THE IMPACT OF TALENT MANAGEMENT ON RETENTION

Journal of Business Studies Quarterly

2014, Volume 5, Number 3 ISSN 2152-1034

THE IMPACT OF TALENT MANAGEMENT

ON RETENTION

Victor Oladapo, Strayer University

ABSTRACT

American businesses face the challenge of replacing 70 million experienced and talented

workers over the coming decades as the Baby Boomer generation retires. The challenge comes

at the same time as seismic shifts in the ethnic composition of the American workforce, global

economic stagnation, historically high U.S. unemployment, and global security threats. To

remain competitive, executive management must develop stable, long-term talent management

strategies to attract, hire, develop, and retain talent. This study sought to understand the

challenges and successes of talent management programs and the reasons why some companies

choose not to have a program. This study also tested the predictive power of job security,

compensation and opportunity on retention rates.

The data in this study found that for the organizations sampled with a talent management

program (69% of those studied), participants overwhelmingly recognized thestrategic value of

an effective talent management program despite significant challenges to implementation.

Participants cited opportunity for job advancement as the most significant factor affecting

retention rate. For the organizations sampled without a talent management program (the

remaining 31% of those studied), while nearly all HR managers’ support talent management, the

primary reason given for the lack of a program is the absence of executive management support.

The study further revealed that job security, compensation, and opportunity for advancement

were not found to have predictive value for employee retention rates.

Keywords: Talent Management, Employee Retention, Job Security, Compensation

The Impact of Talent Management on Retention

During the last decade, a shortage has emerged of talent in the workplace (Frank &

Taylor, 2004). As organizational leaders struggle to find talented workers, leaders will be faced

with the dilemma of how to retain knowledgeable workers and replace the 70 million Baby

Boomers who will be retiring from the workforce (Frank, Finnegan, & Taylor, 2004). Companies

are now faced with the dilemma of how to address talent management and reformulate strategies

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especially in today’s global economy where every organizational leader must continually invest

in human capital to combat the talent shortage (Temkin, 2008).

Human resources (“HR”) leaders will have to work closely with senior management to

attract, hire, develop, and retain talent. Yet, HR leaders must realize that the talent shortage

presents both socio-economic and cultural challenges as talent crosses borders (McCauley &

Wakefield, 2006).Socio-economic challenges include the changing demography, aging

workforce (i.e., Baby Boomers), lack of comprehensive immigration legislation, global security

concerns the global economic doldrums, and off shoring and outsourcing of jobs (Lockwood,

2006). Cultural challenges include cultural differences from country to country, the power of

labor unions in different cultures, and management style differences (Frank et al.). Organization

leaders must achieve long term stability from their talent management strategies to remain

competitive in the global economy and not engage in short-term approaches that result in

economic crisis, such as massive layoffs (Temkin, 2008).

Talent Management’s Growing Importance

For most of the 20th century, the primary concerns of mangers in the workplace were

tangible resources, such as land, equipment, and money as well as intangibles such as brands,

image, and customer loyalty (Dess & Picken, 1999). All their efforts were directed towards the

efficiency of the two traditional factors of production-labor and capital, but the times have

changed. In today’s economy, 50% of domestic product (GDP) in developed economies is

knowledge based, which is centered on intellectual assets and intangible people skills (Dess &

Picken). These changes have led organizations to develop a highly integrated approach to talent

management as a necessity to ensure productivity, profitability, and sustainable growth over time

(Perrine, 2005).To be able to successfully develop talent management, organizational leaders

must understand the drivers of talent management: (a) the labor pool, (b) retention, (c) the risk of

self-selection, and (d) the effect of hiring on retention.

Attracting, selecting, engaging, developing and retaining employees are the five main

focuses of talent management. In order for companies to gain a competitive advantage, the

demand for human capital will continue to drive talent management (Towers Perrin, 2003).

Although pay and benefits initially attract employees, top-tier leadership organizations focus on

retaining and developing talent (Lockwood, 2006). The talent management process is used to

control certain events that each employee experiences in the work place (Perrine, 2005).

Organizational strategies and talent management strategies will continue to be driven by

workforce trends such as an increasingly global and virtual workforce, different generations

working together, longer life expectancies and an empowered and autonomous workforce that

have forever changed the workplace (Tucker, Kao, & Verna, 2005). Demographic changes have

also caused the workforce to continue to diversify--from age, gender and ethnicity to lifestyles,

migration patterns and cultural norms (Ward-Johnson, 2007). Retail organizations are already

taking advantage of changing workplace trends according to Lockwood (2006, p. 2):

The Home Depot, Inc., the home improvement giant, focuses its staffing initiatives on

older workers and partners with AARP for referrals; 15% of its workforce is over 50.

