Talent Management and Employee Retention: An Integrative Research Framework

Abstract

The differential value created by talented employees and their contribution to organizations in the hypercompetitive and complex global economy has made talent management a strategic priority for organizations. Talent management has been advocated as an important strategy to retain talented employees, but academic studies exploring their relationship are limited. Building on the Resource-Based View (RBV) theory and Social Exchange Theory (SET), the present article studies the relationship between talent management and employee retention. In addition, a conceptual model explaining the role of talent perception congruence and organizational justice in the relationship between talent management and employee retention is developed by incorporating the Perceived Organizational Justice Theory and Congruence Theory in talent management context. This article may assist in setting the direction for future research in the area of talent management and help managers understand the significant roles of talent perception congruence and organizational justice in determining the talent management outcomes.

Keywords

talent management employee retention talent perception congruence organizational justice

Introduction

Organizations are striving hard to achieve success by gaining competitive advantage, and one of the most valuable resources that can help their cause is the human resource they employ. Although discussions on productivity and effectiveness are well on course, issues like turnover, which has crucial role in determining effectiveness, still remain unresolved. Studies show that in the next 5 years, the global employee turnover rate will rise from 20.6% to 23.4%, and India is expected to have the highest rate of attrition globally, pegged at 26.9% (Hay Group, 2013). Retention of high performers was among the top five workforce challenges identified in the Talent Practices Impact Survey conducted by Hewitt (2008); it is a major workforce challenge that CEOs worry about according to The Economist Intelligence Unit (2012); and it is one of the top two people issues of organizations according to Human Capital Trends Study 2014 of Deloitte Consulting (Schwartz, Bersin, & Pelster, 2014). In addition, a survey by Tower Watson (2011) found that almost 30% of companies struggle with the retention of their talented employees.

Losing a normal employee is costly for any organization, because of replacement expenses incurred and hidden costs like productivity loss and morale damage (O’Connell & Kung, 2007; Tracey & Hinkin, 2008). The costs associated with turnover of talented employees may be much higher. The “millennials,” who constitutes a major portion of the global workforce, are considered as job-hoppers. Employees may switch jobs if they do not find compelling reasons to stay on and become active job hunters throughout their career (Gallup, 2016). As talented employees are a prime source of competitive advantage (Michaels, Handfield-Jones, & Axelrod, 2001), attracting and retaining them has become a strategic priority for organizations (Ashton & Morton, 2005). It is in this context that the concept of talent management has gained prominence among practitioners and academicians.

Investment in talent management was found to make a difference in organizations, and those with more talent management initiatives seemed to outperform their industry peers (Ringo, Schweyer, DeMarco, Jones, & Lesser, 2008). They were also less likely to face difficulties in attracting and retaining critical-skill employees (Tower Watson, 2011). The ability to develop and implement integrated talent management is considered as the roadmap for organizational success in the 2020 workplace, with benefits such as increased revenue per employee, less need for downsizing, lower turnover among high performers, lower overall voluntary turnover, and greater ability to hire best talent and develop great leaders (Garr, 2012).

The academic knowledge regarding the array of negative and positive influences of talent management on employee attitudes and behaviors is limited (Hoglund & Höglund, 2012). Only a few academic works have seriously examined the influence of talent management on the retention of talented employees (Chami-malaeb & Garavan, 2013). Handling the turnover of talented employees using talent management has rarely featured as an issue in the talent management literature. Among the few studies that have discussed the relationship between talent management and retention of employees (Björkman, Ehrnrooth, Makela, Smale, & Sumelius, 2013; Chami-malaeb & Garavan, 2013; DuPlessis, 2010), only Chami-malaeb and Garavan (2013) described how talent management influences the retention of employees, proving affective commitment as a mediating variable. The mediating mechanisms through which talent management influences intention to stay are still a blind spot in the literature (Chami-malaeb & Garavan, 2013). There is no dearth of literature which has studied the problem of employee turnover. However, there is a lack of research that looks into talent management as a strategy to improve employee retention.

