Understanding the Basics: What Is Talent Management?

In this blog, we give an overview of what is talent management, why it’s a key aspect of human resources, and how talent management systems help companies develop an engaged, skilled, and productive workforce.

This blog is part of a series explaining the technologies that help companies manage their people, money, and processes.

Digital disruption and a shifting workforce is changing talent management, especially amid the COVID-19 pandemic. There’s been a shift to remote work, and less focus on where talent is located and more on who is the best fit for a certain job. 

What the pandemic hasn’t changed is that employees, wherever they work, want to feel connected and engaged. They want instant feedback, and to know that they add value. They also want close collaboration with colleagues, even if remote.

Businesses, meanwhile, seek to hire the best talent, to keep employees engaged, and to remain nimble to adjust to changing conditions. Employees also desire to remain relevant in today's changing world, so they want continuous learning and development opportunities to gain new skills.

Now more than ever, talent management strategies need to be flexible and agile, not only for managing the talent lifecycle, but also for providing instant insight to tap the power of their workforce. 

Talent management processes and systems help companies do just that. In this blog, we give an overview of talent management, why it’s a key aspect of human resources (HR), and how talent management systems help companies develop an engaged, skilled, and productive workforce. 

What is Talent Management?

Talent management is about taking a strategic approach to attracting, retaining, and developing a workforce. Running a company takes more than hiring people who can perform needed tasks. Companies need to build a competitive workforce by sourcing in-demand skills, investing in continuous learning and skill development, and managing and optimizing performance.

The skills that companies need evolve as the company grows. At Workday, we believe that applying a skills-based lens to optimize talent enables workers to meet evolving business demands. The nature of work continues to change, and along with it, the management of the workforce also needs to change.

In other words, talent management is less about “management” and more about “enablement.” Companies that invest in the employee experience, from retention to development and more, enable their employees to achieve business outcomes, not just tasks.

Companies need to build a competitive workforce by sourcing in-demand skills, investing in continuous learning and skill development, and managing and optimizing performance.

What’s the Difference Between Talent Acquisition and Talent Management?

Talent acquisition involves everything needed to recruit, interview, hire, and onboard talent. Talent and performance primarily focuses on internally finding, developing, and planning for the needed skills, as well as measuring the performance in the organization. More so, talent management is about bringing out the best in people, building career paths that enable them to flourish, identifying needed skills with jobs and particular workers, and making sure that learning is targeted and continuous. 

Talent management shouldn’t be a separate business process; it’s integrated into most business processes and activities in the company. It can include such things as connecting people and work and development opportunities via Workday Talent Marketplace, to companywide programs focused on elevating talent through training, learning, mentoring, and personalized workplace experiences. As HR expert Josh Bersin explains, people don’t just want jobs anymore, they want an employee experience. Talent management is about delivering the right experience at the right time for every employee.

While retaining and growing talent is widely considered a top HR priority, it’s not the only function of HR. At a foundational level, HR institutes workplace policies, benefits, and payroll—while these tasks are sometimes considered transactional, they are foundational operations of every HR department. Depending on the company, HR responsibilities can also include talent acquisition, compliance tracking, workforce planning, and more. In organizations where HR operates as a more strategic function, HR typically takes an active role in the organization’s “people strategy,” which includes building the employer brand, engaging the workforce, and more.

Despite having many roles and responsibilities, HR collectively has evolved to prioritize talent and performance, employee engagement, shaping company culture, and understanding business needs.

How Has Talent Management Changed?

Business and human capital management (HCM) practices have evolved significantly from where they were decades ago. Today a shift in the fundamental nature of work, new technology, and the needs of new generations are changing how work gets done, how employees engage, and how organizations operate. 

As a result, companies are reimagining performance management—moving past annual performance reviews and employee rankings to focus on what employees can do to increase their contributions in the future, instead of proving what they’ve done in the past. At Workday, we believe this means a shift from managing performance to enabling performance

The COVID-19 pandemic also, almost overnight, necessitated a huge shift to remote work in an effort to protect the health and safety of employees. As the months passed and companies and workers adjusted, many workers started envisioning more opportunities not tied to geographic location. Companies have done the same. In this world, which may well encompass remote workers for some time to come, talent management will have to iterate yet again to adjust for less face time, more remote work, more remote learning and development, and more talent from more parts of the world. 

