Ob exklusives Talent Management oder inklusives Talent Management – jeder Ansatz hat seine Stärken und Schwächen.

Careers for everyone? The diverging paths of talent management

Is it better to pour lots of money into developing a smaller number of high potentials or to help the development of all employees? More and more companies are facing this dilemma. Confronted by major challenges such as the shortage of specialist staff, digitalization and new work, the latest studies have shown that talent management is having to shift focus.

Many companies still invest the majority of their training and education budget in a few high potentials and top performers. For a long time, this strategy was very successful in the fight for the best people. After all, employees who have the potential to take on management roles or key positions are few and far between. This uneven distribution of resources used to seem justified. It is based on the assumption that this small number of highly talented and highly qualified “A-team players” contribute exponentially more added value and have a much greater influence on the company’s success than the rest of the workforce.

Is exclusive talent management no longer appropriate to the times?

However, more and more companies are starting to doubt whether this “exclusive” talent management is still the best way. By categorizing staff as “valuable” or “less valuable”, the majority of the workforce is excluded from what talent management has to offer. Indeed, focusing on a few top positions is now seen as too lopsided – and in some ways even counterproductive. This is due to the current framework conditions – namely, the serious shortage of specialist staff, changed values and the hugely accelerated market dynamics. What’s more, the advancing digitalization of the working world makes it hard to predict what the key skills of the future will even be.

Expensive luxury – failing to match investment to needs

The job market is changing. New skills requirements are developing, which frequently also means new job profiles. However, this doesn’t only affect the top performers and high potentials – employees with the correct skill set are missing at every level. Even the types of workers who tend to be overlooked by exclusive talent management – such as blue-collar workers in production and logistics – are in desperately short supply.

Although the digital transformation will lead to a considerable number of activities being automated in the years to come, especially in low-skilled areas (see OECD study), a study by the McKinsey Global Institute found that it will be difficult or impossible to fill large numbers of positions in future, primarily because of demographic change. Other tasks will not disappear so much as change – take professional truck drivers, for example. Even if we get to the point of only having self-driving trucks, there will still have to be a human in the cab.

As a result, the gulf between the number of workers needed and the number available is growing. German industry is already sounding the alarm. According to the KfW-ifo Skilled Labour Barometer published in November 2021, more than 43 percent of companies complain that a lack of skilled personnel is impacting their business operations. This is affecting all sectors and companies of every size.

Out in the cold – frustration rather than motivation

In addition, the flip side of exclusive talent management is increasingly coming under the spotlight – the fact that the majority of the workforce only has access to a fraction of the training resources available in their company. What they are left with is just about enough to cover the absolute necessities, but that just isn’t enough these days, since most employees now want to take control of their professional development and career, shaping it in line with their own preferences and needs.

Talent management therefore also needs to consider the “X Factor” – that is to say, Human Experience Management (HXM) with personalized opportunities, rather than standardized personnel management (HCM). It has been shown that companies that offer a good employee experience are more productive, more efficient and have better sales than competitors with poor employee engagement. Wherever there is a lack of opportunities for personal and professional development, staff feel underappreciated or, despite consistently good work, feel at a disadvantage compared to the few “talents” who receive extra support. This can lead to demotivation, a reduction in their willingness to perform to their best, and a reduced identification with corporate objectives.

Exclusivity vs. inclusivity – what exactly makes someone a “talent”?

All this has ignited a debate over which members of staff should be included in talent management. What exactly makes someone a “talent”?

One thing is for sure – talent management has to refocus its efforts if it is to live up to the challenge of safeguarding the supply of skilled workers while at the same time ensuring a good employee experience. Inclusive talent management is therefore increasingly coming into favor as an alternative to exclusive talent management.

This is a clash of two opposing attitudes to talent management. On the one hand, keeping it exclusive means offering targeted support to selected employees. On the other, taking a more inclusive approach to talent management draws in all – or at least, most – members of staff. The latter approach is based on the presumption that every individual has potential and strengths. However, this is also dependent on people being in a position that suits them, where they can fulfill their potential and put in their best possible performance.

Talent management for everyone – the shape of things to come?

Companies and organizations that operate an inclusive talent management system offer all their employees opportunities for training, and therefore for career advancement, following the principle of “careers for everyone”. This in turn expands the pool of employees involved in professional development and succession planning to include groups that would not have a chance of being involved under an exclusive talent management approach.

Inclusive talent management focuses on diversity and equality – values that play a major role when it comes to choosing an employer, especially among the younger people that make up Generations Y and Z. In fact, according to the latest studies, these very values make companies more innovative, more adaptable and more successful. For example, Gartner has observed a 12 percent increase in performance among staff in companies with a diverse working environment.

Proponents of inclusive talent management also point to the positive effects of a strengths-based approach. This takes as its starting point the assumption that people feel happier and more satisfied when they are able to make the most of their talents and preferences in their work. The employee experience is better. In addition, intrinsic motivation is higher, and it is easier to learn – key points that play a vital role when it comes to the disruptive changes associated with an increasingly digitalized workplace and the need for lifelong learning.

However, just because a company moves toward more inclusive talent management, it by no means follows that the staff see it as fair and inclusive, too. This is particularly true when the company fails to consistently make good on its “inclusion and diversity” promise in its everyday operations or when it doesn’t clearly communicate why some employees are still excluded from the talent pool. This type of breach of promise – as the employees see it – can lead to a drop-off in loyalty and performance among staff.

Which talent management approach is the right one?

Until recently, it was primarily small and medium-sized enterprises (SMEs) that operated inclusive talent management, even if not necessarily in a structured way, and some don’t even call it talent management. Slowly but surely, however, it is finding its way into larger companies, too. Culturally, inclusive talent management is more common in the German-speaking region of Europe, while the Anglo-Saxon world predominantly uses exclusive talent management.

Exclusive and inclusive talent management systems each have their pros and cons. They also both have a major impact on how attractive a company is as an employer, not to mention on its performance and competitiveness. For some, it may therefore not be a case of “either-or”, but rather a matter of finding a hybrid version that works for them.