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INTRODUCTION
Talent management is a recent, practitioner-generated term covering a range of long-standing
practices that aim at getting the right person in the right job at the right time. These include
workforce planning, succession planning, employee development, and career management. The
phrase dates from a 1998 McKinsey report (Chambers et al. 1998), which argued that variations in
the performance of executives explain a great deal of the variance in overall performance across
businesses. It has become the dominant human capital topic of the early twenty-first century
(Cascio & Aguinis 2008a). Virtually every survey of executives, not just of human resource
professionals, confirms this interest, and leading human resource consulting firms have either
developed new practice areas or rebranded existing practice areas to provide so-called talent
management solutions.
Annu. Rev. Organ. Psychol. Organ. Behav. 2014.1:305-331. Downloaded from www.annualreviews.org
Consistent with several commentaries lamenting the gap between miniscule academic interest
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and widespread practitioner interest in this area (Cascio & Aguinis 2008a, Rynes et al. 2007),
a review of the academic literature using the term talent management yields surprisingly few
results. In response, we conducted what might be thought of as an old-fashioned literature review
that worked backward through the bibliographies of relevant articles. We reviewed approximately
500 articles, books, and chapters across the fields of management, human resources, industrial and
organizational (I/O) psychology, sociology, and economics to find studies that address at least
subtopics within talent management. Although the scope of this article does not permit us to
provide a comprehensive review of all the research that intersects the talent management topic, we
reference reviews that do related topics justice throughout.
1
These include (a) a human capital perspective emphasizing an employee’s contribution to the organization, (b) an I/O
psychology perspective emphasizing the ability to predict who will be successful in more senior roles, (c) an educational
psychology perspective emphasizing domain-specific excellence, (d) a vocational psychology perspective emphasizing
a vocational self-concept/identity, (e) a positive psychology perspective emphasizing self-actualization, and (f) a social
psychology perspective emphasizing the perception of talent.
below, the clear focus on strategic jobs is the new idea in academic studies. This definition is
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sufficiently suited to the academic need to stimulate theory development while reflecting the
interests of practitioners, for whom the interest in talent management is strongly focused on a
small number of roles, typically senior management and executive positions.2
2
A standard commonly used in corporations is that talent management programs are for the top 10% of the workforce as
measured by their positions in the corporate hierarchy (e.g., Ulrich & Smallwood 2011).
which suggests that “the value of human capital is inherently dependent upon its potential to
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contribute to the competitive advantage or core competence of the firm” (Lepak & Snell 1999,
p. 35). The most prominent conceptual model remains the architectural theory of HRM (Lepak &
Snell 1999), which marries insights from the resource-based view, transaction cost economics, and
human capital theory to show how differential investments in workers possessing highly valuable
and highly unique human capital can lead to competitive advantages. Several scholars have
expanded on this work, with, for example, promising efforts to show how mobility constraints
provide important boundary conditions on the link between firm-specific skills and competitive
advantage (Campbell et al. 2012).
There is evidence that top performers contribute disproportionately to firm performance.
Research on the productivity of knowledge workers has demonstrated that top performers are
many times more valuable than average performers (see Felin & Hesterly 2007, pp. 211–12). This
has led many practitioners to advocate for an ABC notion of talent management, popularized by
Jack Welch’s vitality curve, in which some workers are really good performers (the A players),
others are really poor performers (the C players), and most are stuck in an average category (the B
players). Implicit in this notion is the idea that performance is dispositional, so that the goal is to
hire A players and get rid of the C players (Axelrod et al. 2002, Smart 2005).
However, there is also substantial research showing that exceptional performance is not entirely
dispositional. Studies of investment bankers (Groysberg et al. 2008) and doctors (Huckman & Pisano
2006) have highlighted the importance of intrafirm social networks to performance, with
Groysberg et al. (2008) finding that star investment analysts were often unable to replicate their
previous levels of performance owing to the loss of social capital associated with a move to a new
firm. Groysberg et al. (2011) cast doubt on a more-is-better approach to talent management,
finding a curvilinear relationship between group performance and the percentage of star analysts
in investment-bank research groups. More generally, the field of HRM is based on the notion that
management practices, and not just individual differences, drive performance.
Moreover, the value of a superior individual performance is often moderated by the job oc-
cupied. Hunter et al. (1990) found significant differences in output when comparing top per-
formers with poor performers across a variety of jobs, but the gap varied significantly depending
on the complexity of the job. Even further back, Jacobs (1981) used contingency theory to model
the relationship between individual performance, jobs, and organizational performance, showing
how exemplary individual performance adds a significant increment to an organization’s total
performance in some jobs but not others.
