It refers to the process of developing and fostering new workers through onboarding, developing and keeping current workers and attracting highly skilled workers at other companies to come work for your company. Talent management in this context does not refer to the management of entertainers.
Companies that are engaged in talent management ( human capital management) are strategic and deliberate in how they source, attract, select, train, develop, promote, and move employees through the organization. This term also incorporates how companies drive performance at the individual level ( performance management).
The term talent management means different things to different people. To some it is about the management of high-worth individuals or "the talented" whilst to others it is about how talent is managed generally - i.e. on the assumption that all people have talent which should be identified and liberated.
This term is usually associated with competency-based human resource management practices. Talent management decisions are often driven by a set of organizational core competencies as well as position-specific competencies. The competency set may include knowledge, skills, experience, and personal traits (demonstrated through defined behaviors).
The term was coined by McKinsey & Company following a 1997 study and then it was the title of a book by Ed Michaels, Helen Handfield-Jones, and Beth Axelrod.