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Talent management strategies also provide the context for diversity and inclusion. Proctor

and Gamble, for example, feels that getting the right mix of people is a major part of

talent management and hires many of its leaders as university recruits.

Anticipated skills shortage in the coming years is another factor that is driving talent

management (Hickey & Dell, 2002) “While not all organizations, industries and professions will

experience a lack of skills, organizations are already competing for talent. For example, customer

service, health care, computer support and technology repair are areas where there is an

anticipated acute talent shortage” (Lockwood, 2006). In addition, as noted in the Society for

Human Resource Management’s (“SHRM’s”) 2005 Future of the U.S. Labor Pool Survey

Report, the anticipated loss of talent in the next decade will vary by organization size, sector and

industry (Collins, 2005). The study confirmed that large organizations--as compared with small

and medium companies--are more concerned about loss of talent from the retirement of the baby

boom generation (Rappaport, Bancroft, & Okum, 2003), public and government organizations

are more concerned about the loss of potential talent than private companies(Morton, 2005).

Key business strategies also drive talent management (Morton).With the growing need

for global technical expertise, Ford Motor Company links competency development to its

organizational strategic goals. Corporate branding, a key organizational strategy, is

another business strategy that drives talent management. Increasingly, firms are linking

their brand to employees and corporate behavior. At JPMorgan Chase, for example, the

concept of leadership for all employees is part of its corporate branding: ‘One Firm, One

Team, Be a Leader. (Lockwood, 2006, p. 3)

To sustain outstanding business results in a global economy, organizations will rethink

and reinvent their approaches to talent management (Ashton & Morton, 2005). Effective talent

management calls for strong participatory leadership, organizational buy-in, employee

engagement and workplace scorecards with talent management metrics (De Long & Davenport,

2003). Companies that master talent management will be well-positioned for long-term growth

in workforce performance for years to come.

The Labor Pool

Even though the economic expansion and new job creation has averaged 2.5% over the

last 10 years, the labor shortage will continue to be driven by the inexorable pull of

demographics and a booming economy (Fischer, Sergevnin, & Zadorskaya, 2001). “The growth

rate in the labor force will continue to shrink steadily and will actually turn negative by 2015”

(Fischer et al., p. 21).

But this only reveals part of the story. Within critical age categories of 25-44, the labor

pool is already shrinking, having an enormous effect on professional, high technology and

service firms that traditionally draw their labor force from these age groups (Stokes & Cochran,

1984). The 35-45 year old category also provides the prime labor pool for executive talent in

large corporations, suggesting a critical gap in executive recruiting and development for years to

come. Many firms are already scrambling to identify the new pool of junior executives who will

one day run their firm (Taylor, 2002).

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The rapid growth in the 45-54 and 55-64 year old groups presents a different challenge.

Employee benefit costs continue to rise, since older workers increasingly utilize benefit

programs, including health care, 401(k) participation and traditional pension programs.

Opportunities for career advancement may be limited within this pool, and keeping the

workforce motivated is highly challenging (Hansen, 2001). The emergence of these two groups

makes the current labor market even more confusing for traditional employers.

The sprout of the Internet based business and new technology development of the early

1990’s led to what was known as “new economy,” a catchall phrase that encompasses Internet-

based commerce and new technology, providing new and alternative career paths for many

employees (“IBM Institute for Business Values,” n.d.). This generation of employees, which is

referred to as generation Y, has caused the market valuations for such new economy firms as

AOL and YAHOO to exceed the market valuations for the entire U.S. automotive, steel and

railroad industries combined (Tucker et al., 2005). In effect, traditional businesses are competing

for executive and professional talent with organizations that not only can provide a lively

entrepreneurial work environment, but that can also provide the potential for rapid wealth

creation through stock options and other nontraditional pay programs (Hansen, 2001).