This has led to recent arguments advocating for the job as the more appropriate locus of dif-
ferentiation. From this perspective, some jobs are more critical to organizational performance
than others, and firms should devote more resources to those jobs in which individual performance
has the greatest potential to impact firm performance (Boudreau & Ramstad 2007, Delery &
management, in which the key jobs were executive positions, assessing which individuals had
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the potential to succeed in those jobs was a central task, and development to make them
successful in those jobs was the most significant expenditure. And it reflects the perspective of
most practitioners, for whom the focus is on filling a small number of key roles, typically senior
management and executive positions, as well as key technical positions (e.g., Charan 2005,
Fernández-Aráoz 2005).
Given the apparent dominance of the job differentiation perspective, we can more clearly
define “talent management” as the process through which organizations meet their needs for
talent in strategic jobs, “talent” as those individuals who currently or have the potential to
differentially contribute to firm performance by occupying strategic jobs,3 and a “talent pool” as
the high-performing incumbents in strategic jobs and those individuals identified as having the
potential to occupy strategic jobs in the future (Cappelli 2008b; Cascio & Boudreau 2008;
Collings & Mellahi 2009, p. 307).
Strategic Jobs
Identifying what constitutes a strategic job requires some discussion as well. Traditionally, talent
management efforts were focused on filling executive-level jobs that were assumed to have the
most important effect on firm performance. The attention on executive positions is mirrored in the
academic literature, which has focused on the antecedents and consequences of CEO and top
management team (TMT) successions.4 However, a key insight from the recent workforce dif-
ferentiation literature is that although executive jobs are almost by definition strategic, strategic
jobs can potentially be located anywhere in the organization, depending on the strategic com-
petencies of the organization. For example, a marketing and sales–focused company may find that
its sales positions are strategic jobs. That strategic jobs exist outside of the executive suite has
been trumpeted as one of the most insightful aspects of this approach, as “there is greater potential
for distinctively competing for and with talent in areas that are less recognized” (Boudreau &
3
One of the shortcomings in this literature is the lack of a consistent term used to identify those jobs with the greatest potential
to improve firm performance. They have been variously described as “strategic jobs” (Becker & Huselid 2006), “key
positions” (Collings & Mellahi 2009), “linchpin positions” (Conger & Fulmer 2003), “A positions” (Huselid et al. 2005), and
“pivotal roles” (Boudreau & Ramstad 2007, Collings & Mellahi 2009).
4
Though of interest to scholars interested in talent management, a review of the executive succession literature is beyond the
scope of this review. The dominant research topic in the field has been the antecedents and consequences of internal versus
external CEO succession (see Karaevli 2007). For a review of the literature of succession planning in general, see Cappelli
(2011). Excellent reviews of the literatures related to CEO turnover and succession include Giambatista et al. (2005) and
Finkelstein et al. (2009, pp. 164–225).
(Huselid et al. 2005), street sweepers at Disneyland (Boudreau & Ramstad 2007), and record
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5
To the extent this has been studied, the literature has focused almost entirely on the CEO position, a context that is not
representative of the vast majority of jobs (Hambrick & Mason 1984) or labor markets (Khurana 2002). A recent
exception is Bidwell & Keller (2013), in which the authors found that performance variability and the supply of
potential internal candidates shape the decision to fill a job through promotion, internal transfer, or external hiring.
that corporations were effectively prisoners to the supply of talent available in the outside market.
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Internally, most employers promoted top performers to supervisory positions, a practice that
had some limited success because the supervisory jobs were not so different from the worker jobs.
But the leap from frontline supervisor to middle manager was a big one in that success in the former
role did not predict success in the latter. Although a few companies, GE foremost among them,
began experimenting with approaches to developing talent internally in the 1920s, the diffusion of
these models was set back considerably by the lack of hiring and development from the Depression
through World War II. Organizations during the post–World War II boom responded just as they
had at the beginning of the century, by raiding competitors for talent. But the demand for senior
managers and executives exceeded the supply, creating a talent bottleneck so severe as to dwarf any
talent shortage before or since (Cappelli 2010).
Recognizing the need to develop an internal supply of talent, employers turned to the military.
