What is talent management?
In this article, we comprehensively cover what talent management is, why it’s a key aspect of human resources, and how talent management systems can help companies develop an engaged, aligned, and agile workforce.
What is talent management?
Talent management is the ongoing process of attracting, developing, and retaining employees, as well as overseeing the workforce as a whole. It helps organizations put the right employees in the right positions while empowering them to grow and thrive in their roles.
An effective talent management strategy encompasses the full employee lifecycle—from recruitment and onboarding through to training, performance evaluation, and career development. When done well, it fosters a workforce that is fully engaged and aligned with the business.
Workday Talent Management solutions go beyond the basics, offering tools designed to simplify and enhance talent processes. With features such as AI-powered insights and real-time analytics, companies can make better decisions, foster deeper employee engagement, and adapt their workforces swiftly to changing business needs.
In this article, we discuss:
Why talent management is important
Key components of talent management
Best practices and tools
The role of HR
Challenges in talent management
Measuring success
Future talent management trends
Why is talent management important?
Effective talent management aligns employee development and performance with larger company goals. It creates an environment where employees are fully engaged, equipped with the skills they need in their roles, and prepared to address new challenges and opportunities as they arise.
By helping employees see how their work contributes to the bigger picture, a strong talent management strategy builds a sense of individual value and investment in the company’s long-term success. This is especially important as employee support for organizational change has plummeted—from 74% in 2016 to just 43% in 2022—as the pace of change continues to accelerate.
Talent managers play a crucial role to this end, identifying areas for growth, addressing skills gaps, and guiding employees toward reaching their full potential—all while keeping organizational priorities front and center.
HR talent management tools make these efforts more streamlined, integrated, and effective. NVIDIA, for example, adopted Workday to manage its massive hiring pipeline, which includes handling 150,000 candidates in the review process at any given time. With Workday, NVIDIA assigns more than 10,000 actions by morning each day and can mass-assign up to 50,000 candidates at once—all with precision.
When companies combine strategic talent management with advanced tools in these and similar ways, they can build a workforce that’s not just efficient but fully aligned with their vision for success.
“Workday lets us give managers much more visibility into the process. We can let them know exactly what stage their candidates are at and what tasks they need to do to move forward.”
—Brad Staresnick, HR Technology Architect, NVIDIA
Alignment in talent management.
For any organization to succeed long term, it needs a workforce aligned with its business strategy and goals. Strong alignment means individual and team-level objectives directly support the organization’s broader mission.
Key talent management activities such as workforce planning, skills-gap analysis, and leadership collaboration make this possible. Here’s how:
Integrating talent with business goals.
Connecting workforce capabilities to business goals means defining the specific skills and expertise required to address both current challenges and future opportunities. Talent acquisition managers are instrumental in bridging these gaps by creating tailored hiring and development plans.
Recognizing these, PwC adopted Workday to transform talent acquisition across its extensive partner network. PwC surveyed talent acquisition and HR teams, and addressed key pain points reported. It created a “Recruiting Academy” for 250+ employees to learn the full Workday functionality and was able to achieve a 60% increase in effective Workday utilization to improve acquisition.
By continuously refining talent strategies in this way to match evolving business needs, organizations can be more flexible and agile, maintaining a competitive edge over more stagnant industry peers.
Leadership’s role in talent strategies.
Leadership sets the tone for workforce development by fostering collaboration between departments, prioritizing resources, and driving a clear vision for growth. When leaders actively participate in talent management, they create alignment across teams and ensure that employee development initiatives reflect broader business priorities.
Leadership also plays a critical role in building a culture of accountability and innovation. By championing continuous learning and supporting employee development, leaders can encourage a workforce that’s motivated, engaged, and prepared to meet new challenges.
When Ochsner Health System adopted Workday to handle its human capital management, payroll, and talent management strategies, its change leaders, cross-functional managers, and executives met monthly to share perspectives and align goals. This made a massive difference in the outcomes achieved, which included 90% faster report generation and deployment for 17,000 employees in less than 1 year.
Advanced tools such as talent management system software can help leaders maintain transparency and track the effectiveness of their strategies. With these insights, leadership teams can make more informed decisions about hiring, development, and succession planning.
With the right tools in place and a strong partnership between HR and company leadership, organizations can strengthen the link between individual performance and long-term business success.
“The resulting data integrity [from adopting Workday] has allowed us to tell a larger story about our candidate pipeline and network of firms.”
—Carrie Rees, HC Operations Director, PwC
Key components of talent management.