At the same time, there are significant attitudinal differences between workforce

generations. Unlike Boomers, a large portion of Gen X and Y children have grown up as

latchkey children in households where both parents worked (Meyer & Allen, 1997). During the

wave of corporate downsizing in the late 1980s and early 1990s, many of these children were

also disillusioned by the experience of seeing parents laid off from organizations to which they

had dedicated a significant portion of their careers (Cascio, 1993). Thus, loyalty to an

organization is not seen as a rewarded value (Meyer & Allen). On the contrary, the Gen X

employees are often skeptical of institutions and value relationships and individualism (Tucker et

al., 2005). Gen Xers communicate easily through the Internet and are rapidly aware of new

opportunities and developments. Thus, managing turnover and retention becomes a diversity

issue in which organizational leaders have to create an employment proposition that attract 22-

year-olds as well as to 60-year-olds, and everyone in between.

Retention

One of the primary concerns of many organizations today is employee retention.

Retention is viewed as a strategic opportunity for many organizations to maintain a competitive

workforce (De Long & Davenport, 2003; Schramm, 2006). Attracting and retaining a talented

workforce keeps many vice presidents of HR thinking of possibilities and opportunities

(Kaliprasad, 2006). Retention is improved when employees are offered compensation and

benefits, have a supportive work culture, can develop and advance and balance work and life

activities (Messmer, 2006).

“The war for talent” has almost become a cliché. The consulting industry has responded

with countless articles, seminars and research studies. In the past few years, several major studies

on employee retention have been completed, each purporting to identify the “top five reasons

why employees leave” (Frank et al., 2004). While the studies vary in their details, they all tell the

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same story. Employees depart because their current employment proposition--some mixture of

tangibles (pay and benefits), and intangibles (supervisor relationship, work/life balance, work

content, career path, trust in senior management)--is unsatisfactory, and they have the

opportunity to join another organization where, presumably, that employment proposition is

better (Kaliprasad).

When talent acquisition and retention are a problem, the senior team member consults

HR for answers (Patel, 2002). For HR professionals, this provides a daunting challenge.

Traditionally, the HR profession has been built around silos of expertise. Compensation experts

focus on market equity, incentive pay, retention bonuses and stock options to solve retention

problems. Similarly, a benefits expert will focus on the importance of flexible benefit plans

communicated brilliantly and delivered seamlessly. The organizational design specialists address

work/life balance, supervisor training, and career development” (Kates, 2006).

The best practice organizations treat employee retention as a strategic problem (Farley,

2005). These organizations have well-defined plans that prioritize the skills they wish to retain,

and the employment proposition best suited to the purpose (Farley). The resources of the firm,

ranging from the executive team, HR, employee communications, PR and line management are

teamed together to tackle the issue cooperatively (Patel, 2002).

The Risk of Self-Selection

Our labor shortage discussion underlines the complex dynamics associated with labor

markets and turnover. Due to the fact that the causes of turnover are diverse, “one size fits all”

approaches and unilateral approaches to retention can have substantial unintended business

consequences, creating pools of self-selected employees (Walker & LaRocco, 2002). This issue

is best illustrated by an extreme case. The U.S. subsidiary of a foreign corporation dedicated to

high-technology factory automation systems was having significant difficulty in hiring and

retaining skilled mechanical and electronic engineers. Pay was observed to be fair, but not a

differentiator. On further investigation, several significant organizational issues were uncovered,

including frustration with lack of direction, performance management and cultural issues related

to a foreign parent company.

The single bright spot for the organization was an extraordinarily rich traditional health

indemnity plan (Hansen, 2001). In fact, employee opinion research showed that the health plan

was a primary reason why employees stayed, despite significant frustration with other aspects of

the organization (Hansen). Ironically, the health plan became a competitive disadvantage,

because it prompted this organization to self-select for employees who were willing to tolerate a

high degree of organizational dysfunction in return for a rich health plan--a work culture highly

unattractive to the best-of-breed engineers so badly needed by this firm. In a different

environment, these same benefits could have been positioned as a major selling point, or

reallocated into different programs more attractive to the targeted audience (Bates, 2007). While

extreme, this example is by no means unique. Well-designed cafeteria-style flex plans can create

unintended self-selection issues if other aspects of the employment proposition are not justified.