In the short period of time leading up to World War II, the Navy began what was arguably the first
truly systematic effort at large-scale management development and succession planning. Its effort
became a blueprint used by many companies as the basis for building their own talent development
programs, and a common model of internal talent management soon emerged.
This model was designed to provide a steady supply of internal candidates capable of filling
managerial and executive jobs. It began with careful recruitment and substantial investments in
identifying individuals with the potential to become executives, including the use of psychological,
vocational, and intelligence testing. Careers and career planning unfolded within all these large
corporations, with internal advancement supported by early investments in training and regular
movements within the firm to provide development opportunities. External hiring at the executive
level was virtually nonexistent; one study found that by 1950, 80% of current executives had been
developed from within (Newcomer 1955), and another shortly after found that few contemporary
executives in any company had begun their careers elsewhere (Steel 1957).
This model was predicated on the stability necessary to generate long-term forecasts of human
capital demand through workforce planning (see Cappelli 2011, p. 676). Succession plans were
but a subset of these broader workforce/manpower planning models covering entire organi-
zations, described by Vetter (1967) as “manpower planning for high talent personnel.” These
forecasts, which in some cases extended out a decade, were matched against estimates of the future
supply of internal candidates. The assumption was that the supply of talent for executive positions
was entirely internal, with career advancement and development centrally managed by the firm.
The most sophisticated efforts attempted to model the movement of individuals within a career
system by including individual behavior and psychological variables, supervisory practices, group
norms, and labor market outcomes.
These practices were developed to support talent management within closed employment
systems (Althauser & Kalleberg 1981). Workers were shielded from external competition, and
for hiring entry-level candidates; assessments of potential (including assessment centers, ability
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and personality tests, etc.); developmental assignments like job rotations, shadowing, and action
learning with coaches; assessments of performance such as 360 feedback and forced rankings;
career ladders; and succession planning to fill the important jobs. Virtually every contemporary
practice in talent management was developed and in place during this period. The academic world
investigated some of these topics, developing huge literatures on employee selection and assess-
ment, reflecting the interests of the I/O psychologists. Institutional economists and sociologists
created large literatures on career advancement and arrangements such as internal labor markets.
Topics such as workforce planning, succession planning, and employee development saw sub-
stantially less interest from academics.
appeared. In the mid-1960s, a study of personnel departments found that 96% did planning
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thorough enough to maintain a dedicated manpower planning function (NICB & Janger 1966),
but by the mid-1990s, only 19% of companies responding to a Conference Board survey reported
engaging in any sort of structured workforce planning. The decline in overall workforce planning
was accompanied by a similar decline in succession planning. A 2005 survey found that only 29%
of employers have succession planning programs (Fegley 2006), and of those that do, only about
a quarter appear to do any such planning more than two levels below the CEO (Cohn et al. 2005).
Uncertainty on the supply side arises from difficulties in predicting (a) skills and competencies
needed in the future and (b) turnover. If the competencies needed in the future change dramatically,
a talent pool that looks robust now may look deficient in the future. And although organizations
can use historic turnover rates to predict future exit rates, voluntary turnover is often unavoidable
(Allen et al. 2010) and introduces substantial error into these predictions. Increased hiring of
experienced candidates from competitors has created retention concerns, further complicating
estimates of internal supply. Moreover, firms have limited control over the future availability of
skills and competencies available on the labor market (Cappelli 2008a).
Popular management books on talent management often put forward historical practices at
older companies such as GE as the model to emulate (e.g., Charan et al. 2011). However, such
models require extensive up-front investments that can be difficult to recoup if human capital needs
change or if employees unexpectedly leave, both common occurrences. A recent survey of high-
potential (HiPo) programs illustrates this problem: Although 75% of firms report that HiPo
employees are more than 50% more valuable than an average employee, less than a third reported
realizing a significant return on their HiPo investments (Martin & Schmidt 2010).
The reality of talent management under uncertainty is quite different from what existed under
the old model. External hiring has not only increased; it has become a de facto talent management
strategy for many firms, with just-in-time hiring emerging as a substitute for workforce and
succession planning, internal development, and even assessment (Cappelli 2010). Relying on
external hiring to fill strategic jobs leaves employers at the mercy of the labor market, resulting in
talent shortfalls and other costs whenever labor markets tighten. Just as it can be difficult for firms
to recoup their investments in internal development, recent research has identified informational,
social, and sociocognitive impediments limiting firms’ ability to recoup the costs associated with
identifying, attracting, selecting, compensating, and onboarding external candidates.
