- Talent management is a strategic approach to hiring, developing, and retaining top employees to drive business success.
- In HR, talent management covers sourcing, onboarding, performance management, succession planning, employee engagement, and workforce strategy.
- Top managers use data-driven insights to boost internal mobility and help employees build the critical skills they’ll need in the future.
The global job market is on the brink of a major transformation, according to the World Economic Forum’s Future of Jobs Report 2025. Technological change, economic uncertainty, demographic shifts, geoeconomic fragmentation, and the green transition — individually and collectively — are reshaping the future of work.
Given these changes, you might wonder:
- How do you attract and hire qualified talent to tackle and fill emerging roles?
- What skills will I need moving forward — and what skills does my team have today?
- How can I retain and continuously develop top performers?
The answer is effective talent management, a strategic approach to managing and developing employees throughout the employee life cycle to create a high-performing workforce.
Here, we present the six key components of talent management and why these are essential for your organization’s long-lasting success.
We’ll cover:
- What is talent management?
- The six key components of talent management.
- Why talent management matters for business success.
- Talent management strategies and best practices.
- The future of talent management.
- Elevating workplace culture.
- How to improve that way you manage talent with AI-powered technologies.
What is talent management?
Talent management is the strategic approach to hiring, developing, and retaining employees. It touches every HR function, including talent acquisition, onboarding, performance management and development, retention and engagement, and even strategic workforce planning.
Effective talent management includes bringing in highly qualified new talent and promoting from within by identifying and cultivating top performers’ skills and potential.
When you align talent management practices with broader organizational strategy, you can carve out a competitive advantage by developing talent with skills you need for today and tomorrow.
6 key components to talent management strategy
Organizations thrive when the right people are in the right roles. However, to ensure your best employees stick around, stay engaged, and keep growing, you must have an effective talent management strategy in place.
A holistic people management strategy covers six key areas:
1. Attracting and hiring the right talent
An effective talent management strategy starts with understanding the skills you have today and determining how to best acquire the skills your organization lacks. Effective talent managers know that it’s not easy — or sustainable — to exclusively hire externally.
Internal hiring can reap compounding benefits by increasing retention, engagement, and performance. In addition, external hiring is about 20% more expensive than hiring internally.
You’ll also want to find the right talent. Top performers, or A-Players, may only be 10% of your workforce, but investment in them could increase that rate to 60% or higher. To find high performers with staying power, consider looking for candidates with high potential.
Uncovering skills adjacencies is essential for any organization looking to hire or promote from within. AI-powered talent intelligence can help you identify adjacent skills and potential, greatly expanding your talent pool.
2. Employee onboarding, development, and training
The talent experience starts at hiring, but it’s cemented during the onboarding process. This is essential to get right, as effective onboarding can increase new hire productivity, and it can cost 3-4x an employee’s salary to rehire a role.
After onboarding, there’s learning and development. Employee development and training can range from one-off sessions to longer programs that lead to certifications. Learning happens in multiple ways, including formal training sessions in person or online, and informally, like learning from peers and through mentorship programs.
What’s important is that employees feel like they’re growing — that they’re gaining the skills they want and your organization needs.
Research shows that L&D professionals are experiencing a skills crisis, with 49% reporting their executives are concerned that their organizations don’t have the right skills. Continuous training helps you instill the skills you need while boosting retention and employee engagement.
Related content: Learn how to make the shift to a talent-centric approach to talent management.
3. Performance management
According to Pew Research, 84% of workers who regularly get manager feedback say they are very satisfied with their manager or supervisor. Employees want to know how they’re doing. They crave regular feedback and support for their growth and goals, and need recognition for their efforts and achievements.
Performance management does this by creating a structured program for employees that includes regular check-ins, clear goals, a way to track progress, and concrete ways to help employees develop the skills they need to achieve their goals — and support your business.
When goals aren’t clear or feedback isn’t given, it’s easy for employees to lose direction and motivation. And when that happens, not only does their performance suffer, but attrition quickly follows.
4. Succession planning
Succession planning identifies and develops the next generation of managers and leaders. It ensures the business stays on track, even when unexpected departures happen, and operations keep running smoothly.
