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mdc-u-grid-col-lg-span-10"><div><h1 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-u-ts-2 mck-u-animation-slide-down ArticleDefault_mck-c-article-default__heading__bv6rL"><div>Winning with your talent-management strategy</div></h1></div><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_8032924 mdc-u-ts-10 mck-u-animation-blur-in-800 ArticleDefault_mck-c-article-default__description__sjoe9"><div><time datetime="2018-08-07T00:00:00Z">August 7, 2018</time> | Survey</div></div></div></div></div></div></div><div class="mck-o-container"><div class="mck-o-container--wrapped mck-o-container--mobile-spacing mdc-u-grid mdc-u-grid-gutter-xxl"><section data-layer-region="article-body-header" class="mdc-u-grid mdc-u-grid-col-md-12 mck-u-animation-blur-in-400 byline-share-container"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-7 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-8 mdc-u-ts-10"></div></section><section class="mdc-u-grid mdc-u-grid-col-md-12 mck-u-animation-blur-in-400"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_8032924 mdc-u-ts-5"><div class="mck-u-links-inline">Three best practices for managing and allocating talent support better business performance, according to a new survey.</div></div></div></section><main data-layer-region="article-body" class="mdc-u-grid mdc-u-grid-gutter-xxl"><div class="mdc-u-grid mdc-u-grid-col-1 mdc-u-grid-col-md-12"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><div class="mdc-o-content-body mck-u-dropcap"><div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="DownloadsSidebar_mck-c-downloads-sidebar__iFmyt mck-o-xs-right-span"><div data-layer-region="downloads-right-rail"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-c-heading--title___5qyOB_8032924 mdc-c-heading--border___K8dj3_8032924"></h3><div><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_8032924"><a data-component="mdc-c-link" href="#/download/%2F~%2Fmedia%2Fmckinsey%2Fbusiness%20functions%2Fpeople%20and%20organizational%20performance%2Four%20insights%2Fwinning%20with%20your%20talent%20management%20strategy%2Fwinning-with-your-talent-management-strategy.pdf%3FshouldIndex%3Dfalse" class="DownloadsSidebar_mck-c-downloads-sidebar__download-link__fPqFQ mdc-c-link___lBbY1_8032924" target="_self" data-layer-event-prefix="Download Link" data-layer-action="click" data-layer-report-type="" data-layer-file-name="winning-with-your-talent-management-strategy" data-layer-report-name="winning-with-your-talent-management-strategy>"><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_8032924 mdc-c-icon--size-md___yi5fA_8032924 mck-download-icon"></span><span class="mdc-c-link__label___Pfqtd_8032924"> (PDF-4 MB)</span></a></div></div></div></div> <p><strong>The allocation of financial capital</strong> has long been recognized as a critical driver of an organization’s performance. The value of managing and allocating human capital, however, is less widely known. But the results from a new McKinsey Global Survey confirm the positive effects of <a href="/featured-insights/mckinsey-explainers/what-is-talent-management">talent management</a> on business outcomes.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_bottom__9aoSL FootNote_inactive__VZfCp" aria-describedby="d7571396-3524-45f3-b396-7d3f37567475"><sup class="FootNote_footnotesup__e73z_">1</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="d7571396-3524-45f3-b396-7d3f37567475" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">The online survey was in the field from November 14, 2017, to November 28, 2017, and garnered responses from 1,820 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. To adjust for differences in response rates, the data are weighted by the contribution of each respondent’s nation to global GDP.</span></span></span></a></span> According to respondents, organizations with effective talent-management programs<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_bottom__9aoSL FootNote_inactive__VZfCp" aria-describedby="214c29fb-1894-4bda-b1ca-8c1290e1cbd3"><sup class="FootNote_footnotesup__e73z_">2</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="214c29fb-1894-4bda-b1ca-8c1290e1cbd3" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">We define an effective talent-management program as one that, according to respondents, has “effectively” or “very effectively” improved the organization’s overall performance.</span></span></span></a></span> have a better chance than other companies of outperforming competitors and, among publicly owned companies, are likelier to outpace their peers’ returns to shareholders.</p> <p>The survey also sought to uncover the specific practices that are most predictive of successful talent-management strategy. While there is no one-size-fits-all approach to the effective management of human capital, the survey results reveal three common practices that have an outsize impact on the overall effectiveness of talent management as well as organizational performance: rapid allocation of talent, the HR function’s involvement in fostering a positive employee experience, and a strategically minded HR team. The survey results also point to underlying actions that organizations of all stripes can take to cultivate these practices and thereby improve their talent-management strategy and organizational performance.