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The Importance of Talent Management and the Challenges It Faces

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 The Importance of Talent Management and the Challenges It Faces

Mochamad Azkha Rinaldhy

Master Programme of Management in IPB University

Abstract

Talent management is not just a simple human resource key term one will come across. It is also
dedicated to recruiting, managing, creating, and maintaining the best and brightest workers in the
industry. Indeed, talent management is critical to a company's corporate plan because it oversees
one of the company's most valuable assets: its employees. That is why, in order to attract
employees, businesses should make an effort to efficiently manage them and assist them in
developing their skills and capabilities. Here are some of the reasons why businesses should put
money into talent management. It could be argued that there are challenges that human resources
may face in its execution. Using a literature review as a method, this journal attempts to clarify
the value of talent management and some of the challenges. According to the literature review,
talent management is the organization's primary base, with many major problems such as talent
pool retention, employee contracts, and career management.

Keywords: Human Resources, Talent Management, Talent Pool.

1. Introduction
When it comes to talent management, the twenty-first century is a battlefield. Some
creative people consider today's job market to be a seller's market. Loyalty to a single boss, or even
a single career path, is more often the exception than the rule. To better control their human capital
resources, forward-thinking companies must reconsider their approach to talent management. The
aforementioned companies would be better placed to compete in a highly competitive market as a
result of their actions. According to the Society for Human Resource Management – SHRM, the
task of HR has evolved tremendously over the years to include a broad range of organizational
initiatives such as training, workforce growth, diversity and equality in the workplace, disaster
preparedness, incentive management, and the development and implementation of organizational
strategy. The Society for Human Resource Management – SHRM promotes businesses to invest
in human resources on a continuous basis, with "HR leaders serving as business partners while
working closely with senior management to attract, recruit, grow, and retain talent," according to
the organization.
 Talent management has grown over time, in tandem with the HR profession's growing roles
and maturity, to become integrated into an organization's priorities and strategy. Talent
management has evolved from a one-time managerial activity to a daily operational practice with
a strategic focus. The ability to access talent is directly related to an organization's performance.
Human capital is now being linked to management processes like succession planning, leadership
growth, retention, and career planning (Perrine, 2005)
Companies like Microsoft, Southwest Airlines, and SAS Institute are experts in talent
management. If companies want to keep up with the pace and sophistication of technological
advancement, they must cultivate employee competencies. The most long-lasting competitive
advantage comes from effective talent management. No business can afford to be unprepared for
the best and worst of circumstances. "One of the most challenging challenges for HR leaders is
talent management," says one expert Lockwood, 2005.
For a variety of purposes, the concept of "talent management" is appealing. Managers and
HR practitioners believe they should be doing more to develop employees for the future, and the
term "talent management" is also used to refer to this. The word may also apply to career growth,
which has been difficult to describe in companies for a long time because people were mostly left
to their own devices in terms of their employment. It's all about the positives: doing things for the
best people, investing in their growth, capitalizing on their "potential," and thus concentrating on
people's strengths. Also, the term "talent management" has the ability to include both meeting
organizational needs and helping individuals, which is in line with the current understanding of
what HR should be trying to accomplish.
Human resource departments have a variety of responsibilities, but one of the most difficult
is hiring and retaining staff. Indeed, according to a 2012 report by the Society for Human Resource
Management, talent management will be HR’s biggest challenge by 2022. The aim of this research
is to identify the challenges that occur talent management using literature review method.

2. Talent Management Definition

The definition of talent management, according to Lewis and Heckman (2006), has a
“disturbing lack of clarification.” They believed that talent management is merely a trendy word
or euphemism for human resource management. They also proposed that talent management might
refer to a systemic approach to performing these tasks. Many HRM practitioner publications
advocate for workers who have been recognized as having outstanding talent to be handled
differently. Case studies and other anecdotal evidence are often cited by proponents of this
viewpoint. This was the case in Handfield-Jones et al(2001) .’s research, whose efficacy was later
questioned. Despite the organization’s continued dedication to talent, the changes in bottom line
performance were only temporary.
According to Pfeffer (2001), focusing solely on external recruiting and retention of “big
talent” senior executives could result in 745 unintended negative organizational consequences.
Increased internal competition, undervaluing current workers, and a corporate culture of
entitlement or invincibility, all of which may lead to poor decision-making.
The ability to elevate the art of HRM to its theoretical state is presented by talent
management. HRM has historically lacked the strategic integration, complexity, and broad-based
transparency that talent management requires. The “fight for talent,” a term coined by McKinsey
Consultants in a 1998 research study, is synonymous with a sense of urgency. According to case
study facts, there is a common perception that the organization’s most valuable asset and primary
source of competitive advantage is human capital. The third perspective is seen as the most
problematic, given the contradictory positions that are presented (i.e. a focus on a select few versus
all employees).