The purpose of the present article is to contribute to the literature by proposing the relationship between talent management and employee retention, building on the Resource-Based View (RBV) theory and Social Exchange Theory (SET). This article also develops a conceptual model explaining the mediating role of talent perception congruence (congruence theory) and organizational justice (perceived organizational justice theory) in the relationship between talent management and employee retention. It also shows future directions for academic research in the area of talent management and its outcomes.

Theoretical Foundation of Talent Management

The increasing popularity of talent management among academicians and practitioners is accompanied by a lack of strong conceptual frameworks that promote empirical studies. While developing the conceptual framework for the present research, two questions arose: (i) What are the theories that underpin the concept of talent management? and, (ii) How should talent management be investigated to make it an effective practice to enhance retention?

Talent Management: The Concept

The concept of talent management has attracted a substantial debate on the lack of a consistent definition and conceptual boundaries (Ashton & Morton, 2005; Collings & Mellahi, 2009; Lewis & Heckman, 2006). A critical review of the literature by Lewis and Heckman (2006) identified three streams of thought about talent management. The first stream includes those studies which merely replace the term “human resource management” with “talent management,” and contribute nothing or little to the domain. The second stream is built on succession planning literature and highlights the concept of talent pool development based on organizational objectives. The third stream focuses on managing talented people by filling all roles in the organization with “A” performers (Lewis & Heckman, 2006). Collings and Mellahi (2009) have proposed a fourth stream that emphasizes the identification of key positions, which may be the starting point of the talent management process. According to Collings and Mellahi (2009), talent management includes

activities and processes that involve the systematic identification of key positions which differentially contribute to the organisation’s sustainable competitive advantage, the development of a talent pool of high potential and high performing incumbents to fill these roles, and the development of a differentiated human resource architecture to facilitate filling these positions with competent incumbents and to ensure their continued commitment to the organisation. (p. 305)

This is one of most cited definition in the talent management literature (Gallardo-Gallardo, Nijs, Dries, & Gallo, 2015) and the present research also builds on these conceptual boundaries to formulate the proposed model.

The systematic identification of key positions that differentially contributes to the sustainable competitive advantage of the organization is the starting point of any talent management system (Collings & Mellahi, 2009). Not all positions contribute equally to the strategic intent of an organization, and therefore greater focus should be on those positions that can contribute significantly to the organization’s strategic goals. The existing scenario in many organizations favors the overinvestment in nonstrategic roles. The concept of “A positions” (Huselid, Beatty, & Becker, 2005) and organizational roles with above-average impact (Boudreau & Ramstad, 2005) argues for the importance of identification of positions that have a direct impact on the strategy and which exhibits high performance variability among people in these positions (Huselid et al., 2005).

The second element emphasizes the development of talent pool to fill the key positions in the organizations through external hiring and internal development (Collings & Mellahi, 2009). There is a lack of consensus among academicians about “who is considered as a talent” and often organizations are left to define talent. Every employee is different in terms of performance and potential, and employees’ potential is often a common denominator in identifying talents (Tansley, 2007). On this line, talented employees are “those individuals who can make a difference to organisational performance, either through their immediate contribution or in the longer term by demonstrating the highest levels of potential” (Tansley, 2007). As pivotal positions have huge strategic implications, these need to be filled with talented employees, and organizations should differentiate talented employees from other employees. The talent pool is developed with the objective of filling the key positions and it does not discount the value of other employees in the organizations. This drastically differs from the “top-grading” concept (Smart, 2005), which recommends filling all positions in the organization with “A performers” and “war for talent” approach, as has been proposed by the consultants of McKinsey who argued the elimination of “C players” from the organization (Michaels et al., 2001).

The final element of talent management comprises differentiated human resource architecture that supports the filling of identified key positions with talented employees, through which their continued commitment to the organization can be ensured. The identified employees may be groomed to meet the requirements of the key positions. There are no prescribed human resource practices that support talent management; rather, a contingency approach that is appropriate to the organizational context may be adopted (Collings & Mellahi, 2009). A commitment-orientated human resource system may facilitate better deployment of talented employees (Lepak & Snell, 2002).