</p> <h2>Why effective talent management matters</h2> <p>According to the survey responses, there is a significant relationship between talent management—when done well—and organizational performance. Only 5 percent of respondents say their organizations’ talent management has been very effective at improving company performance. But those that do are much more likely to say they outperform their competitors: 99 percent of respondents reporting very effective talent management say so, compared with 56 percent of all other respondents.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_bottom__9aoSL FootNote_inactive__VZfCp" aria-describedby="9f30fb2a-98d7-49ce-b8fc-876f9bc023a5"><sup class="FootNote_footnotesup__e73z_">3</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="9f30fb2a-98d7-49ce-b8fc-876f9bc023a5" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Figures were calculated after removing the 3 percent of respondents who answered “don’t know” when asked how their organizations’ performance over the past three years compared with competitors’ performance.</span></span></span></a></span></p> <p>What is more, the effects of successful talent management seem to be cumulative. Like an overall effective talent-management program, the abilities to <a href="/capabilities/people-and-organizational-performance/our-insights/attracting-and-retaining-the-right-talent">attract and retain talent</a> appear to support outperformance (Exhibit 1). Among public companies, we see a similar effect on total returns to shareholders (TRS). At companies with very effective talent management, respondents are six times more likely than those with very ineffective talent management to report higher TRS than competitors.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mck-c-content-header"><div class="ContentHeader_mck-c-content-header__eyebrow__cBTe_"></div></div><div class="mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex1.svgz?cq=50&cpy=Center"/><img alt="The abilities to attract and retain talent, in addition to having an effective talent-management program, support organizational outperformance." src="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex1.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <h2>Three drivers of successful talent-management strategy</h2> <p>To support these outcomes, the results suggest three practices that most closely link with effective talent management: rapid allocation of talent,<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_bottom__9aoSL FootNote_inactive__VZfCp" aria-describedby="ca3ff5c2-09c3-4008-850f-b8ce3b6d52c5"><sup class="FootNote_footnotesup__e73z_">4</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="ca3ff5c2-09c3-4008-850f-b8ce3b6d52c5" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">We define rapid allocation of talent as the fast or very fast movement of talent among strategic projects as priorities arise and dissolve.</span></span></span></a></span> HR’s involvement in employee experience, and a <a href="/capabilities/people-and-organizational-performance/our-insights/putting-talent-at-the-top-of-the-ceo-agenda">strategically minded HR team</a> (Exhibit 2).</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mck-c-content-header"><div class="ContentHeader_mck-c-content-header__eyebrow__cBTe_"></div></div><div class="mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex2.svgz?cq=50&cpy=Center"/><img alt="Talent-management effectiveness is linked most closely with rapid talent allocation, employee experience, and strategically minded HR leaders." src="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex2.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <p>Respondents who say all three practices are in place—just 17 percent—are significantly more likely than their peers to rate their organizations’ overall performance, as well as TRS, as better than competitors’ (Exhibit 3). They are also 2.5 times more likely than others to rate their organizations’ overall talent-management efforts as effective.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mck-c-content-header"><div class="ContentHeader_mck-c-content-header__eyebrow__cBTe_"></div></div><div class="mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex3.svgz?cq=50&cpy=Center"/><img alt="The three key practices for effective talent management also support organizational outperformance relative to peers." src="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex3.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <h2>Rapid allocation of talent</h2> <p>Only 39 percent of respondents say their organizations are fast or very fast at <a href="/capabilities/people-and-organizational-performance/our-insights/organizing-for-the-age-of-urgency">reallocating talent as strategic priorities arise and dissolve</a>—a practice that leads to a 1.4-times-greater likelihood of outperformance. And while it is well established that <a href="/capabilities/strategy-and-corporate-finance/our-insights/how-nimble-resource-allocation-can-double-your-companys-value">companies with rapid capital allocation are likely to see higher TRS<span style="white-space:pre"></span></a>, our findings show that the same holds true for talent allocation. At public companies that quickly allocate talent, respondents are 1.5 times more likely than the slower allocators to report better TRS than competitors.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_bottom__9aoSL FootNote_inactive__VZfCp" aria-describedby="d8bcf77d-a754-43ba-8de0-802901450cb7"><sup class="FootNote_footnotesup__e73z_">5</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="d8bcf77d-a754-43ba-8de0-802901450cb7" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Respondents who say their organizations have rapid talent reallocation are 2.2 times more likely than those who say their organizations have slow or very slow talent reallocation to report better TRS than competitors, as noted in Mike Barriere, Miriam Owens, and Sarah Pobereskin, “<a href="/capabilities/people-and-organizational-performance/our-insights/linking-talent-to-value">Linking talent to value</a>,” <em>McKinsey Quarterly</em>, April 2018.