Talent management relies on several key components that support employees throughout their career journey. When these elements work together, they create a talent management program that drives engagement, enhances productivity, and supports long-term business success. Let’s break down these core areas of focus:
Talent acquisition.
Talent management teams must have systems in place to identify candidates with the skills and potential to meet their company’s immediate and evolving business needs. Talent acquisition managers lead the way in this effort and modern talent management software helps streamline and scale the process with features such as:
Automated candidate screening: reduces manual workload by quickly identifying top talent based on predefined criteria
Centralized communication tools: enhance collaboration between HR teams and hiring managers to ensure seamless recruitment workflows
Analytics and reporting dashboards: provide real-time insights into hiring trends and performance to enable more strategic decision-making
Onboarding and integration.
Onboarding is a critical step in helping new employees integrate into the company and contribute value more quickly. Clear communication, role-specific training, and mentorship programs enable new hires to feel confident and supported from day one.
Best practices such as assigning mentors or providing guided training sessions can create an environment where employees can easily adapt and thrive. Organizations that invest in structured onboarding often see benefits such as higher engagement, faster productivity, and stronger retention rates.
Learning and development.
Lifelong learning has become an important part of talent management and the business world at large—with new technologies emerging all the time and markets that change rapidly, talent management teams must be equipped to deliver personalized learning opportunities that address immediate skills gaps and long-term career development.
Continuous learning platforms are important tools for achieving this. They facilitate reskilling, upskilling, and professional development programs delivered in a variety of formats—seminars, interactive virtual workshops, self-guided lessons, and more.
By integrating personalized learning paths and tracking progress through talent management systems, companies can foster a culture of growth, innovation, and company loyalty.
Performance management.
Performance management should no longer be seen as simply monitoring employee behavior or enforcing compliance. Instead, it’s meant to enhance individual employee contributions, foster personal growth, and keep employees motivated and engaged.
Talent management software is an important tool for scaling this process while keeping it personalized, enabling clear goal-setting, ongoing feedback, and measurable progress tracking.
For example, a tech company using talent management software may set quarterly performance goals tailored to different roles. Managers can provide real-time feedback through the platform, identifying strengths and areas for growth while offering training recommendations, such as coding workshops or leadership courses, to support career progression.
By moving beyond one-size-fits-all metrics, organizations can focus on developing employees at an individual level while strengthening their workforce over time.
Succession planning.
Succession planning isn’t something leaders always prioritize while they’re still active in their roles but it’s a cornerstone of long-term organizational resilience. Without planning for eventual turnover at every level of the company, organizations risk instability when leaders leave.
Well-executed talent succession planning provides a clear pathway for internal mobility that gives the best-performing employees opportunities to take on high-level roles when they open.
Workforce planning.
Workforce planning connects an organization’s current and future talent needs to its strategic goals. It puts the right people, with the right skills, in the right roles, at the right time. This includes addressing skills gaps as they arise, reallocating talent to meet shifting priorities, and building a workforce that can adapt to market changes or organizational growth.
For example, a manufacturing company transitioning to automated production might identify gaps in robotics and programming expertise within its current workforce. By leveraging planning tools, HR teams can implement upskilling programs for existing staff and target recruitment efforts to attract new hires with specialized technical skills.
With the help of advanced workforce planning tools, organizations can simulate different scenarios, identify potential risks, and plan solutions before challenges arise. This proactive approach strengthens talent pipelines and drives long-term success, even in unpredictable markets.
Best practices and tools in talent management.
Modern talent management tools and processes are transforming how companies manage and optimize workforces. By combining technology with strategic practices, organizations can unlock greater efficiency and employee engagement. Here’s how:
Data-driven insights.
Analytics are a core part of modern talent management software, empowering organizations to predict workforce trends, measure performance, and make more informed decisions on a daily basis. Analytics tools transform raw data into real, actionable insights that improve every aspect of a talent management strategy.
For instance, predictive analytics can identify potential skills shortages or turnover risks so HR teams can proactively address challenges before they escalate. Workforce analytics helps with tracking employee engagement and uncovering opportunities for improvement that drive retention and productivity. With the right software, organizations can back decisions with real-time data at all times.
Rapid talent allocation.
Talent management system software enables companies to quickly redistribute resources and skills to meet evolving needs—an essential capability in today’s fast-changing industries. By centralizing workforce data and using real-time analytics, businesses can identify talent gaps, assess its current capabilities, and rapidly deploy employees where they’re needed most.
