July 27, 2018

Talent management: The comprehensive guide for leadership teams


“Talent management is more than just a competitive advantage; it is a fundamental requirement for business success.” – Rob Silzer & Ben Dowell

In our 2017 SME Confidence Index, 47% of Vistage members cited talent management as their biggest business concern. Two decades after McKinsey shone a light on the ‘War for Talent’ in US and European businesses, the importance of talent management in organisations of all sizes, in all markets, is well recognised. An organisation may only perform at the level of the people inside it – and the most successful companies are home to the best staff.

Deloitte research demonstrates a clear and direct correlation between effective recruitment, development and retention tactics, and business success. Organisations with a developed, active talent planning strategy earn, on average, 26% more per employee than those without. Analysis of exit interviews shows that 75% of employees leave their role for reasons their employer could have prevented with better management. Arguably, the issue has earned more attention over the past decade as businesses have had to orient themselves around a younger generation of employees focused on workplace autonomy, flexibility and CSR.

Employee engagement is the measure of success for talent management. Engaged teams are happier and – as a direct result – more profitable, with satisfied employees 22% more productive than unhappy ones. They’re more loyal, too, being up to 53% less likely to leave their role in the next 12 months. Given the expense associated with finding new employees, this represents a significant cost-saving before any of the other benefits of talent management are considered. Businesses should be working hard to meet the needs of high-performing and high-potential staff members.

Successful talent management requires balancing a range of key elements, from HR to training to finance. Glassdoor reports that 76% of managers see recruitment as their biggest challenge. 52% of HR teams, meanwhile, view a lack of interest in talent management by senior leaders as the biggest obstacle to making it work effectively for their organisation.

Understanding the benefits, core principles and challenges of talent management is therefore vital to help executives build sustainable, long-term talent strategies.

This guide offers an introduction to talent management for senior teams seeking to refine and improve the way they hire, manage and retain skilled and talented employees. Throughout, we’ll provide links to deeper-dive articles and original Vistage reports on the topic.


  1. Key issues in talent management 
    1. Defining ‘talent management’
    2. Areas of focus
    3. Factors for success
    4. Shifting expectations
    5. Why now?
  2. Key ingredients for successful talent management 
    1. Culture
    2. Training
    3. Recruitment
    4. Intrapreneurship
    5. Rewards and benefits
    6. Flexible working
  3. Conclusion:  The ABLE Framework 


Key issues in talent management

“Strategic talent management systems are integrated vertically with the business strategy and horizontally with HR systems that complement and reinforce each other.” – Patrick Wright & Gary McMahan

Talent management schemes can represent a considerable investment for organisations – with some, like GE and Johnson & Johnson, visibly putting talent planning at the core of their business model and operations. Executive teams should approach the issue at a ‘root and branch’ level for maximum effectiveness – making the practise an integral part of their organisational culture.

What does this look like in practice?

Defining ‘talent management’

Talent Management (noun):

Strategies and tactics implemented by organisations to recruit, retain and develop high-performing or high-potential employees.

For all organisations, the key to effective talent management – and to earning its attendant business benefits – is to seek to
actively understand employees’ individual needs, and to build and continually review a strategy that balances their needs with those of the business.

This is the talent management challenge: what motivates and empowers the personal development of one employee might fail to elicit a response in another.

The other hurdle is being able to recognise employee talent. ‘Talented’ staff are those that do – or could, with training – deliver outsize value that constitutes a competitive advantage for an organisation – helping make it more profitable, efficient and effective.

Crucially, ‘talent’ is different to ‘skill’. Where the latter can be taught, talent is more closely related to mindset and approach. This fundamentally affects talented employees’ expectations. Where many staff are content to perform their role to earn a competitive salary, talented individuals demand more from their work. Partly, this is because they understand their value to an organisation. More significant is the fact that talented employees tend to view their work as an expression of their talent – and therefore expect to draw value from the role itself and the environment they work in. This is explored further below.

