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Four steps to making talent management a core competence

According to a study reported in the June 2005 issue of the Harvard Business Review, 'people-driven' businesses are now predominant. But many companies, even in people businesses, don't yet have the talent management processes they need to excel. While organizations have perfected sophisticated techniques for managing capital investments, suppliers and the production and flow of goods and services, their capabilities in managing people seriously lag.

In their article, "The Surprising Economics of a 'People Business'" consultants Felix Barber and Rainer Streck argue that people are now the most significant cost in many industries when compared to spending on capital, R&D and suppliers. In industries like advertising, IT services, financial and brokerage, engineering, telecommunications and health care, personnel represents the largest component of total spending (40 percent to 70 percent). These are what the authors refer to as people businesses. They have high overall employee costs, a high ratio of employee costs to capital costs and limited spending on activities like R&D.

Another category they identify is 'people-oriented' businesses. These are companies where spending on personnel, while not the largest component of total spending, is nonetheless significant because it exceeds capital costs. Companies in this category include software firms, airlines, restaurants, pharmaceutical and chemical companies, consumer goods and automotive. Only industries like utilities and oil spend more on capital costs than on people.

The authors assert that in people and people-intensive businesses, the performance of talent drives the overall performance of the company. And the distinct economics of people-driven businesses call not only for different business performance measures but also different management practices. In these businesses, where even "the slightest changes in employee productivity have a significant impact on shareholder returns, 'human resource management' is no longer a support function, but a core process for line managers."

I agree with these assertions but would go one step further to say that in people-driven businesses talent management must be a core competence for the entire business. Not only should line managers be adept at managing people but the corporation needs to have a robust people management capability that is clear, coherent, and applied company wide.
Many companies are only beginning to appreciate the importance of enterprise wide talent management. For example, I recently spoke with an HR executive in a large services organization who indicated that her firm was finally waking up to the importance of managing their talent in an integrated fashion across the enterprise. The company realized it was losing tens of millions of dollars a year in unnecessary recruitment and termination costs and lost productivity. Its approach to recruitment was fragmented and not connected to other key talent management activities. It did not have an enterprise view of vacancies and surplus people across the organisation. Development and deployment of people were separate and non-integrated activities. Lastly, there was no organizational focal point to oversee the process.

The result was that for several years hundreds of people were laid off in one part of the business while hundreds of others, often with similar skills to those departing the organization, were hired in other parts of the company.

Regrettably, this situation is not unusual in many organizations today. Indeed, many companies are missing substantial opportunities to save costs and improve performance by upgrading their talent management capabilities. There are four steps that companies can take to quickly assess their talent management process and begin improving their talent management competency:

Step 1 – Identify Key Roles. Analyze the key steps in each part of the talent life cycle (identification and attraction, hiring and inculcation, motivation and development, appraisal and reward, building and sustaining relationships) and map the key players and their roles and responsibilities to each stage. Are there gaps in responsibilities – key activities that no one is directly accountable for? Are there overlapping responsibilities – multiple people responsible for the same activity? Are the right people in the right roles? Are line managers provided with consistent and effective processes, guidelines and tools for managing talent?

Step 2 – Take an Inventory of Your Talent Management Skills. Identify the critical skills needed to play the key roles in the talent life cycle effectively. To what extent does your company employ people who possess them? What might you do to improve or develop them? What are you doing in-house that might be better outsourced? What have you outsourced that you should be doing in-house?

Step 3 – Measure the Right Things. Assess the measures you use to evaluate the performance of your talent management process at each life cycle stage such as offer-to-hire ratios, average tenures of new hires, performance ranking, skill fit to job requirements, etc. What data are you capturing and reporting? Does it feed directly into a enterprise talent scorecard? How do these measures align with your overall talent management strategy?

Step 4 – Set Up a Process-Wide Feedback Loop. Everyone managing talent needs to understand the big picture and to connect their role and responsibilities to the overall objectives of the process. How is data captured in each stage of the life cycle reported and communicated? How are knowledge and experiences shared across the process? Where are the information gaps and missed communications? How much feedback is formally captured and communicated versus informally discussed among staff? What key actions might you take to improve your feedback mechanisms?

With so much of the costs and performance of a business now dependent on people, isn't it time managing them became a core competency of your organization?

Tony DiRomualdo is a business researcher, writer, and advisor with Next Generation Consulting. He works at the intersection of people, business strategy, and information technology to help companies create a committed and high performance workforce. Tony can be reached at

The opinions expressed herein or statements made in the above column are solely those of the author, & do not necessarily reflect the views of Wisconsin Technology Network, LLC. (WTN). WTN, LLC accepts no legal liability or responsibility for any claims made or opinions expressed herein.


Om Kumar Munakhia responded 9 years ago: #1

Sir, a little bit indepth elaboration covering these aspects would help in explaining these steps using some trends and data. An excellent efforts put by you. Congrate!

Satish responded 9 years ago: #2


I found your website to be interesting and would like to contribute to it.. I have written articles on topics relating to the people management..

May i know the process of getting them published on your site.

Dr. Sahana Dey responded 9 years ago: #3

Its really very interesting to read your article. I am working on talent management in hotel industry. I would like to get more articles on this topic, could u please let me know where from i can get them?

Abdullah Lin responded 9 years ago: #4


Interesting article. Do you have the Talent Management model which I can use for electronics industry?


BD Yadav responded 9 years ago: #5

Do you have the Talent Management model which I can use for Oil Sector industry?

Pichate A. responded 8 years ago: #6

Can anyone share about Talent Management Practiced, which I can use for Call Center or Customer Services please???

flora responded 8 years ago: #7

Valuable article. Do you have the Talent Management model which I can use for traditional but fast growing industry?

nipun rastogi responded 8 years ago: #8

It's realy a burning topic at present in a dynamic envoirnment. I really got a lot from this article.

Gary L. Melling responded 8 years ago: #9

For anyone interested in how to build a skills and competency-based work force go to the following URL. Once there, click on whitepapers and downlod the first one: "Skills-based Human Capital Budgeting"... this paper was published in a Harvard journal and is still used by NASA as a reference on how to do skills-based work force planning and talent management.

Phiona responded 8 years ago: #10

Your article was apt and helpful. Sadly, it took crises to wake up companies to the integrated talent management approach.

Genisia responded 7 years ago: #11

The article is good. I am a student doing a project on talent management. Can I get some more information please?

Basil responded 7 years ago: #12

I'm a MBA student, I was curios how those 4 steps you share, if implemented will be able to improve managing the talent of your employees. Could you site a company who used those 4 steps and what is the end result.

Used this 4 steps and what is the end result?

Ophelia responded 7 years ago: #13

The web site very informative. I would like to have
a flow chart for talent management so that i could present to the management. thanks

suprava responded 6 years ago: #14

sir, i need some information about the talent management practises in manufacturing and retail sector and what is the difference?

mostafa responded 6 years ago: #15

i am student of phd
i need some information about talent management and competency
plese tell me about that what do write hypothesis of my booklet?

Matungwa responded 6 years ago: #16

I am student of MBA majoring Human Resources, i need some information about talent management and competency in International Banking Industry, I am expecting to start writting my dissertation on the same topic.
Thank you.

Danga responded 6 years ago: #17

Your article has openned my eyes on competence management. If I may get more articles please on the same. I'm doing a MSc. HRM and I hope you could be of help on this.

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