For example, a global consulting firm experiencing a surge in demand for digital transformation expertise could use talent management software to identify employees with relevant skills, redeploy them to high-priority projects, and provide targeted training to address immediate needs all while maintaining operational efficiency.
Cross-functional agile teams.
Cross-functional agile teams bring together employees with diverse expertise to tackle complex challenges. They operate with flexibility and adaptability so businesses can respond quickly to market changes while fostering innovation.
Talent managers play a key role in assembling and supporting these teams, maintaining the right mix of skills and collaboration. Agile teams excel in addressing time-sensitive projects, such as launching a new product or implementing a companywide initiative, delivering faster results and time-to-market.
An agile workforce built around cross-functional collaboration also drives employee engagement by giving team members a broader understanding of company goals and stronger sense of ownership over their contributions.
The role of HR in talent management.
HR departments are the driving force behind effective talent management strategies—the critical link between leadership and employees. By aligning workforce development initiatives with high-level goals, HR ensures every employee’s growth contributes to the company’s broader success.
The role of HR encompasses creating a thriving workplace culture, supporting career development, and implementing programs that drive engagement and retention. From workforce planning to reskilling, HR leaders shape talent management strategies that equip organizations for modern opportunities and challenges by:
Creating a positive employee experience.
HR is responsible for shaping environments that keep employees engaged and motivated at every stage. From onboarding processes that set new employees up for success to implementing tools such as employee feedback platforms, HR makes individuals feel heard and valued.
HR also handles initiatives like wellness programs, meaningful recognition systems, and opportunities for skills development to contribute to a positive work environment that fosters loyalty and reduces turnover, helping companies build stronger, more experienced internal workforces.
Promoting cultural alignment.
HR shapes and maintains a cohesive organizational culture that reflects the company’s mission and values. It oversees key areas such as diversity and inclusion, internal communications, team building, and leadership development—all of which foster collaboration and make employees feel empowered to contribute.
Challenges in talent management and how to solve them.
Effectively managing talent comes with specific challenges, including addressing skills gaps, retaining employees over time, and fostering leadership involvement. Left unaddressed, these issues can lead to reduced productivity, lower engagement, and even missed opportunities for business growth.
By identifying and addressing talent management challenges proactively, organizations can strengthen their strategies long term. Here’s how to tackle some of the most pressing obstacles:
Skills gaps and reskilling.
Skills gaps not only hinder individual performance but also weaken a company’s ability to innovate, compete, and respond to changing markets. They often arise due to rapid technological advancements, shifting industry demands, or internal barriers to upskilling.
Solution:
Conduct regular skills audits: Use tools such as workforce analytics to identify current gaps and anticipate future needs. This data-driven approach ensures you’re targeting the right areas for development.
Develop targeted reskilling programs: Focus on both hard and soft skills that align with organizational priorities. For example, pairing hands-on technical training with cross-functional collaboration skills can prepare employees for hybrid roles.
Create incentives for learning: Establish clear pathways for career growth tied to skills-building efforts, such as certifications or promotions. This boosts employee engagement and fosters a culture of continuous improvement.
Leverage technology: Invest in learning management systems or integrated talent management software to deliver personalized training at scale. These tools provide on-demand resources, track progress, and adapt to individual learning styles.
Reskilling is no longer a “nice-to-have” initiative—it’s a business imperative that ensures your workforce remains competitive and adaptable.
Retention strategies.
Employee turnover can drain resources, disrupt workflows, and damage morale, especially when top talent leaves. High turnover often stems from poor engagement, limited growth opportunities, or a misalignment between employee expectations and organizational practices.
Solution:
Enhance employee engagement: Foster a positive workplace culture by prioritizing open communication, employee recognition, and meaningful work. Regular surveys and feedback sessions help HR teams understand employee concerns and take actionable steps.
Offer clear career paths: Employees are more likely to stay when they see opportunities for growth. Provide mentorship programs, leadership development tracks, and visible promotion opportunities to build loyalty.
Revisit compensation and benefits: Competitive pay, flexible work arrangements, and modern benefits packages (such as mental health support and wellness initiatives) are increasingly important for retaining talent.
Invest in internal mobility: Use HR technology to identify employees with high potential for different roles within the company. Internal promotions not only reduce hiring costs but also build trust and loyalty.
Strong retention strategies don’t just keep employees around—they create a motivated, satisfied workforce that drives long-term success.
Leadership involvement.
When leadership takes a passive approach to talent management, it creates a disconnect between organizational goals and workforce development. This lack of involvement can lead to underutilized talent, unclear priorities, and a workforce that feels undervalued.