The traditional model of growing talent from within and the more recent just-in-time model
based on external hiring represent polar-opposite perspectives. Fortunately, these are not either/or
choices in practice. Cappelli (2008b) suggests an approach, based on supply chain management for
which addressing uncertainty in supply is the key concept, in which organizations recognize the
inevitable problems created by uncertainty and combine internal and external approaches to talent
management in ways that minimize the cost associated with those problems. A simple example of
for the external sourcing of talent, is at odds with an increasing realization that careers are more
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Assessing performance. Few jobs lend themselves to purely objective measures of performance
(Baker 1992). As a result, subjective measures of performance, which involve judgment with
respect to both the aspects of performance and the level within each aspect, are common in most
jobs and are executed through performance appraisals. Concerns related to inequality aversion in
the form of leniency and centrality biases can combine to suppress variation in the performance
evaluations, thereby making it difficult to identify top performers. If the variation in appraisal
scores is compressed, then it also becomes more difficult to identify those strategic jobs in which
exemplary individual performance will have an impact on firm performance.
Organizations have attempted to overcome the challenge of identifying top performers that
results from the biases associated with performance appraisals through competency modeling,
which has replaced job analysis in many organizations. In contrast to job tasks, which are
attributes of jobs, competencies can be used in a more straightforward manner to assess individual
job performance, as they refer to “behaviors or behavioral themes that are instrumental in the
Assessing potential. Finding those individuals who are capable of filling strategic jobs in the
future—that is, those who have the potential to succeed at a job they have yet to do—is more
challenging than assessing performance. HiPo programs are designed to meet the challenge. They
Annu. Rev. Organ. Psychol. Organ. Behav. 2014.1:305-331. Downloaded from www.annualreviews.org
are used to identify individuals who are the best bets for success in strategically important roles,
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Communicating potential. A tactical challenge with HiPo programs is whether and/or how
widely employers should communicate HiPo status. Research drawing on organizational behavior
concepts has explored this question in an effort to better understand the effects of workforce
differentiation on individuals. Gelens et al. (2013) developed a theory suggesting multiple rela-
tionships between communicating HiPo status and perceptions of organizational justice. Dries
(2011) surveyed workers in organizations that disclosed their list of HiPo candidates and in others
that did not, finding that communicating HiPo status to HiPo workers increased their job per-
formance, career success, and commitment. Another study revealed that individual managers’
support of HiPo programs increased with their level of involvement in the identification process
(Slan-Jerusalim & Hausdorf 2007). A Center for Creative Leadership study revealed that 77% of
is based on attributes they cannot control, such as personality and IQ, it will quite likely have
a demotivating effect. It is also unclear how communicating HiPo status and then removing that
designation at a later date, a likely occurrence when performance influences the assessment of
potential and when human capital needs change, affects workers (Silzer & Church 2009).
Talent-Pool Retention
Although employers are fond of attributing retention concerns to the changes in the attitudes of
workers, recent research has shown that retention problems are largely self-inflicted. The increase
in external mobility has been driven more by changing employer preferences than by changing
worker preferences (see Bidwell et al. 2013, p. 76). No longer willing or able to provide any
assurance of continued employment, employers have encouraged workers to take control of their
careers, and as a result, employees around the world report being open to external opportunities
even when not seeking them directly (Towers Perrin 2006).
Talent-pool retention is a particularly pressing concern. A 2012–2013 Towers Watson survey
of global employers found 50% experiencing problems retaining top-performing employees; that
number rose to 55% for HiPo employees and 56% for employees with skills linked to the
organization’s strategic competencies (Towers Watson 2013). Cappelli & Hamori (2005, 2013)
found, in two studies using two separate executive populations, that executives change
employers every three to four years and that almost 50% of executives were willing to consider
searching for a new job at another company when asked by a search firm. It is difficult to sustain
costly investments in employee training and development when the employees receiving that in-
vestment leave so quickly.
The extensive research on voluntary turnover is too large to review here (see Allen et al. 2010,
Holtom et al. 2008, Hom et al. 2012), but a subset of that literature argues that firms should target
retention efforts differentially toward the organization’s talent pool, whose turnover is more likely
to be dysfunctional (Allen et al. 2010, Cappelli 2000). Hausknecht & Holwerda (2013) identify
five characteristics of turnover that are useful for assessing the impact of talent-pool turnover:
leaver proficiencies, time dispersion, positional distribution, remaining-member proficiencies, and
newcomer proficiencies. Kwon & Rupp (2013) provide empirical support for the differential
impact of talent-pool turnover, finding a significant negative effect of high-performer turnover
on firm performance, but no effect for turnover of the remaining workforce.
