Human resource departments have numerous tasks to fulfill, but recruiting and retaining employees is arguably the most important (and challenging) part of the job. Talent management is now an essential business strategy companies should not overlook.
talent management: explained
Talent management is the art of having the right people in the right jobs at the right time. It can be applied from recruitment and selection onwards but is generally taken to mean managing and developing people with the potential to make a difference to performance, either short or long-term, up to and including future leaders.
Nearly six out of ten organizations undertake talent management activities, covering all or most employees in two-fifths of organizations, mainly through on-the-job training, coaching, or in-house development such as internal knowledge-sharing. Other formal or informal activities can include networking events, leadership coaching, mentoring, and meetings with clients, particularly where this is not a regular part of the individual’s role.
why is talent management important?
Talent management capitalizes and focuses on employees, one of the most important assets of the company. It involves attracting and retaining talents, but it also helps maximize the value of every individual contributing or will contribute something to the company’s success.
how do companies apply talent management?
Talent management is focused on the individual for organizational improvement. It requires its separate strategy to run alongside resourcing and retention strategies but is likely to mean something different in every organization. Whatever methods are used, the Chartered Institute of Personnel and Development (CIPD), a global association for human resource management professionals, stresses the importance of senior management support and having a formal procedure for selecting participants to raise its perceived value.
what are the biggest talent management challenges the HR industry faces today?
A 2012 study by the Society for Human Resource Management determined that by 2022, talent management will be HR's greatest challenge. The new generation of employees has evolving needs, demands, and expectations, so it would be challenging for companies to acquire, retain, and develop talents. Here are some of the biggest challenges the HR industry faces today:
higher total compensation demands
Employees constantly feel pressure to provide well for themselves and their dependents. When they feel their compensation isn't fair, they won't hesitate to speak up about the situation. In a recent survey, employees stated that pay is the most important contributing factor to their overall job satisfaction. This creates a difficult situation for any human resources manager, whose job includes keeping employees satisfied while keeping costs low. When it comes to employee retention, it's up to HR to decide who is worth keeping and who isn't.
tightening talent market
When the unemployment rate skyrocketed back in the late 2000s, employers could easily find talented new recruits because the pool of applicants was huge. Now that it's fallen to less than 5 percent in some countries, it's much more difficult to find new personnel. If you don't have the resources to offer the highest compensation package, your company might consider other appealing job perks like flexible hours or remote positions.
unappealing company culture
Younger employees (millennials, in particular) expect a different work environment than their predecessors did. Most recent grads aren't happy to sit at a desk, fulfill their job duties, and go home at the end of the workday. They're looking for jobs that offer perks like a relaxed, open communication policy; flexible scheduling; and meaningful job tasks with clear objectives. Companies that don't meet at least some of these demands will be hard-pressed to find suitable employees.
increased employee turnover
HR managers are constantly battling against a high employee turnover ratio. The Center for American Progress states that, on average, a company will pay approximately one-fifth of an employee's salary on recruitment costs to find a suitable replacement. This number is typically much higher for jobs that require a high level of education or specialized training. Obviously, this means that employee retention is incredibly important for the overall success of a company. High employee turnover could quickly affect an otherwise healthy bottom line.
lack of leadership
According to the Society for Human Resource Management, top executive positions are experiencing the highest level of turnover. This creates a unique problem for HR: a lack of leadership within the organization. To combat this problem, HR managers should talk to the current leaders to develop a plan for training new executives as old ones are replaced. It's a challenging task to undertake, but the future of the company may very well depend on these proactive measures.
randstad’s stand in the state of talent management in India
Many countries still struggle with the application of talent management. In India, for one, studies show that many companies have yet to improve their talent management strategies based on the demands of the new generation of employees.
“Most of the companies have denied their Human Resource Departments the resources in terms of modern equipment’s and technology to develop and nature the talent pool. There is still a notion that the Human Resource department is only present in a company to record the attendance and pay the staff. It is true that the globalization of the Indian economy has helped Indian companies to borrow new ideas and techniques in all fields of management, including HR, yet this field seems to be developing at a turtle’s pace. There is a huge scope of development in terms of talent creation, management, and retention in the Indian Scenario,” said HR researchers Saba Masod and Tahir Ahmad Wani in Talent Management: Sustaining the Right Talent A way forward for Indian Companies.
Supporting Masod and Wani’s findings is Indian researcher Anita Mathew in Talent Management Practices in Select Organizations in India, who said “Organizations today are confronted by societal developments such as globalization, technological improvements, demographic changes, and increasing global competition. These evolutions cause not only a shortage of workers but also risk losing knowledge and experience. A majority of corporations in India are facing the talent management challenge.”
There’s no denying that Indian companies today face many problems regarding employee acquisition and retention. The answer to most, if not all, of these problems, is to listen to the needs, demands, and expectations of the new generation of employees while adopting modern workplace technologies and strategies.
Learn more about the latest trends, challenges, and news in the HR industry today through Randstad. We have modern in-house services and tools to improve your talent management strategies.