Understanding the Talent Challenge

Tips for how to master the talent challenge - from attraction and development to motivation and retention

November 26, 2016

The talent challenge – attracting, developing, motivating, and retaining an organization’s most qualified employees – remains the foremost priority for U.S. employers, according to a few recent polls, including those by SHRM (Society for Human Resource Management), PWC, and others.  Left unattended, this challenge can cause organizations to miss market opportunities, cancel or delay key strategic initiatives, fall short of meeting growth goals, and fail to innovate effectively.

To understand the root causes of talent challenge, organizations should first define what constitutes both talent and talent management.  Indeed, talent definitions are very much industry- and sometimes even company-specific.  For instance, for some organizations, the definition of talent has been limited to the “top of the house” or leadership ranks.  For some others, talent means leadership plus people with high potential.  Yet, for others, talent encompasses all employees in an organization.  In my highly cited publications I define talent in a more general manner that would fit most organizational contexts: it refers to key people in critical job roles, as well as employees who possess or are pursuing specialized and in-demand knowledge and skills.

“So, it is essential to match key people to key positions, because both academia and practice show us that only this combination of individuals and jobs contributes significantly to overall organizational success”

Translating this definition into more manageable language, talent can be thought of as a combination of an employee’s individual knowledge, skills, and ability, as well as his/her potential to perform at a highest level, plus the motivation to succeed.  Yes, we are indeed talking about top performers and high potentials, or key employees, as they are sometimes called.  Don’t get me wrong, it would definitely be nice to try and develop the entire organizational workforce, but in reality, it is an impossible task.  First, not everyone wants to develop – some people are good at what they do now and quite satisfied where they are in their professional life.  And second and more pervasive reason is that organizations have limited resources and are simply unable to invest in all employees.

It is also important to keep in mind that in order to activate talent, it is essential to place them into the right organizational context: talent in one organization or a professional area may not be considered as such in another.  So, it is essential to match key people to key positions, because both academia and practice show us that only this combination of individuals and jobs contributes significantly to overall organizational success.  We can, therefore, define talent management as a set of organizational processes designed to attract, develop, motivate, and retain key individuals.

Ever since the late 1990s, the field of talent management (TM) has become a key area of focus for both practitioners and academics.  From the practitioners’ viewpoint, taking care of all the issues currently associated with talent management represents a significant demand on their time and resources.  Some of you may remember the famous “War for Talent” book by McKinsey, where the conversation on TM and its importance has appeared for the first time.  As a result, the field of talent management has gained significant attention across industries, geographic locations, and corporate executives.  Indeed, a relatively recent report by Ernst & Young has claimed that superior talent management correlates strongly with enhanced business performance.

“The best employees are about 4 times more productive than their other colleagues”

At an individual level, highly talented employees, when managed effectively, have the potential to generate value for the organization significantly in excess of average organizational performers.  For example, for jobs that require repetitive, non-creative work, top performers are 2-3 times more productive than others, while for jobs in more creative and specialized work, the difference can be as much as 6 times. On average – across all jobs, trades, and world regions – the best employees are about 4 times more productive than their other colleagues.  A key charge for talent management is then to maximize the contribution of these employees to the sustainable success of the organization.

Managers need to remember that to prove successful, the best TM strategies should be very business-focused and must provide the organization with answers to critical questions, such as: Which roles drive greatest value in our organization, and do we know where we stand?  Are we allocating limited resources for highest impact?  How can we stay ahead of the competition while reducing headcount?  These questions gain more and more importance over time, given current workforce trends.  Among the key trends, there are rapidly aging population, increased diversity of the workforce, significant skill deficiencies, and employees’ changing attitudes. We will talk about all these trends in much more detail in my next article. 

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