Creating a Talent Management Strategy – the Full Guide

At AIHR Digital, we write a lot about talent management. However, we’ve never provided a guide on how to create a talent management strategy that helps a business to win in the marketplace. In this article, we will explain what a talent management strategy is, how to create one, and highlight examples of companies that win because of their strategy.

Contents
What is a talent management strategy?
Talent management strategy template
1. Strategic priorities
2. Connecting practices with priorities
3. Required HR processes
Talent management strategy examples
FAQ

What is a talent management strategy

To understand what a talent management strategy is, we first need to understand talent management. Talent management is the full scope of HR processes to attract, onboard, develop, engage, and retain high-performing employees.

This means that talent management is aimed at improving business performance. Productive and engaged employees are what makes a business profitable. Good talent management is, therefore, the ultimate HR practice that helps a company win in the marketplace.

A talent management strategy is the plan of action to optimize employee performance.

This means optimizing performance in the broadest sense. It includes a plan to:

• Bring people up to speed faster (optimizing time to productivity)
• Identify gaps in skills and other job resources early on
• Actively train people to develop lacking skills
• Engage employees
• Retain them to stay productive longer

The basic assumption here is that employees who have all the resources to do their job well, perform better. This is backed up by research.

Below, you see the Job Demands-Resources Model. The model proposes that the right Job Resources lead to higher engagement and – in turn – personal and organizational performance. Job Demands, however, reduce engagement, and lead to burnout, leading to lower personal and organizational performance.

People will be engaged when Job Demands (e.g., an emotionally, mentally or physically demanding job, job complexity, work pressure) are compensated with a similar (or higher) level of Job Resources (autonomy, performance feedback, social support, coaching, relevant knowledge). So, someone working in a highly taxing job should have a high degree of autonomy, relevant knowledge, good and structured feedback, and (social) support from their supervisor and peers to achieve optimum engagement.

A good talent management strategy puts processes in place that enable this matching of job resources when job demands are high.

Let’s make this more concrete by looking at how to create a talent management strategy before we continue to a few real-life examples of companies doing this well.

Talent management strategy template

So how do we create a talent management strategy? In this section, we will propose a talent management strategy template.

For any strategy in the business, your starting point is always the strategy of the business itself. 

1. What are our strategic priorities?

Start your journey off by identifying the organizational goals. These will be leading when it comes to creating a talent management strategy template. Organizational goals are set by the board of directors and sometimes use a business balanced scorecard to define company-wide KPIs.

It is impossible to be the best at everything. To truly be the best, you need to specialize. This is where strategic priorities come in. Most organizations already translated their goals into strategic priorities. Identify and list these.

Strategic priorities are key in selecting the focus areas for HR. They answer questions like: Should we prioritize sales or marketing? Are we focusing more on expanding our customer base or on deepening our customer relationship? Are we working in a project-based manner or are we an operational partner for our clients?

The answers to these questions impact the skills you’re looking for in your new employees, and the ones you want to develop in your existing population.

2. Connecting talent management practices to strategic priorities

The next step is to translate these strategic priorities into talent management practices. How does HR connect to deepening customer relationships? Can HR contribute to transforming consultants into operational partners?

Let’s look at a few examples.

Large tobacco companies are now hiring people who will work on projects to make the world smoke-free to turn their reputation around. Oil and gas companies start to engage in similar efforts. This directly impacts your employer branding and employee value proposition, impacting key talent management strategy decisions.

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If you are a consulting company that is struggling with a decrease in interest in traditional consulting services, you may have to shift your focus towards training consultants to become more commercial and more of a knowledge partner or trainer. This requires a fundamental shift in employee capabilities, leading to a changing learning and development need and a shift in the competencies based on which people are rewarded and promoted.

The essence of this step is to connect the strategic priorities to tangible HR talent management practices.

3. HR processes required to implement and maintain capabilities

The final step of creating a talent management strategy revolves around defining the steps you need to take to realize your strategy. 

A strategy is never executed immediately. As a general rule, it takes 3-5 years to fully execute a strategy. It is therefore important to have systems in place that help in the implementation.

• Workflows. Based on your talent management practices, you can (re)design a number of workflows. For example, if you want to build analytical skills for your HR population, you might have to implement a new set of competencies for the performance evaluation of your HR business partners. As another example, you can support the digital transformation that the organization is going through by adding digital skills to your company’s pre-selection assessment.
• Software systems. Similarly, software – a Talent Management System for instance – can help to support the execution of the talent management strategy. Since you know the contribution of HR to the strategic priority, you can now list the systems and how they need to be used or changed to support the talent management strategy.
• Training. Training is often a crucial part of talent management. Especially in this digital age where company-wide transformations are commonplace, it is crucial to educate people and make sure they have the skills needed to make an impact (for instance by upskilling them).
• Metrics. Lastly, think about your talent management metrics; what does success look like for your talent management strategy? Define success criteria and make them SMART. These are the KPIs that enable you to track progress. Make sure to work with both leading and lagging KPIs. Leading KPIs are less accurate but help you to predict your effectiveness (e.g., tomorrow we estimate rain with 70% accuracy). Lagging KPIs are descriptive. They are accurate but look back, so it is hard to use them to drive decisions (e.g., yesterday, it rained). However, they do help you evaluate your effectiveness afterward.

Talent management strategy examples

Let’s take a look at some real-life examples of talent management strategies that work.

The University of California

If you want to see a good example of a detailed talent management strategy, I suggest you take a look at the HR Strategic Plan 2015-2018 of the University of California. They’ve defined a mission and strategic themes for every part of the talent management process; benefits programs and strategies, compensation programs and strategy, employee relations, etc.

To give you an idea of what such a mission and strategic themes look like, here’s what they defined for Compensation:

Strategic Themes: Align staff compensation programs with relevant markets (particularly total cash). Promote understanding of compensation at UC, and recognize compensation as a competitive tool to drive organizational results.

Mission: Provide tools to managers to administer programs in a fair, efficient and consistent manner.
Create and deliver robust education and training to managers and employees regarding compensation
programs and the role of these programs at UC.

As you can see, there is a clear relationship between the University’s talent management practice here (promote understanding of compensation) and the organizational goal (compensation as a competitive tool to drive organizational results).

Danone in China

At Danone, they were facing the issue of developing business in China. To address this, the company developed and implemented its Bo Le Talent Management Program. The goal of this program was twofold; to transform the HR structure and to attract, develop, and retain young Chinese talents.

The Bo Le Program focuses on accelerating the build-up of a talent pool in the vast and fast-growing Asian market. Developing this talent pipeline enables Danone to have the right high-standard talents to continue its rapid growth in this strategic reason.

The program was a success for several reasons:

• It allowed Danone to attract and retain talents
• It enabled the company to implement a collaborative and continuous process to develop an autonomous pipeline and;
• The program was well-structured enough to launch with local adaptation in other Asian markets.

Loews Hotels

When Loews Hotels shifted its strategic focus, the board realized that it was crucial for the success of the business that everyone was on the same wavelength and worked on the new objectives together.

In order to achieve this, the group introduced various modules (i.e. Performance and Goals and Succession and Development) of a Talent Management System to help them drive the talent management process throughout the organization.

As a result, Loews has been able to build an environment characterized by transparency in which everyone is working towards the same goals. In terms of tangible results, the group’s guest satisfaction went from 5th place to 2nd place and its employee satisfaction levels increased.

FAQ