Theoretical Frameworks of Talent Management

There are a number of theoretical frameworks applied in the studies of talent management. Frameworks that are frequently used in academic literature include RBV, international human resource management (HRM), employee assessment, and institutionalism, among which RBV is found to be the most dominant theoretical framework (Gallardo-Gallardo et al., 2015). Considering the employees as a source of sustainable competitive advantage is the central tenet of RBV on talent management.

RBV argues that sustainable competitive advantage can be derived from the firm’s resources that are valuable, rare, difficult to imitate, and nonsubstitutable (Barney, 1991). It is intangible assets such as proprietary intellectual capital, winning brands, and innovative ideas that have become a major source of competitive advantage for organizations (Michaels et al., 2001). This stream of thought, termed as strategic HRM, is premised on the RBV (Wright, Dunford, & Snell, 2001). The human resource of an organization fulfills all the criteria of the firm’s resource that is capable of creating a sustained competitive advantage (Wright, McMahan, & McWilliams, 1994). Obviously, not all human resource of an organization fit into these criteria, except the high-quality talent pool. The pool of talented employees with high performance and potential can be a source of sustained competitive advantage for organizations.

Building on the RBV theory with the help of transaction cost economics model and human capital theory, Lepak and Snell (1999) argued that organizations ought to invest their limited resources based on the value and uniqueness of the human capital. This is in tune with the concept of workforce differentiation (Becker, Huselid, & Beatty, 2009), which calls for disproportionate investments in those specific jobs and people with disproportionate returns, that lead to the strategic success of the organization. Talent management is grounded on the workforce differentiation concept (Gelens, Dries, Hofmans, & Pepermans, 2013) and focuses on the identification of key positions and development of a talent pool (Collings & Mellahi, 2009). The wide acceptance of workforce differentiation among practitioners presents significant new prospects for human resource strategy to focus on the antecedents and outcomes of workforce differentiation (Huselid & Becker, 2011).

The strategic HRM literature argues for the positive impact of workforce differentiation at the organizational level (Becker & Huselid, 2006), especially in achieving the strategic goals of the organizations. Yet there are implications at the employee level as the distinctions are made among employees, especially in strategic jobs. Moreover, a differentiated workforce strategy may directly create variations in the rewards and benefits employees receive, and as such accounts for various employee reactions (Gelens et al., 2013). Studies which take the employee perspective toward workforce differentiation are limited (Becker et al., 2009). As employee reactions on workforce differentiation describe the reciprocation between employees and organization, SET is used to explain the nature of the relationship.

Based on three foundational ideas, namely, rules and norms of exchange, resources exchanged, and relationships that emerge, SET is considered to be one of the most prominent paradigms in organizational behavior (Cropanzano & Mitchell, 2005). When organizations take care of the employees, exchange relationships evolve. This leads to positive reciprocation from the employees, leading to beneficial consequences. More precisely, employees may feel obliged to reciprocate to the favors and rewards received from the organization. They may reciprocate with positive attitudes like affective commitment, less intention of leaving the job, and work performance (Kuvaas & Dysvik, 2010). The SET framework is used to predict employee-level outcomes of human resource management such as employee motivation, employee commitment, and intention to stay (Gould-Williams & Davies, 2005). On a similar line, SET has been frequently applied in the talent management literature to explain the influence on psychological contract breach, perceived organizational justice, and job satisfaction (Gallardo-Gallardo et al., 2015; Gelens et al. (2013).

Propositions on Talent Management and Employee Retention

This article attempts to propose a relationship between talent management and employee retention. The variations in this relationship, which may be explained by variables such as employee’s justice perceptions and talent perception congruence, have also been incorporated.