Areas of focus

Successful talent management focuses on the following areas, which reflect these expectations. Each is explored in depth in Section 3:

  • Workplace culture, including effective leadership, employee autonomy and Corporate Social Responsibility;
  • Salary and bonus structures, including holiday entitlement and pension provision;
  • Effective recruitment activity, including using candidate testing and successful on-boarding processes;
  • Fostering intrapreneurship, to empower and motivate employees;
  • Employee rewards and benefits, including fitness, entertainment and healthcare schemes;
  • Flexible or semi-flexible working arrangements;
  • Employee training and development, including identifying high-potential team members, and;

Factors for success

Successful talent management schemes require organisations to meet a number of ‘must-have’ conditions, as confirmed by Vistage research covered in Section 3. These are:

    1. Talent management schemes must form part of a systematic framework within an organisation. Research by Vistage and the National Center for the Middle Market (NCMM) found a direct correlation between the formal nature and effectiveness of businesses’ talent management activities. The same survey found that only 22% of organisations have such a framework, however. Schemes should be well-documented and communicated across teams. For our suggested framework, see Section 4 below.

    2. Talent management schemes must be continually reviewed and amended. Employee expectations shift continually, and businesses must adapt to remain competitive employers in their industry. Respondents to Hays 2017 Resourcing and Talent Planning Survey said that communicating and seeking employee feedback on their talent management strategy would be the second and third most important elements of their talent management activity for the following twelve months.

    3. All managers must actively support and implement the scheme. HR professionals cite the failure of their leadership team to buy into talent management as the biggest factor behind scheme failure. Often, managers are the ones at the talent management ‘coalface’, juggling employee demands for flexibility, autonomy and otherwise with the demands of business productivity. It’s important to seek to understand and respect this resistance, in order to overcome it. It’s equally important to recognise when inertia is the cause of obstruction by management teams.

    4. Schemes must be consistently and transparently applied. Employers must meet the promises they make to candidates and employees. It’s also important to promote talent management schemes with sensitivity. Staff that are not the current focus for talent management activities must be offered a fair chance to demonstrate their aptitude in order to be recognised as ‘high-potential’ employees in the future.

    5. Schemes must be sustainable over the long-term. Frameworks must be affordable and meet the commercial needs of the organisation. This is important given that training and development schemes, for example, may affect employees’ decisions about where they live and work over many years. If a scheme is shelved after a short time, staff are likely to express resentment and leave – damaging the business’ employer brand in the process.

Shifting expectations

While these factors for success are timeless and apply to all types of workforce, expectations around talent management and interest in the field have shifted over the past two decades – to the extent that the practise is today a business imperative, and not a ‘nice to have’.

In his Vistage Open Day keynote, Think Shift CEO and leadership veteran Balaji Krishnamurthy summarised the shift as follows:

“Where employees once sought ‘honest pay for honest work’, today they seek ‘meaningful work for meaningful pay’.”

The reversed positioning of ‘work’ and ‘pay’ is critical. Today, employees are increasingly happy to be seen to seek validation through their work, as opposed to using work to fund other activity that validates them as individuals.

This is corroborated by research into the link between employee productivity and empowerment. Gallup research shows that teams who use their individual strengths individuals are six times more likely to be engaged than those who don’t. 70% of employees consider this empowerment integral to their engagement at work. Meanwhile, 87% of staff expect their employer to help balance their priorities in work and life.

In Balaji’s view – explored in our interview – ’meaning’ is now defined by the individual employee, where it would have once been decided by the employer organisation. More significantly, ‘meaningful pay’ need not refer to an employee’s salary. Instead, ‘pay’ constitutes the value they earn as a direct result of their work – whether that means the moral value created through their involvement in CSR programmes, or time spent with their family as a result of a business’ flexible working policy.

For Balaji, the ongoing shift in employee expectations not only seeks to empower employees to have greater say over the conditions they work in and the rewards they earn. It also requires the employer to take on new roles that they wouldn’t have previously considered their responsibility – like supporting employees to cycle to work, or stay fit via gym voucher schemes – all of which can be collected under the ‘talent management’ umbrella.