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The Effect of Hiring on Retention

Effective retention practices start with good hiring practices--qualified and motivated

people will stay longer. Poor hiring practices increase turnover in two ways: new staff members

that are mismatched and disoriented will leave quickly; experienced staff, on the other hand, can

become highly frustrated at the revolving door of newcomers that places a continual burden on

their time and performance (Branham, 2005). Employee orientation is a critical success factor in

hiring, and a large proportion of orientation is related to communication and enrollment in

benefits (Branham). Never again will a firm have such a clear-cut opportunity to communicate

the quality and value of benefits provided, or to demonstrate concern for employee well-being

(Chambers, Foulon, Harnfield-Jones, Hankin, & Michaels, 1998). Yet a shocking number of

companies do not take advantage of this easy opportunity. Rich benefit plans are a significant

competitive disadvantage if employees do not understand or appreciate what they receive. A

rival firm could place a much higher proportion of total labor dollars into base pay, potentially

drawing employees from other firms (Branham, 2005).

The Future of Talent Management

In view of workforce trends, such as shifting demographics, global supply chains, the

aging workforce and increasing global mobility, forward-looking organizational leaders must

rethink their approach to talent management to best harness talent (Frank & Taylor, 2004). By

doing so, leaders will be positively positioned to succeed in a highly competitive marketplace. In

addition, organizational culture, employee engagement and leadership development have a

significant impact on talent retention (Frank & Taylor, 2004). Taking the factors into

consideration, an integrated approach to talent management offers a pathway toward sustaining

outstanding business results (Ashton & Morton, 2005).

Offering enormous business value, talent management is complex and continually

evolving. Influenced by external factors such as the economy, global expansion, mergers,

and acquisitions, critical success factors for effective talent management include

alignment with strategic goals, active CEO participation and HR management. Over time,

common themes around talent management are emerging, such as the role of line leaders

in the development of talent. Overall, the main recurring themes are CEO involvement,

culture, management, processes and accountability (Lockwood, 2006).

Anticipated workforce changes and cost-effective ways to access talent are keys to the

next generation of talent management (Heinen & O’Neill, 2004). Predictive workforce

monitoring will lead to effective strategic talent decision-making. Factors such as flexible talent

sourcing, customized and personalized rewards, distributed and influential leadership, and

unified and compassionate workplace cultures will be important for successful talent

management (Frank & Taylor, 2004). Companies will increasingly utilize different types of

employment relationships, and nonstandard employment models will continue to evolve. Free

agency employment relationships--contracting for the best talent on an as-needed basis--will

become more common (Kaliprasad, 2006). To benefit from the knowledge, skills and corporate

memory of mature workers, phased retirement will become prevalent. Keeping workers engaged-

-particularly the next generations--may call for HR to redesign the workweek, benefits packages

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and reward programs (Hansen, 2001). Scenario planning and talent-match databases will become

essential planning tools (Taylor, 2002).

Scope of Talent Management

The scope of talent management fall into five major categories: recruitment, performance

management, succession planning, training and development and retention. Each of the five

components plays a significant role in talent management, but are viewed as a complete set of

processes an organization must employ to successfully manage the talent needed to execute the

business strategy (“A Framework for Talent Management,” 2007; see Table 1). The five

categories that shape talent management form a process an organization must employ to identify,

acquire, deploy, develop, and manage the employees needed to successfully gain a competitive

edge (“A Framework for Talent Management”).

With the challenges that every organization are now facing or will face in the immediate

future, organizations must realize that the right people will not simply come to their

organizations, and that the right people must be proactively sought by those organizations with

their recruitment strategy. Organizational leaders must develop a learning organization that will

continue to allow the employee to develop self, deploy a performance management system that is

fair, transparent and allow for continuing coaching and feedback, create an environment that

allows for leadership development through succession planning, and use all means to retain

employees (Kaliprasad, 2006).

Table 1

Talent Management Process

Talent Management Process

Organizational achievements Employee

Recruitment Right employees

Performance management Performing the right job

Succession planning Right time

Training and development Right place

Retention Right skills and ability Note. From “A Framework for Talent Management,” 2007, Workforce Management, 86(12), pp. 7-8.

Methodology

The objective of this study was to identify a causative relationship between an

independent variable (talent management) and a dependent variable (employee retention), but

because researchers have no complete control over the independent variables, their relationship

can be more suggestive than proven (Gay & Airasian, 2003). In view of workforce trends, such

as shifting demographics, global supply chains, the aging workforce and increasing global

mobility, forward-looking organizational leaders must rethink their approach to talent

management to best harness talent (Frank & Taylor, 2004). An integrated approach to talent

management offers a pathway toward sustaining outstanding business results (Ashton & Morton,

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2005). Our study sought to measure these relationships in order to help establish the efficacy of

such programs.

