Has your company ever struggled to hold on to important employees?
Has it ever hired the wrong people? Or hired the right people, but they struggled to succeed?
These are all signs your talent management strategy is unsuccessful—or nonexistent.
In this article, we’ll show you how to build a talent management strategy that works. We’ll talk about what a talent management strategy is, and how it can make your company more successful. And we’ll touch on how that success breeds employee retention and growth.
What is a talent management strategy?
A talent management strategy is a formal plan to hire, develop, and keep employees. Ideally, a talent management strategy is guided by data, and customized to the company’s needs.
But what makes a talent management strategy important?
Successful talent management gives your organization several benefits. Here are some of the most notable pros:
Your costs drop.
Labor accounts for as much as 70% of business expenses. Some of that is obvious: salaries, benefits, equipment. But it’s also extremely expensive to train and replace employees.
Every time someone leaves your company, it costs you the equivalent of 6 to 9 months of their salary. High turnover means you pay that cost again and again and again.
Talent management strategies can reduce turnover by improving the employee experience. By reducing turnover, a great strategy takes a big chunk out of your company’s biggest expense.
Your employees power up.
Economists call people human capital for a reason. Just like a business, people benefit from investment. When you improve their skills, you improve their ability to perform at their job.
Talent management programs create development opportunities for your employees. They open mentoring doors, and refine your in-house training. And these approaches have huge benefits. Organizations with a strong learning culture are 52% more productive.
Learning won’t boost your profit overnight. But as your employee skill sets grow, so does your business—until eventually, you dominate the market.
Your business strategy becomes easier to execute.
A talent management strategy isn’t just about hiring or developing or keeping people. It’s about making sure your talent matches your business strategy.
Sometimes companies have a great employee in the wrong place. You might have a leader that’s great at bold visions and aggressive expansion, but is stuck dealing with fine details. It makes the leader unhappy. It also makes your business less effective.
On the other hand, focusing on the strengths of your employees increases performance by 8 to 18%. That’s exactly the kind of approach a talent management strategy is built to carry out.
With a great talent strategy, you can align the behaviors of your employees to their role. In turn, you can align each team to their business objective. Once this happens, your business will start achieving even the most impossible goals.
You gain a huge competitive advantage.
Many companies constantly lose their top performers. This isn’t just inconvenient. It destroys their ability to compete.
Studies show that hiring the right managers and the individual contributors boost company revenue by a combined 33%. That’s because great businesses aren’t driven by their equipment, or even their brand. They’re driven by their people. Whether it’s a salesperson that leaves every customer smiling, or an engineer that creates a first-of-its-kind solution, every business thrives with the right talent.
By improving your talent acquisition, talent management strategies make sure you have the best people. By improving your employee experience, they make sure you keep the best people. And as any growing startup can attest, that can overcome even the biggest or best-funded competition.
The core components of a talent management strategy
Every talent management strategy can be broken down into five basic areas of focus: Plan, Identify, Hire, Retain, and Train.
Every talent management strategy starts with strategic workforce planning. In its simplest form, that means asking several questions, such as:
- How many people do you need to hire?
- Which roles or departments do you need them in?
- What skills or behaviors mean success in those roles?
- When do the positions need to be filled?
In practice, it’s a little more complicated. To answer these questions, you need a whole host of other information, such as:
- Your business goals.
- Your business strategy and department strategies.
- Your desired company culture.
An effective talent management strategy requires identifying where your plan is succeeding, and where it’s falling short. That requires data.
When most people think of data, they think of metrics. But data can also include descriptive data, like exit interviews. When companies develop talent management strategies, they often use several kinds of data, such as:
- Employee turnover rates to identify if a retention problem exists.
- Employee engagement surveys to identify the causes of turnover.
- Exit interviews and employee interviews to identify ways to improve the employee experience.
- KPIs for individuals to identify when an employee’s performance needs improvement.
- KPIs for departments to identify systematic causes of underperformance.
Bad hires are expensive—costing up to 30% of the employee’s annual pay. As a result, most talent management strategies emphasize effective hiring practices. There are several common ways companies try to achieve this:
- Expand their talent pool through referral programs.
- Attract better candidates through a strong employer brand.
- Select better candidates through candidate assessment tools.
- Hire candidates that add unique value to their teams with team assessment tools.
Employee retention is another major focus—and a liability, if done wrong. Tactics company use to address retention include:
- Reward high performance to encourage the best talent to stay.
- Create a positive company culture so that employees feel happier at work.
- Connect day-to-day work to a compelling mission so that employees feel more driven and excited about work.
- Increase pay and benefits to improve the employee value proposition.