Among the employers’ most important duties, according to Balaji, is to define and practise set values. These values in turn determine the organisation’s employer brand – attracting candidates who prioritise the values espoused by the business. The IBM Employee Experience Index shows that four fifths of employees feel more engaged with their work when it appears consistent with the values of their organisation.

Why now?

The shift outlined by Balaji requires executive teams to rethink how they find, manage and retain talent, to account for candidates’ and employees’ new expectations. Beyond the obvious commercial benefits of talent management, increased interest in the field can be explained in three ways.

First: in economic terms, today’s businesses are being forced to do more with less.

With the average cost of employing a £27,600 member of staff for the first 12 months hitting more than £50,000, it makes sense to invest in the development of existing staff and ensure that recruitment, when it happens, is effective.

Second: the last two decades have seen a wholesale shift in working practices.

Digital technology has fundamentally altered our expectations of where, when and how we earn a living. Younger generations with no experience of working life before the advent of the internet – ‘digital natives’ – are more likely to ask why they shouldn’t work at home, outside of 9 to 5 hours, or for employers in other countries.

Finally, employers are increasingly aware of the importance of value of cultural and personal ‘fit’ within teams.

Our profile of Vistage member Claire Edmunds illustrates this development. At her specialist sales consultancy Clarify, Claire’s executive have implemented extensive testing and training systems to help her staff work more efficiently and effectively.

Clarify applies detailed psychometric testing in all interviews – screening employees based on whether they fit the personality profile needed in her target team. Once employees join the business, they undergo ‘clean language’ training to better communicate with their peers and are rewarded via compensation packages designed around what motivates them as individuals. It’s an approach that Claire recognises as expensive, but which saves Clarify costs by cutting employee churn later in the employee lifecycle.

For Claire, shifting to active talent management is as much an ethical decision as a commercial one. Like Balaji, she views employers as having a responsibility to nurture and grow employees. This sentiment is echoed, in particular, by younger employees. According to Deloitte, 39% of millennials believe it’s their employer’s obligation to help prepare them for future shifts in industry. Today, failure to develop staff therefore represents failure to develop business.


Key ingredients for successful talent management

“The specific talent management strategies will vary, depending on the business strategy, the stage in the life cycle of the business, the level of leadership commitment and the culture of the organization.” – Michael Avedon & Gillian Scholes

As part of our September 2017 Confidence Index survey, we asked Vistage members across the UK which aspects of talent management they planned to focus on over the next year. The results are below – with suggested considerations for each.

While we recommend leadership teams consider all seven elements, the significance of each within businesses’ talent management strategy will change according to the organisation in question, its industry sector, and the needs of its teams and individual staff.


Talent management is less a part of the culture of successful businesses; it should be their culture.

Vistage members cited changing their organisational culture as the key to improving their recruitment and retention performance in our Confidence Index. In practice, this looks like defining and communicating a clear set of organisational values to attract and engage staff – including those related to Corporate Social Responsibility and those to talent, specifically.

Talented employees are typically driven to work in organisations whose values match their own, and whose product or service serve those values directly. Regarding the second type of values, our survey suggests that flexibility, employee autonomy, collaboration and an acknowledgement of the importance of work-life balance are the most important workplace benefits to promote to talented candidates. This is confirmed by Deloitte research – which shows that even the youngest employees crave the same aspects workplace culture as those in their 30s.

By implementing these organisational values, Vistage members expected their teams to work more closely together and to communicate more clearly and honestly. Moreover, building a talent-focussed business culture enables better leadership by empowering decision-making and providing a sense of direction for the organisation – in turn building a framework for staff to work within and feel a sense of ownership for.

The net result: more engaged, and therefore more productive and loyal employees.

Essential Reading:



Beyond building a culture for success, a majority – 66% – of Vistage executives cited training and development as their most important focus for attracting and retaining high performing and high potential employees.

According to Gallup research, 44% of employees in late middle age rate ‘professional or career growth and development opportunities’ as a deciding factor in choosing which jobs to apply for. This figure rises to 69% for millennials, and 87% for staff born after 1995. This research dovetails with other studies focused on younger workers’ appetite for personal development and entrepreneurialism, as covered in our article on continual learning in the workplace.

