Talent Management vs. Performance Management: Difference Between

Talent management and performance management are two critical components of human resource management that are often intertwined but have distinct objectives and processes. 

Talent management is a long-term strategic approach that focuses on attracting, developing, and retaining top talent in an organization. This involves identifying future talent needs, 

implementing programs to attract and develop employees, and creating a work environment that helps foster employee engagement and retention. 

The goal of performance management is to improve individual and organizational performance and align it with the company’s goals and objectives. 

This involves regular communication between managers and employees, setting performance expectations, providing feedback and coaching, and offering opportunities for professional development.

How does Talent Management work?

A talent management process involves bringing the right talent on board and allowing them to grow to their full potential while keeping the organization’s goals in mind.

Talent management is recognizing talent gaps and empty positions, sourcing and welcoming the best-fit candidates, developing their skills for present and future needs, training for proficiency with an advanced approach, and keeping them engaged and driven to reach long-term business aspirations. 

It emphasizes the holistic view of managing human resources at work to ensure that an organization achieves its goals. To sum up, it’s about bringing on board the right people and equipping them to benefit the business.

The Pillars Of Talent Management

Several experts and vendors have recently mentioned five pillars of talent management, a change from the traditional four pillars. 

Talent management systems include applications that fall into one of the following broad functional areas, regardless of the number and name of the applications. 

Talent management systems vendors vary in terms of the characters and number of pillars, but the concepts remain the same:

Software for recruitment

Recruiting and onboarding are essential in hiring top-notch employees and ensuring they are adequately assimilated into the organization. 

Crafting a good image for the business for external parties like potential employees and internal new hires is critical to ensuring longevity with staffers. 

Software solutions are often employed to help manage every phase of this process, with an applicant tracking system typically being a standard component.

Software for learning and development

A learning and development program encompasses all aspects of employee development, including compliance training, workforce development, and career development.

 Organizations can increase employee satisfaction and retention, as well as efficiency and productivity, by providing career growth and training opportunities.

Software for performance management

Performance management sets goals for the company, teams, and employees. On the employee side, performance management refers to measuring, appraising, and managing employee performance. 

With its concrete goal-setting and measurement, performance management helps companies better understand how they’re doing in various categories.

Also, performance management allows managers to identify top performers and evaluate employees over time. Increasingly, organizations are using continuous performance management tools because they provide more timely feedback and have several other advantages. 

Organizations use these tools as an alternative to traditional annual reviews or as a replacement for them to foster growth and performance.

Software for compensation management

By rewarding employees fairly and competitively, compensation management software can help acquire and retain talent by providing financial value to employees, including salaries, bonuses, and benefits packages. 

Through pay-for-performance compensation management, the software can boost employee retention and prevent employee frustration over a lack of recognition.

Software for succession planning

A succession plan identifies successors for critical positions or roles. It helps ensure that each area of a company has a pool of qualified employees.

What is Performance Management?

An employee’s performance is monitored and evaluated by managers using performance management as a corporate management tool. In performance management, people are encouraged to perform to their best abilities and to produce the highest quality work most efficiently and effectively.

An effective performance management program uses traditional tools, such as developing goals, objectives, and milestones, defining what effective performance looks like, and developing processes for measuring it. 

However, performance management turns every interaction with an employee into an opportunity to learn instead of using the traditional paradigm of year-end reviews.

Managers can leverage performance management tools to streamline workflow, suggest new strategies, and make other decisions that could help employees accomplish their objectives. 

This, in turn, assists the organization in attaining its aims while maximizing its performance. For instance, a sales department manager would assign staff members to target revenue volumes they must achieve within a specific time frame. 

These figures should be accompanied by relevant advice in a performance management system to encourage success.

PCER (Performance Management Model)

Performance management creates an ongoing dialogue between employees and supervisors. To facilitate the performance management process, the Division of the PCER (Plan, Coach, Evaluate, and Reward) model. 

Through this approach, the best techniques are used to create a performance plan, coach for the successful completion of the project, and complete the annual performance evaluation.

Check out the Awareness Session Slide Deck website for more information about performance evaluation.


As part of performance management, the supervisor reviews the employee’s position restrictions, communicates competencies, sets goals, and discusses them with the employee. 

This helps establish a mutual understanding of the employee’s performance and behavior expectations.


To help their employees reach their goals, the manager provides coaching and feedback throughout the year. 

During the Plan phase, goals and other documentation are created as a working document, which can be referenced throughout the performance review process.

 Employee performance notes can be made by the supervisor and the employee at any time and can be tracked outside of Workday at any time.


The supervisor may assess an employee’s performance based on different resources like yearly performance notes, customer feedback, employee self-review, and commendations. 

A meeting is set up to explain the evaluation and give feedback about what went well and where there’s room for improvement. After that, the supervisor finalizes the evaluation in Workday, sending it to the employee for approval before it can be formally closed.


At year-end and throughout the year, the supervisor recognizes and rewards performance.

Model for Talent Management

Even though talent management is not standardized, some HR professionals have proposed excellent models that companies can use.

Your model must include the following elements, regardless of how you develop it.


Planning aligns your talent management model with your organization’s overall objectives.

In addition, it assesses current employees to see what is working well for the company and ensures you seek talent with the right skills and experience.