However, aside from a very specific literature exploring the retention of TMT members in the
context of mergers and acquisitions (see Krug et al. 2013), we have little understanding of how
executives, HiPo candidates, and top performers come to leave organizations. Research on the
unfolding model of voluntary turnover suggests that many turnover decisions commence with an
Employment contracts. A popular approach for addressing retention concerns, and one that is
relatively new, is the use of explicit employment contracts that try to restrict the ability of
employees to leave. It is not legal—indeed, it is unconstitutional—to compel employees to stay on
a job. It is, however, legal to require that they pay back training and education investments if
they leave before a certain date. It is also legal to require noncompete agreements that prevent
employees who leave from working for competitors for a fixed period of time.
Using both surveys and in-depth interviews of technical professionals, Marx (2011, p. 696)
found that firms strike back against the mobility of high-tech workers via the strategic use of
noncompete agreements. Noncompete agreements require employees to agree in writing that that
they will not use confidential information gained from their employment or for a limited time will
not compete against their former employers; such agreements trigger liquidated damages and
injunctive relief if broken (Bishara 2006, p. 289). They are often signed reluctantly and are stra-
tegically presented to workers only after an initial oral agreement of employment has been reached,
when the candidate has the least bargaining power (Marx 2011). Garmaise (2011) reports that over
70% of firms require their executives to sign noncompete agreements, and their use has steadily
expanded to cover jobs located a lower levels of organizations (Garrison & Wendt 2008).
The evidence on the effectiveness of noncompete agreements is mixed. As intended, they do
reduce exits (see Garmaise 2011 for evidence on executives and Marx et al. 2009 for evidence on
inventors). However, using archival data, Garmaise (2011) found that although self-directed
investments in human capital among top managers are more likely to improve performance than
firm investments are, the use of noncompete agreements encourages firm investments while
discouraging self-directed investments. Using an experiment design, Amir & Lobel (2013) found
that individuals in the noncompete condition were generally less motivated and thus more likely to
leave a task uncompleted, although the results on overall job performance are mixed. Other
research has focused on the effect of noncompete agreements within geographic regions, showing
that the lack of mobility reduces the information spillovers so critical to innovation and growth
(Marx 2011, Samila & Sorenson 2011). The enforcement of noncompete agreements varies by
state, and courts are increasingly reluctant to enforce these agreements if they are restrictive
enough that they impair the ability to work.
Proactive job design. A very different approach to dealing with talent-pool retention involves
providing employees with the opportunity to proactively modify their own jobs, roles, tasks, and
terms of employment in ways that make these items more desirable to employees (Grant & Parker
2009, pp. 347–51). Proactive approaches to job design include job crafting, role adjustment, and
idiosyncratic deals (i-deals). Although we were unable to find empirical evidence linking
Career Management
Career management has also undergone dramatic change. Once employees had opportunities to
go elsewhere if they did not like the moves their current employer required, organizations moved
away from the command-and-control model in which each organization moved employees like
chess pieces across a board to serve its own goals (Baruch 2006, p. 130). New conceptual models of
careers6 place the burden of career management on the individual rather than the organization (see
Sullivan & Baruch 2009 for an excellent review).
Although organizations may no longer actively plan individual careers, they remain an im-
portant actor in shaping careers by providing the opportunity structures through which mobility
takes place. These opportunity structures, however, are neither stable nor straightforward,
changing as businesses adapt to environmental uncertainties. Yet even during periods of stability,
flatter hierarchies, broader jobs descriptions, and new ways of organizing work within the firm
(Barley & Kunda 2001) hinder the ability of employees and managers to identify opportunities for
development and advancement. The idea that careers can be planned inside organizations is
effectively gone, as the job ladders around which career advancement was based no longer exist.
What has emerged is a system in which employees and employers actively seek opportunities to
make good short-term matches inside the firm and to assemble them in ways that meet talent needs
and lead to meaningful careers (Cappelli 2008b, pp. 206–7). Two structures supporting this new
system are the career-lattice model and internal job boards.