Influence of Talent Management on Employee Retention

Applying SET for talent management implies that when an organization invests in its employees, the latter may feel obliged to the organization to reciprocate with positive attitudes and better performance. Selection into the talent pool is a critical incident that defines the terms of the exchange relationship between employees and their organizations (Dries & De Gieter, 2014). Employees may perform very well as well as develop positive attitudes toward the organization, which may show as commitment and staying intentions. As talent management is premised on identifying talented employees and placing them in key positions, a high level of individual performance is certain (Collings & Mellahi, 2009).

While examining attitudes, it is more sensible to adopt a multicomponent view of attitude that includes cognitive, affective, and conative components (Ajzen, 1989). Among the various attitudes exhibited, the intention to stay could be viewed as a conative/behavioral component of employee attitude toward the organization that practices talent management. As intentions strongly mediate the attitudinal linkage with turnover (Tett & Meyer, 1993), intention to stay can predict the retention of employees. Turnover rate of good-performers significantly decreases with the higher levels of HRM inducements and investments and HRM expectation-enhancing practices (Shaw, Dineen, Fang, & Vellella, 2009).

SET can provide a compelling explanation about the influence of talent management on employee behaviors like intention to stay (Chami-malaeb & Garavan, 2013). Practitioners consider talent management as an important retention strategy for talented employees (Hughes & Rog, 2008; Lockwood, 2006). Empirical investigations also suggest that employees who are benefited from a talent management system have less intention to leave the organization (Björkman et al., 2013; Chami-malaeb & Garavan, 2013; Dries & Pepermans, 2008). In short, the role of talent management in the retention of employees can be summarized as the first proposition, as follows:

Proposition 1: Talent management has a significant positive relationship with employee retention.

Role of Organizational Justice in the Relationship Between Talent Management and Employee Retention

As turnover intention of the employee is the best predictor of actual turnover (Griffeth, Hom, & Gaertner, 2000) and employee turnover may be costly for any organization due to its negative effects on organizational performance (Shaw, Duffy, Johnson, & Lockhart, 2005), it is crucial to examine the predictors of employee turnover. Aquino, Griffeth, Allen, and Hom (1997) tested the referent cognitions model by integrating justice constructs into employee turnover process and identified the important role played by justice in influencing the actual job quitting. Many researchers thereafter have investigated the influence of justice perception on employee turnover in various contexts and found that employees perceiving higher fairness are less likely to leave the organization (DeConinck & Johnson, 2009; Nadiri & Tanova, 2010; Pare & Tremblay, 2007; Parker & Kohlmeyer, 2005).

The concept of organizational justice has become significant in social science research since the 1980s. The most commonly described dimensions are distributive justice, procedural justice, informational justice, and interpersonal justice (Colquitt, 2001; Colquitt, Conlon, Wesson, Porter, & Ng, 2001; Greenberg, 1990). Perception of organizational justice has been found to influence various employee attitudes like job satisfaction (Colquitt, Conlon, Wesson, Porter, & Ng, 2001; Nadiri & Tanova, 2010), trust (DeConinck, 2010; Wong, Ngo, & Wong, 2006), organizational citizenship behavior (Colquitt et al., 2001; Moorman, Niehoff, & Organ, 1993; Organ & Ryan, 1995), and turnover intentions (Aquino et al., 1997; Colquitt et al., 2001). Studies have identified variables such as job satisfaction (Parker & Kohlmeyer, 2005), organizational commitment (Parker & Kohlmeyer, 2005; Simons & Roberson, 2003), perceived organizational support (DeConinck & Johnson, 2009), and trust (Bal, de Lange, Ybema, Jansen, & van der Velde, 2011), which intervene the relationship between justice perceptions and turnover of employees. The role of organizational justice perceptions in determining employee turnover is empirically established.

Talent management, as already explained, is a workforce differentiation practice. Though differentiating employees may be justifiable from a strategic perspective, there is no doubt that it creates fairness perceptions among employees (Gelens et al., 2013). Earlier studies identified that positive attitudes like lower turnover intention and commitment to developing competencies are exhibited by employees who are benefited, that is, those who are considered high potentials (Björkman et al., 2013). Moreover, Marescaux, De Winne, and Sels (2013) also identified the negative effects of workforce differentiation. Talent management creates differential reactions between employees who are identified as high potentials and those who are not, and affects the perceived fairness in the system. The influence of talent management on employee attitudes like turnover intention can be better understood by using the theory of perceived organizational justice (Gelens et al., 2013).

