--- title: Why Talent Management is important description: why talent management is important to organisations and the role of employee engagement --- [![HeadLight-logo-from LF for website](https://blog.head-light.co.uk/hubfs/HeadLight_Sep2016/HeadLight-logo-from%20LF%20for%20website.png)](https://head-light.co.uk/) - [About Us](https://head-light.co.uk/what-makes-head-light-different/) ### [Our Clients Our clients come from industry, justice, government and not for profit sectors.](https://head-light.co.uk/our-clients/) ### [Case Studies Find out what people have said about Head Light and how we have helped.](https://blog.head-light.co.uk/case-studies) ### [Client Charter We like to be clear and upfront in how we work – and how we won’t work. Our Client Charter sets this out.](https://head-light.co.uk/client-charter/) ### [Consulting Partners When you partner with another organisation to deliver services to your clients, your reputation and future business success rests on your Partner’s ability and commitment to make it happen.](https://head-light.co.uk/consulting-partners/) ### [Our Location Head Light is based in Ascot, if you visit us with an electric vehicle, then you can have a free charge on us!](https://head-light.co.uk/contact-us/) ### [About Head Light Head Light helps public sector and regulated organisations turn workforce signals into intelligence about capability, readiness and risk. We are recognised in the Fosway 9-Grid™ for Talent & People Success and have supported customers for 20 years.](https://head-light.co.uk/what-makes-head-light-different/) - [Workforce Capability Intelligence](https://head-light.co.uk/workforce-intelligence-platform/) ### [Workforce Signals Surfacing the evidence layer that turns workforce data into intelligence.  ](https://head-light.co.uk/workforce-intelligence-platform/) ### [Capability Intelligence Understanding workforce capability across your organisation.](https://head-light.co.uk/workforce-intelligence-platform/capability-intelligence/) ### [Workforce Readiness Tracking organisational readiness in real time.](https://head-light.co.uk/workforce-intelligence-platform/workforce-readiness/) ### [Succession Intelligence Understanding leadership continuity and succession risk.](https://head-light.co.uk/workforce-intelligence-platform/succession-intelligence/) ### [Workforce Risk Identifying workforce capability risk before it becomes operational risk.](https://head-light.co.uk/workforce-intelligence-platform/workforce-risk/) ### [Organisational Insight Understanding workforce sentiment and organisational confidence.](https://head-light.co.uk/workforce-intelligence-platform/organisational-insight/) - [Products](https://head-light.co.uk/products-overview/) ### [Talent 360 360-degree feedback software - spot potential, pinpoint development focus, embed recognition.](https://head-light.co.uk/products-overview/talent-360/) ### [Talent Performance Embedding a culture of performance conversation and recognition.](https://head-light.co.uk/products-overview/talent-performance/) ### [Talent Navigator Individual career ownership through career path mapping.](https://head-light.co.uk/products-overview/talent-navigator/) ### [Talent Successor Succession planning software: providing a strategic line of sight.](https://head-light.co.uk/products-overview/talent-successor/) ### [Talent SafeGuard Skills management: by the individual and for the individual.](https://head-light.co.uk/products-overview/talent-safeguard/) ### [Talent En-Gauge Plan and take action to strengthen employee engagement.](https://head-light.co.uk/products-overview/talent-en-gauge/) ### [Talent Advance Keep track of goal planning.](https://head-light.co.uk/products-overview/talent-advance/) - [Consultancy & Training](https://head-light.co.uk/consultancy-training/) ### [Design a Skills or Competency Framework Get a skills or competency framework right for your organisation and your talent management practices make a real and lasting contribution.](https://head-light.co.uk/designing-your-competency-framework/) ### [360 and Performance Assessment Design We develop, test and validate bespoke assessments across all sectors, at every level of talent and every stage of talent management.](https://head-light.co.uk/assessment-design/) ### [Designing a Talent Management Strategy Do you have a Talent Management strategy? Do all your talent activities integrate, utilise the same language and align with your organisational strategy?](https://head-light.co.uk/talent-management-strategy/) ### [Talent Management for Managers Talent Management is not the sole domain of the HR or Learning & Development