Over the next 20 years, talent will be the single largest in-demand corporate resource. People who are operationally agile, technologically astute, excellent communicators, and great leaders will be coveted and highly sought-after. Sadly, this already scarce resource (see war for talent) will only continue to become more precious. With experienced baby boomers retiring in droves and a widening skill gap, the war for talent is in full effect.

The solution? Attracting and retaining the right talent for your organization. The problem? Many organizational leaders fail to recognize and embrace the strategic importance of talent management. Talent management is no longer an HR function. Today's CEOs and company leaders must take an aggressive approach to strategic talent management – the acquisition, growth, and retention of top talent.

So, how does your organization stack up? Take the talent survey now for in-depth results on the state of your talent management strategy and how you compare.

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The purpose of talent management is to attract the best talent and then motivate, engage, and retain that talent to help them perform better. When done properly, it can help build a sustainable competitive advantage to outperform competitors. This strategy is no longer an option, it’s a requirement.

Consider this your comprehensive guide, providing the most critical information on how to manage talent today, in order to ensure short- and long-term success for your organization.

Talent Management Strategy

What is it?

Talent management represents how you will acquire and retain the right talent to ensure that your business achieves its goals. What is your acquisition strategy? What is your employer brand? How will you engage and retain your talent? These are some questions which your talent management strategy will tackle.

Talent Management involves the programs and practices a company uses to attract, hire and onboard employees; manage employee performance, development and career progression; compensate them; and transition them out of the organization if necessary. Another way to think of talent management is the process of handling employees from hire to retire.

To think of this more practically, consider these commonly practiced processes, which are all part of talent management:

  • Talent attraction
  • Employee onboarding
  • Performance management
  • Employee retention
  • Employee development
  • Compensation
  • Succession planning

Companies who are able to develop and implement these processes successfully will be more effective at getting the right talent to achieve their primary business goals, and ultimately compete in the global economy.

A Note on Strategic Workforce Planning

Strategic Workforce Planning (SWP) is closely related to talent management strategy. They are like very close friends, maybe even cousins. You can think of SWP as the why, what, where, and when of managing talent because it helps answer these questions. Talent management provides the how.

How are you managing your talent in order to get the right people, in the right place, at the right time, for the right cost.

What really sets SWP apart is its focus on aligning a company’s human capital, or talent strategy to its business goals. Think of it this way- Your people are your key drivers of success. It is their talent, knowledge, abilities and skills which are responsible for achieving the goals of your business. Therefore, the development of a talent management strategy must begin with understanding your business goals and then determining what skills, abilities and competencies your people need in order to achieve those goals

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By 2020, there will be five generations of talent sharing one office. Each generation has different preferences, views, expectations and priorities when it comes to work. What is the generational makeup of your workforce? What about your critical roles? Companies who cater to the preferences of their unique workforce will experience greater success with their talent strategy.

Five Generations of 2020

As you can see above, millennials make up the largest generation of the U.S. workforce. Therefore, most organizations will need to get really good at dealing with them catering to their work preferences. It’s a partnership- HR and company leadership, who are primarily responsible to make the workplace welcoming and respectful to all generations.

The ability to offer options and cater to the generational makeup of your unique workforce from benefits and compensation to training and advancement will be key!

As discussed, the development of a comprehensive talent management strategy requires an initial focus on strategic workforce planning. Of the six steps below, the first four can be considered part of SWP. Step five begins to explore the how of talent management strategy- the specific methods and processes of attracting, training, and retaining talent.

Step 1. Align Talent and Business Strategy

Does your organization have a clear definition of its primary business goals? Does it have a clearly defined organizational strategy? Today, the answer may not be so straightforward. As businesses grow and begin competing globally, their basic strategy and goals become fragmented and may not be consistent across the organization.

As an organization, how can you accomplish anything without a clear business strategy, let alone develop a talent management strategy?

Consider your company’s business strategy and goals as a map to the future state. Your talent is the vehicle which helps transport your company to its destination- to achieve its business objectives. Is your company’s roadmap clear? Is your talent capable of reading the map and translating it into directions which lead the company to success? This analogy is meant to highlight the importance of aligning talent strategy to business strategy.

This first step is simple- have a CEO-approved business strategy on paper. You will need to keep this front and center throughout the rest of the process. Getting buy in, interest and support from the CEO is a serious bonus of this step as well. Aim to make company leadership a part of the entire process- all the steps!

