According to a CIPD labour market survey of more than 2,000 companies published in February, UK employers expect to give workers pay rises of 5% in 2023.

The figure is the highest since 2012 when the measure was introduced and is reported against a backdrop of skill shortages, a tight labour market and the threat of recession.

Although this is a record increase for the CIPD’s quarterly employment barometer, the rise does not keep pace with inflation, currently running at 10.1%.

With UK employer hiring confidence remaining strong and worker shortages continuing, particularly in hard-to-fill vacancies, it’s not surprising that organisations are looking at new ways to recruit and retain their talent.

Which is where HR professionals come to the fore. Talent management, or in other words managing the workforce, has always been an important function of human resources.

Done well, it can help attract, develop and retain your workforce. When implemented strategically and aligned to business objectives, it can both improve the productivity and competitiveness of your organisation.

The world of work has changed rapidly in the last decade. External factors such as a global pandemic, new technology and Brexit have all accelerated the process in recent years. As a result:

  • Organisations had to react quickly.

  • Many have changed shape and formed new supply chains.

  • Hybrid working has become the norm rather than the exception.

  • Skills-based hiring has gathered pace.

  • There is increasing competition for talent in every sector.

Businesses are now operating in a climate where the workforce holds the power. But while pay is always important as a short-term fix to attract talent and reduce turnover, there are other factors that come into play for employees such as career development, job security, flexible working, and an organisational culture that aligns to your values.

In this new era for work, it has never been more important for organisations to get their people strategy right. This article shines the spotlight on talent management and explains how it is vital to developing an engaged, skilled and productive workforce.

What is talent management?

The CIPD defines talent management as the “systematic attraction, identification, development, engagement, retention and deployment of those individuals who are of particular value to an organisation. This may be through their high potential or because they fulfil critical roles.”

At its heart, talent management is simply a matter of anticipating the workforce needed at any given time and then setting out a plan to meet it.

Sounds simple but it is far easier said than done, just ask any HR practitioner. Consequently, some companies rely on a reactive approach - that is to predict no needs and rely on external hiring when necessary.

Others are more proactive and develop future talent internally through training and development, the downside of which all takes time. An optimum approach is to use a combination of the two.

Who is your talent?

Who is your talent? The initial aspect of any talent management strategy is to determine your chosen individuals. Will your plans relate to the whole workforce or just your highfliers? What does the term talent mean for your organisation?

  • Is it inclusive or does it refer to pockets?

  • Can you break down your workforce into socio-economic groups and devise talent management strategies for each segment?

While completely inclusive might be preferable, your organisation might not have the time or the resources to focus on everyone. As recruiting for senior and skilled roles is more challenging in the current climate, this could be a good place to start.

Whatever you decide is right for your organisation, it’s important to be clear from the outset who is included in your talent management strategy.

Why is talent management important?

There is increasing competition for well-qualified talent. A CIPD resourcing and talent planning study which surveyed over 1,000 UK based HR professionals last year, found that 77% experienced difficulties attracting candidates, up from 49% the previous year.

Recruiting for senior and skilled roles was most challenging (58%) although 26% had difficulties attracting low-skilled candidates. Nearly two thirds (66%) reported that talent is more difficult to retain compared with a year ago.

These findings are a cause for concern. Without the right talent, organisations risk a disengaged culture, a lack of innovation and low customer satisfaction.

The reason being that an engaged and motivated workforce leads to more productive employees. A 2022 report by the management research firm Gallup found that: “Business units with engaged workers have 23% higher profit compared with business units with miserable workers”.

The main benefit of a talent management approach, therefore, is to ultimately improve the productivity and performance of your business. A contributing by-product is to grow the knowledge within your company by retaining and developing your workforce.

Progressive organisations understand this and have developed agile talent strategies for innovation and growth. They have invested in people development and technology which helps to encourage retention and attract talent for the future.

But, while most business leaders agree that talent management is vital to delivering results, many don’t have the time, money or expertise to prioritise the process. They find themselves at the mercy of a competitive labour market, and as a result, have to fight for talent by providing unsustainable packages to recruit and retain key employees.