team. delivering your organisation’s people a strategy.](https://head-light.co.uk/talent-management-for-managers/) ### [Feedback Facilitator Training Investing in 360-degree feedback delivers little benefit if the review and feedback conversation is not handled properly.](https://head-light.co.uk/facilitator-training/) ### [Administrator Training Deploying a talent management software system successfully is not about luck. It requires robust and secure software, solid processes and great administrators.](https://head-light.co.uk/administrator-training/) - [Our Blog](https://blog.head-light.co.uk) - [Blue Light Services](https://head-light.co.uk/blue-light-services/) ### [Blue Light User Group Sharing talent management best practice and collaborating on new features to the Talent platform.](https://head-light.co.uk/blue-light-user-group/) ### [Talent Management for Police 360, PDR and talent and succession planning for police officers and staff.](https://head-light.co.uk/talent-management-for-police-forces/) ### [Talent Management for Fire and Rescue Services 360, PDR and succession planning for fire and rescue services.](https://head-light.co.uk/talent-management-for-fire-and-rescue-services/) [TELL ME MORE](https://head-light.co.uk/contact-us/) # Why Talent Management is important --- **Talent Management has broadly existed in various forms for many years with organisations using such processes as succession planning and competency frameworks to identify and develop their high potential performers.** The term itself was coined in the late 1990s, gaining particular momentum as firms tuned into the fact that having a consistent and focused approach to managing intellectual capital within the organisation would have a positive impact on the business. Since then White Papers, surveys, reports and articles on the subject abound, each with perhaps a slightly different definition of talent management and each taking their own angle, but all with the same consistent message: there are clear bottom-line benefits to having an effective, integrated talent management strategy which is underpinned by the broader business imperatives and this enables current and future success. Various studies have focused on these business benefits and the role of talent management practices and, with the EU backing a legislative initiative to improve the gender balance in the boards of companies listed on stock exchanges, there is a further argument for having a more inclusive and targeted approach to talent management. - Huselid and Becker (1995) researched the HR practices of 740 companies and found that those using High Performance Work Systems (HPWS) or integrated talent management practices had significantly higher levels of organisational performance, measured by an increase in market value per employee. - Watson Wyatt’s European Human Capital Index study in 2002 suggested that there were 36 HR practices and policies which were associated with an almost 90% increase in shareholder value. - The Institute of Work at Sheffield University conducted a study on manufacturing companies in 2001.  Its research demonstrated that people management practices were a better predictor of company performance (productivity and profitability) than strategy, technology or research and development, accounting for 20% of the variation in the financial performance indicators. - Ernst & Young in its report titled Managing Today's Global Workforce: Elevating Talent Management to Improve Business found that those companies which effectively manage talent consistently, deliver higher shareholder value. They analysed results from a survey of 340 senior executives conducted in 2009 to assess global talent management practices and evaluate their impact on business.  It was found that companies which align talent management with business strategy deliver, on average, 20% higher return on equity than those without alignment; those that integrated their talent management programmes delivered 38% greater returns. Another strong argument for investing in a coherent talent management strategy is engagement. There is a growing wealth of data which suggests that an engaged workforce leads to a range of organisational performance benefits.  For instance, the 2009 MacLeod report to Government cited a number of correlates of high engagement levels, many which have been reported by the poll experts Gallup in its studies of engagement. Among its findings: - In organisations with strong talent and engagement practices, more employees were likely to recommend the company to others, with 67% of employees in organisations who had strong Talent Management practices advocating their company versus only 33% of employees in the organisations which did not. - When comparing business units, those with engagement scores in the bottom quartile averaged 31 – 51% more employee turnover, 51% more inventory shrinkage and 62% more accidents than those in the top quartile.  