Solution:
Embed leadership in talent planning: Involve executives in defining workforce strategies to ensure alignment with business objectives. Leaders should work with HR to anticipate challenges and allocate resources effectively.
Encourage active participation: Leaders should mentor employees, participate in training initiatives, and provide visible support for talent management programs. This visibility fosters accountability and reinforces the importance of employee growth.
Use data to inform decisions: Equip leadership with dashboards and analytics tools that offer real-time insights into performance, engagement, and workforce trends. These tools enable executives to make informed, strategic decisions.
Tie talent development to business outcomes: Show leadership how talent initiatives directly impact key metrics such as revenue, customer satisfaction, and market competitiveness. This creates buy-in and ensures talent management remains a top priority.
Active, engaged leadership turns talent management from an HR-driven effort into an organizationwide strategy for success.
Measuring talent management success.
Effective talent management is about more than implementation—it requires ongoing measurement to understand its true impact. Using talent management system software, organizations can dive into their workforce data, uncovering patterns and actionable insights that drive better decision-making.
By continually evaluating the effectiveness of talent management programs, companies can refine their strategies to foster growth, improve retention, and prepare for future workforce demands.
Key performance indicators (KPIs).
Talent-related KPIs provide a foundation for evaluating talent management success. They help HR talent management teams and leaders identify what’s working, find areas for improvement, and drive better alignment between talent practices and broader business objectives.
Some of the most impactful KPIs for talent management include:
Employee retention rates: the percentage of employees who stay with the company over a specific time, often measured annually
Employee engagement: the proportion of employees actively participating in surveys, training, or feedback programs that indicate workplace satisfaction
Performance metrics: quantifiable measures such as sales targets, customer satisfaction scores, or project completion rates to evaluate employee effectiveness
Time-to-fill vacancies: the average number of days it takes to hire and onboard candidates for open roles
Internal mobility rates: the percentage of employees promoted or transferred to new roles within the organization over a set time
Talent management software helps HR teams track these KPIs with precision, offering actionable insights through dashboards and workforce analytics. By focusing on the right metrics, organizations can adapt quickly, enhance employee experiences, and strengthen their overall talent strategy.
Future trends in talent management.
Today’s talent management landscape is always evolving and driven by forces such as emerging technologies, changing workforce dynamics, and new HR trends that arise. These factors are reshaping how organizations approach their talent strategies, emphasizing innovation, adaptability, and personalized employee experiences over just traditional oversight. Important trends to prioritize now include:
Emphasis on diversity and inclusion.
Building diverse teams is an ethical imperative and a competitive advantage. Companies are now using advanced analytics within HR systems to track and close representation gaps, implement equitable hiring practices, and foster a culture of inclusion.
AI-driven talent management.
AI is revolutionizing how organizations approach talent management. AI tools are being used to identify potential skills shortages, predict turnover risks, and even create dynamic workforce allocation models. They can provide actionable recommendations such as which employees are ideal for leadership development based on performance trends and skills analysis.
Personalized learning and development.
Employees no longer see career growth as optional—it’s a key factor in job satisfaction and retention. Modern talent management systems can provide customized learning paths that adapt to the individual, whether it’s through micro-learning modules, certifications, or leadership programs.
Employee well-being and mental health support.
Forward-thinking organizations are now embedding well-being into their talent strategies. This includes offering flexible work arrangements, creating burnout prevention plans, and investing in tools that monitor employee engagement and stress levels. For instance, some companies use anonymous pulse surveys to gauge team morale and adjust workloads as needed.
Skills-based workforce models.
Skills-based workforce planning is transforming how organizations approach hiring and internal mobility. By prioritizing employees’ capabilities rather than traditional job titles, businesses adapt to evolving needs with greater agility. Workday research found skills-based talent management teams 107% more likely to place talent effectively and 98% more likely to retain high performers.
Skills-based talent management teams are 107% more likely to place talent effectively and 98% more likely to retain high performers.
—Workday Research
Taking next steps.
Talent management has evolved into a vital driver of business success, enabling organizations to attract, develop, and retain the talent they need to thrive. By embracing tools such as AI-powered talent management software, companies can anticipate workforce needs, address challenges such as skills gaps and turnover, and create personalized growth opportunities that drive engagement and loyalty.
With Workday Human Capital Management (HCM) solutions, you can build a talent management strategy that’s data-driven, future-focused, and aligned with your long-term vision. Discover how Workday can help your organization thrive today.