Studies have established that organizational justice is a significant predictor of turnover of employees (Aquino et al., 1997; Colquitt et al., 2001) and talent management evokes the perception of justice (Gelens et al., 2013). This leads to the assumption that justice may intervene the relationship between talent management and employee retention. The role of distributive and procedural justice perceptions in the relationship between high potential identification and employee outcomes, such as job satisfaction and work effort (Gelens et al., 2013), has been empirically established (Gelens, Dries, Hofmans, & Pepermans, 2014). Though studies have focused on the influence of procedural and distributive justice on employee attitudes, the influence of interpersonal justice cannot be neglected (Colquitt, 2001; Colquitt et al., 2001).

Distributive justice refers to fairness in the outcomes such as promotion opportunities or financial rewards (Colquitt et al., 2001). Grounded in equity theory, it argues that individuals evaluate the ratio of their outcomes to the input in comparison with others. The perception of inequity (over-reward or under-reward) may distress employees (Adams, 1965). They may reduce this distress and restore equity through different techniques like changing or distorting outcomes or input, changing the reference point, or terminating the relationship (Adams, 1965). In the context of talent management, employees receive differential outcomes in terms of career development opportunities, recognition, and so forth, based on their potential. The nonhigh potentials, who are not included in the talent pool of the organization, may compare their input–outcomes ratio with that of the high potentials (Gelens et al., 2013) and may feel underrewarded. The reactions to inequity scenarios are affected by equity sensitivity of employees (Huseman, Hatfield, & Miles, 1987). Information asymmetry further intensifies the sensitivity to feedback in employees (Dries & De Gieter, 2014). It is quite possible for employees to expect high potential status to perceive equity because all employees prefer being overrewarded to being equitably rewarded (Shore, 2004).

Irrespective of their talent level, employees develop fairness perceptions regarding talent management outcomes. Employees perceiving fairness in outcomes may reciprocate by positive work attitudes and behaviors (Jones & Skarlicki, 2003). Distributive justice plays a substantial role in determining the turnover intention of employees (Cohen-Charash & Spector, 2001; Colquitt et al., 2001; Jones & Skarlicki, 2003). These findings point toward the mediating role of distributive justice in the relationship between talent management and employee retention, which is summarized as the following proposition:

Proposition 2: Distributive justice mediates the relationship between talent management and employee retention.

Adding on to the fairness of outcomes, Leventhal (1980) introduced the concept of fairness in the process, through which the allocations were made, as “procedural justice.” The employees’ perception about the neutrality of the procedures and trust in the organization influence procedural justice (Tyler, 1989). Similarly, employees perceive higher fairness in procedures when they perceive their influence on the process to some extent (Lind & Tyler, 1988). These rules are also applicable to talent management procedures. As there are no set rules that bind talent management procedures, they may vary across organizations and even within an organization in terms of implementation. The talent management procedures with inputs from employees, open communication strategy, and the proper evaluation methodology result in higher procedural justice (Slan-Jerusalim & Hausdorf, 2007). So, procedural justice may be perceived differently by employees in a talent management context. The procedural justice perceptions are found to have a significant role in predicting the turnover intentions of employees (Cohen-Charash & Spector, 2001; Lambert et al., 2010). Hence, the role of procedural justice in the relationship between talent management and retention could be summarized as the following proposition:

Proposition 3: Procedural justice mediates the relationship between talent management and employee retention.