Career lattice. A popular concept in the practitioner literature on career management is the
corporate lattice model (e.g., Benko & Anderson 2010). In contrast to the traditional job-ladder
model, the job-lattice model provides multiple paths for advancement and development resulting
from vertical and horizontal links among the jobs within an organization. The lattice model
embraces the theoretical concept of multidirectional careers (Baruch 2004), in which career
development and advancement result from a combination of lateral, upward, and even downward
moves. The lattice model offers an alternative to traditional succession planning. Rather than
developing employees to fit narrow jobs at a specific time in the future, this model develops broad
competencies in employees as lateral moves increasingly replace vertical moves as a form of
development (Van der Heijde & Van der Heijden 2006). Having developed a broader set of
competencies, the internal talent pool is more likely to meet the changing demands of future
strategic jobs.
6
These new conceptual models include protean and boundaryless careers (see Briscoe & Hall 2006), postcorporate careers
(Peiperl & Baruch 1997), and intelligent careers (Arthur et al. 1995).
Whether the lattice model actually exists in practice is not clear, however, and what employers
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could do to implement it is not obvious. Specifically, whether careers can truly be said to advance
by lateral moves may simply be a semantic point, redefining what career advancement means.
Given that it is proving impossible for employers to sustain a predictable path for career ad-
vancement, the idea that employers could provide multiple paths is even more difficult. The idea
may turn out to be an after-the-fact rationalization of how careers play out, which makes it less
useful as a management concept.
Internal job boards. Multiple career paths are further supported by the use of internal job boards,
through which current employees apply for new jobs within the organization. Unlike the con-
ceptual notion of a career lattice, internal job boards are real and now define how careers advance
in most large organizations. Recent data indicate internal job boards are used by over 95% of
organizations (Taleo Res. 2005). They are designed to facilitate the exchange of information
necessary for employees and employers to make the short-term matches that constitute careers.
In providing a common platform for such an exchange, posting creates a market for talent within
the firm.
Internal job boards are not new, having been introduced in collective bargaining agreements
following World War II. Their application beyond production jobs and their use as a market
mechanism are new, however. Early versions covered only a limited set of jobs and imposed
onerous eligibility requirements on potential applicants (typically seniority), and most com-
panies discouraged or severely restricted lateral moves, limiting their reach. By contrast, few
restrictions are now placed on the types of jobs that are posted and who is eligible to apply,
which is consistent with the perspective that employees are now responsible for managing their
own development.
Although job boards have received limited academic attention, several theories suggest their
use should have a significant impact on how careers unfold within firms. As a formal process for
allocating workers to jobs, internal job boards may be beneficial to the advancement of women
and minorities (Strum 2001), but, as with many organizational practices, their actual effect on
workplace inequality is unknown (Bielby 2000). The dissemination of information may help
overcome talent management failures attributed to agency problems and bounded rationality
(Mellahi & Collings 2010). Agency theory suggests that subunits may not want to share their
talent or help to develop talent located in other parts of the organization. Bounded rationality and
information asymmetries may result in the marginalization of talent located in more distant parts
of the organization, including international subsidiaries, as managers begin by searching locally
and have difficulty evaluating geographically and socially distant talent. Broadcasting oppor-
tunities internally may also facilitate the development of atypical career paths (Kleinbaum 2012) as
employees become aware of a wider variety of opportunities.
contingencies affecting MNE staffing decisions. Gong (2003) uses both agency theory and the
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resource-based view to identify cultural distance and time as antecedents to the use of parent-
country nationals. Other work has borrowed from institutional theory (Gaur et al. 2007, Gong
2006) and organizational demography (Gong 2006) to explain the national diversity of the
subsidiary TMTs and subsequent performance. Collings et al. (2008) use a case study approach to
provide an important perspective on subsidiary TMT staffing decisions as a means of control and
on the relationship between control and organizational culture.
7
Parent-country nationals are nationals of the country where the MNE is headquartered; host-country nationals are nationals
of the country where the international subsidiary is located; and third-party nationals are nationals of one country, working in
a second country and employed by a MNE headquartered in a third country.
8
This is not a universally held view among strategy scholars, however. For example, a foundation of the knowledge-based
view of the firm is the notion that “hiring new workers is not equivalent to changing the skills of a firm” (Kogut & Zander
1992, p. 383).
