Talent Management and Performance Management

Talent Management

            Talent management is used to refer to the process by which companies develop and manage staff competencies and talents in order to improve productivity. It also involves forecasting the company's staff needs and planning on how to meet this demand. Most managers will recognize talent management as the processes used in recruiting new workers, development of the new as well as existing workers and the attraction of skill and talent into the company. Processes involved in talent management can be well classified to include acquisition management which is the process of acquiring employees; performance management which involves evaluating the ability to achieve set objectives; learning management which involves developing employee knowledge and compensation management which is planning for the effective reward system for the employees.

            The talent supply chain refers to the complete process of hiring, retaining and assigning the appropriate talent to the appropriate job. The process of replacing staff is also included in the supply chain process.

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Just as a well designed supply chain can help to save on costs, add value to a product and gain client loyalty, talent supply chain works in the same way. Hiring the right people and developing the skills of existing employees will ensure that productivity of the company will increase. Good remuneration and other employee incentives will help to gain loyalty from employees hence reduce turnover.  Professor Peter Cappelli compares talent management to supply chain management. He suggests that talent can managed better if supply chain management is applied to people.

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Cappelli (2008) maintains that the kind of uncertainty and variability witnessed in management of the supply chain is the same as that in talent management. According to him, companies can hardly predict the level of talent that will have been developed in the future. Further, companies cannot even tell whether the people possessing these talents will even be around in the near future. Cappelli (2008) suggests that the best way to cope with this kind of uncertainty is to be more adaptive as well as responsive.

Performance Management

            Performance management is the process by which firms assess progress in comparison to predetermined goals and objectives. We note that performance management is directly linked to talent management because the improvement of talent can only be evaluated through assessing how employees perform. Performance management is meant to ensure that the companies consistently meet their goals and that this is done in an efficient manner. Performance management not only assesses whether the goals are met but also undertakes continuous building on the process of attaining the goals while incorporating relevant actions that will increase the probability of achievement of these goals. Actions include the provision of required resources and improvement of employee skills and ability. It also involves identifying the employee strengths and weaknesses and coming up with ways of utilizing them or developing them respectively. The management needs to lay clear expectations on employees if the goals are to be effectively met. Performance is then continuously monitored and the need to develop capacity to perform is identified. A good performance management system must also reward good performance to encourage future commitment. Performance management ensures that the firm's goals are well interlinked with individual objectives. When the employee performance is managed, organizations are guaranteed of considerable returns and achievement of the firm's targets and objectives. The major advantages of performance management are the ability to facilitate growth, encourage commitment of employees, eliminate overpayments and save time.

Application of talent management and performance management

            Talent management has a relatively short history but has so far its use has risen rapidly. Talent management is a concept that emerged in the 90s and companies were not so keen on its adoption then. In the past, the human resource departments actually had a hard time convincing the management to take up talent management. It was seen as expensive and absolutely unnecessary. The idea behind its inception was the fact that most companies spent tremendous efforts in attracting talent through employing qualified people but did little to retain this talent within the company. The idea has undergone a process of assimilation and more companies continue to adopt the technique as a way of retaining their employees. Business performance has advanced significantly over past decades with the advancement in management techniques. Companies have realized the importance of talent as well as performance management in the accomplishment of their goals. This is more so given the strategic importance of retaining profitable employees which has become more competitive over the years. The 'war of talent' as it is called has led to the adoption of more employee-focused motivational tactics so as to prevent them from leaving the company for others. Similarly, there is more knowledge on the uncertainty in talent nurturing hence the adoption of better techniques to deal with this uncertainty.

            The present day challenges encountered by companies are on how to attract, train and retain employees with talent. Companies have often found themselves in dilemma when they invest heavily on talent development only for employees to keep changing jobs. What they do not realize is that unlike inventory, employees are highly mobile resources and failure to pay their efforts adequately will lead to their exit for better paying jobs. This more often than not means that there is no return for the investment in talent made on these employees. Talent management must therefore put employee motivation as an important factor. Companies are also faced with the problem of the costs of too many and the lack of enough talent. Lawler (2008) suggests that there should be well laid talent management plans which will ensure that the company does not spend too much while gaining little or nothing in the process. The best way to attract talent according to him is to hire the best in the first place. This is what most companies have adapted in their talent management plans given that developing someone to become good can be quite challenging.

            The make vs. buy decision is one dilemma that faces most companies engaging in talent management and performance management. The decision to be made is whether to develop talent from within the company or to hire from outside. Professor Benjamin Campbell notes that it could prove cheaper to hire employees who already have talent as opposed to training internal employees to gain the required talent. This is especially so when product generations are short and the time required to develop talent to fit in the job description is too short. External labor market therefore provides the best solution. The other argument is that training from within is beneficial in that the employees are already well vast with the organization's processes and just need to be prepared to take up the new responsibility. This make decision can be used in slower moving industries or in companies with a definite hierarchy. The other consideration that the company should make before deciding on whether to buy or make is the cost involved in each. If the firm cannot afford to train until the internal employees gain the knowledge then they should buy. However if it is cheaper to train than to hire externally, then the firm should choose to make.

            Despite all these challenges, talent management continues to advance with better strategies being set to ensure that firms get the best talent. Perhaps the most important advancement in talent and performance management is the use of performance management software. With advancement in technology, performance management is much easier, more accurate and economical to companies. Software such as Insdala performance management software, Halogen software, Authoria integrated software among others are some of the major kinds of software adopted for talent management. They often give a systematic guide to employers on recruiting, retaining and performance management so that the company's talent development can be well traced. One application of these software is in development of on boarding programs. More proactive approaches to make on boarding easier are being taken up by top companies. An example is Hewlet Packard which has an on boarding website containing the company history, profile and a welcome note from the Chief executive officer. This according to the management ensures that the newly hired employees can make a tour through the office by opening the website. This makes on boarding and assimilation easier and training costs can be reduced. Companies have also taken to using the Web 2.0 technologies such as social networks and blogs to tap online communities in a bid to increase talent and skills at their disposal. Learning for existing employees is also enhanced through the use of these systems.

            Motivation plays a important role talent and performance management. It is only when companies motivate their staff that they can avoid losing employees to other companies through the talent war. Presently, companies are diverting from financial to creative non-financial rewards which could have great impact on the employee morale. Examples include holiday packages, recognition certificates, promotions, among others. Rewarding top performance also comes in handy in retaining talent in the company.


            Talent management and performance management have proved to be an invaluable undertakings for any company which wants to retain a successful workforce. Managing talent not only improves the employee skills but also ensures that the company’s productivity is improved. The effect of talent management is saving of costs and the establishment of an excellent workforce. Recruiting the best remains the only way to ensure a talented workforce.  Depending on the company, the procedure for acquiring staff could either be through recruiting internally or hiring from outside which constitutes of the buy vs. make decision. In order to avoid being victim to the war of talents, companies must seek to motivate their employees so that their efforts to build talent are not wasted when these employees move to other companies.

Word Count: 1639


Cappelli, P. (2008). Talent on Demand: Managing Talent in an Age of Uncertainty.        Cambridge, MA: Harvard Business School Press.

Lawler, E. D. (2008). “Talent: Making People Your Competitive Advantage”. San Francisco,      CA: Jossey-Bass

Lawler, E., ; McDermott, M. (2003). Current performance management practices.         WorldatWork Journal, 12, 2, 49-60.

Updated: May 20, 2021
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Talent Management and Performance Management. (2020, Jun 02). Retrieved from https://studymoose.com/talent-management-and-performance-management-new-essay

Talent Management and Performance Management essay
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