Guest post: Talent Management Success: Hidden Benefits of a Well-Executed Strategy

I really liked Amanda’s post How Proper Talent Management Helps a Business Succeed. I think it makes some great points about the benefits of talent management.

There’s lots of research that says that companies with mature, integrated talent management programs have better business results.

  • McKinsey: companies with strong talent practices outperformed their peer group, earning 22 percent higher shareholder returns.
  • Watson Wyatt: good people practices can increase a company’s value by as much as 30 percent.
  • Russell Investments: firms on the Fortune “100 Best Companies to Work for” list outperform the S&P 500 and the Russell 3000 by as much as 10 percent.
  • Stanford professors O’Reilly and Pfeffer: a change of one standard deviation in an index of human resource management practices produced increases of $20 000 to $40 000 in stock market value per employee.
  • IBM Institute for Business Value: companies of all sizes who invest in talent management practices outperform their industry peers.
  • Jackson Leadership Systems: “organizations that have strategically aligned talent management, succession planning and executive development systems have significantly higher financial performance than those firms that do not.”

And this research is certainly helpful to organizations and their HR teams who are trying to build a business case for implementing talent management programs and processes or for buying software tools to support these.

But we sometimes forget to look at “how” talent management best practices help deliver these business benefits. You can almost think of these as the “hidden benefits” that really underpin success. Let’s look at a few of these.

Better Employee Engagement

We know that to be engaged, employees need:

  • Clear expectations and a context for their work
  • The opportunity to do their best and develop
  • Recognition and praise for their contributions
  • Support from their manager

Well your talent management programs are designed to ensure your employees get all of that. They provide the structure and foundation for what should ideally be an ongoing dialog between managers and employees about expectations, performance and development, but too often isn’t.

Things like performance reviews, goal setting and review, development planning, talent reviews, compensation adjustments, job descriptions and competency models all support, encourage and even require managers to give employees the direction, feedback, development and recognition they need to be engaged. And engaged employees are higher performers.

Better Alignment

By ensuring employees have goals that are aligned with the organization’s goals and cultivating core and job-specific competencies in your employees, your performance management process helps to build alignment. It ensures employees are working on the right things and completing their work in a way that supports the organization’s mission and values.

And your recruiting programs, development programs and succession management/career development programs can all help communicate and build organizational strengths and culture, driving greater alignment.

A Stronger Talent Bench

Most CEOs today are concerned about their leadership pipeline and having sufficient talent in key areas to execute their business strategy. Many cite this is a factor that is limiting organizational growth and success.

Well-executed, best practice talent management programs are designed to build your organization’s talent bench. By fostering the performance, development and success of every employee, they help build organizational talent. But they further help you identify and nurture your high-performing, high-potential employees, so you can “grow” the talent you need from within.

Reap the Rewards

Best practices based talent management programs can help your organization build a strong, engaged and high performing workforce. While they certainly help you achieve better business results, it’s the increased engagement, alignment, bench strength and focus on performance they foster that help you get there.

Sean Conrad is a Certified Human Capital Strategist and Senior Product Analyst at Halogen Software. He writes about employee performance management and other talent management functions for Halogen’s Exploring talent management blog. Follow Halogen Software on Twitter.