Step 2. Identify Current State

The purpose of this step is to identify data trends for your critical roles including identifying what kind of skills your workforce currently has. How have you been operating thus far?

To do this, consider which roles are critical to accomplishing the goals of the business. Is there a specific role or roles which may be considered more critical? For some businesses this role might be an engineer, barista, pilot, instructor or consultant. All jobs are important. Some simply create more value and wealth than others. In general, about 10-15% of jobs can be considered a critical role. These are the roles you want to spend the most time and energy on analyzing, and in general when developing your talent strategy. Consider the competencies and skills required of these critical roles and record this information into a success profile.

Begin by collecting relevant data such as:

  • Skill levels
  • Turnover rates
  • Employee engagement rates
  • Performance metrics
  • Job categories
  • Length of service
  • Gender
  • Diversity

Next analyze the data for trends and assess using multiple variables linked together. Below are some potential variables to consider:

  • Turnover by length of service
  • Engagement by location
  • Engagement by manager
  • Turnover by demographic factors
  • Sources of talent leading to highest hire quality
  • Performance by location

After completing this step, you may end up with more question than answers. That’s ok! Try to identify meaningful analytics, rather than measure what is easy. Remember that data can never be perfect, so don’t get too bogged down in details and end up in a state of analysis paralysis. Move forward with what you are able to collect.

The value of making data-driven decisions cannot be understated.

Step 3: Identify Future State

Armed with information on where you are (current state analysis), and where you want to go (business strategy), you have the makings to create a solid talent management strategy! This involves a bit of forward thinking and is where the word ‘strategic’ really comes into play.

To begin, discuss and develop different possible future scenarios. With the goals from step one in mind, consider what possible internal and external environmental changes, and organizational strengths and weaknesses could impact your company’s ability to achieve them. For instance, perhaps your company wants to expand into a new territory, but talent with the specific technical skills required is hard to come by.

There may be a few different strategies which will provide you with the talent you need to achieve those business goals. Record them, discuss them, and choose the one you feel provides the largest chance of success. This exercise is important as it creates a platform for discussion and creative thinking, as well as team member buy-in.

Ask the questions:

  • Does the current workforce have the skill and competencies necessary to perform the duties our new business strategy requires?
  • Is there a strong external labor supply with the skills necessary to achieve our business goals?
  • Will external factors have an effect on our internal business decisions, goals, vision or workforce?
  • Do any internal weaknesses potentially threaten the achievement of our defined goals?

The most critical part in this step is to uncover the composition of the future workforce, what will it look like? Ask the following questions:

  • What skills and competencies will be required of the future workforce?
  • What will the organization need to do to attract prospective employees?
  • How can we upskill our current workforce?

Some possible factors to consider during this step include:

  • Competitive threats
  • Globalization
  • Availability of talent
  • Growth

Step 4. Identify the Gap

With a clearly defined picture of the composition of your current workforce, and the requirements of your future workforce, it’s time to identify the gap between them. The data you should compare includes, for example:

With this information you can build a plan to close the gaps and develop your future workforce. It may be helpful to prioritize the gaps relative to criticality.

Step 5. Develop an Action Plan

Step five is where the ‘how’ of managing talent comes in, here we see more of an overlap between workforce planning and talent management. We’re moving on and developing a plan of action to close those identified gaps. There are a variety of methods to utilize to close the gaps. Some include hiring new talent, upskilling current employees, moving critical talent into senior roles, improving retention of key talent, increasing engagement, etc.

Therefore, the following primary talent management processes now come into play:

Talent Attraction

Finding good talent is critical to any organization. When the economy is booming and your market is hot, competing to find the best talent suddenly becomes increasingly difficult. This is the current climate most are operating in today; we call it the War for Talent. What has emerged as a solution to this problem? Ladies and gentleman, may I introduce the employer brand.

A phrase worthy of the buzz it has produced! Today, having an employer brand is a fundamental part to any successful business, a necessary component of your talent attraction strategy. It represents your company’s reputation from the perspective of a potential employee, and describes the value your company gives to employees.

Before beginning with your talent attraction strategy, consider your critical roles and their generational makeup. Will this change in the future? As previously mentioned, each generation has unique preferences when it comes to work and career.

