|Management of a business|
Talent management (TM) refers to the anticipation of required human capital for an organization and the planning to meet those needs. The field has been growing in significance and gaining interest among practitioners as well as in the scholarly debate over the past 10 years, particularly after McKinsey's 1997 research and the 2001 book on The War for Talent. Talent management in this context does not refer to the management of entertainers.
Talent management is the science of using strategic human resource planning to improve business value and to make it possible for companies and organizations to reach their goals. Everything done to recruit, retain, develop, reward and make people perform forms a part of talent management as well as strategic workforce planning. A talent-management strategy should link to business strategy and to local context to function more appropriately (Tyskbo, 2019)
The precursor to "talent management" seen extensively in firms during the latter part of the 20th century was centered around internal talent development. An overemphasis was placed on the training and evaluation of managerial positions creating an excess supply of middle-management talent. Poor business forecasting of economic downturn in the 1970s combined with no-layoff policies for white-collar workers resulted in corporate bloat. Recession throughout the 1980s saw large increases in unemployment as firms restructured, placing less importance on internal development. As a result the hiring of outside talent largely replaced the internal development schemes seen in businesses earlier in the century and by the late 1990s had reached its limit. Firms found they were both attracting and losing experienced employees at the same rate and needed to explore new ways of retaining and nurturing incumbent employees.
The term was coined by McKinsey & Company following a 1997 study. The following year in 1998 "talent management" was entered in a paper. Written by Elizabeth G. Chambers, Mark Foulon, Helen Handfiled-Jones, Steven M. Hankin, and Eduard G. Micheals III. However, the connection between human resource development and organizational effectiveness has been established since the 1970s.
The profession that supports talent management became increasingly formalized in the early 2000s. While some authors defined the field as including nearly everything associated with human resources, the NTMN defined the boundaries of the field through surveys of those in corporate talent management departments in 2009–2011. Those surveys indicated that activities within talent management included succession planning, assessment, development, and high potential management. Activities such as performance management and talent acquisition (recruiting) were less frequently included in the remit of corporate talent management practitioners. Compensation was not a function associated with talent management. Lastly, the strategy of using talent management help organizations with workforce during WWII.
[need quotation to verify] A talent management system is suggested to be used in business strategy and implemented in daily processes throughout the company as a whole. It cannot be left solely to the human resources department to attract and retain employees, but rather be practiced at all levels of an organization. The business strategy must include responsibilities for line managers to develop the skills of their immediate subordinates. Divisions within the company should be openly sharing information with other departments in order for employees to gain knowledge of the overall organizational objectives. The issue with many companies and the military today is that their organizations put tremendous effort into attracting employees to their company, but spend little time into retaining and developing talent.
The talent management strategy may be supported by technology such as HRIS (HR Information Systems) or HRMS (HR Management Systems).
Talent management is an organization's ability to recruit, retain, and produce the most talented employees available in the job market. Talent consistently uncovers benefits in these critical economic areas: revenue, customer satisfaction, quality, productivity, cost, cycle time, and market capitalization. Having good talent management is when one has good skills, knowledge, cognitive abilities, and the potential to do well. Talent management is also an important and necessary skill for people in the workforce to acquire. Finding good and talented people is not a hard thing to do, but making sure that they want to stay working for the same business is the challenge. If someone has so much talent and they are good at what they do, businesses will want them to stay and work there forever. However, most of those people are either satisfied with the job they have, or they go out and look for better opportunities.
The importance of recruitment of the proper talent is crucial to the overall long term success of the organization. Recruitment processes are vital because if people don’t appreciate the initial process, they will not be willing to stay with the organization. Technology has advanced greatly giving many corporations the ability to locate the correct people for the task at hand. Nearly, all multinational enterprises (MNEs) are faced with the challenge of curating a formidable arsenal of its workforce. It has been reported that nearly 75% of the CEOs of the world have pointed out the unavailability of the required skills and capabilities as the main obstacle faced by organizations aiming for their growth (Sen, 2019)  Companies need to decide whether it is correct to "buy" or "make" employees. Making an employee refers to teaching the individual certain skills needed for the job. However, it has to be determined whether or not the employee has the potential to learn the skills. Buying an employee is hiring an individual that already possesses the required skills needed for the job. If the person has the required skills, their starting wage will likely have to reflect the talent.