</span></span></span></a></span> The link between rapid allocation and effective talent management is also strong: nearly two-thirds of the fast allocators say their talent-management efforts have improved overall performance, compared with just 29 percent of their slower-moving peers.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor1up mck-o-md-center mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-1up"><div class="mdc-u-grid mdc-u-grid-gutter-md mdc-u-grid-col-lg-12 mdc-u-grid-col-md-12 "><div class="mdc-u-grid-col-md-span-12"><header data-component="mdc-c-header" class="mdc-c-header"><div class="mdc-c-header__block___i1Lg-_8032924"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924"><div>Would you like to learn more about our <a href="/sitecore/service/notfound.aspx?item=web%3a%7b4797fcea-568a-464d-990c-cf68e03eb4f0%7d%40en">Talent Match Solution</a>?</div></h3></div></header></div></div></div> <p>To allocate talent more quickly, the survey results point to three specific actions that meaningfully correlate with the practice (Exhibit 4). The first of these is the <a href="/capabilities/people-and-organizational-performance/our-insights/linking-talent-to-value">effective deployment of talent based on the skills needed</a>, which has a direct impact on the speed of allocation. Respondents are 7.4 times more likely to report rapid talent allocation when their organizations effectively assign talent to a given role based on the skills needed.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mck-c-content-header"><div class="ContentHeader_mck-c-content-header__eyebrow__cBTe_"></div></div><div class="mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex4.svgz?cq=50&cpy=Center"/><img alt="Rapid talent allocation is most likely when skills-based deployment, executive involvement, and cross-functional teams are in place." src="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex4.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <p>Second is executive-team involvement in talent management. Respondents who say their leaders are involved in talent management are 3.4 times more likely to report rapid talent allocation at their organizations. The frequency of leaders’ involvement also makes a difference. At organizations that quickly reallocate talent, executive teams usually review talent allocation at least once per quarter (Exhibit 5). Finally, the results suggest that organizations where employees work in small, cross-functional teams are more likely than others to allocate talent quickly.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-inline-module-container mck-o-md-center"><div class="mck-c-content-header"><div class="ContentHeader_mck-c-content-header__eyebrow__cBTe_"></div></div><div class="mck-u-inline-module-border-bottom"><picture data-component="mdc-c-picture" class="Exhibit_mck-c-exhibit__image__pyIDm"><source media="(min-width: 768px)" srcSet="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex5.svgz?cq=50&cpy=Center"/><img alt="At a majority of organizations that quickly reallocate talent, executive teams review talent allocation at least quarterly." src="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/winning%20with%20your%20talent%20management%20strategy/svg-winning-with-your-talent-ex5.svgz?cq=50&cpy=Center" loading="lazy"/></picture></div><div class="mck-u-sr-only"></div></div> <h2>HR’s involvement in employee experience</h2> <p>A second driver of effective talent management relates to employee experience—specifically, <a href="/capabilities/people-and-organizational-performance/our-insights/the-organization-blog/employee-experience-essential-to-compete">the HR function’s role in ensuring a positive experience</a> across the employee life cycle. Only 37 percent of respondents say that their organizations’ HR functions facilitate a positive employee experience. But those who do are 1.3 times more likely than other respondents to report organizational outperformance and 2.7 times more likely to report effective talent management, though our experience suggests that the HR function’s role is just one of the critical factors that support <a href="/capabilities/people-and-organizational-performance/our-insights/the-organization-blog/time-for-an-ex-intervention">great employee experience</a>.</p> <div data-component="mdc-c-module-wrapper" data-module-theme="default" data-module-background="transparent" data-module-category="" class="mck-c-disruptor1up mck-o-md-center mck-u-inline-module-border-top mck-u-inline-module-border-bottom mck-u-screen-only" data-layer-region="disruptor-1up"><div class="mdc-u-grid mdc-u-grid-gutter-md mdc-u-grid-col-lg-12 mdc-u-grid-col-md-12 "><div class="mdc-u-grid-col-lg-span-4 mdc-u-grid-col-md-span-5 Disruptor1Up_mck-c-disruptor1up__image___2Gc4"><picture data-component="mdc-c-picture"><img alt="How Prudential Financial is tackling the future of work" src="/~/media/mckinsey/featured%20insights/future%20of%20organizations/how%20prudential%20financial%20is%20tackling%20the%20future%20of%20work/how-prudential-financial-5050-1536x1536.jpg?cq=50&mh=145&car=16:9&cpy=Center" loading="lazy"/></picture></div><div class="mdc-u-grid-col-lg-span-8 mdc-u-grid-col-md-span-7"><header data-component="mdc-c-header" class="mdc-c-header"><div class="mdc-c-header__block___i1Lg-_8032924"><h3 