The causal comparative method was used, because we were trying to find out how having

talent management program affects retention (Cooper & Schindler, 2003).Groups are not

randomly assigned to treatments and participants are not randomly assigned to groups. We could

have used statistical controls for confounding influences if we had gathered data on confounding

variables and used them as covariates in our analysis, but we decided that was beyond the limit

of our immediate concerns.

Selection of Subjects

According to the quantitative research approach, the survey technique was the most

appropriate to select participants for our study. The survey was constructed to address the issues

surrounding talent management programs compared to the retention rate before and after

deployment of the program. With the sample population being the organizations with talent

management programs already in place, approximately 200 emails were randomly sent directing

potential participants to the online survey. Potential participants included human resources

personnel, such as HR generalists, managers, and directors.

The research sample included HR personnel from 36 organizations out of the targeted

200 organizations with the majority of the respondents located in the Southeast (45.7%) and with

the next two largest regions being the northeast (22.9%) and the Midwest (17.1%). The survey

respondents included senior HR personnel at the targeted organizations, including HR

generalists, managers and directors.

Instrumentation

Survey questionnaires were used to evaluate the talent management and retention as well

as to analyze how the retention in the organization hadchanged since those organizations

implemented talent management programs compared against their retention rate when the

organizations had no talent management program in place. Questionnaires are a useful research

tool when a large ѕаmple or even a population needs to be surveyed. Eасh person was аѕked to

respond to the same set of questions, providing an efficient way of collecting responses from a

large ѕаmple. Other advantages of questionnaires are that they require less skill and sensitivity to

administer than interviews and they reduce the possibility of interviewer bias. Therefore, our

study wasbased on the questionnaires investigation. The two main purposes of the questionnaires

were recognized to be: to draw ассurate information from the respondent; to provide a standard

format within which fасts, comments and attitudes could be recorded.

The research questions could have been formulated in a number of ways. The researcher

understands that the selection of questionnaire methods is very critical to the success of the

survey. A questionnaire is essentially a data capturing instrument. It lists all the questions to

which the researcher wants the respondents to answer and it records the response of the

interviewee. The questionnaire was designed to have open-ended, closed-ended, dichotomous

questions and multiple-choice questions.

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Open-ended questions are asked to obtain unprompted opinions, which are categorized as

qualitative data. In other words, no predetermined set of responses exists, and the participant is

free to answer however the participant chooses (Pannell & Pannell, 1999). Open format

questions are effective to solicit subjective data or when the range of responses is not tightly

defined (Pannell & Pannell). An obvious advantage is that the variety of responses should be

wider and more truly reflect the opinions of the respondents. The method increases the likelihood

of receiving unexpected and insightful suggestions when predicting the full range of opinion is

impossible. A questionnaire usually concludes with an open format question asking the

respondent for ideas for changes or improvements (Pannell & Pannell).

Fixed response questions force the respondent to choose one or more responses from a

number of possible replies provided in the question (Pannell & Pannell, 1999). Closed ended

questions usually provide quantitative data (Pannell & Pannell, 1999). Two broad groups of

closed questions include: dichotomous and multiple choice. Dichotomous questions allow only

two possible answers: yes or no, true or false, and so forth. The dichotomous questions are the

simplest of all closed questions. Multiple choice questions present a list of possible responses

from which the respondent may choose. Multiple choice questions must be designed саrefully to

incorporate all possible answers. By offering an “other, pleаѕe specify” category, that саn be

collated, that wаѕ not originally conceived, or responses that do not fit neatly into the imposed

structure(Pannell & Pannell, 1999).

The type of questions that were used in this investigation was a mixture of both open and

closed questions. The majority of the questions were closed ended questions, because closed

format questions offer many advantages in both time and money. By restricting the answer set, it

is eаѕy to саlсulate percentages and other hard statistiсаl data over the whole group or over any

subgroup of participants. Closed format questions also make it eаѕier to trасk opinion over time

by administering the ѕаme questionnaire to different, but similar participant groups at regular

intervals. Closed format questions allow the researcher to filter out useless or extreme answers

that might oссur in an open format question.

Central Research Questions:

R1.What are some of the challenges that your organization faced in the war of talent?

R2. What are the factors that are driving retention rate in your organization?

R3. What reasons do organizational leaders give for implementing a talent

management plan?

R4. What has been the outcome of deploying talent management programs?

