Talent Relationship Management: Definition, Process, and Benefits

The Spanish soccer team FC Barcelona has a renowned youth academy, La Masia, which has produced some of the world’s best soccer players, including Lionel Messi and Andres Iniesta. The academy focuses on developing players’ soccer skills, building relationships with players, and providing them with a supportive environment where they can thrive.

In basketball, football, soccer, and similar sports, coaches and managers work to identify talented players and build strong relationships with them, both on and off the field. Coaches and managers work to develop relationships with young players at a very early age, often starting in youth leagues. They then work to develop those players over time, providing them with training and support and building relationships with them that can last for many years.

These are some great examples of how effective talent relationship management can build successful teams and develop talented individuals over time. It's also an approach HR leaders might want to consider for strategic workforce planning and transformation.

What is Talent Relationship Management?

Talent relationship management (TRM) is a formal practice that builds and maintains relationships with internal and external talent. Organizations can attract, develop, and retain the best talent using tools and strategies, including candidate relationship management, employee engagement programs, and succession planning. The goal of TRM is to create a talent pipeline that meets the needs of the business, both now and in the future.

Internal vs. External Talent Relationship Management

The main difference between internal talent relationship management and external TRM is the focus of their talent management efforts.

Internal TRM focuses on managing and developing the talent already employed within the organization. This includes identifying high-potential employees, providing training and development opportunities, and creating career advancement paths within the organization. Internal TRM is focused on retaining and developing the organization’s existing workforce.

On the other hand, external TRM focuses on building and maintaining relationships with potential future employees outside the organization. This includes employer branding, talent acquisition, and creating a positive candidate experience during the hiring process. External TRM focuses on attracting top talent and building a pipeline of potential employees.

While internal and external talent relationship management focus on different areas, there are a few similarities between them:

• Both aim to attract and retain talented individuals: While internal TRM focuses on retaining existing employees, external TRM aims to attract potential candidates.
• Both require effective communication and relationship-building skills: Whether building relationships with current employees or potential candidates, effective communication and relationship-building skills are crucial for internal and external TRM success.
• Both require a deep understanding of the organization’s culture and values: To manage internal talent or attract external talent effectively; it’s important to have a clear understanding of the organization’s culture and values and to ensure that these are communicated effectively to potential candidates.
• Both can significantly impact an organization’s success: Effective talent management, whether focused on internal or external talent, can lead to increased employee satisfaction, improved performance, and, ultimately, greater success for the organization.

6 Steps for Successful Talent Relationship Management

Before we start with the talent relationship management process, let’s first understand what happens when you skip one of the steps.

Despite being aware of the changing market and the need to pivot, Blockbuster ultimately failed to execute its ideas and make the necessary changes to stay competitive. Though they had talented and innovative employees and ample financial resources, the company struggled to make the right choices and implement effective strategies. Why?

Blockbuster board member and activist investor Carl Icahn strongly opposed the company’s move into the online rental market, advocating for preserving Blockbuster’s brick-and-mortar roots. This led to the removal of John Antioco, the CEO who had steered the company since 1997. In his place, Jim Keyes was appointed in 2007.

Like Icahn, Keyes was committed to maintaining Blockbuster’s physical presence. However, this strategy ultimately proved to be a misstep in light of the growing trend towards digital streaming and online rentals. This example highlights the impact of missing a critical step: Identifying talent and implementing effective talent relationship management strategies to ensure those individuals can contribute to the company’s success.

Here's a closer look at why this step and others are critical for a successful talent relationship management process:

1. Identify talent needs that match the organization’s future goals

Organizations that align talent strategies with their business objectives are more likely to outperform their competitors in key revenue growth and profitability areas, according to a study by the Society for Human Resource Management (SHRM).

Identifying talent needs that match the organization’s future goals through strategic workforce planning (SWP) is a crucial step in talent relationship management. HR leaders can achieve this by analyzing their employees’ skills and capabilities, projecting the skills and competencies required in the future, and identifying gaps. This involves conducting a comprehensive workforce analysis and market trend research to determine the talent required to achieve future business objectives.

HR leaders can use analytics to gain insights into their current workforce’s capabilities and assess whether their organization has the right mix of skills, knowledge, and experience to meet future needs. Workforce analytics and labor market intelligence can also help HR leaders identify potential skills gaps, anticipate changes in employee demographics, track retirement trends, forecast future talent demands, analyze market trends, study the competition, and consult with other leaders within the organization to ensure that the talent needs identified align with the overall business strategy.

2. Attract and engage the right talent

Nearly three-quarters (70%) of the global workforce is comprised of passive talent — people who aren’t actively seeking new jobs but are open to new opportunities, according to LinkedIn. Additionally, a study by SHRM found that the cost of a bad hire can spike as much as 150% of their annual salary, underscoring the importance of attracting and engaging the right talent from the outset.

