Talent Management: How to Invest in Your Workforce

14 August 2008:

The war for talent. The coming brain drain. Mismanaged succession. In recent years, judging by steady increases in spending on talent management, workforce challenges like these have become top of mind for most companies, large and small. But what is the most productive way to invest in your workforce, and what are the chances you will see a tangible return?

A new study conducted jointly by IBM's (IBM) Institute for Business Value and Washington-based think tank Human Capital Institute (HCI), and shared exclusively with BusinessWeek.com, has yielded promising answers to those questions.

Last spring, researchers from IBM and HCI surveyed 1,900 professionals in over 1,000 public- and private-sector companies, from a range of industries, geographies and organizational sizes. Respondents scored their companies in 30 specific competencies, which fell into six key practices of talent management: strategy development, attracting and retaining, motivating and developing, deploying and managing, connecting and enabling, and transforming and sustaining.

Companies with high scores across the board were more likely to have strong financial performance, based on reported change in operating profits between 2003 and 2006. "It's not the first research to show a correlation between talent management and financial results," admits Allan Schweyer, executive director of HCI and one of the authors of the report, "but it's one in a handful, and I think it really adds to that body of evidence that is helping organizations to build a solid business case for investments in talent management."