Executive search firms. Most of the attention in outside hiring concerns executive labor markets,
where the context is distinct from other jobs in that firms rarely post want ads, employed exec-
utives interested in moving rarely circulate resumes, and search processes are typically initiated by
search firms as opposed to candidates (Cappelli & Hamori 2013). Executive search firms play
a particularly important role in staffing those strategic jobs located in the upper levels of
organizations; what little data exist suggest that the majority of external hiring into such jobs is by
recruiting from a competitor through the use of an executive search firm (Cappelli & Hamori
2013), often due to political and legitimacy concerns (Khurana 2002).
Executive search firms play a matchmaker role, overseeing the entire process of pairing indi-
viduals and hiring organizations. Much of the research emphasizes how they structure the supply
of external candidates by taking over the initial screening and assessment roles. Executive search
firms are able to tap into a different pool of potential candidates than employers can access di-
rectly, those passive job seekers hidden from hiring organizations (Hamori 2010). They exert
further influence on which candidates are considered by clients, and thus who gets access to certain
jobs, by filtering out what they consider to be unsuitable candidates (Fernandez-Mateo & King
2011, King et al. 2005; but see Khurana 2004 in the case of hiring CEOs, for which the boards of
directors play the key role).
One question about the search firm process is whether such firms provide more diverse slates of
candidates, both in terms of candidate experience and demographics, because they have better
information on candidates than an individual employer has. The available evidence, however,
suggests that the slates presented to clients exhibit little diversity (Dreher et al. 2010, Hamori
2010). Hamori (2013) found that moves mediated through executive search firms typically result
in executives moving into similar functional roles in similar industries. In terms of subsequent
performance, however, there is no evidence comparing the outcomes of matches facilitated by
retained search firms with those of matches conducted by firms themselves.
Online job boards and social media. For strategic jobs located at lower levels of the organizational
hierarchy, online job boards and social media sites are important intermediaries. They play an
information provider role, disseminating information about opportunities to potential candidates
and aggregating information on potential candidates for organizations (Autor 2001, Cappelli
2001). They also make it easier for employers to reach a larger audience of potential candidates as
well as make comparisons among applicants, which are attributes that are attractive to organi-
zations. The explosion of specialized job boards and access to individual profiles on social media
sites would appear to provide employers with the ability to target their recruiting efforts to certain
groups or individuals, although little empirical research has examined either the use of these
DISCUSSION
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The practices associated with talent management and therefore the academic literature tracking
those practices are in considerable flux. The post–World War II internal model was based on
workforce plans to determine future needs and relied on recruiting from schools for entry-level
jobs, sophisticated selection from that applicant pool, and assessment of potential. These practices
led to substantial investments in training and development, internal career plans, and then
succession planning to fill executive jobs. This model seems for practical purposes to be over. Many
of the largest and oldest corporations do retain some elements of this approach, although their use
has been substantially diluted by the rise of outside hiring. Smaller and newer companies never had
those practices. For them, outside hiring is often the de facto solution to talent management
problems. Research on the above practices has also declined sharply, perhaps because there are
fewer opportunities for data collection.
Also associated with the decline of research in this area are outsourcing and the rise of vendors.
Topics such as assessing potential for advancement are still relevant in many organizations, but it
is now much more likely that any sophisticated assessment exercises will be done by vendors
(Ulrich et al. 2008). Research results have a much greater downside risk for a vendor than they ever
had for individual employers: A study showing that an employer’s practices are ineffective might be
a temporary embarrassment but would lead the employer to change those practices and improve its
outcomes. A study showing that a vendor’s practices were ineffective likely puts it out of business.
Getting data to study the outcome of practices such as recruiting and selection, assessment,
development, and career advancement may therefore be more difficult.
A related change has to do with research on the new and emerging practices in talent man-
agement. Certainly after World War II and possibly before, talent management topics were the
preserve of personnel psychology.9 That is no longer the case. Clearly there are a great many
practicing psychologists still engaged in designing selection and assessment systems, but research
on these and related topics is in sharp decline. The new topics, associated with external hiring, are
much more likely to be studied by researchers in strategy and organizational theory precisely
because those conceptual models better fit the phenomenon being studied.
Even with interest from researchers from these new fields, we know remarkably little about the
new practices in talent management. We lack even simple descriptive data about how employers
are handling the challenges of talent management: There are no systematic, representative data on
employment practices in the United States. Nor do we have detailed descriptions of how individual
companies handle talent management, although we see tremendous promise in academic–
9
Workforce planning was an exception, at least in the 1960s and 1970s, when it was a focus of interest in operations research
(e.g., Dill et al. 1966).