Without a solid succession plan and the right tools to manage promotions, you could struggle to fill leadership roles, lose momentum, and face expensive and time-consuming recruitment efforts to find outside talent.
5. Employee engagement
According to our most recent talent survey, 71% of respondents struggled with staffing challenges. When employees feel stuck, unnoticed, or like there’s no path forward, they disengage and, eventually, leave.
Employee engagement is one of the most vital components of talent management. Without a workforce, there is no work.
Of the 1,200 employees we surveyed in that report, only 61% said they were satisfied in their current roles. This could explain why 82% of employees reported looking for a job in the past 12-18 months.
To be successful, organizations must retain top talent. With career opportunities being one of the top reasons people change jobs, creating a workplace where people feel supported and empowered makes them more likely to stay and grow with you..
6. Strategic workforce planning
Strategic workforce planning is the umbrella under which all other talent management functions sit. It looks at which skills your organization needs and then determines the best way to acquire those skills, whether through hiring, upskilling, reskilling, or hiring contractors.
Most crucially, you must be involved in this process. Our latest talent survey showed that 82% of HR leaders are misaligned with C-suite objectives. This misalignment is contributing to an $8.9 trillion lost, or about 9%, in global GDP, due to low employee engagement.
Related content: Discover how skills-based talent intelligence can drive business transformation by aligning employee potential with business goals.
Why talent management matters for business success
Gone are the days when HR was just a back-office function handling paperwork and paying wages. Today, you are critical to business growth, with your expertise in attracting, advancing, and retaining the best talent.
Here are some of the benefits you can expect from a holistic talent management function — powered by talent intelligence.
Better organizational performance
Organizations prioritizing talent see higher returns for their shareholders than competitors. Additional McKinsey research found that 99% of organizations that said their talent management was very effective outperformed competitors.
Yet, most HR functions aren’t aligned with organizational needs.
The problem? Many businesses don’t actually know what skills their employees have, let alone how to keep them engaged. The HR tools they rely on don’t show them a real-time view of skills, and when HR and leadership aren’t on the same page, good people slip through the cracks.
That leads to high turnover, lost institutional knowledge, and a struggle to stay competitive.
But when talent management is in sync with business goals, it drives performance by boosting engagement and productivity. Talent is upskilled with necessary skills, and you gain a bird’s-eye view of the skills you have in-house and the ones you need. You can then work together with hiring managers and employees to build on those skills, or decide if you need to open an external search.
Attracting and retaining top talent
Out of all the organizations that didn’t have problems hiring over the past year, half (48%) said it was due to having a strong employer brand.
When you find and develop the right talent — and when employees truly feel you’re invested in them — you create a highly attractive workforce that stands out to top-tier candidates.
This pays dividends not only in hiring but throughout the employee life cycle, as people who feel like they’re contributing to a good brand and growing their skills are more likely to stay and perform well.
Stronger organizational culture
A great workplace culture isn’t just a perk — it’s essential for building high-performing teams. However, less than a quarter of employees are engaged at work, taking a heavy toll on your organization’s culture.
When employees don’t feel connected to their work — or if they feel like they’re the only ones working hard — it fosters discontent and slows productivity. People start checking out, mistakes happen, and soon, they start looking for a new job.
When done right, talent management builds trust and loyalty, encouraging employees to grow with your business. Recognizing talent, celebrating wins (big and small), and rewarding efforts go a long way in fostering loyalty and motivation.
Plus, when people feel valued and supported, they’ll share ideas, take initiative, and drive innovation.
Better succession planning
Many employees in our talent survey cited unsupportive, negligent, or incompetent managers as reasons for job dissatisfaction. Strong leadership drives success, yet many organizations underestimate the vital role managers play in motivating employee growth.
Building a pipeline of strong future leaders not only ensures continuity of operations — it promotes lasting employee satisfaction.
A workforce ready for anything
With skills changing faster than ever, organizations can no longer afford to ignore employee development opportunities.
With the right talent management strategies and training programs, employees can stay current with industry trends, learn relevant skills, and become better positioned to meet your organization’s goals.
Talent management best practices
Today, your HR teams and hiring managers must:
- Focus on best practices that enhance every part of the employee journey.