This is obviously bad news for your organisation’s future growth and productivity. Could it be the right time to introduce an effective talent management strategy which can:

  • Improve efficiency and performance.

  • Encourage a learning culture.

  • Create meaningful work.

  • Improve diversity.

  • Add value to your brand?

How to develop a clear talent management system

Building a talent management system can be as simple or as complex as you like but it should match the business goals and objectives of your organisation.

The CIPD recommends it could begin with taking a strategic approach to workforce planning to determine future needs. For example:

  • Review your organisation’s critical skills and key roles.

  • Think holistically about your workforce including permanent and temporary staff.

  • Use technology and data to help with developing proactive strategies.

  • Widen your talent pool by varying your recruitment strategies.

  • Look at your employer brand and ensure it is attractive and well communicated.

The workforce plan will help prioritise talent management activities and, says the CIPD, should typically include:

  • Recruitment

  • Talent pools

  • Succession planning

  • Life-long learning

  • Leadership development

  • Career management

  • Deployment

  • Performance management

  • Employee engagement

  • Employee retention.

Don’t forget the talent management loop which maps out the distinct steps and processes that are involved. The CIPD identifies six key areas in the talent loop:


External candidates by creating an appealing employer brand.


Talented individuals based on past performance and future potential.


Learning and development initiatives.


Employees so they are likely to be motivated and perform well.


A learning and development culture will reduce employee turnover and improve talent retention. Reward and recognition are also important tools.


Your workforce in the most effective and efficient way. Plan where skills gaps lie, the training required to meet those gaps, the opportunities for additional qualifications, and that invaluable longer-term investment in skills and development such as apprenticeships.

The 3 Rs - initiatives to recognise, retain and reward talent

You’ve got your talent management strategy up and running. These are some of the initiatives that will make it a success...

  • Review what is possible when it comes to pay.

  • Assess your overall benefits package and be flexible in your offering and personalisation. 68% of those surveyed by the CIPD said that hybrid/remote working allowed their organisation to retain more talent.

  • What are the opportunities for career development in your company? Create in-house talent development programmes to grow new talent and encourage employees to think about lateral moves as progression.

  • Develop and update skills. Upskilling existing employees is the most common response to recruitment difficulties, said 60% of those surveyed in the CIPD’s Resourcing and talent planning report.

  • Are your onboarding processes in tip top shape so new recruits can acclimatise quickly to their new working environment?

  • Apprenticeships are a great way of developing your talent and retaining them in the business. A survey by Reed found that 64% of apprentices remained with the same employer after completing their programme.

  • Include strategies to encourage employee wellbeing.

  • Regularly thank your employees for their good performance.

Track your performance

Evaluating talent management is difficult but necessary to ensure that investment is justified. To get the ball rolling determine how many people you are losing from your organisation and how many roles you are filling internally.

Another measure could collate employee turnover and retention data with those who have been selected to participate in talent management programmes.

Get everyone on board

While HR practitioners understand the importance of talent management, some find it difficult to get the buy-in from business it deserves, says Evelyn Thurley, a CIPD and HR apprenticeship tutor at Reed Learning.

“I do believe that most HR professionals understand talent management processes but they struggle to articulate their strategy and, therefore, to achieve that credibility at the top table. There is an opportunity for HR professionals to challenge the thinking around talent management and make it a priority because the skills gap in the UK isn’t going to change overnight.

“It is really important for everyone in the organisation to understand the strategy and to be on board if employers want to retain their existing talent. Involving managers in both the strategy and design of talent management processes improves the chances of them being workable and a success,” she adds.

Improve your talent management skills with Reed Learning

Reed Learning offers the full range of flexible online CIPD qualifications at Foundation, Associate and Advanced levels in HR and L&D. All HR programmes include specific modules on recruitment and talent management to improve your knowledge.

We are also providers of HR and L&D apprenticeships at levels 3, 5 and 7. So, if you are interested in honing your skills on the job while become CIPD qualified then get in touch.