Attracting and engaging talent is a crucial aspect of talent relationship management. HR leaders must identify the right channels to attract talent and communicate their organization’s value proposition. One way to attract talent is through job postings on popular job boards, social media platforms, and career websites. Another way is through employee referral programs, where current employees can refer their contacts for open positions.

HR leaders must ensure their employer brand and employee value propositions (EVPs) are strong and visible to engage talent. They should highlight the organization’s ethics, culture, values, and career growth opportunities to attract top talent. The job description and salary details should be clear and transparent, detailing the role’s responsibilities and expectations. HR leaders can also engage talent by providing a positive candidate experience, such as by providing timely communication and feedback.

3. Nurture relationships

Companies prioritizing talent relationship management can significantly reduce the cost-per-hire and overall turnover, which can also result in significant savings associated with recruitment, training, and lost productivity.

To nurture relationships with candidates and employees, HR leaders must focus on building and maintaining open lines of communication. This involves personalized engagement, regular feedback, and a willingness to listen and respond to the needs and concerns of each individual.

By leveraging employee surveys, performance data, employer branding analytics, and other feedback mechanisms, HR leaders can gain insight into what employees and candidates are looking for in their careers and how they can be better supported and engaged.

Personalized engagement is critical in building strong relationships with employees and candidates. This involves providing opportunities for learning and development as well as offering flexible work arrangements and recognition for achievements. HR leaders can also use technology to support personalized engagement through online training and development programs, employee portals, and social media platforms.

4. Develop talent

The American Society of Training and Development found that companies invested in employee training and development have 218% higher income per employee than companies that don’t.

To develop talent, HR leaders can create learning and development plans designed to satisfy employees' unique needs and goals. This can involve providing on-the-job training, coaching, mentoring, and opportunities for job shadowing or cross-functional assignments. HR leaders can also provide access to online training resources and encourage employees to attend industry conferences and seminars to stay up-to-date on the latest trends.

To effectively develop talent, though, HR programs must align with the organization’s overall strategy and goals, and adjust with changing worker needs. By doing so, organizations can help create a culture of learning and development that supports employees' long-term success.

5. Retain talent

A study by the Work Institute found that the cost of employee turnover in the United States alone was nearly $900 billion in 2023. The study also found that the top reasons for that turnover are often preventable, indicating that effective talent relationship management can lead to significant cost savings.

HR leaders can retain talent by creating a work environment and EVP that meets employees’ needs, expectations, and career goals. Providing competitive compensation, benefits packages, and opportunities for learning and development along with creating a positive workplace culture are critical components of retention.

Measuring employee turnover and attrition rates, employee satisfaction levels, and employee engagement levels can help HR leaders gauge the effectiveness of their retention strategies. Additionally, tracking employees’ career progression and skills development can help identify opportunities for growth and career advancement, increasing employee satisfaction and retention.

Other key performance indicators (KPIs) that HR leaders can measure to evaluate the effectiveness of their retention efforts include the time it takes to fill vacant positions, employee referral rates, and absenteeism rates. By monitoring these KPIs, HR leaders can identify areas for improvement and implement changes to improve retention and maintain a positive and engaged workforce.

6. Measure success

Companies that regularly measure their talent management programs are more likely to achieve their business goals. Research emphasizes the importance of measuring the success of talent relationship management and using data to make informed decisions.

To measure the success of their talent relationship management process, HR leaders need to track and analyze key metrics that indicate how well their strategies are working. One important metric is time-to-hire, which measures how long it takes to fill open positions. HR leaders should aim to reduce the time-to-hire as much as possible without compromising the quality of the hire.

Retention rates are another crucial metric to measure, indicating how well the organization can retain its employees. HR leaders should track retention rates over time and compare them to industry benchmarks to identify any areas of concern.

Employee satisfaction surveys are a powerful tool for measuring the success of talent relationship management. These surveys provide valuable insights into how employees feel about the organization, its culture, and its management. HR leaders can use this feedback to identify areas of improvement and make data-driven decisions to improve employee satisfaction.

Other key metrics include employee engagement, performance metrics such as productivity and sales figures, and turnover rates. By regularly tracking and analyzing these metrics, HR leaders can make data-driven improvements to their talent relationship management process and ensure they meet the organization’s goals and objectives.

Data-Backed Insights for Talent Relationship Management

Organizations can achieve their goals by identifying talent needs, attracting and engaging the right candidates, nurturing relationships, developing talent through workforce planning, and retaining top performers.

It just takes comprehensive planning and data-driven insights to make it happen.

Workforce analysis and labor market intelligence help HR teams align talent strategy with business objectives and improve talent relationship management metrics — such as time-to-hire, retention rates, and employee satisfaction scores — by improving employer branding, creating appealing and differentiated EVPs, and offering customized learning and development opportunities. It can also help organizations benchmark against competitors and track market trends that could impact internal and external TRM.

Then any organization can start building its own amazing team and develop the best talent.