The Importance of Talent Management and Its Impact on the Performance of Business Organizations


Talent management is becoming increasingly important, as a result of the tough competition today’s firms have to face and the remarkable benefits that being able to attract and retain skilled employees has been proved to bring. (Schweyer, A., 2004) According to a study conducted by Mckinsey and Company (2001) on 77 large companies, talent has become the most precious and valuable corporate resource. In fact, while the demand for talent has been growing over the past few years, the number of skilled employees available has been decreasing, which is why companies will have to invest more time and resources in order to find bright individuals in the future.

(Mckinsey and
Company, 2001)

According to a survey carried out by Ready and Conger (2007), numerous companies can not find talented individuals to fill strategic positions, which considerably constrains their ability to grow. The negative impact that this lack of talent has been found to have on businesses’ performance is the reason why talent management (henceforth, TM) has started to receive a high degree of attention from both practitioners and academics.

As Serrat (2012) pointed out, betting on people instead of strategy is essential to succeeding in today’s knowledge-based world and, therefore, those organisations that wish to become more competitive should develop strategic approaches to TM which suit their needs. (CIPD, 2011)

As a result of this, organisations undertaking TM activities have increased from 36% in 2009 to 62% in 201, which shows the high recognition TM has recently started receiving. Taleo Research (2010) noted that up to 70% of a firm’s value is based on its employees’ skills and experience.

Get quality help now
Writer Lyla

Proficient in: Talent Management

5 (876)

“ Have been using her for a while and please believe when I tell you, she never fail. Thanks Writer Lyla you are indeed awesome ”

+84 relevant experts are online
Hire writer

Another study by McKinsey & Company (2001) revealed that in order to be successful, organisations should identify and select those employees who demonstrate superior potential and then resources, such as training and coaching ,should be allocated to these skilled individuals in order to cultivate and nurture their talent. To do so, it is crucial that firms should focus on the employee’s perspective, which is why CIPD (2010) launched the “Talent Perspective” research, a survey which showed that employees perceive TM programmes very positively, especially when they include coaching, networking and mentoring, as these boost employee’s morale and Commitment.

However, a recent study revealed that there is “a disturbing lack of clarity regarding the definition, scope and overall goals of talent management” (Lewis, R. E. and Heckman, R. G., 2006, p. 139). This is confirmed by another survey carried out by CIPD (2006), from which it emerged that even though 51% of the HR professionals surveyed were undertaking TM activities, only 20% of them operated under formally-defined TM programmes. It is evident that TM is still surrounded by great confusion and uncertainty and that more clarity is
needed on its definition, characteristics and impact on firms.


To critically evaluate how TM can affect a business’ performance and how firms can benefit from the implementation of TM programmes into their corporate strategies.


  • To provide a comprehensive definition of TM
  • To analyse relevant literature in order to assess the impact of talent management in relation to HR-related business’ performance
  • To investigate the role of talent management within today’s organisations
  • To evaluate how talent is managed within case study companies.

Potential implications for organisations willing to incorporate TM programmes into their corporate strategies.


When it comes to strategic management, most people tend to focus on a business’ assets and how it can make the most out of them. A business’ profitability and success, after all, are defined by the amount of assets it possesses and how promptly it meets its obligations. Little attention is given to those who make businesses profitable and, even though those who manage and run the largest multinational companies are very likely to be subject to public scrutiny, the significant impact that talented and skilful individuals could have on any business, whether small or large, is often ignored or overlooked.

As it often happens, for people to really appreciate and pay attention to something, it is necessary that they risk losing it, just like limited resources and clean air, which have become global pressing issues only after researchers identified the negative consequences of industrialisation and modernisation.

Similarly, now that the demand for talented workers exceeds its supply and companies are starting to complain about the difficulties they encounter in filling strategic positions with skilled individuals, TM is becoming a much debated topic.

This paper aims at assessing the impact that TM programmes can have on a fim, whilst identifying those strategies and practices that firms should adopt in order to attract skilled workers, retain them and augment their talent.

Literature Review

A review of relevant literature is crucial to exploring the influence of TM on human resource outcomes, as well as to providinga clear and comprehensive definition of this term. In fact, a recent paper concluded that there is “a disturbing lack of clarity regarding the definition, scope and overall goals of talent management” (Lewis and Heckman, 2006, p. 139) and many different approaches have been adopted to the analysis of TM. (Cappeli, P, 2008; Colling, D. G. and Mellahi, K. 2009; Tulgan, B., 2002; Berger, L. A. and Berger D. R., 2003; McKinsey && Company, 2001). Lewis and Heckman’s (2006) observations on talent management have been supported by Hart (2007), who also pointed out that there are significant gaps in existing knowledge.

Therefore, the aim of this literature review is to shed light on the concept of talent management and identify similarities and differences between various talent management models. With regards to the relationship with TM and firms, Collings and Kamel (2009) stated that there are a number of mediating variables that bridge such a relationship, such as recruitment, retention and engagement. This theory was also supported by McCartney and Garrow (2006), who observed that outcomes always link to reducing turnover and retaining talents, as well as decreasing rates of new hires. Therefore, the following chapters will focus on defining TM and identifying gaps for argument, as well as similarities and differences between various talent management approaches.

Cite this page

The Importance of Talent Management and Its Impact on the Performance of Business Organizations. (2023, Mar 10). Retrieved from

Let’s chat?  We're online 24/7