Talent management and labor productivity

Despite growing interest in talent management, the extant research leaves insufficientlyanswered whether and under what boundary conditions talent management contributes toorganizational success. The present study examines the relationship between talentmanagement and labor productivity and how organizational goal-setting with respect to thespecificity, difficulty, and temporal proximity of goals moderates this relationship. Weempirically validate our theory through a multilevel analysis based on cross-industry panel dataon 1,997 manufacturers nested in 115 3-digit Standard Industrial Classification (SIC)industries. The findings indicate that talent management is positively associated with laborproductivity. Moreover, firms which improved talent management in a given year ofobservation relative to their average level across the observation period experienced an increasein labor productivity when they also improved their goal-setting practices. In contrast, firmsthat did not improve their organizational goal-setting practices relative to their average levelacross the observation period did not experience an increase in labor productivity through talentmanagement. Our study contributes to the nascent literature on the relationship between talentmanagement and organizational performance and on this relationship’s boundary conditions.