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924"><div>Read our latest thinking on talent management strategy</div></h3></div></header><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_8032924 mdc-c-link-container--display-column___X0HDD_8032924 mck-c-disruptor1up__content Disruptor1Up_mck-c-disruptor1up__content--links__VV4lE mdc-u-grid-gutter-md"><a data-component="mdc-c-link" href="/featured-insights/future-of-work/how-prudential-financial-is-tackling-the-future-of-work" class="mdc-c-link-cta___NBQVi_8032924"><span class="mdc-c-link__label___Pfqtd_8032924">Read the article</span><span data-component="mdc-c-icon" class="mdc-c-icon___oi7ef_8032924 mck-link-arrow-right-icon"></span></a></div></div></div></div> <p>A couple of key actions underlie the HR function’s ability to ensure better employee experiences. One is quickly assembling teams of HR experts from various parts of the function to address business priorities. Just 24 percent of respondents say their organizations employ this characteristic of <a href="/capabilities/people-and-organizational-performance/our-insights/the-ceos-guide-to-competing-through-hr">an agile HR operating model</a>, and they are three times likelier than other respondents to report a positive employee experience. Second is deploying talent and skills in a way that supports the organization’s overall strategy. One-third of all respondents say their organizations’ HR business partners are effective at linking talent with strategy in this way, and those who do are over three times more likely than other respondents to say the HR team facilitates positive employee experiences.</p> <h2>Strategic HR teams</h2> <p>The third practice of effective talent management is an HR team with a comprehensive understanding of the organization’s strategy and business priorities. When respondents say their organizations have a strategy-minded HR team, they are 1.4 times more likely to report outperforming competitors and 2.5 times more likely to report the effective management of talent.</p> <p>The factor that most supports this practice, according to the results, is cross-functional experience. When HR leaders have experience in other functions—including experience as line managers—they are 1.8 times more likely to have a comprehensive understanding of strategy and business priorities. Also important is close <a href="/capabilities/people-and-organizational-performance/our-insights/an-agenda-for-the-talent-first-ceo">collaboration among the organization’s chief HR officer, CEO, and CFO</a>.<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_bottom__9aoSL FootNote_inactive__VZfCp" aria-describedby="332da9a4-1854-4917-b5f4-36a2ebbe7244"><sup class="FootNote_footnotesup__e73z_">6</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="332da9a4-1854-4917-b5f4-36a2ebbe7244" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">Dominic Barton, Dennis Carey, and Ram Charan, “People before strategy: A new role for the CHRO,” <em>Harvard Business Review</em>, July–August 2015, pp. 62–71, hbr.org.</span></span></span></a></span> Fewer than half of all respondents say those executives work together very closely at their organizations,<span class="FootNote_footnote-holder__tjRqy"><a aria-label="footnote" href="javascript:void(0);" class="FootNote_footnote-wrapper__AIRwL undefined FootNote_bottom__9aoSL FootNote_inactive__VZfCp" aria-describedby="acf45c7d-18c4-425e-866f-1c8bc0d326e9"><sup class="FootNote_footnotesup__e73z_">7</sup><span class="FootNote_notch-wrapper__b_5NS"><span class="FootNote_notch__omKtY"></span></span><span class="FootNote_tooltip__QtrbA mdc-u-mt-2"><span class="FootNote_footnote-content__r2OVl"><span id="acf45c7d-18c4-425e-866f-1c8bc0d326e9" aria-hidden="true" data-module-theme="light" class="FootNote_footnote-text__VjKgO mck-u-links-inline">The question “How closely, if at all, does your organization’s chief HR officer work with your CEO and CFO?” was asked only of respondents in vice president and C-level roles.</span></span></span></a></span> but those who do are 1.7 times likelier to report a strategy-minded HR function. The findings also point to the importance of transparency with all employees about strategy and business objectives. Respondents who say their organizations’ employees understand the overall strategy are twice as likely to say their HR team has a comprehensive understanding of the strategy.</p> <hr/> <p>In summary, effective talent management—and the practices that best support it—contributes to a company’s financial performance. No one approach works for every company, but the survey results confirm that rapid allocation of talent, the HR function’s involvement in fostering positive employee experience, and a strategic HR function have the greatest impact on a talent-management program’s effectiveness.</p></div><div class="container-placeholder"></div></div></div><div class="mdc-u-grid mdc-u-grid-gutter-xl"><section role="contentinfo" data-layer-region="article-about-authors" class="mdc-u-grid mdc-u-grid-col-md-12 AboutAuthor_mck-c-about-author__nRJzu"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-3 mdc-u-grid-col-lg-end-11"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-c-heading--title___5qyOB_8032924 mdc-c-heading--border___K8dj3_8032924 mdc-u-align-center"></h5><div data-component="mdc-c-description" class="mdc-c-description___SrnQP_8032924 mdc-u-ts-8 mck-u-links-inline mck-u-links-inline--secondary mdc-u-mt-5"><div><p>The contributors to the development and analysis of this survey include <strong>Svetlana Andrianova,</strong> a specialist in McKinsey’s Charlotte office; <strong><a href="/our-people/dana-maor">Dana Maor</a>,</strong> a senior partner in the Tel Aviv office; and <strong>Bill Schaninger,</strong> a senior partner in the Philadelphia office. </p><p> They wish to thank Laura Lee, David Mendelsohn, and Trevor Young for their contributions to this work.