Looking at the same business units, those with engagement scores in the top quartile averaged 18% higher productivity and 12% higher profitability. - In a study on the earnings per share (EPS) growth of 89 organisations, they found that the EPS growth rate of organisations with engagement scores in the top quartile was 2.6 times that of organisations with below-average engagement scores. Engagement is now understood to be a major driver of individual and organisational performance, and has therefore become a management imperative and an important aspect of talent management. An effective talent management strategy will ensure that critical roles are understood and that key people and your stars of tomorrow are identified, managed appropriately through the organisation, engaged, motivated, empowered and retained. For more about developing a Talent Management Strategy, why not read our series of White Papers, *Developing your Talent Management strategy.[![Developing your Talent Management strategy - Part 1](https://no-cache.hubspot.com/cta/default/2397834/75e04caf-01ae-44c0-9251-2e74863ff160.png)](https://cta-redirect.hubspot.com/cta/redirect/2397834/75e04caf-01ae-44c0-9251-2e74863ff160)*   [Developing Competencies](https://blog.head-light.co.uk/topic/developing-competencies) [Employee Engagement](https://blog.head-light.co.uk/topic/employee-engagement) [Talent Management](https://blog.head-light.co.uk/topic/talent-management) ## Related posts ### [The Police Leadership Commission Report: What It Means for Your Force](https://blog.head-light.co.uk/police-leadership-commission-report-what-it-means-for-your-force) The Police Leadership Commission report sets a clear direction for policing - and it has immediate i... 23 Jul 2026 ### [Organisational Insight: evidence that organisations fail to use](https://blog.head-light.co.uk/organisational-insight-evidence-not-used) Organisational insight is one of the most underestimated assets available to HR and business leaders... 13 Jul 2026 ### [How your Workforce Intelligence platform turns data into signals](https://blog.head-light.co.uk/workforce-intelligence-platform-turns-data-into-signals) Every organisation generates data about its people continuously. Performance ratings, development ac... 13 Jul 2026 [![HeadLight-logo-from LF for website](https://blog.head-light.co.uk/hubfs/HeadLight_Sep2016/HeadLight-logo-from%20LF%20for%20website.png)](https://head-light.co.uk/) [![Fosway-2025](https://blog.head-light.co.uk/hs-fs/hubfs/Fosway-2025-150x150.jpg?width=150&height=150&name=Fosway-2025-150x150.jpg)](https://blog.head-light.co.uk/news/head-light-fosway-grid-2025)   ### Useful Links - [Home](https://head-light.co.uk/) - [About](https://head-light.co.uk/what-makes-head-light-different/) - [Workforce Signals](https://head-light.co.uk/workforce-intelligence-platform/) - [Products](https://head-light.co.uk/products-overview/) - [Blue Light Services](https://head-light.co.uk/blue-light-services/) ### Workforce Signals - [Capability Intelligence](https://head-light.co.uk/workforce-intelligence-platform/workforce-mobility/) - [Organisational Insight](https://head-light.co.uk/workforce-intelligence-platform/organisational-insight/) - [Succession Intelligence](https://head-light.co.uk/workforce-intelligence-platform/organisational-insight/) - [View All](https://head-light.co.uk/workforce-intelligence-platform/) ### Our Products - [Talent 360](https://head-light.co.uk/products-overview/talent-360/) - [Talent Performance](https://head-light.co.uk/products-overview/talent-performance/) - [Talent Navigator](https://head-light.co.uk/products-overview/talent-navigator/) - [View All](https://head-light.co.uk/products-overview/) ### Consultancy & Training - [Consultancy & Training Services](https://head-light.co.uk/consultancy-training/) - [Designing your competency framework](https://head-light.co.uk/designing-your-competency-framework/) - [360 and performance assessment design](https://head-light.co.uk/assessment-design/) ### Support - [Contact](https://head-light.co.uk/contact-us/) - [Blog](https://blog.head-light.co.uk) - [FAQs](https://head-light.co.uk/faqs/) - [Resources](https://head-light.co.uk/resources/) - [News](https://blog.head-light.co.uk/news)   Copyright © Head Light Ltd. 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