepare for the transition to the next level.
- Focus not only on the talent strategy itself but on the elements required for successful implementation.
- Measuring business impact and workforce effectiveness during and after implementation.
Reasons to Focus on talent management
1. Positive relationship between talent and organizational performance
Organizations are increasingly seeking to quantify the return on their investment in talent. As the result is a body of ‘evidence’ that paints a compelling picture of the impact of talent on business performance. Thus, organizations that are more effective at managing talent have higher percentages of superior organizational performance than groups of organizations of similar size with less effective talent management.
2. Talent is a valuable resource that creates value for organizations
Organizations’ financial value often depends on the quality of talent; since they manage talent with the same rigor as they treat their financial assets, treating them as the valuable resource that they are, they usually see better results. So, it reallocates talent to high-value areas and pushes talent management to the top of the growth agenda. In the past century, numerous studies have shown that more than 60% of the average value of an organization is attributable to its physical assets, including equipment and facilities. And only about 40% goes to intangible assets like patents, intellectual property, brands, and, most of all, people. In this century, however, those percentages have roughly reversed, with 80% of value attributed to intangible assets and 20% to tangible assets.
3. Complexity and dynamism in modern business models
More than ever, intense competition makes it difficult to maintain a competitive advantage over the long term. New products and business models have shorter life cycles and require continuous innovation. Moreover, intelligent technology allows greater access to information and forces organizations to move at “business speed.”
4. Focus on senior leaders
Boards of directors and investors focus on top leaders, as they expect them to create value. This focus, which is most visible at the CEO level but is generally felt up and down the organization chart, leads to an increased focus on talent quality, not just at the senior leaders level, but at all levels.
5. Changing employee expectations
Today’s employees are concerned about getting a challenging and meaningful job, which forces organizations to focus more on talent management strategies and practices. Knowing that they are also more loyal to their profession than the organization, more concerned with work-life balance, and willing to take ownership of their careers and development. As a result, responding to these myriad challenges makes it difficult to attract the “hearts” and “minds” of today’s workforce. However, it is critical to do so, as there is a large body of evidence showing how cultures built within organizations are essential to attracting and retaining key talent.
6. Evolution of the composition of the workforce
The proportion of workers between 60 and 64 is expected to reach 60% during the next five years. Most are in senior positions, diluting the opportunity for lower-level talent to advance and leaving young employees feeling stuck. They may seek opportunities with other organizations, further fueling the war for talent.
In today’s era of talent management, it’s not a matter of “What do you do?” Even more. Therefore, organizations must practice effective and comprehensive recruitment and be proactive through a comprehensive process that continually identifies, tracks, develops, and retains employees.
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