</p></div></div></div></section><section class="mdc-u-grid mdc-u-grid-col-md-12 mck-u-screen-only"><div class="mdc-u-grid-col-md-start-2 mdc-u-grid-col-md-end-12 mdc-u-grid-col-lg-start-5 mdc-u-grid-col-lg-end-9"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-c-heading--title___5qyOB_8032924 mdc-c-heading--border___K8dj3_8032924 mdc-u-align-center">Explore a career with us</h5><div data-component="mdc-c-link-container" class="mdc-c-link-container___xefGu_8032924 mdc-c-link-container--align-center___ar3mu_8032924"><a data-component="mdc-c-link" href="/careers/search-jobs" class="mdc-c-button___U4iY2_8032924 mdc-c-button--secondary___Boipq_8032924 mdc-c-button--size-large___jwpUy_8032924" aria-label="Search Openings" data-layer-event-prefix="CTA Link" data-layer-action="click" data-layer-category="careers" data-layer-subcategory="search" data-layer-text="Search Openings"><span class="mdc-c-link__label___Pfqtd_8032924">Search Openings</span></a></div></div></section></div></main></div><div data-component="mdc-c-module-wrapper" data-module-theme="light" data-module-background="lightest-grey" data-module-category="StandalonePromo" class="RelatedArticle_mck-c-article-related__GGA76 mck-u-screen-only" data-layer-region="related-articles"><div class="mdc-o-container__wrapper is-wrapped mdc-u-spaced-mobile"><h5 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-c-heading--title___5qyOB_8032924 mdc-u-align-center">Related Articles</h5><div class="mdc-u-grid mdc-u-grid-col-md-3 RelatedArticle_items-container__s2uD0"><div class="mdc-u-grid mdc-u-grid-gutter-lg Card_card__diA2r Card_hover-effect__RGb9b"><div class="Card_wrapper-image__8b4P6"><a data-component="mdc-c-link" href="/capabilities/people-and-organizational-performance/our-insights/an-agenda-for-the-talent-first-ceo" class="mdc-c-link___lBbY1_8032924"><picture data-component="mdc-c-picture" class="Card_wrapper-image__8b4P6"><style>.picture-uniqueKey-anag-0 { aspect-ratio: 16/9 }</style><img alt="An agenda of a talent-first CEO" class="picture-uniqueKey-anag-0" src="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/the%20agenda%20of%20a%20talen%20first%20ceo/wwt-articlehero_1536x1536_200.jpg?cq=50&mw=767&car=16:9&cpy=Center" loading="lazy"/></picture></a></div><div class="Card_wrapper-text__U6Y3k"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_8032924 Card_content-block__pF6Z1"><span>Book Excerpt - <i>McKinsey Quarterly</i></span><h6 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-u-ts-6"><a data-component="mdc-c-link" href="/capabilities/people-and-organizational-performance/our-insights/an-agenda-for-the-talent-first-ceo" class="mdc-c-link-heading___Zggl8_8032924 mdc-c-link___lBbY1_8032924"><div>An agenda for the talent-first CEO</div></a></h6></div></div></div><div class="mdc-u-grid mdc-u-grid-gutter-lg Card_card__diA2r Card_hover-effect__RGb9b"><div class="Card_wrapper-image__8b4P6"><a data-component="mdc-c-link" href="/capabilities/people-and-organizational-performance/our-insights/the-ceos-guide-to-competing-through-hr" class="mdc-c-link___lBbY1_8032924"><picture data-component="mdc-c-picture" class="Card_wrapper-image__8b4P6"><style>.picture-uniqueKey-thec-0 { aspect-ratio: 16/9 }</style><img alt="HR-competing_thumb_1536x1536_200_Standard" class="picture-uniqueKey-thec-0" src="/~/media/mckinsey/business%20functions/people%20and%20organizational%20performance/our%20insights/the%20ceos%20guide%20to%20competing%20through%20hr/hr-competing_thumb_1536x1536_200_standard.jpg?cq=50&mw=767&car=16:9&cpy=Center" loading="lazy"/></picture></a></div><div class="Card_wrapper-text__U6Y3k"><div data-component="mdc-c-content-block" class="mdc-c-content-block___7p6Lu_8032924 Card_content-block__pF6Z1"><span>Article - 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<i>McKinsey Quarterly</i></span><h6 data-component="mdc-c-heading" class="mdc-c-heading___0fM1W_8032924 mdc-u-ts-6"><a data-component="mdc-c-link" href="/capabilities/people-and-organizational-performance/our-insights/linking-talent-to-value" class="mdc-c-link-heading___Zggl8_8032924 mdc-c-link___lBbY1_8032924"><div>Linking talent to value</div></a></h6></div></div></div></div></div></div></div></main></div><script id="__NEXT_DATA__" type="application/json">{"props":{"pageProps":{"locale":"en","dictionary":{},"sitecoreContext":{"route":{"name":"Winning with your talent management strategy","displayName":"Winning with your talent management strategy","fields":null,"databaseName":"web","deviceId":"fe5d7fdf-89c0-4d99-9aa3-b5fbd009c9f3","itemId":"7db54b79-d19a-4ced-93e0-a1eaafc4de11","itemLanguage":"en","itemVersion":1,"layoutId":"ae753eb4-a035-40b4-83bf-4b4438df6742","templateId":"683910db-02ba-40ba-92e7-726c880160a9","templateName":"ArticleJSS","placeholders":{"jss-main":[{"uid":"232bb7e9-289f-492d-a916-2b6185e44a84","componentName":"ArticleTemplate","dataSource":"","fields":{"data":{"articleTemplate":{"title":{"jsonValue":{"value":"Winning with your talent-management strategy"}},"sEOTitle":{"value":""},"description":{"jsonValue":{"value":"Three best practices for managing and allocating talent support better business performance, according to a new survey."}},"sEODescription":{"value":"Three best practices for talent-management strategy support better business performance, as well as better overall people management, according to a new survey."