MSG Team's other articles

10441 Need for an Effective Performance Management System

In the era of cut throat competition and globalization, organizations have realized the importance of strategic HR practices for gaining a competitive edge over the competitors. A well designed performance management system can play a crucial role in streamlining the activities of the employees in an organization for realizing the ultimate corporate mission and vision. […]

9184 Why Entrepreneurs must be Opportunists and be in Control over their Future

Entrepreneurs must be Opportunists The term opportunist is often used to refer to someone who is supposed to change their positions and stand depending on the circumstances. Indeed, when someone says that somebody else is an opportunist, it is usually in the negative sense wherein the other person is being categorized as an individual who […]

12203 The Problem with ESOP’s

Employee Stock Option Plans (ESOP’s) are one of the most popular ways in which modern startup companies reward their early employees. In Silicon Valley, many companies such as Google and Facebook have used Employee Stock Option Plans (ESOP’s) to lure the best talent from the market. Since these companies have become very successful, there are […]

9690 How to Build a Successful Knowledge Management System

Example of a Successful Knowledge Management System: Infosys The previous articles in this module introduced the term knowledge management and presented some real world examples of how knowledge management works in contemporary organizations. This article examines the ways and means to build a successful knowledge management system and the process by which essential components of […]

12828 What is Competency Based Assessment – Meaning and Important Concepts

With the ever evolving and diversifying business challenges, the approach to the management of human resources has also undergone a paradigm shift. The competitive advantage achieved through technology, new products and information is short lived and vastly evaporating. The only distinguishing feature from the competition which remains, are the skills and contribution from the employees. […]

Search with tags

  • No tags available.

There are pros and cons of every management philosophy and the associated processes. Talent management is no exception to it. While many organizations simply decline to have it under their umbrella because it costs the exchequer, still others approve of it equally strongly as an effective people management process.

Before we discuss the financial benefits of talent management the following may be of our interest and worth a thought:

  1. Most of the organizations are short sighted, when it comes to people management.
  2. People management may not go well with pure capitalists.
  3. Organizations and industries are growing at a fast pace, faster than the rate at which talent is produced.
  4. There is dearth of talented and skilled professionals both at the top as well as bottom.
  5. Due to cut throat competition and a consequent lack of talented professionals the attrition rates have increased across all industries, especially so in services industry.
  6. Poaching has become common place; employee retention has become the Achilles heel of corporations.

All the above mentioned statements clearly indicate that the talent is unable to keep pace with the growing industry and also that the industry has failed to breed the pool of talented individuals as per its requirements. A fast industry growth meant that there would be a need for talented professionals for upcoming avenues and unfortunately corporate seemed to miss out on this. Business houses nowadays have diversified interests in different industries, employment opportunities are fast coming up but unfortunately the talent is pool is shrinking. This tells upon the finances of an organization in a big way.

Let’s see how.

Less attrition means lesser expenditure on hiring: BPO’s and start ups, for example where the attrition rate is the highest remain occupied in searching for people every now and then. Now this incurs financial losses to the organization. An organization not only pays an employee for his/her work but also spends a considerable amount on their training and development. There is transfer of skill and expertise and when the same employee leaves after a brief stint with the organization, it costs the latter.

The problem gets even worse when such a scenario occurs at the top level. An unoccupied executive position can cost an organization dearly. The solution - a proper talent management in place can solve this problem. The following facts become worth consideration here:

  1. New employees cost the company 30-60 % more than the existing employee in terms of compensation only.
  2. There is an additional cost incurred on training and developing the new individual.
  3. The process of recruitments itself costs an organization in a big way, right from advertising a post, to attracting talent and finally short listing and hiring someone for the job. Often there is a compromise in hiring when the need is urgent.

Organizations clearly need to look inside for solutions and design and develop better employee retention, rewards and recognition strategy. Performance management needs to be taken care of.

Article Written by

MSG Team

An insightful writer passionate about sharing expertise, trends, and tips, dedicated to inspiring and informing readers through engaging and thoughtful content.

Leave a reply

Your email address will not be published. Required fields are marked *

Related Articles

Current Trends in Talent Management

MSG Team

Achieving Competitive Advantage through Talent Management

MSG Team

Benefits of Talent Management

MSG Team