Why Is Talent Management Important?

People are the heart of a company. Without the right talent, companies risk poor culture, low customer satisfaction, and most importantly, a lack of innovation. Employers today face a more complex talent management landscape than ever before, and those that manage talent well will have a competitive edge over those who do not. 

Traditionally, expenses related to employees were viewed as a cost to the business. But to keep up with the rapid pace of change, companies must nimbly leverage the skills of their employees for innovation and growth. Companies must continually invest in their employees.

In other words, talent management matters because engaged employees are more productive employees, which in turn affects a company’s bottom line. According to a study from Jacob Morgan, author of “The Employee Experience Advantage,” organizations that invest in employee experience environments across culture, technology, and physical space (where employees work) are four times more profitable than organizations that don’t. 

Here’s how Workday views talent management: Happy employees lead to happy customers and deliver business results.

What Is a Talent Management System?

Employee engagement is among the biggest indicators for high productivity, innovation, customer satisfaction, and profitability. But to strategically drive employee engagement,  companies need insights related to their people, business, and talent. 

Cue the modern talent management system. Historically, talent systems focused on integrating talent practices around job competencies. However, a modern talent management system supports and facilitates the employee experience—and connects those experiences to the business strategy. The employee experience is every interaction with the company, from the candidate experience to hiring, from participation in professional development to wellbeing programs, and more. Then using the insight gained from supporting and facilitating the employee experience, companies can hone their business strategies across the organization, from identifying skills gaps to retaining high potential talent, and more.

For instance, every company would like to strategically retain top talent and build high-performing teams across the organization. But how do you start? And how do you know if you’re on track? A talent management system empowers companies with the insights they need to create an environment for employees to do their best work, and the analytics that measure success of those conditions. Employee surveys help companies measure sentiment on workplace culture and experience, both important indicators of employee retention and performance.

Or maybe your company has a diversity and belonging initiative to build a more diverse workforce. A modern talent management system gives critical insight and facilitates processes that improve diversity and belonging: understand where your company stands on diversity metrics with a data dashboard on demographics, remove unconscious biases in the hiring process by covering up identifying information on resumes, and nurture a culture of belonging with product features that welcome contributions and foster broader connections.

A modern talent management system supports and facilitates the employee experience—and connects those experiences to the business strategy.

What’s more, companies gain richer and deeper insights into their workforce when talent management and HCM are in the same system. A single system allows companies to more easily align and analyze workforce trends and goals with an organization’s goals and initiatives. Workday Human Capital Management , for instance, incorporates talent analytics within transactions to provide relevant insight and inform decisions in real time. Workday HCM also combines talent data with other worker information, such as last promotion, vested stock, or management changes, to provide a more holistic view on retention risk, employee potential, or organizational health—and even recommends appropriate actions. 

With people, business, and talent data all in a single system, Workday HCM provides insight and agility businesses need for a world-class workforce. In contrast, legacy and other cloud-based systems often include tools that are disconnected from central human resources (HR) information, introducing another source of fractured talent information. Workday brings people data together to better manage HR, talent, and performance.

What Are the Key Benefits of Talent Management?

Strategic talent management helps an organization better understand, align, and develop its workforce. With detailed insight into a workforce, leaders can better drive organizational growth. Detailed insight about employee data—such as behaviors, productivity, skills, and aspirations—can help a company better realize the full value workers can deliver. Talent management also helps companies:

Lead change. By understanding workers’ skills and capabilities, company leaders can better inform global business planning and achieve strategic objectives. 

Traditionally, talent management systems have struggled to keep their skills data accurate because skills data is typically unstructured and frequently changing. For instance, multiple descriptions exist for the same skill—common skills can have up to 20-plus synonyms. In addition, required skills for a role are constantly changing—new skills emerge and others become obsolete. However, Workday skills cloud brings order to unstructured skills data. 

Infused into Workday HCM, Workday skills cloud is a machine learning-powered, universal skills ontology—a way of understanding what makes up a skill and the relationship between different skills. This means that skills cloud organizes information in relation with other concepts, such as understanding that a worker skilled in Microsoft Excel may also have skills in data analysis, reporting, and other tasks Excel is used for. As such, skills cloud helps organizations cleanse, understand, and relate job skills data.The technology simplifies the skills language for recruiters, managers, and HR professionals, and it’s all without requiring any skills administration on their part. More so, skills cloud sets the foundation for a frictionless talent marketplace, one that helps employers leverage artificial intelligence to identify internal talent and create development opportunities for their employees.