3. The Importance of Talent Management

Talent management is critical for at least two primary reasons, in addition to the advantages
listed previously. The first is that strong talent management means that companies can effectively
hire and retain key employees. The second aspect is the degree of commitment among these staff.
“Talent management is integral to involving workers in the organization,” according to Morton
(2005). The ability to resolve any of these problems efficiently has become a key determinant of
organizational performance, and in some cases, survival.
a. Recruiting and retaining talent
The importance of talent acquisition in talent management is becoming increasingly
recognized by businesses. In reality, the most important thing a company can do in the entire
talent acquisition cycle is to start with the right talent. The reality is that the minimum
functionality provided by most talent management systems is inadequate to meet recruitment
needs.
 According to a Deloitte survey, the number of 15-29 year olds joining the workforce is
gradually declining. This will result in a "chronic labor shortage in both regional and vertical
markets," according to the study. One of the most pressing concerns for 35% of those
interviewed was insufficient skills of incoming staff. According to the Bureau of Labor
Statistics in the United States, there will be 6 million more positions than people to fill them
by 2008. Between 2015 and 2025, the gap will widen significantly. To better understand each
pillar, a description of each is below.
• Recruitment – In order for a talent management strategy to exist, there must first be
talent. Recruitment is Step 1 in creating the strategy. Here, companies and
organizations work to attract talented people who can be converted in to employees.
• Learning and Development – This pillar includes everything from ongoing training to
learning during the employee lifecycle. It allows for workers to fine-tune and further
develop the critical skills needed to meet their performance goals and to help the
company complete its strategic goals.
• Performance Management – Once hired, talent is expected to perform at a high
standard. This process includes the way in which HR measures and improves
performance. Common procedures include performance reviews, one-on-one
meetings, and reward and recognition programs.
• Retention – As defined, retention is about keeping high performing talent with the
company or organization as long as possible. This leads to increased productivity and
successful completion of strategic goals.
b. Employee engagement
An organization's talent management plan can lead to employee engagement in
addition to helping with successful recruiting and retention. Employee engagement, like talent
management, is a concept that has no clear meaning. “Employee engagement is a heightened
emotional and intellectual attachment that an employee has for his or her employment,
organization, boss, or coworkers that influences him or her to devote additional discretionary
effort to his or her work,” according to Gibbons (2006
To put it another way, the more engaged an employee is, the more likely he or she
would be to say positive things about the company, thus contributing to the development of a
positive employer brand; want to stay with the company, thereby minimizing turnover; and
consistently exert a higher level of effort, thus potentially influencing variables like service
quality, customer satisfaction, and employee retention. In reviewing the results of 12 major
research studies Gibbons (2006, p. 6) identified the top drivers of employee engagement. These
include:
• trust and integrity – the extent to which the organization’s leadership is perceived to
care about employees, listens and responds to their opinions, is trustworthy, and “walks
the talk”;
• the connection between individual and company performance
• career growth opportunities – the extent to which employees have opportunities for
“career growth and promotion” or have a clearly defined career path;
• pride about the company – the extent to which employees derive self-esteem from their
work;
• co-workers/team members – attitudes and perspectives of co-workers towards their
jobs and the company;
• employee development – the extent to which efforts are made to develop the
employee’s skills; and
Many of these factors may be interpreted as a management theory. "Emotional drivers
such as one's relationship with one's boss and pride in one's job had four times greater effect
on discretionary work effort," Gibbons (2006) concluded. Assuring the involvement of these
drivers in the company has far-reaching consequences for HRM policies and procedures
impacting those in a supervisory role.

c. Organizational outcomes
There is a growing body of evidence that different talent management and employee
engagement activities are related to financial performance. Morton (2005), citing Day and Lord
(1988) and Hunter et al. (1990), claimed that leadership efficiency can account for up to “45
percent of an organization's performance” (p. 21). Furthermore, Becker et al. (2001) discovered
a clear association between high-performance HRM systems and activities and a variety of
organizational variables such as turnover, revenue per employee, and market value in studies
performed during the 1990s.
 Employee engagement has been linked to a variety of significant business results.
Highly engaged workers, for example, expect to remain with their current employers 66% of
the time, compared to just 12% of disengaged employees. Hewitt and Associates (2004)
discovered that as employee engagement improved, so did financial performance metrics.