Along with these dimensions, organizational justice also includes interactional justice. The conceptual overlapping on interactional justice and procedural justice are strongly debated still, but majority of the studies have treated it differently (Cohen-Charash & Spector, 2001; Cropanzano, Prehar, & Chen, 2002). Procedural justice may be referred to as the formal aspects of the process of resource allocation, whereas interactional justice includes the social aspects related to the process (Cropanzano et al., 2002). Interactional justice encompasses interpersonal and informational justice, where the former is related to the degree of dignity, politeness, and respect in the treatment supervisors give to the employees and the latter focuses on the open and honest explanations in the process (Colquitt et al., 2001). Though lesser in strength compared with procedural and distributive justice, interactional justice also predicts turnover intentions of employees (Cohen-Charash & Spector, 2001). Because talent management is a delicate issue, the fairness in the treatment of employees by supervisors is crucial, especially for employees who are not identified as high potential. This may have an important role in determining the turnover intention of employees (Siers, 2007). Similarly, informational justice may also be important in talent management context. Some organizations adopt strategic ambiguity as a strategy for communicating their high potential programs (Dries & De Gieter, 2014; Dries & Pepermans, 2008), which could be interpreted by stakeholders in more than one ways. Many organizations prefer to remain secretive about their talent management policies and practices due to various reasons. The risk of so-called “crown prince/princess syndrome,” where high potential employees may display arrogance and complacency if they are informed of their status within the organization (Dries & Pepermans, 2008; Gobel-Kobialka, 1998), is one of the assumed negative effects. The high potential status can make employees more feedback sensitive and can create a negative influence on their satisfaction and commitment level (Kotlyar, 2013). Similarly, fears of creating high expectations (Silzer & Church, 2010), fears of subjective assessments, fears of losing employee morale (Dries & De Gieter, 2014), and fears of demotivating employees who are not labeled as high potentials (Snipes, 2005) also prevents organizations from disclosing information regarding their talent management programs. But information secrecy often may result in negative effects like psychological contract breach (Dries & De Gieter, 2014). In short, the role of informational as well as interpersonal justice in the relationship between talent management and retention could be summarized as follows:

Proposition 4: Informational justice mediates the relationship between talent management and employee retention.

Proposition 5: Interpersonal justice mediates the relationship between talent management and employee retention.

Role of Talent Perception Congruence in the Relationship Between Talent Management and Employee Retention

As organizations vary in their definition of talent and the degree of openness that they allow in their talent management programs, a situation about misperceptions regarding talent is possible. This resulted in a variable called “talent perception incongruence,” a term coined by Sonnenberg, van Zijderveld, and Brinks (2014). The concept was explained as situations where an organization’s executives perceive an individual as a “talent,” but the individual is unaware of the same, and also where they do not consider an individual a “talent” but the individual believes that he or she is. Talent perception incongruence was found to partially mediate the relationship between perceived talent management practices and psychological contract fulfillment (Sonnenberg et al., 2014). The role of talent perception incongruence in the relationship between talent management and employee attitudes is important.

The concept of incongruence was detailed in Carl Rogers’ client-centered framework (Rogers & Koch, 1959), in the context of personality. There are a number of occasions when a discrepancy develops between the perceived self of the individuals and their actual experiences. Such a discrepancy is referred to as incongruence between self and experience. According to Rogers and Koch (1959), individuals want to experience things that are consistent with their self-image. If incongruence occurs, they may use defense mechanisms like denial, or repression, or avoid the situation so as to feel less threatened by the undesirable feelings.

Taking this concept to the marketing scenario, Sirgy (1982) proposed the self-image/product-image congruity theory and introduced various self-image/product-image congruity states that differently influence purchase motivation. Among various congruity states, positive self-congruity had the strongest influence on purchase motivation, followed by positive self-incongruity, negative self-congruity, and negative self-incongruity in that order. Positive self-congruity is the comparison between a positive product–image perception and positive self-image belief; positive self-incongruity is between a positive product–image perception and a negative self-image; negative self-congruity is between a negative product–image perception and a negative self-image; and negative self-incongruity is between a negative product–image and a positive self-image belief (Sirgy, 1982). The concept of self-congruity has been frequently used to predict various outcomes like brand loyalty (Kressmann et al., 2006; Mazodier & Merunka, 2012; Sirgy, Lee, Johar, & Tidwell, 2008), travel behavior (Sirgy & Su, 2000), career anchorage (Chebat, Sirgy, & St-James, 2006), and purchase motivation (Ericksen, 1997; Sirgy, 1985). In human resource context, Yurchisin, Park, and O’Brien (2010) proved that employees with self-image/store image congruence had lesser intentions to leave the job.