Supporting Questions:

R5. What is the level of agreement (or rank order) of Challenges, Retention, Program

in Place, and Decide to Implement survey questions?

R6. Does Retention predict Retention Total Scores?

R7. Does Opportunity predict Retention Total Scores?

R8. Does Compensation predict Retention Total Scores?

R9. Does Job security predict Retention Total Scores?

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The participating HR personnel answered an 18-question online survey about various

factors, talent management program characteristics, resources, programs, and practices that may

impact employee retention. Survey data was collected utilizing two types of closed-ended

questions. The first type of questions asked the organizational respondents to rank the various

factors by levels of importance with regards to causality or effect on a certain attribute. The

second type of question asked the organizational respondents to rank how strongly they agreed or

disagreed with a number of statements regarding talent management programs within their own

organizations.

Procedures

The data was collecting through the web/online. The questionnaire was posted online

with a link where the respondent could just click on the link to answer the survey. The survey

targeted HR managers, HR directors, and vice presidents of HRs. The e-mail messages were

designed to invite potential candidates to participate in the web-based survey by providing a

unique password that protects against multiple responses by the same respondent. The survey

was administered through a secure server to protect the privacy of the respondents.

Primary and secondary data was collected to describe the impact talent management has

on retention. The research instruments were administered personally to managers and human

resources personnel to ensure that all entries were filled to avoid invalidating the process. In the

survey portion, the respondents were asked to rate their answers according to the Likert scale.

The interview questions included bасkground information, positioning, brand central idea,

сommuniсаtion, management and employers skills. For secondary data, information was

obtained from magazines and websites. The survey did provide data to populate a very rich

databаѕe, which enables researchers to give possible answers that are important for management

recruitment and retention.

Results

In a competitive marketplace, talent management is a primary driver for organizational

success (Lockwood, 2006). Companies doing the best job of managing their talent deliver far

better results for shareholders. Companies scoring in the top quintile of talent-management

practices outperform their industry’s mean return to shareholders by a remarkable 22 percentage

points. Talent management isn’t the only driver of such performance, but it is clearly a powerful

one (Chambers et al., 2001). Retaining knowledgeable employees is a key goal of senior

management and one of the primary motivators for having a talent management program.

Although pay and benefits initially attract employees, top-tier leadership organizations focus on

retaining and developing talent (Lockwood, 2006). Improving an organization’s retention rates

represents a significant opportunity for an organization to improve its bottom line and it serves as

one of the primary focuses of a well-designed talent management program.

While there are a number of factors that affect the retention rates of valued employees, it

is widely believed that the most important factor is the way in which an organization and their

HR department administers its talent management program. Awareness of exactly how important

these programs are to an organization and an understanding of how the various aspects of talent

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management programs impact retention are both useful for management as they seek the

determine the costs and benefits of implementing various HR programs. The present study

sought to investigate the perceptions of HR managers on the usefulness of talent management on

retention within their organizations.

In particular, this study sought to determine the quality and effectiveness of talent

management programs by examining: i) Organizational attitudes towards talent management

programs; ii) Employee retention and the causes of employee turnover (negative retention); iii)

Organizational experience with having a talent management program and their organizational

outcomes after having implemented the talent management programs; iv) Finally, the predictive

ability of the various aspects of talent management programs on retention were measured.

Attitudes Toward Talent Management

Organizations and their HR departments have direct control over a number of variables

that may be important to retaining valued employees. It is sensible to assume that their choices

with regard to the variables under their control may be driven by their viewpoint of the

effectiveness of these variables on retention rates as opposed to the costs of implementing them.

Management and HR departments both need to be convinced of the efficacy of talent

management on retention before these policies can be implemented.

The overall sample of HR personnel regarded corporate strategy as the primary reason

why their organization did not have a talent management program, indicating that HR personnel

perceived that explicit corporate policy that did not value talent management or a policy that did

not allocate the requisite resources or money towards a talent management programs were the

biggest impediments to utilizing those programs within their organizations. The perspective that

talent management is not worth the cost is at odds with prevailing corporate wisdom. Research

shows that organizations increasingly focus on talent management. Moving from reactive to

proactive, companies is working hard to harness talent. According to SHRM’s 2006 Talent

Management Survey Report, 53% of organizations have specific talent management initiatives in

place. Of these companies, 76% consider talent management a top priority (Lockwood, 2006).