From a talent management standpoint, employee evaluations concern two major areas of measurement: performance and potential. Current employee performance within a specific job has always been a standard evaluation measurement tool of the profitability of an employee. However, talent management also seeks to focus on an employee’s potential, meaning an employee’s future performance, if given the proper development of skills and increased responsibility. What goes into these dimensions has been showed to differ depending on local organizational contexts (Tyskbo, 2019)
This term "talent management" is usually associated with competency-based management. Talent management decisions are often driven by a set of organizational core competencies as well as position-specific competencies. The competency set may include knowledge, skills, experience, and personal traits (demonstrated through defined behaviors). Older competency models might also contain attributes that rarely predict success (e.g. education, tenure, and diversity factors that are illegal to consider in relation to job performance in many countries and unethical within organizations). New techniques involve creating a competency architecture for the organization that includes a competency dictionary to hold the competencies in order to build job descriptions. Companies like Southwest Airlines, Microsoft, and General Electric all use talent management.
A talent marketplace is an employee training and development strategy that is set in place within an organization. It is found to be most beneficial for companies where the most productive employees can pick and choose the projects and assignments that are ideal for the specific employee. An ideal setting is where productivity is employee-centric and tasks are described as “judgment-based work,” for example, in a law firm. The point of activating a talent marketplace within a department is to harness and link individuals’ particular skills (project management or extensive knowledge in a particular field) with the task at hand. Examples of companies that implement the talent marketplace strategy are American Express and IBM. In today´s globalized economy, cultural agility is a behavioral trait that international enterprises especially value in job applicants at the time of hiring.
The process of retaining employees to work in the organization on a long-term basis is defined as employee retention (Sen, 2019). Organizational resources are used to train new employees into skilled workers. This gives options to businesses that want to hold onto employees as long as they can. (Sen,2019). By keeping a healthy long term relationship between employees and management, companies benefit from a skilled and talented staff that will cohesively work together to achieve long term goals. The most important factors involved in employee retention are compensation, workplace environment, growth options, and the support structure of the company (Sen,2019). One of the greatest drivers of employee engagement and retention are intangible assets, that are mostly related to the way a manager treats their employees. The proper and fair treatment of all employees will increase their engagement levels and in the long run result in less of a need for micromanaging. The main cause for talented people leaving their jobs is due to the fact they are not being allowed to do as much as they would like to do for their organizations. The right employees want to feel impactful and have a feeling of importance as they go about their daily work. Employees are more likely to stay if they have a good relationship and open communication with their immediate boss and have a feeling of importance in the workplace. This is the main reason why frontline leaders should develop their employee retention skills as retention rates are likely to feature prominently in annual reports in the future. If management can hire and keep the right employees on board it will translate into positive and sustainable success in the future.
In adverse economic conditions, many companies feel the need to cut expenses. This should be the ideal environment to execute a talent management system as a means of optimizing the performance of each employee and the organization. Selection offers are large return on investments. Job analysis and assessment validation help enhance the predictive power of selection tools. Data points such as cost-per-placement or average time to recruit are critical in predictive analytics for talent management. These evaluation methods use historical data to provide insight. However, within many companies the concept of human capital management has just begun to develop. With more companies in the process of deepening their global footprints, more questions have been asked about new strategies and products, but very few on the kind of leadership structure  that will bring them success in their globalization process. “In fact, only 5 percent of organizations say they have a clear talent management strategy and operational programs in place today.” The impact of globalization on talent management practices is specifically covered in several recent books.