In the context of talent management, organizations identify talented employees, and there are chances that it may not be in line with the self-image of the employees. In a similar line with Sirgy’s self-image/product-image congruity theory, talent management also gives rise to talent perception congruity states like positive talent perception congruity, positive talent perception incongruity, negative talent perception congruity, and negative talent perception incongruity. For instance, employees may perceive themselves as talents in the organization and get a talent status, which may be referred to as positive talent perception congruity, whereas employees may not perceive themselves as talents in the organization yet get a talent status, which may be viewed as positive talent perception incongruity. Similarly, employees may perceive a nontalent image and do not get talent status which results in negative talent perception congruity, and employees may perceive a talent image yet do not get talent status, giving rise to negative talent perception incongruity.

Even though congruity and incongruity in talent perceptions may predict employee outcomes differently, getting a talent status consistent with self-image may always predict positive outcomes like employee retention. So, while examining the relationship between talent management and employees, for intention to stay, talent perception congruence may have a significant role to play, which is formulated as the sixth proposition for the research.

Proposition 6: Talent perception congruence mediates the relationship between talent management and employee retention.

In short, the propositions discussed here portray the relationship between talent management and employee retention with the mediating roles of organizational justice and talent perception congruence. These relationships are formulated in the form of a conceptual model (see Figure 1).

Figure 1.

A conceptual model relating talent management and retention with mediating roles of organizational justice and talent perception congruence.

Discussion

The article proposes a theoretical framework which relates talent management and employee retention with the mediating roles of organizational justice and talent perception congruence. This provides insights to academicians in developing a future research agenda in talent management. It tries to lessen the paucity of studies that examine how talent management influences employee retention and provides a theoretical foundation for probing this relationship. The mediating roles of organizational justice and talent perception congruence may not be limited to the relationship between talent management and employee retention but can be extended to explain various talent management outcomes (Gelens et al., 2013; Sonnenberg et al., 2014).

A recent article has evaluated the studies on the role of actual status and perceived talent status on different employee attitudes and found that these studies give inconsistent findings (Meyers, De Boeck, & Dries, 2017). This inconsistency could be better explained by the concept of talent perception congruence. Talent status may not be able to explain employee attitudes, as all employees may not have issues with their nontalent status in the organization. So, it is not the talent status per se that influences employee attitudes like intention to stay; rather, it is the consistency between the self-image of the employees and their talent status (Sonnenberg et al., 2014). This concept is new but important in the context of talent management to predict various employee-related outcomes like retention, engagement, psychological contract fulfillment, and so on (Sonnenberg, 2011). In addition, interventions to increase congruence need to be investigated so as to boost the effectiveness of talent management initiatives.

From a practical perspective, talent management is often viewed as a panacea for dealing with talent-related issues in an organization (Michaels et al., 2001). Unfortunately, managers are not clear about the mechanism of how talent management enhances retention (Chami-malaeb & Garavan, 2013). This article offers human resource practitioners an opportunity to examine the role of justice perceptions and talent perception congruence in the context of talent management to enable higher retention levels. It also helps them to reposition their focus from talent management to other variables that play significant roles in determining talent management outcomes. Organizations need to enhance congruence in talent perceptions which seems simple but is not so in reality. It is not feasible for organizations to provide all employees with the talent status they expect, but organizations can enhance the talent perception congruence through various interventions like talent counseling and feedback (Mensah, 2018; Sonnenberg, 2011). Organizations may adopt clear policies, systematic procedures, appropriate documentation, and transparency in their talent management practices (Meyers et al., 2017) to further improve congruence. Formation of peer partners and mentors can further improve the alignment of employee perceptions with organizational decisions (Wanberg, Kammeyer-Mueller, & Marchese, 2006).

