Pay For Talent | Talent Management

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Pay for Talent: Integrated Talent Management Helps to Retain Key Employees and Drive Business Success

This insight is from: "Pay for Talent: The Next Generation of Talent Management Strategy"



Talent management, a key component of the human resource management function, is facing several major challenges. Despite high unemployment rates, employers face a shortage of candidates with the skills necessary to drive business results. In addition, employee engagement is at its lowest level in years. Pay for Talent, a new compensation model that recognizes past performance while tying factors like critical skills, future potential, risk of loss, and emerging corporate needs into the overall reward process, can help you retain key talent while supporting short- and long-term business goals. Pay for Talent requires effective integration of talent management activities, including compensation management, performance management, succession planning, and employee development, all within the context of your unique corporate culture. This paper discusses the Pay for Talent model, including critical links between performance, succession, and compensation, and recommends ways to determine your company’s readiness and implement a successful program. 

Employee Engagement is a Top Talent Management Concern

According to a 2011 Mercer report, 32 percent of employees are planning to leave their current jobs. At the same time, research by Bersin and Associates shows that organizations with a deliberate and defined process for identifying high potential staff are seven times more effective at delivering business results. This suggests there’s a huge financial pay-off to effectively identifying, managing, developing, and rewarding top talent with in-demand skills. To realize this pay-off, developing effective strategies to retain critical employees should be a talent management priority for today’s organizations.

Identify Critical Jobs and Key Talent to Jumpstart Retention Strategies

In order to best leverage your workforce for business success, your organization must first identify key staff as well as those organizational roles which will drive key corporate objectives. Assessment and calibration processes can help by aligning managers around consistent criteria and generating quality discussions about people, roles, contributions, performance and potential. Once you’ve identified key talent in critical roles, you need to develop talent management strategies to retain them through effective day-to-day management, employee development and mobility, and compensation management.

Use Compensation as an Effective Talent Management Lever

When it comes to compensating employees, you want to get the biggest bang for your buck. This means optimizing your compensation spend in a way that rewards and incents key employees for performance that drives business results — past, present and future. As important, you want to make sure you’re compensating your workforce fairly based on clearly-defined criteria and benchmarks to ensure employee engagement and minimize compliance risk. This paper discusses how the Pay for Talent compensation model broadens the discussion of employee retention to encompass a number of talent management processes, including performance management, succession planning, employee development, and talent assessment against future leadership criteria.

Putting Pay for Talent into Practice for More Effective Talent Management

Not all organizations are ready to implement a full-scale Pay for Talent program right out of the gate. Since Pay for Talent integrates many key talent management functions, including talent assessment, performance management, succession planning, and employee development, it may require that you continue to develop and roll out specific functional processes. This paper provides guidelines for determining your organization’s readiness as well as recommendations for developing a Pay for Talent implementation roadmap that is aligned with your current talent management state and unique corporate culture.

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The Next Generation of Talent Management Strategy

Pay for Talent enables your organization to use compensation as a key lever across all talent management processes to drive business success. However, an effective Pay for Talent program requires up-front work, including discussions around performance, key talent, critical roles, and potential and future success to align managers based on consistent criteria. Make sure you design a program that will work with your current compensation management strategy and overall business goals. Most important, take measures to implement Pay for Talent within the context of your unique corporate culture to optimize your compensation spend and meet key business goals today and into the future.

*A complete list of sources and citations can be found in the full report.

32% of employees are planning to leave their current jobs. Source: Mercer Inc., “Inside Employees’ Minds,” 2011.

About This Report: Written in early 2012, this report is based on a December 2011 webinar which was conducted in partnership with Talent Management Magazine and featured senior members of ADP’s talent management team.

Keywords: Talent Management

Business Types: Research for Midsized Organizations, Research for Large Organizations

Roles: Research for Human Resources Professionals

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