The Complete Human Resource Publication

Talent Series

Building Talent Strategy 3 Principles & 3 Steps

By Mandeep Kaur

‘Talent strategy’ results in ‘effective business outcomes’. Talent is the most critical aspect in an organisation, especially in today’s context.

The word ‘talent’ means different things in different organisations. For some, it refers to high performers, senior leaders or critical talent; for others - it refers to all employees. However, in the context of a talent strategy, it generally refers only to a subset of talent segments - those that are critical to achieving business goals.

But do all organisations have a clear plan to leverage talent effectively?

While most organisations have various types of talent activities, some of them lack a clear talent strategy, with processes in place to support it. This is concerning…given that a talent strategy provides direction for the organisation’s talent management efforts and aligns with the organisation’s business strategy and objectives. Other areas of concern are not enough clarity in terms of owner/process and not adequate stakeholder engagement and inability of the organisation’s leaders to follow the talent strategy.

At the outset, let’s first understand - “What really is a Talent Strategy?“

Talent strategies are strategic decisions related to key talent to support organisations in achieving their business outcomes. These decisions help clearly define - which talent activities the organisation will - and will not - engage in.

Let’s look at how we can build an effective Talent Strategy, which would provide leaders with guidance as to the critical investments - as well as some of the tactical decisions - that should be made. It is critical that the strategy identify what types of activities to reinforce and make obvious which activities are not.

Building Talent Strategy - 3 Principles

Principle 1: Driven by Business Leaders and Aligned to Business Objectives

There is a strong relationship between business outcomes and organisations that involve business leaders at all levels in the talent strategy. A strong relationship also exists between business outcomes and organisations that clearly map their talent strategy to business objectives.

There are two aspects to it: One, organisations highly effective at meeting or exceeding financial targets map specific elements of the talent strategy to business objectives to a great extent. Two, organisations highly effective at operational efficiency have talent strategies that are driven by business leaders and which are clearly aligned to business objectives.

Principle 2: Clarify what the Organisation should do and not do

Leaders should establish clear criteria about which talent segments are included in the talent strategy. It is pertinent to desist from including everyone in it, as talent strategy is about deciding where to put incremental investments. It is important to understand that the talent strategy is different from employment brand or development strategy/learning architecture, which would be applicable to everyone in the organisation.

Principle 3: Should be Measureable

All good strategies are designed to achieve objectives. It is tough to know if a strategy is working unless a plan exists about how to measure its progress. As important it is for an organisation, to develop its talent strategy, it is also as critical for it to have clearly articulated outcomes and a plan for measuring progress. Some organisations use a balanced scorecard for this, while others rely on approaches that are customised to their specific business.

Building Talent Strategy - 3 Steps

Now, let’s look at the steps, to build talent strategy.

These are relevant for both

• Organisations that build a Talent Strategy ever year or
• Organisations that are building a Talent Strategy for the first time.

Step 1: Business Strategy and Challenge Identification

It is important to start with review of the organisation’s current business strategy and goals, and the plans to achieve those goals and anticipated challenges. In case of a large organisation, with multiple business units - it is critical to drill down to strategies for a specific business unit perspective also, which will be unique to that business unit. In this context, there will be an enterprise level Talent Strategy and specific business unit level talent strategy for the unique business goals and challenges of that business unit.

It is critical in this aspect to engage business leaders in this phase. The importance of involvement of the key stakeholders at this step cannot be undermined.

In terms of timing - the talent strategy and the business strategy should be developed in roughly the same timeframe and the business planning and talent planning groups should have some common members. This can allow some insights from the talent need/strategy identification process to be fed to the business planning process (i.e., if the organisation has an aggressive plan to grow in a specific region but HR leaders think the organisation may not be able to attract and retain the talent for that expansion, it makes sense to adjust the expansion plan).

On the basis of the understanding of the strategy, a strategy document should be built that summarises following:

• Business strategy;
• Short- and long-term business objectives;
• Critical capabilities of the organisation;
• Potential weaknesses of and opportunities for the organisation;
• Any identified talent implications.

Step 2: Talent Need and Strategy Identification

What are the talent requirements necessary to address the business strategy? Identification of talent segments are most critical to the business in achieving its goals - strategy to attract, develop, engage, and retain individuals in these critical roles. The leaders can then create the strategic talent plan, which outlines how the organisation can achieve that strategy.

If the talent strategy is developed well after the business strategy and plans are developed, then leaders responsible for creating the talent strategy need to understand well the context of the business strategy.

Sometimes, HR leaders assume that they need to develop a talent strategy and then ‘sell’ it to the business. Organisations are much more effective when business leaders co-create the talent strategy with HR leaders to enable clear alignment to business strategy and deep support from leaders throughout the organisation. In fact, it is found that organisations that involve business leaders at all levels in setting the talent strategy are nearly six times more likely to score in the top quartile of business outcomes.

Critical Component of Drafting a Talent Strategy are:

• Identify and group talent outcomes necessary to achieve business strategy and goals. Once the talent strategy is clear - it is important to finalise the talent outcomes to align with the talent strategy.

• Prioritise desired talent outcomes, behaviours, and activities. Talent outcomes that would reflect in the talent strategy on the basis of the above.

Alignment could be, for e.g.:

- Retention of key talent
- Pipeline of leaders for critical roles
- Development that keeps skills updated and engages employees

• Identify and prioritise critical talent segments necessary to achieve desired talent outcomes. Specifically, considering each talent segment’s impact on the organisation’s value chain, contribution to key business outcomes and the effort required to replace individuals in those roles.

• Forecast supply and demand of critical talent segments and identify gaps. After the team has identified the critical talent segments, it is imperative to identify the expected supply of and demand for these individuals.

• Develop a holistic talent strategy for addressing talent needs. Determine how to address this gap most effectively. It is critical to remember that a strategy is a series of interlocking decisions; so it is not enough to simply focus on attracting people. The organisation also needs to think about how to retain, develop, and promote those individuals as well in a consistent fashion.

HR has a wealth of data available on the talent within the organisation. It is critical to integrate this data into their talent strategy. One of the deciding factors of a good talent strategy is how effectively the HR team has integrated talent analytics or workforce planning data into their talent strategy.

A critical look at the draft of the Talent Strategy, as it is being built, is required to ensure the following, whether it aligns to:

• Overall business strategy;
• Short-term business objectives;
• Long-term business objectives;
• Maintenance of the critical capabilities of the organisation;
• Development of the critical capabilities of the organisation;
• Addressing any potential weaknesses of the organisation;
• Seizing of potential opportunities for the organisation.
Step 3: Designing the Related Talent Management Activities

It’s not just about the strategy, but also about each activity and related processes and expected behaviours, to support the talent management strategy, which are critical. This involves aligning both the strategy for each individual activity (e.g., performance management or learning), with supporting the processes, activities, and expected behaviours. Also, the leaders are responsible for redesigning the technology systems and processes to align with the design of the new talent activities. Their support is necessary to complete all the 3 steps in designing a Talent Strategy.


Talent strategy is part of a larger effort to create alignment throughout the organisation, from leaders’ most strategic intentions down to the organisation’s most tactical needs. Leaders need to have clarity as to which talent segments are most critical to achieving goals of the business and a strategy for how to best attract, develop, engage, and retain these individuals.

This is the core of the talent strategy.


Mandeep Kaur

She is Talent Management Leader, IBM

Read more related articles:




  Copyright © lbassociates All rights reserved. Design by Uday N Jha