Talent Management is broadly defined as the process of ‘recruiting, managing, assessing, developing and maintaining’ a workforce (Khatri and Gupta et al., 2010). It is a practice that is directly related to the preservation and safeguarding of a company’s competitive advantage, a competitive advantage that is provided by an almost inimitable and increasingly scarce resource, talented people (Collings and Mellahi, 2009). In 1982 the Brookings Institution found that 62 per cent of average company value was credited to physical assets (equipment and facilities) and only 38 per cent to intangible assets (patents, intellectual property, brand, and, most of all, people), by 2003, these percentages had changed dramatically, with 80 per cent of value attributable to intangible assets and 20 per cent to tangible assets (Wellins, Smith, Erker, 2012). These figures provide compelling evidence for the significance of talent management and its ability to drive company performance.
Talent management and its implementation has a growing fan base amongst HR professionals (ADP, 2010). Over the last five years there has been an emergent correlation between the use of talent management and greater share holder returns (Wellins, Smith, Erker, 2012). Organisations are all too aware of the need for talent in what is a ‘hyper- competitive and increasingly complex global economy’ (Wellins, Smith, Erker, 2012). People are often considered an organisation’s most valuable asset and resource, as such, HR managers as well as fulfilling the basic functions of recruitment and training, must also concentrate resources on actively ‘managing’ talent as it is an ‘increasingly scarce resource’ (Wellins, Smith, Erker, 2012). This new emphasis on talent management is not surprising considering it is estimated that companies now spend over a third of their revenues on employee wages and benefits (Wellins, Smith, Erker, 2012).
In 2007, ‘The Hackett Group’, a strategic advisory firm, produced research recognising the congruence between ‘developing and retaining a talented workforce’ and company performance (ADP, 2010). Their research states, “Companies with top-quartile talent management outperformed typical companies across four standard financial metrics” (ADP, 2010). ‘They generated EBITDA (earnings before interest, taxes, depreciation, and amortization) of 16.2 percent, versus 14.1 percent for typical companies’ (ADP, 2010). Surveys conducted by ‘FORTUNE Magazine’ pointed to the connection between admired companies and the presence of talent management schemes. Two of nine qualities found in admired companies were, ‘the ability to attract and retain talented people and long-term investment value’, these factors represent the very essence and purpose of talent management. (ADP, 2010).
Talent management seeks to provide a comprehensive construction of an organisation’s current and future strategy. It seeks to highlight business priorities by identifying and isolating divergences in...