4. Powers that influence talent management policy and practice

Despite these advantages, it is unclear to what degree these concepts are currently
implemented. Dr. Moses claims that middle managers fail to meet delivery deadlines because they
lack the authority, information, or budget to do so. Since they can't do what they need to do to
deliver, highly talented people are being stressed out and exhausted. He claims that instead of
being stretched, they are being traumatized.
Morton (2004) described a range of "external" influences that can act as driving or
restraining forces in talent management policy and practice. The economy, mergers and
acquisitions, and global expansion plans are among them. The economy's impact on talent
management is probably self-evident. Cultural diversity, foreign job placements, and the need to
consider and collaborate efficiently with local workforces all play a role in global expansion plans.
CEOs play a critical role in setting the tone for talent acquisition programs. Talent
management must be seen as critical to achieving the organization's objectives. "Talent acquisition
must be raised to a burning corporate priority," according to the report. It is important to have a
compelling business case that is consistent with the organization's strategic goals.
Planning and interpretation are capabilities that HRM practitioners lack. Many businesses
lack well-integrated data collection and analysis systems. Data may be helpful in showing how
talent management impacts organizational outcomes. These kinds of data may be crucial in
justifying future investments.
Talent management requires the creation of an implementation strategy. This entails
ensuring strict transparency, which is backed up by a strong organizational framework.
Establishing line/business unit accountability, according to Morton (2004), is the fourth most
significant internal factor. According to Morton's report, the organizations with the most rigorous
TM methods often have the clearest TM organizational frameworks. He claims that the type of
structure doesn't seem to matter, but getting one does.
 An employee value proposition makes clear to the employee "what's in it for them" Older
workers are a potential source of employees as the baby boom age pool of retirement-age
individuals looks for alternative working arrangements. In Canada, Federal and Provincial
legislation and employment programs continue to evolve, making it easier to bring in workers from
outside the country. The employee proposition is an important component of an employer brand,
making clear to employees what benefits they will receive.
Many organizations, regardless of size or industry, could benefit from the increased
formalization and integration of some HRM practices. The hospitality industry is likely no
exception. Line managers have an important role to play in understanding what motivates people,
and ensuring access to learning opportunities, and treating people with respect. In many
organizations, in many organizations "raises or other sweetening of the compensation package are
common responses when a valued employee shows signs of leaving"

5. Talent Management Challenges

a. New Issues with Internal Talent
Most organizations still think of talent management as being about current employees.
Traditional talent management practices are aimed at existing employees. Many of the major
concerns have to do with identifying individuals for development and future advancement.
b. Identifying the Internal Talent Pool
An evergreen question in talent management is which employees should be the focus
of scarce development resources. Since few jobs allow for purely objective performance
evaluations, subjective evaluations are common in most jobs. Concerns regarding disparity
aversion, expressed as leniency and centrality biases, may work together to minimize
heterogeneity in performance assessments. It's difficult to pinpoint which strategic jobs need
exceptional individual performance to have a positive effect on the company's overall
performance (Cascio 2006, Pichler 2012, Roberson et al. 2007).
Via competency modeling, organizations have attempted to address the difficulty of
recognizing top performers that arises from the prejudices associated with performance
appraisals. Person work performance can be assessed using competencies in a more clear
manner. By being more precise about the qualities in question, they can also make it easier to
distinguish between average and top performers. 2011 (Campion et al.). However, it appears
that whether competencies will deliver on this pledge is an open question. Sanchez and Levine
(Sanchez & Levine, 2009, 2012).
c. Talent-Pool Retention
According to recent studies, retention issues are primarily self-inflicted. Employers are
no longer willing or able to guarantee that employees will be employed in the future. As a
result, workers all over the world claim they are more open to outside opportunities. Towers
Perrin (Towers Perrin, 2006). Retention of the talent pool is a critical issue. According to a
Towers Watson survey of global employers, half of them are having trouble keeping top
performers. It's tough to keep spending money on employee training and growth because the
people who benefit from it leave too easily. According to Cappelli and Hamori (2005, 2013),
executives change jobs every three to four years.
Many voluntary turnover decisions, according to research on the unfolding model of
voluntary turnover, begin with an environmental shock that results in a violation of the worker's
self-image. It seems fair to assume that different members of an organization's talent pool have
different self-images and are subject to different shocks. Understanding why these people quit
will help you develop more successful talent-pool retention strategies.
The concept of a pool of talent as a collection of several applicants spread through a
variety of positions is not new, but it contrasts with the succession planning–based notion that
each strategic position will have a successor who will take over when it becomes vacant. The
definition of a pool is close to that of a portfolio. If individual positions are lost or individual
candidates are no longer viable (or even employed), a larger pool of candidates becomes a
more desirable alternative to the succession model.
d. Employment contracts.
Employees cannot be forced to remain on the job, but they may be forced to sign
noncompete agreements. Employees who leave are forbidden from working for rivals for a
specified period of time under such agreements. The evidence on how successful such
agreements are is mixed. They reduce exits as expected, but they also make people less
motivated and more likely to abandon a mission. Noncompetition agreements are applied
differently in each jurisdiction, and courts are becoming increasingly unable to impose these
agreements if they are so restrictive that they hinder one's freedom to operate. The lack of
mobility reduces the information spillovers so critical to innovation and growth (Marx 2011,
Samila & Sorenson 2011, and Samila 2011).
Allowing workers to form their own careers, positions, assignments, and terms of
employment in ways that make them more attractive to them is known as proactive job design.
Job crafting, position change, and idiosyncratic deals are all proactive approaches to job
design. We couldn't find any evidence of a correlation between constructive work modification
and turnover. Certain employment, especially strategic jobs, are more likely to provide the
situational potential for promoting constructive approaches to work design.
e. Career Management
Career management is now borne by the employee rather than the company, according
to new career conceptual models. Since the work ladders on which career promotion was
centered no longer exist, the notion that careers can be planned within organizations is
essentially gone. What has evolved is a framework in which both workers and managers
consciously search out opportunities to make good short-term matches within the company
and to put them together in ways that fulfill talent requirements and contribute to meaningful
careers. The career-lattice model and internal work boards are two systems that sustain this
new framework. The incentive systems are neither robust nor simple, and they are continuously
evolving as companies adjust to changing environmental conditions. (According to Sullivan
and Baruch, 2009)
Wellins, Liu, & Qiuyong (2010) contend, based on their research on Chinese
organizations as they investigated the challenges faced when implementing Talent
Management initiatives, the following:
• Many frontline executives in companies lack the skills to use talent acquisition
techniques and processes. Leaders' most important role is to choose and cultivate
talent—and they're failing miserably.
• Most companies lack an accurate pool of ready talent, which is essential for
successfully recruiting the right people into key leadership roles.
• The majority of companies don't properly track the results of their HR development
efforts.
• It's virtually impossible to know which methods are successful and how to improve
them without metrics.
 • Organizations don't always understand how talent acquisition fits into their overall
business strategy”.
According to Tansley, Harris, Stewart, and Turner (2006), HR strategy making is
usually limited. Human resources must be in sync with the company's mission, philosophy,
and overall plan. A talent management program, like all human resource techniques, should
be an important part of an organization's human resource agenda.