Managers still debate on whether to keep secrecy about talent management initiatives and proclaim all sorts of negative consequences like crown prince/princess syndrome (Dries & De Gieter, 2014; Silzer & Church, 2010), moral issues, and turnover among those employees who are not selected. The arguments in this article highlight the significance of fairness in outcomes, procedures, information, and interactions associated with talent management in determining retention. It calls for managers to seriously focus on the fairness aspects of talent management to enhance the outcomes rather than increasing the number of initiatives (Gelens et al., 2014).

Talent management is often adopted by organizations for improving their recruitment and selection practices (Hughes & Rog, 2008). Identifying talent is only a small part of the totality of talent management practices. Providing human resources with appropriate training and development programs to improve their skill sets and career management may potentially motivate and give the much-needed impetus to the human resource development function in organizations which adopt talent management (Pandita & Ray, 2018).

Implications for Future Research and Practice

Studies in talent management have been dominated by qualitative research and a limited number of empirical investigations. But empirical studies are crucial for the validation of concepts and models. The propositions formulated in the above theoretical research model may be empirically tested to provide meaningful insights into the relationship between talent management and employee retention.

The propositions in the formulated research model consist of organizational (i.e., talent management) and employee levels (e.g., talent perception congruence, organizational justice, and retention), and therefore it is most appropriate to adopt multilevel designs to integrate both levels of analysis. Similarly, talent management could be learned from various stakeholder perspectives—HR directors, line managers, and employees. In the same line, the outcome variable, that is, retention, could be studied based on actual data on employee turnover as well as employee’s probability of staying back with the organization captured in the concept of intention of stay.

Both cross-sectional and longitudinal designs may be employed for validating the framework, based on the type of inferences that a researcher wants to derive. A cross-sectional design may be employed in organizations with well-established formal talent management system to confirm the relations. Here, talent management has been measured at a single point of time and therefore any variations on the talent status cannot be incorporated, which may account for variations in other variables of interest. Longitudinal designs are best suited for studying the role of talent management practices on perceived organizational justice and employee outcomes (Gelens et al., 2013), but researchers need to target organizations which plan to introduce an intervention in their talent management procedures. As such, it may be more viable to adopt a cross-sectional design, especially while examining organizations with a fully developed talent management system. It is also worth noting that appropriate care should be taken to control variables such as industry type, level of maturity of talent management system, cultural differences, and so on, that may affect the proposed research framework.

The contribution of talent management to human resource development and employee engagement is often not explored. The literature on talent development focuses mainly on themes like career development issues, the relationship between development, attraction and retention of talents, the influence of contextual factors in the talent development, and the diversity issues (Hedayati & Li, 2016). The concerns like who constitutes talent, what are the competencies to be developed, ownership and pace of development process, and the architecture to support the development may also get in the way of the human resource development (Garavan, Carbery, & Rock, 2012). The exclusiveness of talent management strategy may determine whether development initiatives be tailored to key positions and people or may focus on building wider organizational competence and social capital (Iles, Preece, & Chuai, 2010). The future studies may explore the elements of talent management that expedite and impede development process in organizations.

Conclusion

Talent management is a strategic initiative of organizations to attract, develop, and retain its talented employees so as to achieve a competitive advantage. The fairness regarding outcomes, procedures, and interactions in the talent management process along with perceptual congruity regarding talent status is influential in determining the effectiveness of talent management as a retention strategy. This article has presented a comprehensive model that describes the relationship between talent management and employee retention, illustrating the role of talent perception congruence and organizational justice.

Footnotes

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) received no financial support for the research, authorship, and/or publication of this article.

ORCID iD

Anoopa Narayanan

Author Biographies

Anoopa Narayanan is pursuing her doctoral research in the area of talent management at School of Management Studies, Cochin University of Science and Technology, Kerala, India.

S. Rajithakumar is a professor in School of Management Studies, Cochin University of Science and Technology, Kerala, India.

Manoj Menon is an assistant professor in the Department of Human Resource Management of Rajagiri College of Social Sciences, Kerala, India.

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