The number of organizations in America convinced of the usefulness of these types of programs

is only slightly over half of all organizations. This means that a meaningful consensus has yet to

be reached on this topic and that more research needs to be done in order to convince the talent

management hold-outs of the value of such programs.

In the view of the HR departments in this study, corporate strategy and leadership

commitments are the top reasons why talent management is not a strategic priority for their

organizations. The belief in talent and its impact onthe bottom line are at the heart of talent

management. To be effective, the talent mindset must beembedded throughout the organization,

starting with the CEO (Lockwood, 2006). Quite simply, if the senior management of an

organization buys into the talent management concept, it will be entrenched into the fabric of the

corporate culture. Alternatively, if senior management is not a believer, the firm’s scarce

resources will be allocated to other pet projects.

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Employee Retention

In addition to ranking attitudes towards talent management programs, HR department

personnel expressed their views on the relative causes of employee turnover. The data confirms

Lockwood’s findings that although pay and benefits initially attract employees, it is not the

primary reason given for retaining them. There have been a handful of studies on this topic over

the past few years and while the studies vary in their details, they all tell the same story.

Employees depart because their current employment proposition--some mixture of tangibles (pay

and benefits), and intangibles (supervisor relationship, work/life balance, work content, career

path, trust in senior management)--is unsatisfactory, and they have the opportunity to join

another organization where, presumably, that employment proposition is better (Kaliprasad). All

of the reasons listed for why employees leave organizations fall under the purview of talent

management and understanding employee hot buttons should provide insight into where

organizations could deploy resources to reduce turnover.

The opportunity for advancement, job security and compensation were the top three

reasons given by the survey respondents for leaving an organization in order of relative

importance. The fact that compensation was not the most important factor corroborates other

studies and validates the proposition that an effective talent management program should address

opportunity for advancement as well as job security and that merely having a competitive

compensation scheme is not an adequate employee retention program. Clearly there are other

more important factors other than compensation that organizations should focus on improving in

order to reduce turnover.

Implementing a Talent Management Program

In addition to ranking attitudes towards talent management programs and retention, the

study examined the programs that are already in place within the organizations that responded to

the questionnaire. In particular, the study asked if an organization had a specific talent

management program and asked the respondents about their views on the efficacy of these

programs.

The majority of the respondents’ organizations did in fact have a talent management

program in place. Furthermore, the respondents indicated that they generally agreed that the core

tenants of talent management were valued by their organization and were deemed important. In

particular, the respondents agreed that retention is a leadership priority; that retaining workers

depends on talent management; and that their organizations are committed to promotion from

within (which was the primary reason given previously for turnover). Interestingly, the data

revealed that respondents did not think that their organizations offered job security, which was

listed previously as one of the major causes for turnover, suggesting that these organizations

could stand to improve their current talent management programs. Finally, the respondents did

not agree that their organizations offered comparable compensation to similar firms in their local.

Given that the compensation is listed as one of the lesser reasons for employee turnover, it makes

sense that being strictly competitive in this area might not be a particular priority for an

organization given that there are other more important retention factors.

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Respondents were equally divided on whether their organizations knew how to measure

talent performance and productivity while they overwhelmingly believed that emphasis on

effective talent management will pay off in the long run. This would seem to indicate that there

has been significant progress made with regards to convincing HR personnel of the value of

these concepts; however more improvement is still needed in attaining agreement on

implementation strategies.

Talent Management’s Predictive Ability

Due to its intuitive appeal, the researcher sought to determine if the responses from some

of the specific questions regarding each of the different aspects of talent management could

predict the retention composite score calculated earlier in the study using regression analysis.

The responses to the questions did not predict the retention composite score in a statistically

significant way. This does not mean that there is no link between the variables, only that the way

that we defined the variables and gathered the data in our specific study did not have any

predictive ability.

Conclusions and Recommendations

As changing demographics have inexorably altered the business landscape, it is generally

accepted that organizations are currently dealing with the daunting task of replacing

knowledgeable and talented workers. Furthermore, the consensus is that there has become a

shortage of talent in the workforce and that companies will have to actively wage war for talent

in order to get the right people with the right skills into their organizations. Many American

companies are already suffering a shortage of executive talent. Three-quarters of

corporateofficers surveyed said their companies had “insufficient talent sometimes" or were

"chronically talent-short across the board" (Chambers, et al., 1998). Due to these issues, senior

management focuses a substantial portion of their resources on attracting, hiring, developing, and

retaining talent in order to remain competitive. Human resource (“HR”) departments are at the

center of these personnel acquisition and retention efforts by being responsible for coordinating

talent management programs, although buy-in is required across the organization in order for

these programs to be effective. Broadly defined, talent management is the implementation of

integrated strategies or systems designed to increase workplace productivity by developing

improved processes for attracting, developing, retaining and utilizing people with the required

skills and aptitude to meet current and future business needs. The data and analyses contained in

this research suggest a number of valuable and insightful conclusions regarding the impact of

talent management.