Detailed insight about employee data—such as behaviors, productivity, skills, and aspirations—can help a company better realize the full value workers can deliver.

Empower employees to drive their careers. When people are enabled to do their best work and discover new opportunities, it positively affects overall company performance and delivers the best results for colleagues, customers, and the organization.

In Workday HCM, the Opportunity Graph is a tool that shows employees what their next internal move could be. The performance enablement tool analyzes how other employees moved from a similar job to their next role. The insight helps workers see the breadth of opportunities available at the company, develop skills to prepare for potential moves, and connect with other employees who have achieved a similar career mov mobility. Also, the opportunity graph suggests learning activities that can help the employee prepare for the potential next role.

Engage people. With both continuous and periodic feedback, as well as regular check-ins, companies can better drive engagement and enhance the development of the workforce.

The study “Employee Performance Management Needs a Promotion,” conducted by Forrester Consulting on behalf of Workday, found that companies that embrace continuous performance management drive greater business value. For example, those with monthly or ongoing performance check-ins are up to 1.5 times more effective at engaging and retaining employees than those with an annual process.

Another form of frequent check-ins are frequent internal surveys across the organization. That may seem excessive or even radical, especially for organizations that only see the need to conduct internal surveys once or twice a year. But to attract and retain the best people, companies must be in tune with the experiences of their employees. For pulse surveys created through Workday HCM, the results are summarized in an executive dashboard, and the resulting data can be used to uncover hidden patterns and anomalies in workplace sentiment, which lets managers and leaders see areas that might require attention. 

What Are Talent Management Processes?

Talent management processes are procedures related to workforce and employee career progression. Simply put, talent management processes are at the heart of company success because they deal with the biggest asset in every company: their people. 

Talent management processes cover the following areas: 

The company business plan. Here’s where the plans for growth and expansion of the company, revenue, and all other facets that will drive when and where talent is needed and in what capacity.

Workforce planning. At this stage, workforce planning determines the skills and future employees needed to execute the business plan. However, the execution and strategy to acquire the needed skills and employees are achieved by talent acquisition or talent management. 

Onboarding. Processes that acclimatize and train new employees to company processes, systems, and culture. 

Performance management. Traditional performance management focuses on the past and "monitoring" performance. However, companies are starting to shift toward performance enablement, a forward-facing approach designed to empower employees to drive their career progression. Performance enablement processes emphasize ongoing dialogue and development (continuous performance management), and a greater focus on building career experiences.

Training and performance support. Training, online learning, and other tools enable workers to reach their full potential, expand their skills and capabilities, and become ready for new career opportunities. Learning and talent mobility is especially critical for companies that want to keep their employees engaged and close the skills gap in their organizations through reskilling or upskilling. Amid the pandemic, virtual learning has expanded and become a vital resource for companies to reskill or upskill their workforce and adjust to the changing needs of the business.

Succession planning. This ensures that the company has capable managers and leaders moving up and through the ranks. Succession planning in Workday HCM lets users identify critical roles for succession, nominate internal and external candidates, assess readiness, target development needs, and create succession pools and plans. Once plans are active, Workday generates alerts and notifications to help teams monitor the health of such plans.

Compensation and benefits. Compensation and benefits attract employees to the company, and help ensure that top talent remains with the company.

Critical skills and gap analysis. Organizations are going through a transformation, particularly in the area of digital skills that are essential to become more agile. By assessing the skills of the workforce today, and the projected skills and capabilities needed in the future, companies can better plan for and prepare a workforce that fills the gaps and positions needed by the company to take full advantage of all opportunities. For instance, talent management technology such as the Workday skills cloud helps companies identify the skills gap in their organizations, and it empowers workers to find out the skills they need to grow in the organization. 

Talent Management: A Competitive Differentiator

An agile, people-first talent management strategy will enable people to be their best selves, encourage career mobility via continuous learning and access to information, and better empower organizations to have the talent and skills they need to address both challenges and growth opportunities they face. Increasingly, talent management is a big differentiator in a competitive global economy.

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