Millennials represent the largest generation of workers. According to a recent poll by Gallup, millennials have a unique preference for the opportunity to learn and grow. Therefore, creating career ladders and lattices, and using other career development strategies to attract these workers will be critical for most companies.

What different generations look for when applying for a job

Consider the 5 major influencers (that companies have control over) potential employees consider when evaluating employers:

Work Environment

Free lunch, beer on tap, arcade games, dogs in the office… This is the new working environment! Working from home is also a growing trend. Many studies are finding improved performance by allowing employees time to work from home.

Compensation

Having a competitive compensation strategy is critical to attracting top talent. Consider performing a compensation analysis to benchmark your company against competitors in your industry.

Career Opportunities

As discussed above, opportunities for growth and development are critical to employees, especially millennials. This is where career ladders and lattices, and career sculpting come into play. This information needs to be communicated and easy for current and prospective employees to find.

Company Culture

Company culture is highly related to the employer brand. It takes into account all of the methods of talent attraction and development your company utilizes. It's critical to define and communicate in a simple way. It’s the backbone of your employer brand and sets the tone for work environment.

Benefits

Benefits packages are critical to both talent attraction and retention. Health insurance is of course the foundation of any benefits package. However, many companies are coming up with innovative and creative ways to entice employees with benefits. Some examples include chief medical officer on staff, unlimited paid time off and student loan debt repayment.

Talent Development

Although employees are increasingly seeking opportunities for growth and advancement which goes hand in hand with development programs, many companies (a whopping 43% according to some polls) fail to create a yearly training budget. So, if you fall into the 43%- you’re not alone. Just remember how important this is to your millennial workers.

Indeed, developing talent is a strategic priority. Your company’s ability to build diverse, skilled and flexible teams is a key driver of success. One of the greatest competencies of leaders is their ability to build talent. Yet studies have shown that as leaders move up the organization, their ability to develop others decreased. Has your company’s leadership made the commitment of developing its greatest resource- its talent?

Below are some effective strategies to develop your people and ensure they have the skills required to achieve company goals.

  • Individual development plans – this could be considered the backbone of your talent development strategy. Every employee has different career interests and goals, and it’s up to leadership to help identify and guide employees, as well as set specific development goals and track progress to those goals.
  • Learning management systems (LMSs) – Today there are many to choose from. The benefits of these platforms are many. Forget about getting documents signed, paperwork, and tracking training. The system lets you track how users advance through training and/or development programs.
  • Corporate Universities – they help bring structure to internal training efforts and assist in aligning the training with the organization’s goals. Learn more and watch a short video here.
  • Coaching and mentorship programs – Although slightly different, these types of training programs pair a subject matter expert with an employee in need of training. The coach or mentor can help to improve specific skills, or groom employees for higher level responsibilities.

Before beginning your talent development strategy, consider these core principles for developing talent.

Performance Management

Performance management is a critical component of any comprehensive talent management strategy. But it is not just an annual review or a self-evaluation. It’s more than a form or a tool to track goals and improvements. It is the process of creating a work environment which enables employees to perform to the best of their ability. From having clear job descriptions, comprehensive employee selection processes, to ongoing feedback and coaching- performance management is a full-term employment process.

As you can see, utilizing performance management is critical to the company achieving its vision. Without goals for talent, and checking progress to goals, the organization will fail to ensure the employees’ activities are congruent with the organization’s objectives, and that they are progressing in the right direction.

Don’t get performance management confused with performance appraisals. Performance appraisals are more narrowly focused on a process of judging past performance. Performance management is a more collaborative approach, with leaders checking in more frequently, aiding in the establishment of individual goals, and providing more frequent discussions and coaching throughout the year.

Fortunately today, there are many electronic performance management systems (PMSs) which make it much easier and more convenient to stay on track with performance management. The systems automate the process, which notifies parties of upcoming collaboration dates. Previous reviews can be accessed and are archived and the ability to achieve goals can be tracked over time. Overall, there are many capabilities and systems to choose from.

How to develop a performance management system

Retention

Loosing a talented employee is every manager’s worst nightmare. Not only are there financial consequences, turnover can impact the organization’s knowledge base, as well as decrease performance and morale. It’s already tough attracting talented employees in the current business environment, now losing them has an even bigger impact.

Today’s workforce is looking for things like purpose, development opportunities, ongoing conversations, a coach rather than a boss, and a manager who leverages their strengths instead of obsessing about their weaknesses.

