How Important is Talent Management to Business Success?
While this question seems pretty absurd to those of us in the “people business,” from a business perspective companies and their leaders answer this question each and every day by the decisions they make and the actions they take. And we know many employees certainly do not feel like their company’s greatest asset.
So how important is talent management to business success? Should people really be your company’s most important asset? Let’s start with some definitions and research results.
The Definition of Talent Management
We define talent management as the proactive and thoughtful attraction, development, engagement, and retention of the talent required to execute your strategic plan in a way that aligns with your corporate culture. While the overall functions of attracting, developing, engaging and retaining top talent are quite similar across companies, what makes talent perform at a high level is unique to each company’s strategy and culture.
In a nutshell, talent management is all about planning your human resources strategically to build business value and support organizational goals. If you believe as we do that having the right people in the right place at the right time can be your greatest competitive advantage, then make sure you are taking the right steps to make that happen.
Talent Management Research
Our organizational alignment research found that talent accounts for 29% of the difference between high and low performing teams and organizations. So talent matters right? Not so fast.
Our research also found that:
So how important is talent management to business success? Does it really come in third place when compared to strategy and culture? It depends.
Our research found Talent Management can make an enormous difference as long as people strategies are aligned with business strategies and cultural norms. Companies that do this well:
Companies that attempt to attract, develop, engage and retain talent within unclear business strategies or misaligned cultures struggle mightily to perform.
So What Does that Mean?
Now that we have a common definition of talent management and know how it fits in with business strategy and culture – how important is talent management to business success? In our opinion, talent management is critical to long-term business health and performance. We can only think of three instances where talent investments may be comparatively less important – especially in the short term.
Your Next Steps to Maximize Talent Management Investments
To put forth a plan that will create high performance through people make sure you:
1. Have a Clear Enough Business Strategy
Make sure you have high executive-level agreement and commitment for the business strategy. For a strategy to be clear enough to wisely invest in talent management, it must be understandable enough, believable enough and implementable enough to fully rally leadership and their teams behind it. Without a clear business direction to link to, people strategies, which often take longer to deliver results, can become quickly minimized and diluted.
2. Align Your Culture to Your Strategy
Once your strategy is clear enough to move forward, your culture must be healthy enough, consistent enough and aligned enough with the business strategy to get the most out of your people investments. Because people and business strategies must go through culture to get results, talent management initiatives can be brought to a standstill by an unhealthy or misaligned culture. Make sure you assess and align your culture before finalizing plans to hire, develop, engage and retain your top talent.
3. Establish Capability Needs
After your strategy and culture are aligned, your next step is to identify the critical capabilities required for the company to achieve its business goals. Then determine whether those skills and competencies are present, need to be developed in existing employees or must be hired in from the outside. This gap analysis provides the input to your Talent Management Plan.
4. Assess Priorities and Agree Upon Next Steps
Resources are finite and people strategies often take time to come to fruition. Based upon the critical few strategic business priorities over the next 12-36 months, identify the major strategies, goals and success metrics for how you plan to attract, develop, engage and retain talent to execute current and future plans. Then ask for what you need to confidently make it happen.
The Bottom Line
So back to our initial question – “How important is talent management to business success?” Talent management can provide you with a competitive edge as long as it is aligned with a clear business strategy and supported by a high performance culture. Otherwise, your talent plans are probably just wishful thinking.
To learn more about how to align your talent strategies with business priorities and your culture, download Why Talent Is Surprisingly Only 1/3rd of the Recipe for Talent Success
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