Businesses are listening. Last year, 42% of UK employees created a personal development plan with their manager – up 8% from the previous year. Organisations should seek to identify high potential employees early on in their tenure. Where possible, seek to provide development opportunities ‘on the job’ to save time and cost, open up new opportunities for collaboration between individuals, and ensure that valuable knowledge is ‘handed down’ from senior staff. Most importantly, deliver lessons in a format that staff understand and respond to. Today, this can include learning via smartphone, tablets, and even virtual reality headsets.

Essential Reading:



With in-house recruitment costing an average of £4,800 per new employee and the price of hiring underestimated in up to 95% of cases, improving recruitment practices remains a key focus for Vistage members.

In our September Confidence Index, executives described the three keys ways they sought to tackle the issue. First, by building partnerships with specialist recruitment consultants focused on their sector; second, by getting rid of their recruitment agency altogether, and finally by improving their employee onboarding process.

We recommend employers place equal emphasis on the three stages of recruitment: search, selection, and integration. Our research with NCMM also suggests that employers prioritise speed of recruitment – to catch talented candidates that will leave the market quickly – and to make recruitment a continual process, that enables them to identify valuable candidates even when there is no existing vacancy for them.

Before starting their search outside the organisation, managers should ask whether they could offer a development opportunity to an existing high-performing or high-potential employee. They should seek to boost their employer brand by offering clear and considered careers pages on their website and showcasing their day-to-day work on social media. Finally, descriptions of job roles should be accurate to prevent disappointment for candidates down the line.

When selecting candidates, look for cultural fit – the cause of up to 89% of failed hires. It’s also important to recognise and reward candidate talent early on in the selection process. Skilled candidates are typically highly conscious of their value to prospective employers and – as a result – lack loyalty to their organisation. In this case, offering ‘quality of life’ perks early on the recruitment process can prove valuable.

Effective recruitment continues into employees’ first months in their new role. Integrate candidates into teams by offering ongoing personal support. Identify targeted training opportunities as quickly as possible, and communicate these opportunities to individuals. Many businesses – most notably Ray Dalio’s Bridgewater Associates – choose to go one step further in this respect, profiling new employees behavioural style and providing tailored communications training in response. Clarify founder Claire Edmunds explains the benefits of this approach in our interview, here.

Essential Reading:



Employee autonomy is widely perceived as a business risk; yet it’s risk that enables businesses to grow.

Autonomy is regularly named as important to talented employees – particularly by those born after 1981. With ⅓ of UK employees anticipating leaving their job in the next 12 months, empowering staff to make decisions and take control of their day-to-day work makes sense, enabling them to create their own success and deepen their engagement. The benefits speak for themselves. 91% of ‘highly engaged’ staff claim to ‘almost always’ work their hardest, compared to 67% of those who describe themselves as ‘disengaged.’ Companies offering ‘high levels’ of staff freedom were up to 20 times more likely to outperform those with ‘low levels ‘ of freedom, according to LRN.

In practice, intrapreneurship requires staff to think freely about their role, to work as they choose to, and to seek out opportunities for innovation and self-development. This final point is significant: in tough economic conditions, most businesses rely on staff to repeat profitable, productive activities without variation or flexibility. Intrapreneurship demands the opposite. Employees should be encouraged to spend time thinking about how to improve the work they do and empowered to make changes where possible.

To ensure intrapreneurialism works for the business and not against it, leadership teams should consider building a formal intrapreneurial development programme that sets out training opportunities and workplace expectations for employees, and incentivises bold thinking. Researchers Lisa Anne Whitelaw and Lucia Garcia-Lorenzo’s study of intrapreneurialism at Thales UK showcases the benefits of the approach, and how it can be built into every working practices on a constructive – not destructive – basis.

Essential Reading:


Rewards and benefits

The second most important talent management activity for Vistage members surveyed in our September Index, rewards and benefits are often the first thing executive teams think of when it comes to ‘talent management’.