},"displayDate":{"jsonValue":{"value":"2018-08-07T00:00:00Z"}},"body":{"value":"[[DownloadsSidebar]]\n\u003cp\u003e\u003cstrong\u003eThe allocation of financial capital\u003c/strong\u003e has long been recognized as a critical driver of an organization\u0026rsquo;s performance. The value of managing and allocating human capital, however, is less widely known. But the results from a new McKinsey Global Survey confirm the positive effects of \u003ca href=\"/featured-insights/mckinsey-explainers/what-is-talent-management\"\u003etalent management\u003c/a\u003e\u0026nbsp;on business outcomes.[[footnote 1]] According to respondents, organizations with effective talent-management programs[[footnote 2]] have a better chance than other companies of outperforming competitors and, among publicly owned companies, are likelier to outpace their peers\u0026rsquo; returns to shareholders.\u003c/p\u003e\n\u003cp\u003eThe survey also sought to uncover the specific practices that are most predictive of successful talent-management strategy. While there is no one-size-fits-all approach to the effective management of human capital, the survey results reveal three common practices that have an outsize impact on the overall effectiveness of talent management as well as organizational performance: rapid allocation of talent, the HR function\u0026rsquo;s involvement in fostering a positive employee experience, and a strategically minded HR team. The survey results also point to underlying actions that organizations of all stripes can take to cultivate these practices and thereby improve their talent-management strategy and organizational performance.\u003c/p\u003e\n\u003ch2\u003eWhy effective talent management matters\u003c/h2\u003e\n\u003cp\u003eAccording to the survey responses, there is a significant relationship between talent management\u0026mdash;when done well\u0026mdash;and organizational performance. Only 5 percent of respondents say their organizations\u0026rsquo; talent management has been very effective at improving company performance. But those that do are much more likely to say they outperform their competitors: 99 percent of respondents reporting very effective talent management say so, compared with 56 percent of all other respondents.[[footnote 3]]\u003c/p\u003e\n\u003cp\u003eWhat is more, the effects of successful talent management seem to be cumulative. Like an overall effective talent-management program, the abilities to \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/attracting-and-retaining-the-right-talent\"\u003eattract and retain talent\u003c/a\u003e appear to support outperformance (Exhibit 1). Among public companies, we see a similar effect on total returns to shareholders (TRS). At companies with very effective talent management, respondents are six times more likely than those with very ineffective talent management to report higher TRS than competitors.\u003c/p\u003e\n[[exhibit 1]]\n\u003ch2\u003eThree drivers of successful talent-management strategy\u003c/h2\u003e\n\u003cp\u003eTo support these outcomes, the results suggest three practices that most closely link with effective talent management: rapid allocation of talent,[[footnote 4]] HR\u0026rsquo;s involvement in employee experience, and a \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/putting-talent-at-the-top-of-the-ceo-agenda\"\u003estrategically minded HR team\u003c/a\u003e (Exhibit 2).\u003c/p\u003e\n[[exhibit 2]]\n\u003cp\u003eRespondents who say all three practices are in place\u0026mdash;just 17 percent\u0026mdash;are significantly more likely than their peers to rate their organizations\u0026rsquo; overall performance, as well as TRS, as better than competitors\u0026rsquo; (Exhibit 3). They are also 2.5 times more likely than others to rate their organizations\u0026rsquo; overall talent-management efforts as effective.\u003c/p\u003e\n[[exhibit 3]]\n\u003ch2\u003eRapid allocation of talent\u003c/h2\u003e\n\u003cp\u003eOnly 39 percent of respondents say their organizations are fast or very fast at \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/organizing-for-the-age-of-urgency\"\u003ereallocating talent as strategic priorities arise and dissolve\u003c/a\u003e\u0026mdash;a practice that leads to a 1.4-times-greater likelihood of outperformance. And while it is well established that \u003ca href=\"/capabilities/strategy-and-corporate-finance/our-insights/how-nimble-resource-allocation-can-double-your-companys-value\"\u003ecompanies with rapid capital allocation are likely to see higher TRS\u003cspan style=\"white-space: pre;\"\u003e\u003c/span\u003e\u003c/a\u003e, our findings show that the same holds true for talent allocation. At public companies that quickly allocate talent, respondents are 1.5 times more likely than the slower allocators to report better TRS than competitors.[[footnote 5]] The link between rapid allocation and effective talent management is also strong: nearly two-thirds of the fast allocators say their talent-management efforts have improved overall performance, compared with just 29 percent of their slower-moving peers.\u003c/p\u003e\n[[disruptor1Up dis1]]\n\u003cp\u003eTo allocate talent more quickly, the survey results point to three specific actions that meaningfully correlate with the practice (Exhibit 4). The first of these is the \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/linking-talent-to-value\"\u003eeffective deployment of talent based on the skills needed\u003c/a\u003e, which has a direct impact on the speed of allocation. Respondents are 7.4 times more likely to report rapid talent allocation when their organizations effectively assign talent to a given role based on the skills needed.