Importance Of Talent Management In Sme Management Essay

Strategic Talent Management is a Human Resource process in which the air is to find the right people for the right jobs at the right time to achieve the expected results of the business.

In a time when there are constant technological changes and the increased number of challenges, talent management has become very difficult for businesses and hence companies are in a constant desire to attract the new and retain the old talent.

Talent management can be defined as “the implementation of integrated strategies or systems designed to increase workplace productivity by developing improved processes for attracting, developing, retaining and utilizing people with the required skills and aptitude to meet current and future business needs.”

The main aim of talent management is to develop and maintain a pool of workforce which is skilled, dedicated, and committed.




Talent Management Strategy


Importance of Talent Management in SME’s

Helps in finding the right people for the jobs.

It is an important tool for a business in the constant changing economy.

Reduces the attrition rate of employees.

It helps in aligning the human resources with the strategy of the business.

It clearly explains the roles and responsibilities of the employees.

Helps in training, development and knowledge transfer of the workforce.

It reduces the effect caused due to sudden attrition.

Discovers the skills of the employees and puts them in the right job.

It helps in the retention of employees.

A small to medium size manufacturing company with a staff of almost 180 people comprising of 8 people in the management team, 60 people in the administrative and sales staff and 112 people in the production. The company is experiencing a high labour turnover across the company, with a number of key staff moving to competitors.

This study will make an attempt to make the SME able to manage its talent better and reduce the attrition.

Key drivers to talent management

Demand for Human Capital

The constant demand for human capital to gain a competitive advantage has become a key driver for talent management. Talent management strategies hence focus on attracting, selecting, engaging, developing, and retaining employees.

The employees of the SME are more attracted towards the pay and benefits provided by the company and its competitors and hence the attrition rate has become high. More and more employees are shifting to other firms for better pays and benefits. Here the top concern of the management has become the retention of old talent and development of new talent.

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The Changing economy and Globalization

The transition towards a knowledge economy has changed the valuation and perspective of companies. Talent is considered a strategic asset for the companies. As there are fast technological advancements there is a constant gap between the skills set of the employees and their work profile.

It is very important for the SME to find and retain the right people. The employee base of a SME referred here is very small and hence it is very important that each and every employee is right for the job.

Longer Life spans

The ageing of the workforce means that the seniors are working longer just because of their experience and hence are retained by the organizations even in their retirement years.

For e.g. The Home Depot focuses on having older workers and almost 16% of its workforce is above 50 years.

For the SME this can be a big drawback because it will complicate the workforce planning and increases challenges related to succession planning. It might also result in mental differences due to the generational gap between the employees.

New Technology and Increased Expectations

The technology is growing with a fast pace and the employees also have to keep up to that pace in order to satisfy their employers and meet their goals.

Key Business Strategies

The key business strategies also drive talent management in a big way. For e g a automobile company will have to recruit talent which has great technical expertise.

Effect on the SME

The SME has a very small employee base of only 180 and hence each and every employee is very important and higher attrition rate would definitely be detrimental for the business.

For instance if the SME has 20 customers accounts which are managed by the 8 people of the managerial staff, if one of the mangers moves to the competitor he reduces the efficiency of the company by 12.5% and increases the workload of the other managers.

Since the SME comprises of a very small management team if people from the management go to the competitor firms the SME will suffer. There will be wrong decisions if a proper management team is not there. If there is high rate of attrition ain the sales and administrative staff the sales would come down and there would be situation of mismanagement in the administration.

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If the labour attrition rate is high then the production of the SME would come down and hence it would affect the total profitability of the firm.

In order to recruit new staff the SME would have to do a lot of expenses in recruiting, training etc and again the profitability of the firm would be affected.

The reasons for high attrition rate in the mentioned SME can be because of:

Scarcity of skilled and unskilled labour

Low image of the job

Unpleasant work

Unfair working conditions

Low wages

The SME needs to focus on the development of their staff in order to be competitive in the market.

Key Issues in Talent Management for a Small and Medium Enterprise

SME’s prefer an informal management and human resource development process as compared to larger firms.

SME’s are becoming more global in nature but their HR practices are not.

Measuring the effectiveness of talent management in a Small and Medium Enterprise is a challenge.

Recruiting talent is a big challenge.

The route map for SME for better talent management

Recruitment: Constant recruitment of the right people with the right talent who are fit for the job.

Talent Mapping: Deciding what kind of talent is required to fulfil the needs of the business. Identify the talent gaps and fill them.

Workforce planning and development: Filling in the gap between the current state and the future state.

Performance Planning and Evaluation: Evaluate the performance of every employee and plan the future as per that.

Retention: Use of retention strategies can be made in order to keep the talent of the company with the company.

A model of talent management for the SME

Maintaining and establishing alignment

This would include the following:

Job Descriptions – deciding what is required for the job

Performance Management – Goal setting, measurement of performance, evaluation

Think and plan for the future

Succession Planning

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Strategic Planning

Talent management based on the outcome of results

Grow talent and strengthen the human capital

Developement of every individual in the SME by training classes, competency development etc.

Coaching and Mentoring

The above model was used by a manufacturing company and it helped it to a big extent in controlling the attrition rate and managing talent within the organization.


Concluding from this research we can say that talent management is very important for any SME since it affects the profitability and productivity of the SME in a positive manner.

In the SME talent management and HR practices are not given much importance and in most cases it resides within the hands of a few people who are not specialized in HR.

Talent management is not given much of an importance in smaller companies as compared to that of the bigger ones.

It can be also said that the smaller the company the lower the amount of talent management is required.

SME’s lack HR expertise as compared to larger firms but they also have an advantage of dealing with the talent on case by case basis. Formalised management and talent management procedures can result in inefficiency and unsuitability to the employees because of lack of flexibility.

Talent management is directly related to productivity, profitability, innovativeness and reduction of attrition rate for the SME.

Talent management helps managers to plan their workforce, motivate them, and retain them.

It helps in creating a sustainable advantage in the knowledge based economy.

Recommendations for the SME

Managers of the SME should take up training regarding the talent management strategy. The more knowledge they have the better will be the HR practices in the firm. Talent management brings a positive impact for both the employer and the employee.

Managers of the SME will have to improve their forecasting skills. They will have to forecast their manpower needs as a long term process and develop and train employees accordingly.

Training and development of each and every employee case by case would help the managers of the SME to know the need s of the employees and what steps to take for their development and retention.

Identify and implement motivation strategies.

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