Many companies are still investing the bulk of their training and further development budget in a small number of high potentials and top performers. This strategy has long been quite successful in the battle to attract and retain the brightest minds. After all, employees who are suitable for management duties or key positions are few and far between. This imbalance in the allocation of resources seemed justified up to now, based on the assumption that the few – but particularly efficient and highly qualified so-called “A-players” – contribute exponentially more to value creation and corporate success than the rest of the workforce.
Is exclusive talent management a thing of the past?
However, doubts are emerging in ever more companies as to whether this “exclusive” talent management is still the best policy. Due to the classification of employees as “valuable” or “less valuable”, the majority of employees are excluded from talent management initiatives. In fact, concentrating on a few top performers nowadays appears to be too one-sided and – with regard to some aspects – even counterproductive. This is all due to the current prevailing circumstances, namely the ever more acute shortage of skilled workers, changing expectations and values and rapidly accelerating market dynamics. Furthermore, and as a result of the increasing digitalization of the workplace, it is difficult to predict which key competencies will even be in demand in the future.
An expensive luxury: investment that ignores needs
The job market is changing. New skill requirements are emerging, often associated with new job profiles. However, this does not only apply to top performers and high potentials as there is a general lack of employees with the required skill sets on all performance levels. Even those employees long ignored by exclusive talent management, such as blue-collar workers in manufacturing or logistics, are desperately needed.
Despite the fact that a considerable number of jobs will be “automated out of existence” in the coming years due to the digital transformation, particularly affecting low-skilled workers (cf. OECD study), a study by the McKinsey Global Institute claims that numerous jobs will not be filled in the future, primarily due to demographic trends. Other jobs will not simply disappear, but change, as illustrated by the example of a professional driver: Even if there are only self-driving trucks on the road at some point in the future, there will still be a person in the cab.
This will result in a widening gap between labor supply and demand. The German industrial sector is already raising the alarm: According to a KfW-ifo Skilled Labor Barometer survey conducted in November 2021, more than 43 percent of German companies lamented the fact that their business activities are detrimentally affected by a lack of skilled workers. This applied to all sectors of the economy and companies of all sizes.
Exclusive vs. inclusive: Who is regarded as a “talent”?
In view of the above, a debate has ignited about which employees should be included in talent management measures. Who is regarded as a “talent”?
One thing is certain: Talent management has to change its focus if it wants to meet its goal of attracting and retaining a pool of skilled workers while simultaneously ensuring a good employee experience. This explains why “inclusive” talent management is increasingly becoming widely accepted as an alternative to “exclusive” talent management.
This has led to a clash between two contrasting views. While exclusive talent management specifically fosters the development of individual employees, inclusive talent management encourages the advancement of all or nearly all employees. This is based on the assumption that every person has their own potential and strengths. However, the main thing is that the position suits the individual so that they can unleash their full potential and deliver an optimal performance.
Talent management for everybody: is this what the future holds?
Companies and organizations that pursue an inclusive talent management policy provide all employees with the opportunity to partake in further training and therefore the chance to climb the career ladder, based on the principle of “a career for everybody!” This widens the circle of employees involved in career development programs and succession planning to include groups that would otherwise be excluded under exclusive talent management.
Inclusive talent management is based on the principles of diversity and equal opportunities, in other words those very values that play a major role when opting for a particular employer, especially among younger people, millennials and Generation Z, and which, as substantiated by recent studies, ultimately make a company more innovative, adaptable and successful. For example, Gartner, the technological research and consulting firm, recorded a 12 percent increase in employee performance in companies with a diverse work environment.
Proponents of inclusive talent management also cite the favorable impact of the strengths-based approach. This concept maintains that people who can cultivate their talents and preferences in the workplace are more content and more at ease, thereby improving the employee experience. Not only that, but their intrinsic motivation is higher and learning becomes less of a chore – crucial factors that play a decisive role, especially in light of the upheaval associated with an increasingly digitalized world of work and the need for lifelong learning.
However, even if a company adopts a more inclusive form of talent management, this doesn’t necessarily mean that employees will perceive it as fair and inclusive. This is particularly true in cases where the company fails to consistently deliver on its promise to be “inclusive and diverse” in everyday practice or is unable to effectively communicate why some employees nevertheless remain excluded from the talent pool. Such behavior is interpreted as a breach of trust and can lead to a decline in employee loyalty and performance.
Which form of talent management is the best?
Up until recently, the adoption of inclusive talent management was primarily confined to small and medium-sized enterprises (SMEs), although they didn’t always implement it in a structured manner and in some cases didn’t even refer to it as talent management. It is, however, slowly beginning to gain credence in larger companies. Culture-wise, inclusive talent management is more deeply embedded in the German-speaking world, while exclusive talent management dominates in the Anglo-Saxon countries.
Whether inclusive or exclusive talent management, one thing is certain – both approaches have their relative strengths and weaknesses. And both have a decisive impact on a company’s attractiveness as an employer and on its productivity and competitiveness. For many companies, it is therefore not an “either-or” decision, and a hybrid approach could be the best way forward.