- Understand that these practices don’t work in isolation; they must work synergistically throughout the employee lifecycle.
With that said, here are some best practices for your talent management function.
Hire for potential, not pedigrees
In a recent webinar poll, over a third of respondents said they weren’t confident in assessing a candidate’s potential. Businesses need to adopt smarter hiring strategies and move past traditional hiring methods.
Skills-based hiring focuses on what candidates can do, not just their past experience or qualifications. However, many traditional recruitment systems still filter candidates based on outdated criteria like education and job history, missing an opportunity to assess their true potential.
Best practice:
When it comes to skills-based hiring, waiting for the perfect candidate to show up just isn’t an option. Start building relationships now. Widen your talent pools and stay connected with candidates, even when there isn’t an immediate opening.
AI-powered talent platforms can instantly surface qualified candidates from lists of past applicants (silver medalists) and other relevant databases, including public groups or even contractors, to jumpstart each new requisition.
In addition, these can make hiring easier by automating routine tasks like emailing candidates and scheduling interviews. Less time spent on admin means more time to find and develop talent.
Tap into HR tools and insights
The majority of HR leaders say they’re overwhelmed with work. You must attract top talent, stay on top of regulations, ensure remote teams stay engaged, and align with broader business strategies, all while adapting to the latest tech.
If you’re still using traditional methods, like using spreadsheets to codify skills or manually sifting through hundreds of résumés, it’s time to make your life easier by shifting to modern HR tech.
Talent intelligence solutions use talent data points to help you make faster, better informed talent decisions. You can get a real-time view of your employees’ skills, and the rising and falling skills in your market. With these insights, you can then make data-driven plans on how to best acquire the skills your organization needs.
Best practice:
Make a skills-first approach part of your talent practice. With a clear picture of the skills you have in-house and the ones you need to acquire, you can match talent to your business goals and smarter, faster moves to drive success.
Make learning a habit
Talent management strategies should foster a continuous learning environment by meeting employees’ desire for growth and aligning learning outcomes with their career goals.
This creates a continuous learning mindset and ensures they develop the right skills to set them and your business up for sustainable, long-term success.
Best practice:
Allow employees to steer their destinies with skills-driven, personalized learning pathways and a talent marketplace. Build a workplace where people are encouraged and rewarded for learning and acquiring new skills.
Prepare for what’s next
Businesses never stand still. Markets shift, tech evolves, and buyers change. If you don’t adapt, you risk being left behind.
But here’s the thing: most change initiatives fail.
Talent management is critical to managing change because it addresses skills shortages head-on. Despite that, our recent poll showed that 40% of businesses struggle with skill shortages in critical areas, while another 40% can’t attract the right candidates.
Without the right talent strategy, even the best-laid talent plans will fall short.
Best practice:
Make sure your talent management strategy encourages employees to work together across different teams and departments.
With talent intelligence, you can discover and redeploy hidden talents that could be useful in other parts of the business. For example, someone in accounting with a knack for data analysis could be useful in marketing.
The future of talent management
Talent management’s core principles will always stay the same: find the right people, invest in their development, promote them, and reap the rewards. However, technology and employees’ desires will always be in flux.
Technological changes affect how HR and managers enact effective talent management. For example, talent intelligence helps HR build skills-based talent strategies and enhance internal mobility.
However, employees also want to be involved in technological changes; 4 in 5 employees report wanting to learn more about how to use AI in their roles. Bringing in new technology and teaching everyone how to use it benefits you and your employees.
Additionally, keep in mind what attracts top employees.. Our latest talent survey revealed what employees value most when looking for a role: better pay, benefits, and work-life balance.
Source: “HR Misalignment Costs You More Than You Think – Here’s Why It Matters”
Build a workplace employees love
The key to sustainable growth isn’t just finding the right talent — it’s investing in their potential. Talent intelligence makes it easy to find and promote employees into roles that align with their skills, potential, and desires — and your organization’s goals.
With a centralized view of talent, you can quickly spot skills gaps, make smarter hiring decisions, and upskill/reskill employees to create an agile workforce ready for anything.
Ready to build an end-to-end talent strategy with Eightfold? Request a demo today or learn more about our platform.