Managing internal and external talent

By: Luowei Yan

The question of how to manage talent in our current labor market continues to be an important topic of discussion among academic researchers and practitioners. However, despite the widespread interest in this field, few academic studies address “talent management” specifically. In response, researchers Cappelli and Keller (2014) provide a literature review on books, chapters, and articles that examine specific subtopics of talent management across multiple disciplines (e.g., human resources and industrial-organizational psychology). This blog post sheds light on the conceptual approaches and practical challenges currently experienced in talent management as discussed by Cappelli and Keller (2014).

Conceptual Approaches to Talent Management

Talent management is “the process through which organizations anticipate and meet their needs for talent in strategic jobs” (Cappelli & Keller, 2014). This can be achieved through:

• recruitment,
• hiring,
• and developmental opportunities.  

Two key debates have come to our attention regarding this topic through the review conducted by Cappelli and Keller (2014). The first one considers the investment of scarce resources (such as development opportunities) and whether companies should use an inclusive or exclusive approach to talent management. Inclusive approaches suggest that resources should apply to all employees to create added value, while exclusive approaches suggest that resources should apply disproportionately to a subset of employees or jobs where employers expect the greatest return on investment.  

Based on exclusive approaches, the second debate considers whether focusing on employees or jobs would provide the most value to the company. If it is employees, employers should identify a subset of valuable and unique candidates who can be designated to various roles; and if it is jobs, employers should identify a specific population of roles (strategic jobs) that are critical to the company’s performance and fill them with talent.  

Traditionally, strategic jobs were assumed to be executive-level positions. Today, strategic jobs are more commonly acknowledged as the ones in which excellent individual performance contributes to firm performance at all organizational levels. For example, game developer/programmer positions are strategic jobs in a game development company.

As talent management involves assessing and developing candidates and identifying strategic jobs, we will further discuss whether the focus of attention resides in employees or jobs.

A Brief Historic Glimpse of Talent Management

Cappelli and Keller (2014) discuss, with the rise in organizational specialist functions around World War I, employers needed a steady supply of potential candidates to fill managerial and executive positions. To meet such purpose, companies generated a common model of internal talent management to grow talent from within. The model began with recruitment and investments in identifying candidates capable of becoming executives, followed by internal development and advancement. Compared to obtaining candidates to fill strategic jobs, this model freed employers from the influence of the outside labor market on talent supply and made retention less of a concern. Tools and practices associated with the model were in place by the 1950s.  

Starting in the 1980s, however, the traditional model declined in its use because of the difficulty to foresee consumer demand, voluntary turnover, and the inability to predict skills required in the future. In response to these uncertainties, employers adopted a new model focused on external hiring for executive positions instead. In this case, employers focus solely on the job and search for candidates who might fit its requirements.

Internal and External Talent

Since strategic jobs can be filled with both internal and external talent, considering practices predicated on internal development and external hiring is worthwhile.  

For internal talent, it is crucial to identify the internal talent pool of exemplary performers currently in strategic jobs and high-potential performers capable of filling those jobs in the future. Rather than adopting the traditional model of structured career management, contemporary employers offer existing employees more flexibility. For instance, employees can proactively modify jobs in ways that are desirable to them. The use of internal job boards also enables current employees to explore multi-directional career paths inside the company.

Today, the process of obtaining external talent for upper-level strategic jobs is often carried out by executive search firms. They can tap into a pool of passive job seekers and conduct initial screening and assessment to filter out unsuitable candidates for companies. Regarding lower-level strategic jobs, online job boards and social media allows employers to spread information about opportunities and gather information from certain individuals or groups. But doing so also creates an overload of information, leading to the use of computerized screening of potential candidates which can be prone to biases, if not properly designed.

How does it relate to what we do at nugget.ai?

At nugget.ai we use assessments to assess individual soft skills that are important for performance on the job. This can be a great resource in both internal and external talent management.

Managing internal talent is more individual-oriented as employers focus on finding and developing existing employees. During the hiring process, nugget.ai applies artificial intelligence (AI)-based screening and scoring methods to provide a holistic view of candidates. We are also continuing to improve our methods to allow us to continuously measure performance over time to track development and provide learning and development opportunities.

In contrast, managing external talent is more job oriented as employers focus on seeking out candidates who might fit requirements of a job. Our AI platform allows employers to build benchmarks of skills required for company and job performance. With these benchmarks, employers can compare candidate skills to their internal talent to determine whether candidates would be a good fit for the job. In addition to this, our platform allows organizations to publish jobs to dozens of job boards simultaneously and collects information to help screen and match you with local and global talent profiles.  

As Cappelli and Keller (2014) propose, the internal model can address the most predictable aspects of talent in demand and the external model can satisfy company needs that are less predictable. nugget.ai acknowledges the benefits and barriers in both models and aims to provide a more convenient and scientific solution to talent management.

Interested in learning about how our tools can fit into your recruitment and hiring process? Contact us here.

References

Cappelli, P. & Keller, J. R. (2014). Talent management: conceptual approaches and practical challenges. Annual Review of Organizational Psychology and Organizational Behavior, 1: 305-331. https://doi.org/10.1146/annurev-orgpsych-031413-091314