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What is talent management?

Talent management is the strategic process of attracting, developing, and retaining skilled individuals to drive long-term organizational success.

Modern business organizations depend on various technologies and resources to maintain their edge. However, amidst all the advancements and support solutions, there is one resource that has always been the most crucial differentiator in defining success: the employees. The human capital within a company serves as the driving force behind innovation, productivity, and growth, operating both behind the scenes and on the front lines as the envoy to the customers.

Consequently, attracting and retaining top talent has always been a critical concern for businesses aiming to secure a sustainable advantage.

But with the disruption brought on in the wake of the COVID-19 pandemic and the subsequent “Great Resignation,” the war for talent has intensified. Today, companies that wish to thrive must adopt a strategic approach to managing their workforce. This is where talent management comes into play. Talent management encompasses a set of deliberate and proactive practices designed to attract, develop, and engage exceptional individuals within an organization—and to retain those individuals for as long as possible. This goes beyond traditional human resource management, placing emphasis on long-term strategic planning and alignment with business goals.

Talent management is an umbrella term, encompassing all the different tools, tactics, processes, etc. involved in finding and hiring the best employees and ensuring they are happy and productive. Talent management provides a strategic framework for an organization to optimize the potential of its employees. By prioritizing the acquisition and development of top-quality talent, businesses can cultivate a workforce that not only meets current demands but also thrives in the face of future challenges.

Applied correctly, talent management can:

  • Act as a foundation for productive teams
    Effective talent management ensures that the right individuals are placed in the right roles, fostering a harmonious and collaborative work environment. By assembling diverse skill sets and complementary strengths, teams can synergize their efforts and achieve higher levels of productivity and efficiency.
  • Empower companies to stay competitive
    In today's rapidly evolving marketplace, organizations must adapt quickly to changing trends and technologies. Talent management enables businesses to proactively identify and acquire the necessary skills and expertise to stay at the forefront of their respective industries, ensuring continued relevance and competitiveness.
  • Enhance employee performance
    Talent management encourages employee-centric practices, such as regular feedback, coaching, and development opportunities, to help employees maximize their potential. By nurturing their skills, knowledge, and abilities, talent management creates a culture of continuous improvement and high-performance, driving organizational success.
  • Motivate growth
    Through talent management initiatives, employees are provided with clear career pathways and growth opportunities. Demonstrating a commitment to employee development and advancement, organizations motivate their workforce to invest their talents and energy in achieving shared goals, leading to increased job satisfaction and long-term loyalty.
  • Promote innovation
    Talent management encourages a culture of innovation by recognizing and fostering creativity and autonomy. By empowering employees to contribute ideas, experiment, and take calculated risks, organizations can unleash a wealth of innovative solutions, driving growth and competitive advantage.
  • Reduce employee turnover
    Investing in talent management helps create a positive and engaging work environment, increasing employee satisfaction and reducing turnover. Providing opportunities for growth, recognition, and improved work-life balance, organizations more consistently retain top performers while also mitigating the costs associated with recruitment and onboarding.
  • Strengthen employer branding
    A healthy talent management strategy enhances an organization's reputation as a great employer. By prioritizing employee development, offering competitive compensation and benefits, and fostering a supportive culture, businesses can create a talent pipeline that fuels their future success.
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Although related, talent management and talent acquisition are two distinct concepts that play complementary roles in building a skilled and engaged workforce. That said, these two variations differ in their focus and scope, despite both being integral to an organization's overall talent strategy.

Talent acquisition refers specifically to the process of recruiting and acquiring talent for an organization. It encompasses all the activities involved in sourcing, screening, interviewing, hiring, and onboarding candidates. The goal of talent acquisition is to identify and attract qualified individuals who possess the skills, experience, and potential required for specific roles within the organization. Talent acquisition ensures that the right individuals are brought into the organization, but its scope is primarily limited to the initial stages of the employee lifecycle, up until onboarding is complete.

On the other hand, talent management goes beyond talent acquisition and deals with engagement and development throughout the entire employee lifecycle—from hire to retire. Talent management focuses on maximizing the potential of employees and creating an environment where they can flourish.