- Create succession plans for senior leaders.
Training is one of the most important parts of a talent management strategy, yet it’s often overlooked. Learning and development ranks as the third-most important benefit to employees. In other words, learning programs improve your hiring and retention. But they also makes your employees more effective at their jobs.
Human resource departments often use the following tools for employee training:
- Comprehensive onboarding, so that new employees start the job with more confidence.
- Internal learning and development programs to refine employee skills.
- Reimbursements for external classes, to help employees gain new skills.
- Mentoring programs to develop employees and share knowledge across the company.
How to implement a talent management strategy model
In this section, we’ll walk you through a step-by-step process for creating your own talent management strategy model.
1. Identify business objectives.
You can pour as much time and money into your talent management strategy as you want. But if it doesn’t support your business needs, it’s not a success. So start with the basics.
- Which goals is your business pursuing over the next year?
- What about over the next five years?
- How do the initiatives of each department play into those goals?
- What does long-term business success look like?
Once you know your business objectives, you can start matching your talent to your objectives.
2. Match talent to your objectives.
Next, you’ll need to gather your HR leaders to figure out how talent can help you achieve those objectives. Questions might include:
- Which roles are most important to achieving each goal?
- What will strong employee performance look like in those roles?
- Which skills or behaviors will help people perform?
- How many people will we need in those roles?
You might feel ready to start decision-making. But first, you need to diagnose your talent problems.
3. Diagnose your talent obstacles.
As part of your talent management process, you’ll need to gather metrics and descriptive data on where your current talent strategy may be falling short.
There’s no single metric that can solve this. Instead, you’ll need to gather as much information as possible from as many sources as possible. Possible approaches include:
- Use employee engagement surveys to find out where problem areas exist.
- Implement KPIs to identify underperforming departments and individuals.
- Use team assessment tools to find out where teams might be misaligned with their objectives.
- Use behavioral assessment tools to find out where people might be misaligned with their jobs.
- Create analytics for outreach emails, job postings, and other elements of your hiring process.
- Interview recruiters, managers, and employees to find out the biggest obstacles to retention, hiring, and performance.
Now you know your core obstacles. What’s next?
4. Decide where you need to focus.
If you try to improve every part of your talent management strategy at once, you may find yourself with too much to do, and not enough resources to do it.
Instead, it makes sense to focus on the most pressing issues. After all, if you can make a difference in a few key areas, your company’s leaders are more likely to support the rest of your talent management strategy.
Areas of focus typically are places where:
- Your current talent strategy is falling behind your business goals.
- Your current talent strategy is underperforming other businesses in your sector.
- You can create large efficiency gains through minimal effort or expense.
After you decide where you need to focus, you can create a plan of attack.
5. Create a plan of attack.
By now, you should have all the information you need to start developing solutions. If not, you may want to consider revisiting one of the previous steps.
Each solution needs to be SMART. In other words, it should be:
- Specific. You need to state exactly who, what, when, where, and why the solution is being implemented.
- Measurable. The solution needs a clear gauge of success. This should be directly tied to one of your diagnosed talent problems.
- Achievable. You should consult with any affected departments to make sure the goal is reasonable to achieve with the time and resources you’ve been given.
- Relevant. Each solution should address one or more business or department goals.
- Timely. The solution should have a specific date it must be completed by. That date should be close enough to be motivating, but far enough away that it is realistic.
Once you’ve written down your solutions, you can—finally!—get input from stakeholders.
6. Get input from key stakeholders.
Without support from key leaders, you may have trouble implementing key parts of your strategy. On the other hand, they may have useful ideas and approaches you hadn’t considered.
As you get approval from stakeholders, you may revisit previous steps. Some assumptions might change and some plans might fall to the wayside. That’s okay! Approval should be a back-and-forth process.
Now that your stakeholders have bought in, you can move onto the final step: identifying where technology could help.
7. Identify where technology could help.
Companies sometimes reinvent the wheel when solving talent problems. Often, software already exists to make these solutions easier. Sometimes, software can even open new opportunities that would be impossible without it.
For example, talent management systems can help your company:
- Create consistent employee onboarding.
- Quickly develop new learning courses.
- Implement effective performance management.
Likewise, talent optimization software can help your company:
- Discover if a candidate is naturally suited to a job.
- Create teams that align with your business goals.
- Develop targeted strategies to solve low engagement.
By comparing existing software to your solutions, you can often achieve better results for a lower expense.
With over 100 years of combined experienced, we’re talent management experts, having helped countless clients and organizations with their talent management and optimization needs.
If you’re still unsure and have questions, book a consult to know how exactly we can help.