This post is part of a series based on the research report Mastering Talent Planning by the National Center for the Middle Market in partnership with Vistage. Download the full report here.

Middle market firms know they need top talent to succeed. In fact, how to go about finding, recruiting, and retaining that talent is one of the biggest issues keeping middle market executives up at night.

One way companies can ensure they have the best people in critical roles both today and going forward is to improve their talent planning efforts. In other words, if your company wants to win at the talent game, then it needs to have a plan.

Talent planning is more than succession planning. And it’s different from talent management.

Sometimes companies confuse the idea of talent planning with succession planning. Or they mistakenly lump talent planning into the same bucket as talent acquisition, performance management, and talent management.

Talent planning is actually a broad and overarching category that includes succession planning as well as identifying key positions and players in your organization, recognizing both high-performing and high-potential employees, performing bench strength analysis, and understanding skills gaps. The results and learning that come out of the talent planning process have an impact on virtually every other talent function at an organization.

When done correctly, talent planning reveals whether an organization has the right talent in place to achieve its strategic and tactical objectives both today and in the future. To that end, talent planning strategy must align the with a company’s overall corporate strategy. And it should shape and motivate a company’s approach to staffing, performance management, and development.

For example, if a company knows who within its ranks can step up to larger roles, it can spend less time looking for talent externally. And if it knows that it will need employees with specific skills in the near future, it can build its training and development initiatives accordingly. With proper talent planning, companies can more effectively leverage their human capital and become more competitive and successful in the process.

Talent planning goes hand-in-hand with faster revenue growth and greater company success.

In line with past research that shows the critical importance of talent, the Center’s latest study reveals that companies that emphasize talent planning are more likely than their peers to experience annual revenue growth of 10% or more. Specifically, in fast-growing companies, greater importance is placed on the talent process. These firms are also more apt to consider themselves good at talent planning and give themselves an “A” for their effort, while slower growing companies are more likely to grade themselves a “C” or less.

Rapidly growing firms tend to implement a variety of talent planning activities including identifying internal talent pools and identifying current and future skills gaps. They also focus on developing their high-potential talent, and they get their senior management involved in the talent planning process. Engaging in a wider variety of talent planning activities is key to success in this area; 80% of companies that implement seven or more talent planning tactics grade themselves an “A” or a “B” on talent panning performance.

Despite the importance of talent planning, many companies fail to implement critical activities.

Most middle market firms do engage in some sort of talent planning effort. And the majority (61%) believe that talent planning is at least as important as other business priorities.

However, key talent planning activities and processes are currently in place at fewer than half of middle market businesses. Even those activities deemed most important—such as identifying essential positions and best performers—are only implemented at about four out of 10 middle market business.

Companies looking to enhance their talent planning efforts may want to concentrate on areas within the scope of talent planning that are considered important, but where performance tends to be lacking. Specifically, these activities include succession planning, developing programs for high potential employees, and identifying skills gaps. The research suggests that focusing effort on these activities can generate the greatest overall impact on talent planning success.

For more details on these findings, and for practical advice on how to up your talent planning performance, see the Center’s full research report, Mastering Talent Planning: A Framework for Success.

Next in this series
Post 2: The ABLE Framework: An Approach for Upping Your Talent Planning Game

Others in this series
Post 3: Identifying Potential: Does your business have a plan for recognizing future leaders?
Post 4: Who's next in line: Does your organization have a well-defined succession plan?