\u003c/p\u003e\n[[exhibit 4]]\n\u003cp\u003eSecond is executive-team involvement in talent management. Respondents who say their leaders are involved in talent management are 3.4 times more likely to report rapid talent allocation at their organizations. The frequency of leaders\u0026rsquo; involvement also makes a difference. At organizations that quickly reallocate talent, executive teams usually review talent allocation at least once per quarter (Exhibit 5). Finally, the results suggest that organizations where employees work in small, cross-functional teams are more likely than others to allocate talent quickly.\u003c/p\u003e\n[[exhibit 5]]\n\u003ch2\u003eHR\u0026rsquo;s involvement in employee experience\u003c/h2\u003e\n\u003cp\u003eA second driver of effective talent management relates to employee experience\u0026mdash;specifically, \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/the-organization-blog/employee-experience-essential-to-compete\"\u003ethe HR function\u0026rsquo;s role in ensuring a positive experience\u003c/a\u003e across the employee life cycle. Only 37 percent of respondents say that their organizations\u0026rsquo; HR functions facilitate a positive employee experience. But those who do are 1.3 times more likely than other respondents to report organizational outperformance and\n2.7 times more likely to report effective talent management, though our experience suggests that the HR function\u0026rsquo;s role is just one of the critical factors that support \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/the-organization-blog/time-for-an-ex-intervention\"\u003egreat employee experience\u003c/a\u003e.\u003c/p\u003e\n[[disruptor1Up dis2]]\n\u003cp\u003eA couple of key actions underlie the HR function\u0026rsquo;s ability to ensure better employee experiences. One is quickly assembling teams of HR experts from various parts of the function to address business priorities. Just 24 percent of respondents say their organizations employ this characteristic of \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/the-ceos-guide-to-competing-through-hr\"\u003ean agile HR operating model\u003c/a\u003e, and they are three times likelier than other respondents to report a positive employee experience. Second is deploying talent and skills in a way that supports the organization\u0026rsquo;s overall strategy. One-third of all respondents say their organizations\u0026rsquo; HR business partners are effective at linking talent with strategy in this way, and those who do are over three times more likely than other respondents to say the HR team facilitates positive employee experiences.\u003c/p\u003e\n\u003ch2\u003eStrategic HR teams\u003c/h2\u003e\n\u003cp\u003eThe third practice of effective talent management is an HR team with a comprehensive understanding of the organization\u0026rsquo;s strategy and business priorities. When respondents say their organizations have a strategy-minded HR team, they are 1.4 times more likely to report outperforming competitors and 2.5 times more likely to report the effective management of talent.\u003c/p\u003e\n\u003cp\u003eThe factor that most supports this practice, according to the results, is cross-functional experience. When HR leaders have experience in other functions\u0026mdash;including experience as line managers\u0026mdash;they are 1.8 times more likely to have a comprehensive understanding of strategy and business priorities. Also important is close \u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/an-agenda-for-the-talent-first-ceo\"\u003ecollaboration among the organization\u0026rsquo;s chief HR officer, CEO, and CFO\u003c/a\u003e.[[footnote 6]] Fewer than half of all respondents say those executives work together very closely at their organizations,[[footnote 7]] but those who do are 1.7 times likelier to report a strategy-minded HR function. The findings also point to the importance of transparency with all employees about strategy and business objectives. Respondents who say their organizations\u0026rsquo; employees understand the overall strategy are twice as likely to say their HR team has a comprehensive understanding of the strategy.\u003c/p\u003e\n\u003chr /\u003e\n\u003cp\u003eIn summary, effective talent management\u0026mdash;and the practices that best support it\u0026mdash;contributes to a company\u0026rsquo;s financial performance. No one approach works for every company, but the survey results confirm that rapid allocation of talent, the HR function\u0026rsquo;s involvement in fostering positive employee experience, and a strategic HR function have the greatest impact on a talent-management program\u0026rsquo;s effectiveness.\u003c/p\u003e"},"isFullScreenInteractive":{"boolValue":false},"hideStickySocialShareBar":{"boolValue":false},"desktopID":{"value":""},"mobileID":{"value":""},"desktopURL":{"value":""},"mobileURL":{"value":""},"desktopPaddingPercentage":{"value":""},"mobilePaddingPercentage":{"value":""},"desktopOverrideHeight":{"value":""},"mobileOverrideHeight":{"value":""},"cerosOembedURL":{"value":""},"cerosRenderMode":{"targetItem":null},"cerosBackgroundColor":{"targetItem":null},"hideByLine":{"boolValue":false},"tableOfContentsTitle":{"value":"TABLE OF CONTENTS"},"accessStatus":{"targetItem":{"key":{"value":"RegisteredUsers"},"value":{"value":"Registered Users"}}},"articleType":{"targetItem":{"displayName":"Survey"}},"hasSpecialReport":{"boolValue":false},"contentType":{"targetItem":{"displayName":"Article"}},"sourcePublication":{"targetItem":null},"externalPublication":{"value":""},"excludeFromClientLink":{"boolValue":false},"originalPublishDate":{"jsonValue":{"value":"2018-08-08T00:00:00Z"}},"footnotes":{"value":"\u003col\u003e\n \u003cli\u003eThe online survey was in the field from November 14, 2017, to November 28, 2017, and garnered responses from 1,820 participants representing the full range of regions, industries, company sizes, functional specialties, and tenures. To adjust for differences in response rates, the data are weighted by the contribution of each respondent\u0026rsquo;s nation to global GDP.