With good reason. According to Unum research, 68% of UK employees say they’d take a job because of the benefits offered. 69% would be more likely to stay in their role because of them. Competitive benefits schemes demonstrate employers’ commitment to supporting employee work-life balance.

Ellipse research provides a list of the benefits most commonly provided by UK employers, in order of popularity:

  1. Workplace pension
  2. Childcare vouchers
  3. Cycle-to-work schemes
  4. Private medical insurance
  5. Life insurance
  6. Gym membership
  7. Employee assistance programmes
  8. Retail or leisure discount schemes
  9. Health screenings
  10. Health cash plans
  11. Financial education and advice
  12. Critical illness insurance
  13. Dental insurance
  14. Income protection insurance

86% of employees claim to their prioritise health and wellbeing, explaining the dominance of medical and fitness benefits on the list. Importantly, however, Ellipse noted the variance of benefits in different industries – finding private medical insurance especially common in the construction sector, for example. In this way, employers should seek to offer the mix of benefits that best reflect the individual and professional needs of their employees. The interests and priorities of 20-something employees are likely to be dramatically different to those approaching retirement.

Leadership teams should regularly review their benefit schemes – not least to keep expenditure under control. Finally, it’s important to help employees understand the significance of the benefits offered to them. Financial instruments like pensions can prove confusing for newcomers. Respondents to Ellipse’s survey indicated that employees’ lack of knowledge about income protection insurance is the reason many employers choose not to offer the benefit.

Essential Reading:


Flexible working

The rise of digital technology has brought flexible working to the forefront of discussions around talent management. This isn’t a surprise. According to Powwonow research, 67% of employees would welcome flexible working, with 58% believing that working outside their office would boost their productivity. 70% of staff say that flexible working opportunities would make a job vacancy more attractive – and 30% would favour choosing when and where they work over a pay rise. One quarter of those in full-time roles would even choose to work part-time, if this caused no damage to their career prospects or hourly wage. The appetite for flexibility is most pronounced among younger employees – with 92% making it a key part of their rationale when searching for job.

For staff, the benefits of flexible working are clear. For employers the issue is less clear-cut. While the practise can help cut overheads and staff absence through sickness, employees can take unfair advantage of the practise, damaging productivity and encouraging resentment within teams. Planning and co-operative working can also suffer. This helps explain why flexible working is statistically more popular among employees than their more senior colleagues. It’s worth noting, too, that the key issues with talent management tend not to involve talented employees.

With the other talent management issues covered here, successful implementation requires businesses to adapt their culture to ensure staff are responsible and accountable for their performance. High levels of employee-manager trust are key – the common factor between, and prerequisite for success for the UK’s most effective flexible-working businesses, according to Great Place to Work research. It’s important to consider that, as employers, businesses can be flexible around the issue of flexibility – offering part-time, flexitime or unlimited holiday options as fits their interests. Crucially, guidelines around flexible working must be clearly communicated and consistently applied.

Essential Reading:



Conclusion: The ABLE Framework

“Talent management is now talent management for all.” - Paul Turner & Danny Kalman

Despite proving the strong correlation between business performance and employee talent, NCMM (National Centre for the Middle Market) research shows room for improvement around talent planning in most organisations.

In many cases, a lack of formal talent management process is what prevents these organisations from achieving its benefits. Our talent management white paper – created in collaboration with Vistage networks in the US – therefore suggests teams use the ABLE framework as a shortcut to developing the approach within their organisation:

  1. Align talent management activities with the business’ corporate strategy
  2. Build systematic processes to ensure activity takes place and is regularly reviewed
  3. Lead by example, involving the entire executive team in setting and implementing the talent management strategy
  4. Engage all employees in the talent management process, making sure they understand the value of the approach.

Executive teams too often overlook the last step. Talent management necessarily involves senior management focused on high-performance and high-potential employees. But the practice benefits all members of an organisation: first, by making it more successful as a whole; and second, by creating an environment that encourages all staff to grow and fulfil their potential.

Find out which other issues are on business leaders’ minds. Visit our Knowledge Centre for the latest Vistage insight.

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