Retention goes hand-in-hand with your employer brand and the culture of your organization. Here are some forward-thinking ideas to guide your retention strategy.

  • Get the culture right – Culture goes hand-in-hand with talent attraction and retention. Creating the culture of your organization is critical. The development of company culture is a discussion which should involve all company leaders. It should match the vision, values and goals of the company, and consider the type of employees you want to attract.
  • Hire employees who fit the culture- Once you have your ideal culture established, make sure to hire employees for CULTURE FIRST. This is the most critical part of hiring, hire for cultural fit! You can always give your employees the tools, resources, and training to improve performance, but you can’t teach someone to align with your cultural values.
  • Perform a compensation analysis- Unfair compensation is frequently cited as a top reason that employees leave their organization. What’s more, finding a replacement employee can be extremely expensive. To ensure you are on par with employers in your industry, perform a compensation analysis. Don’t let this be the reason employees leave.
  • Provide some creative perks- Working from home, flexible hours, flexible vacation packages, performance bonuses… these are some of the perks and benefits many companies are getting creative with. Think about your employees- what kind of creative perks would motivate them to stick around?
  • Keep your employees engaged (see below)!

Engagement

Employee engagement goes hand-in-hand with retention. Employees who are not engaged have low job satisfaction scores, as well as reduced productivity. To be clear on what engagement means- employees who actually care about their work and their company. They work on behalf of the organization’s goals.

According to Gallup’s State of the American Workforce Report, a meager 33% of employees were considered ‘engaged’. To understand if your employees are engaged, you need to understand how to measure engagement. Measuring engagement yourself can be surprisingly difficult, that is why we recommend utilizing a pre-validated engagement survey. This information will prove invaluable to retaining an engaged, productive workforce. It will give you the data and information you need to keep a pulse on your organization. According to a 2016 survey by Gallup, employee engagement efforts have a significant positive effect on organizations.

Outcomes of employee engagement

The data shows that businesses who utilize effective employee engagement efforts realize benefits across the board from productivity to sales. Here are effective strategies to improve employee engagement:

Four ways to improve employee engagement

Succession Planning

The overall idea of succession planning can be broken down into three main types- defined departure, ongoing leadership development, and emergency or interim. Many larger organizations, or those experienced with succession planning, utilize it as an ongoing process of leadership development and knowledge transfer. This is the ideal method and supports a healthy and effectively managed organization. Smaller businesses with less resources may have to handle succession planning as issues arise, such as a CEO’s retirement, or the loss of one or more key employees.

Types of succession planning

Ongoing succession planning is a strategy for identifying and developing future leaders at all levels. This ensures the company is prepared for inevitable changes when employees resign, retire or otherwise leave the organization. A key part of succession planning is leadership development.

The first step in developing a succession plan is to figure out which type of situation you’re dealing with (see above). Next, put together your dream team. Select leaders who are effective communicators, knowledgeable about competencies and development, and who are well connected in your organization.

Think back to the workforce planning steps completed above- what upcoming trends (internal and external factors) do you expect to impact your pipeline of leaders? Again, we’re pulling from strategic workforce planning principals- it’s important to bring your succession plan back to your organization’s larger goals. Make sure the two are in sync! Identifying candidates is where the magic happens. First thing is first, do you understand the key competencies, skills, knowledge etc. required for the role? Begin with a success profile for all critical roles within your organization.

Leadership Development

With a great team of leaders (or leadership team depending on the message), a focus on organizational goals and clearly defined success profiles for critical positions, you can start the evaluation of each person’s future potential. Although someone may want to be in a specific position, it’s up to your team to evaluate whether or not this person has the right potential. If they do, do they have the right skills?

Communicate to your high potentials when they are being considered for a specific role; before they leave to explore other options! For those who are not fit for a role, it’s also good to communicate why. They may not necessarily run for the door, especially if you communicate what they need in order to be successful in their career.

Step 6. Data Measurement

Be patient, realizing success with your new talent management strategy will take time. Just remember- it’s better to measure progress toward goals with data, rather than biased perceptions. Your strategy will require careful monitoring, so choose the metrics you want to track such as turnover rates, retention levels, engagement, time to fill open positions, etc. Consider utilizing a talent dashboard - they have proven to be instrumental in tracking critical talent data to keep progress toward goal achievement front of mind and identify issues as they arise.