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What Is Talent Management, and How Is It Different From HR?

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Leaman Crews - Guest Contributor

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Talent management is key to enhancing employee productivity and ensuring business growth.

Small and midsize businesses aim to hire employees, who are qualified, well-trained, and committed to common goals. Besides, recruiting and retaining employees is critical for long-term business growth. While this may come naturally for some businesses, it often needs a more formalized approach through talent management.

Most CEOs and human resource (HR) leaders consider talent management vital to their organization but not many know what it implies and how it’s different from HR. This guide will give you a deeper understanding of talent management—what it is, why it’s important, and how to implement it effectively.

What is talent management?

Talent management is an organization's strategy to attract, recruit, retain, and develop its employees. It includes the company's practices for four critical HR facets: recruitment, development, performance management, and succession planning.

Consider it a business strategy that helps build your best workforce while improving productivity and enhancing your employees’ experiences.

How is talent management different from HR?

While talent management is often thought to be the same as HR, it’s more appropriate to consider it a function of the HR department.

Talent management is an increasingly important category of HR responsibilities, along with three others: HR administration, service delivery, and workforce management (WFM). Here's a breakdown of what each category entails:

Graphic showing the 4 categories of HR responsibilities

Put into context, it’s understandable that talent management is one component of a well-rounded HR team. Businesses leverage the best talent pool to get a clear competitive advantage. However, it's becoming increasingly challenging to make that happen consistently.

Moving to talent management from a traditional human resource management strategy doesn't imply that task-oriented, back-office needs will cease. Rather, it is about adopting new strategies and techniques that help you manage your employees more effectively.

What are the key stages of the talent management cycle?

The talent management cycle covers four important HR components. Here's how it works:

Recruitment

Recruitment is the first stage of the talent management HR journey. Businesses lay the foundation for success by identifying and attracting top talent who support their values, strategic goals, and work culture. Effective recruitment practices focus on finding qualified candidates with the required skills and experience. These practices also look at candidate culture fit and long-term potential.

Development

Once a company hires talent, it should prioritize development. This phase offers employees growth, learning, and development opportunities. Whether through formal training, mentorship programs, or workplace rotations, development programs value each employee's role and help prepare them for optimal performance.

Performance management

Performance management plays a huge role in talent management, defining the procedure for setting goals, performance reviews, and feedback. Regular performance reviews allow managers and employees to meet expectations, close performance gaps, and celebrate success. This feedback loop creates an environment of accountability, transparency, and improvement.

Succession planning

Succession planning used to be the domain of executive leadership but is increasingly seen as a component of talent management. According to a 2022 Gartner survey, 91% of talent management leaders have partial or complete responsibility for succession management.[1] 

This stage involves identifying and developing the next leaders within the organization. Companies can reduce turnover risks and maintain business continuity by investing in talent early to fill critical roles. Succession planning may include:

  • Identifying high-potential employees

  • Offering them new and challenging roles (also “stretch assignments”)

  • Providing leadership development to prepare them for future leadership roles

What are the benefits of effective talent management?

Organizations invest in talent management because it offers many benefits, including:

Increased engagement

Talent management programs help increase employee engagement, making employees feel appreciated, acknowledged, and supported. This increased engagement creates a more vibrant workplace where employees are challenged to innovate, collaborate, and perform better.

Better employee retention

Employee retention becomes stronger with effective talent management practices. Employees are more likely to stay engaged with the organization if the management supports their career paths and helps them develop their skills. This reduces recruitment costs while keeping the workforce stable and consistent.

Improved performance

Talent management also drives better performance across the board. Employees are better positioned to perform their job functions efficiently when businesses aim to integrate individual talents and aspirations with organizational goals. Ongoing training and development opportunities allow employees to upskill, creating a better-qualified and flexible workforce.

How can organizations implement a successful talent management strategy?

With the changing times, businesses have realized that their success hinges on their people. This has pushed talent into a more prominent, front-facing, strategic role centered around talent management. According to a 2023 Gartner survey, 72% of talent management leaders report having a talent management strategy, and 25% plan to develop one.[2]

If you're unsure how to initiate talent management smoothly, here are some tips:

Reevaluate your organizational structure.

While traditional HR is largely siloed, talent management involves everyone from a business’s CEO to various department heads. If you don’t have enough resources or bandwidth for talent management, you could hire a chief people officer (CPO) to lead your business’s talent management efforts or hire more specialists dedicated to specific facets of talent management (such as a corporate trainer).

Think long-term.

Talent management focuses ​​​​​​​​on long-term strategy, not the day-to-day transactional nature of traditional HR. It involves seeking answers to questions like how to get the best job candidates to apply to your company and how to retain workers and support their growth. While there's no one-size-fits-all blueprint for success, investing in change, testing different approaches, and measuring the outcomes of varied talent management practices will help assess if you're on the right track.

Consider a technology upgrade.

Remember the four categories of HR responsibilities stated earlier? Traditional HR software focuses on many core administrative needs, including payroll, benefits administration, and compliance. On the other hand, a more robust talent management software can automate tasks, track data, and provide direct support for your talent management HR strategy, from recruiting to performance management. Hence, it’s best to audit your technology needs and make a change, if needed.

How can HR and talent management teams work together effectively?

Collaboration among HR and talent management departments is crucial to capitalize on talent management initiatives and achieve organizational success. Here are some critical strategies to foster synergy between these two functions:

Align goals and objectives

HR and talent management teams must align their goals and objectives with the organization's strategic objectives. Understanding the company's vision, mission, and long-term objectives helps both teams create talent management strategies that directly support business performance.

Maintain open communication

Communication between teams needs to be open and transparent. Regular meetings, brainstorming sessions, and cross-functional collaboration forums enable ideas, insights, and feedback.

Share responsibility where appropriate

Human resources management and talent management teams must share accountability for talent outcomes. This means jointly owning key metrics such as employee engagement, retention rates, and performance outcomes. Teams can leverage their expertise and resources more effectively by collaborating around shared goals.

Use integrated talent management systems

Investing in integrated talent management systems and technologies can simplify processes and enable collaboration. These systems allow for central data management, automated workflows, and real-time analytics, enabling teams to make data-informed decisions and improve continuously.

Cross-functional training and development

Consider cross-functional training and development programs for HR and talent management teams. This helps them gain insight into their roles and responsibilities and helps create an environment of trust and understanding, allowing teams to tap each other's strengths and expertise.

Create a culture of continuous feedback

Fostering an environment of continuous feedback is critical to maximize collaboration between HR and talent management teams. Securing stakeholder feedback, running regular performance reviews, and performing post-mortems on talent management initiatives allow teams to identify areas for improvement and make course corrections.

Secure upper management buy-in

Executive sponsorship and support are essential to align and collaborate HR and talent management. Executives should lead talent management initiatives, allocate resources, and guide both teams toward common goals and objectives.

Learning more about talent management

Sooner or later, most small and midsize businesses find the need for talent management. If your company is growing, it's best to start laying the groundwork for the talent management cycle. Now that you have a solid talent management definition and a detailed cycle outline, your organization can reap the benefits of increased engagement and higher retention.

If you're looking for the right talent management software, head to Capterra’s top talent management software list. You may check these resources for additional assistance:



Looking for Talent Management software? Check out Capterra's list of the best Talent Management software solutions.

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About the Author

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Leaman Crews is a freelance writer and technology consultant specializing in finance, HR, and enterprise IT. A former newspaper publisher and editor, his work has appeared in publications across the United States.

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