Consider hiring more workers with specific characteristics if they tend to stay at the organization longer.

Art of attracting

Finding someone else to fill the role is more complex when one person leaves the company.

Talent management ensures you have enough staff to carry out all your operations and prevents heavy workloads that demotivate your employees.

You want to hire driven, skilled employees and seek advancement within your business. The right strategy will attract just such candidates.

The primary consideration here is to make your business more approachable to attract talent. You’ll need to increase visibility in ways that allow you to present your company as the best place to work.

Suppose you don’t hire someone for a specific position. In that case, you should still create a positive experience to allow yourself to engage them for other jobs or use them as ambassadors.


Taking steps to develop talent within a company is part of the development part of the model.

It should identify roles where particular employees could move in the future and how to increase workers’ skills and knowledge to meet new challenges.

It is also essential to provide employees with value to keep them enthusiastic and willing to go the extra mile.

Motivation also requires the proper onboarding – to give new hires a good impression of your company from the beginning. This will increase their likelihood of remaining with the company and working hard.

Retaining employees

Talent management is also intended to keep people at your company for longer.

We need to maintain an enjoyable, meaningful work environment for our employees.

Employees can build a career without leaving the company by focusing on compensation (monetary and otherwise) and company culture.

The transition

Planning for employees’ transitions after they have been hired and developed their skills is essential.

The goal at this step is to maintain their knowledge within the company. This is called knowledge management.

If a worker decides to leave, you must know why. It would help if you planned to promote them or move them to another role, department, or office.

Strategy for Talent Management

Your talent management strategy should align with your organization’s goals and define your required skill.

The talent management process is organized based on the talent management strategy.

You can select from a few various types of strategies.

The #1 strategy is to hire only the best employees

This strategy has obvious advantages:

  • Top talent is immediately available to you.
  • Employees will perform nicely and reach high performance more quickly.
  • Your company grows faster.
  • As a result, you are more prepared for challenges and risks.

There are, however, some disadvantages as well:

  • It’s expensive and will cost you even more if you hire somebody else to do it for you.
  • Retaining top talent could be more challenging.
  • The hiring process may take longer if you need to choose from a larger pool of candidates.
  • Managing a team of top performers can be difficult.
  • Underperformance can result from too many top performers on a team.

The two # strategy is to hire and develop promising specialists.

There are a few advantages to this second option:

  • You can find talent faster if you need more time to search for top employees.
  • Salary costs will likely be reduced.
  • The employee can become a skilled and loyal employee.
  • You can hire two or three promising specialists for the exact cost of one top performer.

Among the main disadvantages are the following:

  • Your company may grow more slowly.
  • As a result, these hires perform poorly compared to top talent.
  • Development requires a more significant investment.
  • You may need to revert to option one if the strategy fails.

Combining Strategies 1 and 2 is Strategy #3

The following quote best describes the strategy:

Combining the two above has the following advantages:

You get the best of both worlds.

  • In addition, you can combine new hires with existing talent.
  • Talented and potentially good specialists (e.g., young employees) will motivate and help them grow.
  • Top talent can teach other employees through knowledge transfer.

However, there is one drawback:

  • Sticking to one strategy may be more appropriate if you have specific requirements (such as urgent growth needs).

How Does Talent Management Work?

A talent management process describes how you manage your human resources, including how you pick employees, hire them, train them, motivate them, fire them, etc.

1. Determine what type of hires you need and what requirements they must meet.

To avoid hiring anyone new, consider teaching existing employees.

2. Attract the right people

Attracting talent involves several stages:

Post targeted advertisements on top job sites – HR branding is helpful here.

To determine the best prospect for the job, consider using personality assessments, references, and tests that require candidates to perform in real-life scenarios.

Make sure you hire the best candidates.

3. Onboard and organize the work

As soon as new employees enter the company, be ready to welcome them.

Make sure they know what tasks they will be assigned, schedule training sessions, and give existing employees to assist new workers.

4. Organize learning and development

It is often easier to develop the skills of your current employees than to hire new ones.

Even if you hire top talent, they will probably want to learn something in their new position.

Provide your workers opportunities to learn and grow, such as conferences, courses, and a learning management system.

5. Hold performance appraisals

Keeping an eye on employee performance lets you see if they can handle additional duties.

An employee can prepare for a promotion, and you may not have to hire new talent.

6. Retain your best talent with a retention strategy

Ensure job satisfaction, motivate employees, and improve company culture to keep them happy at work.

7. Plan for succession

Prepare employees for succession, such as when a senior member retires.

Ensure that employees are provided with continuous learning opportunities, including knowledge management, so they can perform at their best.

An exit interview can help you prevent the same issue from occurring again in the future if an employee leaves the company.


In conclusion, Both are two different aspects of managing an organization’s human resources. 

Talent Management focuses on acquiring, developing, and retaining talent to achieve long-term business goals, while Performance Management focuses on monitoring and evaluating employee performance to achieve short-term goals. 

Talent Management and Performance Management use software and processes to help managers manage their employees effectively. 

Talent Management has five pillars: recruitment, learning and development, performance management, compensation management, and succession planning, while Performance. 

Management uses the PCER model (Plan, Coach, Evaluate, and Reward) to create an ongoing dialogue between employees and supervisors.

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