Talent management focuses on identifying and nurturing individuals with high potential, effectively leveraging their skills, and creating an environment that fosters their growth and commitment. To do this, talent management deploys a range of comprehensive processes and incorporates several advanced technologies for strategic recruitment, selection, onboarding, training, performance management, and succession planning. But at its core, talent management consists of five simple (yet vital) elements that define how effective it is at achieving its mandate:

  • Engagement
    Engaging employees is crucial for their motivation, satisfaction, and productivity. Effective talent management involves proactively checking in with employees to assess their satisfaction levels, understand their goals, and provide necessary support. Regular feedback, coaching, and recognition programs can foster a sense of belonging and ownership, ensuring that employees feel valued and connected to the organization.
  • Flexibility
    Flexibility plays a pivotal role in attracting and retaining talent. Talent management involves providing a range of roles and opportunities that allow employees to exercise their skills and interests. Offering flexible work arrangements, such as remote work options or improved work-life balance initiatives, demonstrates a commitment to accommodating individual needs and can contribute to higher levels of employee satisfaction and retention.
  • Opportunities
    Talent management recognizes the importance of offering employees growth opportunities to enhance their skills and advance their careers. This includes providing educational and training programs, mentorship, and development plans that align with both individual aspirations and organizational objectives. Additionally, offering competitive benefits, incentives, and recognition programs can create a sense of loyalty and incentivize higher performance.
  • Relationships
    Building positive relationships within the workplace is a critical aspect of talent management. Employees value connections with their co-workers, managers, and the broader organization. Cultivating a supportive and collaborative culture promotes open communication, teamwork, and knowledge-sharing. Strong relationships can enhance employee engagement, foster a sense of belonging, and contribute to a positive work environment.

Effective talent management offers numerous benefits to organizational success and sustained growth. By prioritizing the development and engagement of their employees, businesses can unlock the following advantages:

  • Faster filling of open positions
    With a well-defined talent management strategy in place, organizations streamline their recruitment and selection processes, reducing the time to fill open positions. This ensures that critical roles don't sit empty, thus minimizing disruptions and maintaining operational efficiency.
  • Improved recruiting effectiveness
    Filling positions quickly is only a benefit if the new hires are capable of performing their tasks well. Talent management practices, such as proactive talent sourcing, employer branding, and comprehensive recruitment strategies, enhance the organization's ability to attract the best people for the job. By establishing a reputation as an employer of choice and implementing robust selection processes, companies can increase the quality and suitability of candidates, resulting in improved hiring outcomes.
  • Enhanced skill development
    Talent management focuses on nurturing the skills and capabilities of employees through training, mentorship, and career development initiatives. By investing in their professional growth, organizations create a more skilled and capable workforce, leading to improved performance, increased employee satisfaction, and a higher level of expertise within the organization.
  • Better innovation
    Talent management practices that foster a culture of innovation and collaboration drive creativity and ideation within the organization. By encouraging employees to share ideas, experiment, and take calculated risks, businesses harness the collective intelligence of their workforce, leading to more innovative solutions and a clear competitive edge.
  • Lower costs by retaining top team members
    Talent management focuses not only on attracting but also on retaining top-performing employees. By offering opportunities for career advancement, skill development, and recognition, businesses can reduce turnover rates and associated recruitment costs. Retaining experienced team members also helps maintain institutional knowledge and promotes stability within the organization.

Although talent management covers a large area, the talent management process can be distilled into a series of interconnected stages designed to attract, develop, retain, and transition employees effectively. By following this systematic approach, organizations optimize their workforce and ensure the alignment of individual capabilities with organizational objectives.

Although individual organizations may create their own steps, most talent management processes include variations on the following stages:

Graphic outlining the talent management process.

Stage 1: Planning

The talent management process begins with strategic planning. This involves taking an in-depth look at the organization to identify its current needs, forecast what it will likely need in the future, and determine what skill sets will be required to address those needs. Planning involves talent gap forecasting, succession planning, job description creation, and roadmap building for attracting and developing the right employees to fill specific responsibilities.

Stage 2: Attracting and recruiting

With approved plans in place, it's now time to start attracting top talent. The stage focuses on recruitment, and involves employer branding, talent sourcing, and creating an effective recruitment strategy. Organizations may employ various methods to attract a diverse pool of qualified candidates. The goal is to communicate the organization's values, culture, and opportunities to attract individuals who align with the desired talent profile.

