The Impact of Talent Shortage towards Financial Performance: A Literature Review

Abstract

This review delves into how talent shortages affect organizational financial performance, stressing the vital role of talent management practices in overcoming these issues. As the need for skilled workers surpasses the available supply, organizations encounter major threats to their operational efficiency and profitability. The review consolidates existing research, showing that successful talent management practices such as recruiting, developing, and retaining talent are crucial for staying competitive in the market. Additionally, it looks at contextual elements, like organizational culture and location, which affect how talent shortages impact financial performance in multinational corporations. It highlights the necessity of aligning talent management with wider organizational goals to build resilience against talent deficits. The review also explores the mediating effect of employee engagement in this context. Employees who are engaged are more likely to stay with their organizations and positively influence performance, even during periods of talent scarcity. The results indicate that cultivating an engaging work environment not only improves retention but also boosts productivity, leading to better financial results. By drawing on various studies, this review offers a thorough understanding of how organizations can address the complexities of talent shortages through effective talent management and employee engagement strategies. These insights are valuable for practitioners aiming to improve organizational performance in a highly competitive labor market. In summary, the literature demonstrates the complex relationship between talent shortages, talent management practices, and financial performance. Organizations that actively manage talent shortages and promote employee engagement are better positioned for long-term financial success. Future research should explore innovative efforts in talent management and the changing dynamics of the labor market to further refine best practices in this important area.