The report shows what major companies are doing to develop talented employees, what processes are working and not working, and what impact talent management programs are having on company performance.

"While the talent mindset must be present throughout an organization, it must also cascade from the top with the CEO as the driver," said Lynne Morton, author of the report.

A large number of CEOs in major companies are personally involved in the quest to develop talent, the report shows. It provides case studies of initiatives underway at American Express Company, Pitney Bowes, and Cisco Systems, Inc., firms that have implemented company-wide processes to pinpoint and nurture talented employees. It cites American Express' CEO Kenneth Chenault, Pitney Bowes' CEO Michael Critelli, and Cisco Systems' CEO John Chambers as being actively involved in driving talent management programs in their companies.

In most firms, talent management processes are still evolving, with no single measure being universally used to measure this activity. "Some TM practitioners are still viewing its value as intangible or obvious," Morton said. "Some believe, quite simply, that if the company stock price goes up, TM is working. Others look at the value of specific initiatives and at ways those initiatives bring in cost savings for the organizations."

Talent management leaders agree on the importance of the following:

• Knowing your company's critical jobs and having processes in place to target potential gaps.
• Identifying potential successors.
• Sharing talent management measures with boards of directors.
• Tracking percentages of individuals in key positions who are promoted from within versus those who are hired from outside.
• Developing and communicating the specific behaviors expected of leaders in the company to all levels of employees.
• Evaluating employees annually on both performance and potential.
• Informing employees of possible career paths that will benefit them and the organization.
• Using talent management to embed workforce diversity in the company.
• Having at least 15% of employee satisfaction ratings tied to year-end goals and financial rewards.
• Identifying quantifiable opportunities for improvement.
• Establishing a central unit or person—with a cross-functional and divisional perspective—to measure talent management effectiveness.

"Talent management is a business approach that embodies the emotional intelligence of organizations," added Morton. "This is one of the principal reasons why it's not a fad and that it will continue to evolve into an intrinsic, critical part of business."