Stage 3: Selecting and hiring

Once the right candidates have been located, the selecting and hiring stage begins. While the specific processes will be unique to the organization and the position being hired for, they tend to include some form of assessment of applicants' skills, qualifications, and cultural fit through interviews, reference checks, and other selection methods. The aim is to identify the most suitable candidates who possess the required competencies and potential to succeed in the organization.

Stage 4: Developing

Once employees are onboarded, the focus shifts to their development. This stage involves providing training programs, mentorship, coaching, and career development opportunities. Development initiatives aim to enhance employees' skills and knowledge, enabling them to contribute effectively to their roles and grow within the organization. Continuous learning and development programs ensure that employees remain equipped to meet evolving business needs.

Stage 5: Retaining

Retaining top talent is crucial for organizational success. This stage involves implementing strategies to engage valuable employees, and often includes performance management, feedback mechanisms, recognition programs, and creating a positive work environment. By providing growth opportunities, work-life balance, competitive compensation, and a supportive culture, organizations can increase employee satisfaction—reducing turnover and employee disengagement in the process.

Stage 6: Transitioning

The final stage of the talent management process is managing employee transitions (such as promotions, transfers, or departures). This includes succession planning, career transitions, and knowledge transfer processes. Effective transitioning ensures a smooth transfer of talent and knowledge, allowing the organization to maintain continuity and minimize disruption even when shuffling positions and responsibilities.

Most leaders would agree that talent management—in whatever form it takes—is essential for ensuring long-term success. That said, not all are aligned on what talent management strategies provide the best direction to get there. The following strategies have been proven effective for those wishing to attract, develop, and retain top talent, creating a thriving and engaged workforce ready to meet today's shifting challenges:

  • Compensate and reward workers fairly
    Fair compensation and employee rewards are crucial for attracting and retaining talented employees. Offering competitive salaries, performance-based incentives, and benefits packages that align with industry standards and employee contributions enhances job satisfaction and motivates individuals to perform at their best. At the same time, performance-based rewards provide an added incentive for employees to go above and beyond.
  • Create a culture of coaching and collaboration
    Employees are the business' most valuable resource, and that remains true when it comes to employee development. Fostering a culture of coaching, mentorship, and collaboration encourages knowledge-sharing between individuals and teams, allowing experience and insight to become a communal commodity. Providing regular coaching, collaboration, and mentorship opportunities, organizations empower employees to learn from each other, grow their skills, and achieve their full potential.
  • Create detailed job descriptions
    Clear and detailed job descriptions ensure that expectations and responsibilities are well-defined long before the company begins investing in a hire. This helps attract candidates who possess the necessary skills and qualifications, resulting in better hiring outcomes and improved alignment between employee capabilities and job requirements.
  • Ensure that employees are using their strengths
    Talent management involves identifying and leveraging employees' best qualities. By aligning individuals' skills and interests with their roles, organizations can optimize performance and job satisfaction. This approach enables employees to excel in their areas of expertise and contribute their most valuable work.
  • Hire diverse talent
    Embracing diversity in talent acquisition promotes a more-inclusive perspective within the organization. Diverse teams are known to drive innovation, creativity, and problem-solving. By actively seeking candidates from diverse backgrounds, organizations can cultivate a rich work environment while also ensuring a range of experiences, viewpoints, and ideologies to better meet the needs of a diverse customer base.
  • Make workplace culture a top priority
    A positive workplace culture is essential for talent management success. Organizations that prioritize a supportive, inclusive, and collaborative culture foster employee engagement and loyalty. This, in turn, attracts top talent and contributes to a positive employer brand.
  • Provide advancement opportunities
    Talent management involves providing clear career pathways and growth opportunities for employees. By offering advancement opportunities, stretch assignments, and the chance to take on increased responsibilities, organizations can foster a sense of progression, more effectively retaining ambitious talent.
  • Provide opportunities for continuous improvement
    Offering opportunities for professional development, upskilling, and training empowers employees to enhance their skills and stay well acquainted with industry trends as they develop. Continuous improvement initiatives demonstrate a commitment to employee growth and contribute to a culture of learning within the organization.
  • Understand the skills that are being hired for
    A thorough understanding of the prerequisite skills and abilities for each role is crucial in talent management. By assessing these qualifications and building recruitment strategies that focus on finding hires who are already proficient, organizations align their recruitment and development efforts to ensure they invest in talent that has the foundation it needs to get the job done.
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