Establishing an effective talent strategy
According to the Chartered Institute of Personnel and Development (CIPD), creating an effective talent management strategy begins with workforce planning. This process entails analysis of the organisation’s current workforce, to determine its capabilities and its future needs. With this in mind CIPD highlights that following this analysis there are typically two approaches that an organisation will take - exclusive and inclusive.
An exclusive approach segments talent to reflect an organisation's needs, and is specific to key individuals. However, in recent years, the use of an inclusive approach has become more common. This approach focuses on the workforce as a whole, driving engagement and talent development. While some organisations use one or the other, often a combination of the two approaches is preferred.
“Regardless of which approach organisations adopt, fairness and consistency must be applied in all talent management processes, alongside diversity and inclusion considerations. Not ‘joining-up’ approaches to talent management programmes with diversity policies and activities, can mean an organisation fails to reap the benefits of accessing and developing talent from the widest possible pool,” says CIPD.
It also notes: “As talent management operations continue to face challenges with the rise in skill gaps, operating in tight labour markets, and the rise of remote working due to COVID-19, “the new talent reality means organisations must pay more attention to developing talent rather than buying it in”..
In a recent study conducted by McKinsey, the company identified a significant relationship between effective talent management and organisational performance. Among those that had a very effective strategy, 99% believed that they outperform their competitors, compared with 56% of others that did not have an effective strategy. In addition, companies that had a very effective strategy were six times more likely than those with an ineffective strategy to report a higher total return to shareholders (TRS) than their competitors.
Other key benefits include:
- Meaningful work and growth opportunities
- A high-performance workplace
- Driving a continuous learning culture
- Adding further value to the employee value proposition
- Driving diversity and inclusion
- Increased productivity
- Access to human capital data to drive better business decisions
In order to develop an effective strategy, CIPD breaks the strategy down into six key elements: attracting, identifying, developing, engaging, retaining and deploying.
When it comes to attracting talent, it is important that organisations develop an attractive brand and employee value proposition, in order to gain the interest of potential applicants. How an organisation is viewed by the industry and the public can dictate its ability to attract talent. In order to identify the right talent, it is important for organisations to identify the business critical roles with succession plans, to ensure that a critical role isn’t left unfilled for any length of time, leading to potential vulnerabilities. Organisation should then focus on talented individuals in the organisations to develop future potential and talent pools. To develop talent, CIPD identifies that talent development should be both formal and informal: “participants on talent management programmes tend to value coaching and mentoring, and networking particularly highly, especially the opportunity to meet and engage with senior people in the organisation,” notes CIPD. When it comes to driving productivity, organisations that engage with their employees, providing good quality jobs, experience and management, experience higher performance and motivation.
While these first four elements help to get talent through the front door, to see continuous benefits it’s important to invest in development activities to retain talent and reduce employee turnover. Other retention tools can include rewards and recognition. CIPD explains that one of the most effective elements of a strategy is deploying talent. “Organisations must understand where their skills gaps lie to plan the training required and deploy identified talent with job rotations, skill enhancement opportunities, training, additional qualifications, leading on special projects, and secondments to aid progression and growth,” it concludes.
Supporting CIPD’s strategy breakdown, McKinsey’s report identifies three parts of an effective talent management strategy: rapid allocation of talent, executive team involvement and strategic HR teams.
Rapid allocation of talent
In the study conducted by McKinsey, just 39% of respondents believed that their organisation was fast or very fast at reallocating talent. Deployment of talent is a key element of talent strategy, and leads to a 1.4 times greater likelihood of outperformance. McKinsey emphasises that the link between rapid allocation and effective talent management is strong. “Nearly two thirds of the fast allocators say their talent management efforts have improved overall performance, compared with just 29% of their slower-moving peers.”
Executive team involvement
Another key driver is the involvement of the executive team. Among the respondents, those that had involvement from their leaders were 3.4 times more likely to report that their organisations are rapidly allocating talent. In addition to the number of leaders involved having an impact, “at organisations that quickly reallocate talent, executive teams usually review talent allocation at least once per quarter,” highlights McKinsey.
Strategic HR teams
The third key driver identified by McKinsey entails a strategic HR team that understands the organisation's strategy and priorities. “When respondents say their organisations have a strategy-minded HR team, they are 1.4 times more likely to report outperforming competitors and 2.5 times more likely to report the effective management of talent,” concluded McKinsey.
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