Although our review of the conceptual literature led us to define talent management as the
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process through which organizations meet their needs for talent in strategic jobs, efforts to identify
strategic jobs are noticeably absent from the extant literature (Huselid & Becker 2011). Efforts to
operationalize the strategic jobs concept and to empirically identify such jobs within and across
organizations, particularly those located outside the executive suite, are sorely needed. Descriptive
data on how (and whether) organizations identify strategic jobs in practice would also be helpful.
How many employers actively identify strategic jobs within their organizations? How many
identify strategic jobs below the executive level? And what criteria are used to identify such jobs?
In addition, there are a series of evergreen topics for which research needs to be updated to
include new realities, including career management within organizations and identification and
development of HiPo employees. How organizations deal with the uncertainty involved in pre-
dicting what future strategic jobs will look like and how the pool of talent for those jobs will evolve
over time are other issues with significant theoretical and practical appeal.
Beyond these reasonably practical issues are the broader questions associated with talent
management. The practices associated with talent management within an organization matter to
those outside that organization because they determine access to important and desirable jobs. The
actions taken by workers in strategic jobs (which are often powerful positions) are shaped at least
in part by the processes that identify them, shape their attributes, and advance them from one job
to the next. Who gets ahead in this new system is a central issue for social scientists interested in the
individual, organizational, and societal outcomes of the interaction of workers, firms, and other
labor market institutions.
One conceptual issue driven by changes in the practice of talent management is whether the
focus of interest, and indeed the overall approach, has shifted from an orientation on the in-
dividual candidate to a focus on the job, particularly a strategic job. In academic terms, such
a change might lead to a shift from a psychology-based focus on individuals to a more organization
theory–based focus on the organization itself. In the heyday of traditional, post–World War II
talent management, the focus was clearly on the individual candidate. Large numbers of such
candidates were being hired, developed, and moved through reasonably identical jobs in huge
corporations with massive management hierarchies. In virtually all such companies, the idea was
that an executive could be an expat leader now, a marketing leader in a few years, an HR leader after
that, and so forth. Rotation across jobs and functions was by design, without worrying even about
the fit between any specific requirement of each job and the attributes of the rotating manager who
might take it on. Instead, the focus was clearly on finding and developing the candidates.
Today few companies operate like that. As noted above, outside hiring is the dominant ap-
proach to meeting talent needs. By definition, outside hiring and executive search put the focus on
the job and its requirements, including particular attributes of the organization. Then the process
moves to searching for a candidate who might fit those requirements. For current employees,
FUTURE ISSUES
Annu. Rev. Organ. Psychol. Organ. Behav. 2014.1:305-331. Downloaded from www.annualreviews.org
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1. How do employers think about talent management in practice? To what extent does
talent management rely on completely ad hoc responses (e.g., wait for a vacancy and then
weigh the options available for filling it)?
2. How do employers think about the make-versus-buy choice?: Why do some decide to
promote from within, whereas others rely on outside hiring? Within organizations, when
do they decide to use one strategy or the other?
3. How do the institutions and vendors within talent management—executive and con-
tingent search companies, staffing and temp agencies, recruiting process outsourcers
(which handle most all aspects of hiring), etc.—operate?
4. How do structures such as internal job boards work in practice? For example, do
individuals with certain attributes come out ahead? Do certain jobs have advantages
in securing candidates?
5. What does career progression mean in practice inside organizations now? When there
is internal advancement, what drives it, and what does it look like?
6. For those organizations that try to assess potential, how do they do so, and how well
do the arrangements work?
7. When organizations have HiPo programs, what are they based on, and how well do they
work?
8. How do organizations plan for the future when there is uncertainty surrounding the
future attributes of strategic jobs and the knowledge, skills, and abilities of those
individuals most likely to fill those jobs?
DISCLOSURE STATEMENT
The authors are not aware of any affiliations, memberships, funding, or financial holdings that
might be perceived as affecting the objectivity of this review.
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Learning in the Twenty-First-Century Workplace
Raymond A. Noe, Alena D.M. Clarke, and Howard J. Klein . . . . . . . . . . 245
Compassion at Work
Jane E. Dutton, Kristina M. Workman, and Ashley E. Hardin . . . . . . . . . 277
Talent Management: Conceptual Approaches and Practical Challenges
Peter Cappelli and JR Keller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 305
Research on Workplace Creativity: A Review and Redirection
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Errata
Contents ix