HR personnel surveyed recognize that retaining key employees is vital to the health and

profitability of their organizations and they overwhelmingly believe that effective talent

management will pay off in the long run for their organizations. Various programs within

organizations are always competing for scarce resources and management must always seek to

find the right balance between cost and benefit and in the opinion of the HR personnel that

responded to our survey, the benefits outweigh the costs when it comes to talent management.

Although there seems to be unanimity regarding the theoretical usefulness of these programs,

there appears to be some room for improvement for the implementation of talent management

32

programs as organizations are equally divided among those who understand how to measure

talent performance and those who don’t.

There are slightly more organizations with talent management programs than those

without. In our study, we found a higher percentage of organizations using talent management

(approximately two thirds) than previous studies where this number was barely above one half

(Lockwood, 2006).HR department personnel firmly agreed that retaining workers is dependent

upon having talent management programs and they also agreed that the organization had to

internalize and embrace the basic aspects of talent management as well. Despite the fact that HR

department personnel tend to agree that talent management systems are an essential ingredient in

successful organizations, many organizations (nearly one third according to our research) still do

not have talent management programs. For organizations without talent management systems,

the primary reason given for this absence is the lack corporate strategy or the lack of corporate

leadership. This would indicate that although HR personnel have near complete buy-in to the

concept of talent management, senior management on the other hand would seem to be divided

on the efficacy of these programs.HR personnel recognize that there are multiple factors that are

important with regards to the retention of employees. The most significant of these, in their view,

is the opportunity for advancement as well as job security with compensation falling further

down the list.

Future Research

The current study was exploratory and descriptive in nature, and therefore helped to

define some of the parameters and patterns of the perceptions of HR personnel regarding what

matters in employee retention. Future research should extend the examination of this study to

more definitively answer several important questions.

Further research is suggested to inspect what, if any programs or practices help improve

the present factors that HR personnel perceive to be fundamental to employee retention. Our

study focused on our ideas on what may help improve employee retention, but it did not address

their ideas. In particular, research is recommended to determine how best organizations (those

with the lowest turnover) can facilitate the meeting of employee needs and improve retention.

Additionally, the current study does not directly assess all of the potential factors relevant

to employee retention, but uses the preconceived ideas of the researcher. In too many cases the

answer “other” was used indicating that perhaps a wider number of potential factors should be

included in the analysis.

Further research is also recommended to examine the usefulness of talent management

programs on other important aspects within the programs themselves. Since the war for talent

focuses on four main facets, it would be similarly useful to measure the impact of talent

management on attracting, hiring and developing employees as well as on retaining employees.

Another idea that might be explored would be to compare and contrast the experiences of

different organizations that utilize talent management systems against those that do not. In our

study we combined the attitudes and perceptions of HR personnel regardless of whether they had

33

a talent management program in place or not. Separating the two groups might provide insight as

to whether perception and reality are similar.

Moreover, it would be useful to examine the dissonance between the HR personnel’s

agreement in the usefulness of talent management programs versus their self-perceived inability

to correctly measure talent performance. It would be interesting to know why they do not seem

able to correctly measure talent performance when it is deemed critical to the organization.

Finally, investigating the reasons why management does not have the same conviction

with regards to the usefulness of talent management programs that the HR department has would

be beneficial. HR personnel are in near unanimity regarding the usefulness of talent management

programs, yet a large percentage of companies fail to implement these programs. Understanding

the underlying reasons for management’s resistance to these concepts might open the door for

more widespread adoption of talent management programs.

AUTHOR INFORMATION

Dr. Victor Oladapo is the recipient of the Doctor of Business Administration degree in

Management from Argosy University and the Masters of Public Administration from Troy

University. He is an adjunct faculty member at Strayer University. Dr. Oladapo’s expertise

comes in the field of healthcare management, human resources management, business and

Management.

34

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