6. The HR Role
Lockwood (2006) emphasizes that the primary owner of talent management is the HR
department, and therefore the HR department has many roles:
a. Facilitating the talent mentality is one of the most critical tasks. HR pays careful attention
to how the organization's community embraces creativity in general as a talent management
facilitator. In general, "HR's job entails communicating the company's talent management
philosophy across the organization, as well as knowing the industry competition." HR must
also create an integrated and systematic strategic approach to talent management—the big
picture—as well as important data management, such as monitoring turnover and
understanding what factors lead to retention”.
b. In order to incorporate talent management into all aspects of the business, HR also serves
as a change agent. “HR discusses four diverse talent management activities: recruiting,
success management, leadership growth, and organizational strategy” in order to accelerate
this transition (Corporate Leadership Council, 2003).
Finally, pragmatic HR leaders address talent acquisition holistically. Establishing clear
goals and speaking honestly about the talent management process are crucial. Talent management
techniques are more likely to be seen as a rational mechanism if HR explains why talent
management is important, how it works, and what the benefits are to the company and participants
(Walker & LaRocco, 2002).

7. Conclusions
Talent management has been described as a multi-faceted strategic concept championed
by HR practitioners. It is a source of competitive advantage and an integrated set of enterprise-
wide, technology enabled, evidence-based HRM policies and practices. The benefits of an
effectively implemented talent management strategy include improved employee recruitment and
retention rates and enhanced employee engagement.
Steps to implementing an integrated talent management strategy include defining what is
meant by talent management and its objectives. CEO commitment and leadership for its
implementation. Establishing talent assessment, data management and analysis systems and
ensuring people have the necessary analytical skills. Conduct an audit of all HRM practices in
relation to evidence-based best practices. Making changes and formalizing processes as required.
Talent management is an integral part of a healthy organization on many levels.
Competition is fierce in today’s corporate world, with many HR professionals agreeing that there’s
an ongoing “war for talent” —many open positions with not enough high-quality candidates to fill
them. Talent management also works to keep current employees and advance them to higher
positions in the organization. This saves money that could otherwise be lost to high employee
turnover. “It makes much more sense to develop and retain key talent than source, hire and train
new ones. These dynamics make the HR work vital,” Toterhi, 2019.
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