\u003c/li\u003e\n \u003cli\u003eWe define an effective talent-management program as one that, according to respondents, has \u0026ldquo;effectively\u0026rdquo; or \u0026ldquo;very effectively\u0026rdquo; improved the organization\u0026rsquo;s overall performance.\u003c/li\u003e\n \u003cli\u003eFigures were calculated after removing the 3 percent of respondents who answered \u0026ldquo;don\u0026rsquo;t know\u0026rdquo; when asked how their organizations\u0026rsquo; performance over the past three years compared with competitors\u0026rsquo; performance.\u003c/li\u003e\n \u003cli\u003eWe define rapid allocation of talent as the fast or very fast movement of talent among strategic projects as priorities arise and dissolve.\u003c/li\u003e\n \u003cli\u003eRespondents who say their organizations have rapid talent reallocation are 2.2 times more likely than those who say their organizations have slow or very slow talent reallocation to report better TRS than competitors, as noted in Mike Barriere, Miriam Owens, and Sarah Pobereskin, \u0026ldquo;\u003ca href=\"/capabilities/people-and-organizational-performance/our-insights/linking-talent-to-value\"\u003eLinking talent to value\u003c/a\u003e,\u0026rdquo; \u003cem\u003eMcKinsey Quarterly\u003c/em\u003e, April 2018.\u003c/li\u003e\n \u003cli\u003eDominic Barton, Dennis Carey, and Ram Charan, \u0026ldquo;People before strategy: A new role for the CHRO,\u0026rdquo; \u003cem\u003eHarvard Business Review\u003c/em\u003e, July\u0026ndash;August 2015, pp. 62\u0026ndash;71, hbr.org.\u003c/li\u003e\n \u003cli\u003eThe question \u0026ldquo;How closely, if at all, does your organization\u0026rsquo;s chief HR officer work with your CEO and CFO?\u0026rdquo; was asked only of respondents in vice president and C-level roles.\u003c/li\u003e\n\u003c/ol\u003e"},"contributoryPractice":{"targetItems":[]},"aboutTheAuthors":{"value":"\u003cp\u003eThe contributors to the development and analysis of this survey include \u003cstrong\u003eSvetlana Andrianova,\u003c/strong\u003e a specialist in McKinsey\u0026rsquo;s Charlotte office; \u003cstrong\u003e\u003ca href=\"/our-people/dana-maor\"\u003eDana Maor\u003c/a\u003e,\u003c/strong\u003e a senior partner in the Tel Aviv office; and \u003cstrong\u003eBill Schaninger,\u003c/strong\u003e a senior partner in the Philadelphia office.\n\u003c/p\u003e\u003cp\u003e\nThey wish to thank Laura Lee, David Mendelsohn, and Trevor Young for their contributions to this work.\u003c/p\u003e"},"authors":{"targetItems":[]},"nonPartnerAuthors":{"targetItems":[]},"interactiveToUse":{"targetItem":null},"enableArticleComponents":{"boolValue":false},"relatedArticles":{"targetItems":[{"sourcePublication":{"targetItem":{"name":"McKinsey Quarterly"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"An agenda for the talent-first CEO"},"url":{"path":"/capabilities/people-and-organizational-performance/our-insights/an-agenda-for-the-talent-first-ceo"},"eyebrow":{"targetItem":{"name":"Book Excerpt"}},"articleType":{"targetItem":{"name":"Book Excerpt"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"In tumultuous times, a company\u0026rsquo;s talent is its most valuable and reliable asset. What does it take to lead an organization that truly unleashes its human capital?"},"standardImage":{"src":"/~/media/mckinsey/business functions/people and organizational performance/our insights/the agenda of a talen first ceo/wwt-articlehero_1536x1536_200.jpg","alt":"An agenda of a talent-first CEO"},"heroImage":null,"thumbnailImage":null},{"sourcePublication":{"targetItem":{"name":"McKinsey Quarterly"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"The CEO’s guide to competing through HR"},"url":{"path":"/capabilities/people-and-organizational-performance/our-insights/the-ceos-guide-to-competing-through-hr"},"eyebrow":{"targetItem":{"name":"Article"}},"articleType":{"targetItem":{"name":"Article"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"Technological tools provide a new opportunity for the function to reach its potential and drive real business value."},"standardImage":{"src":"/~/media/mckinsey/business functions/people and organizational performance/our insights/the ceos guide to competing through hr/hr-competing_thumb_1536x1536_200_standard.jpg","alt":"HR-competing_thumb_1536x1536_200_Standard"},"heroImage":null,"thumbnailImage":null},{"sourcePublication":{"targetItem":{"name":"McKinsey Quarterly"}},"publicationSource":null,"externalPublication":{"value":""},"title":{"value":"Linking talent to value"},"url":{"path":"/capabilities/people-and-organizational-performance/our-insights/linking-talent-to-value"},"eyebrow":{"targetItem":{"name":"Article"}},"articleType":{"targetItem":{"name":"Article"}},"contentType":{"targetItem":{"name":"Article"}},"description":{"value":"Getting the best people into the most important roles does not happen by chance; it requires a disciplined look at where the organization really creates value and how top talent contributes."},"standardImage":{"src":"/~/media/mckinsey/industries/technology media and telecommunications/high tech/our insights/linking 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