By Philip Rice 

How does your organisation think about ‘talent’? Do you think of talent as an elite group of individuals who will define and determine your future? Or is your approach more egalitarian? Do you view all your employees as talent, each with something to offer the business? And – perhaps the most important question of all – why does it matter?

In fact, in terms of commercial success, the way you think about talent matters very much. When PA Consulting Group carried out research into this, we found that companies that acknowledge that some employees generate more value for the business than others – and segment their talent pool accordingly – can expect total shareholder return (TSR) up to 66% higher than companies that don’t.

Segmenting the talent pool is a approach that promises much, but depends on more than simply looking at employees’ performance and potential. It also requires you to understand how your organisation competes in the market place, what skills and capabilities you need to do this successfully and – therefore – which roles generate the most value for the business and how scares these skills are in the market.

Once you start taking a closer look at this, it becomes clear that every business needs different types of value-generating talent and potentially multiple talent pools. Oil and gas companies, for example, require a mix of innovators and reliable operational leaders to compete successfully, while entertainment businesses need to bring together creative talent with people skilled in exploiting disruptive technologies.

Understanding the value-generating roles in your business – and identifying the best people to perform these roles – will help you focus resources on the talented employees who contribute the most. Yet despite the clear advantages of this approach, we know that only 36% of companies make understanding which roles generate most value part of their talent management activity.

There’s another area where carefully thought-out differentiation can make your approach to talent management more effective: the offer you make to the talented people you most want to retain, develop and motivate.

Many companies depend on a ‘one size fits all’ offer – or at least the same offer for every employee at a particular level. They forget that different people want different things from their careers. Some people are motivated by a clear career ladder and the opportunity to make steady progress up its rungs; other are motivated by the knowledge that they are working for a brand leader whose values reflects their own.

Understanding what each of your talented individuals wants can help you create tailored remuneration and development packages. We know, again from our research, that good alignment between what talented individuals want and what their employer offers is associated with increased TSR (over 40% higher in companies where alignment is strong).

Segmenting the talent pool and differentiating the offer for different groups of employees should be part of a comprehensive talent management approach that can have real impact on performance. To be most effective, these processes need to do more than exist as a policy; they need to be embedded in your organisation’s culture and practices. Why? Because our research shows that embedding talent management processes can help you outperform companies that don’t – and by up to 67%.

This statistic makes a clear case for embedding talent management in your business. But another statistic shows there’s still some way to go. 58% of companies say that talent management is not well embedded in their organisation. Could your organisation be one of those to benefit from changing the way it thinks about and manages talent?

Philip is a strategy and HR expert at PA Consulting Group. He has been working in the field of HR transformation and organisation design for nearly 20 years with world class organisations including BP, Emirates NBD, Unilever and ARASCO. You can reach Philip on LinkedIn here.

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