Dr. John Sullivan wrote an article for ERE, "Talentonomics" - Proving the Economic Value of Talent Management, in which he borrows from the book, Freakonomics to help explain why talent management is more crucial to a company's success than anything else.

As Sullivan defines it, talentonomics is "using the economic, scientific and statistical approaches to clearly demonstrate the revenue impact of excellent talent management programs."

It's easy, in the current economy, to see what impact talent management can have on a company, particularly if the talent is mismanaged. Think of all the money that goes into recruiting top candidates for internships and entry level jobs. Then imagine what would happen if all the best candidates left to work for other companies because their needs weren't met.

Sullivan uses professional sports and the entertainment industry as examples of the impact talent management can have on a company's success. It's in the news all the time. The best performers get the largest salaries and the most concessions in their contracts. No owner wants to lose his winning quarterback or pitcher to another team.

And no movie studio is going to hire a lesser known actress if he can get Angelina Jolie instead. Yes, Angelina Jolie will demand a much higher salary, but she's such a big box office draw that the movie studio will recover its investment plus interest. So making arrangements for her to bring her children with her on location is an example of great talent management.

It's Sullivan's belief that any company can achieve similar success showing a willingness to pay a little extra to get the creme de la creme of entry level job candidates, then do whatever it takes - within in reason, of course - to keep them.

Sullivan's Four Steps of Talentonomics are

Step 1: Indentify the business impacts that executives care about
Step 2: Show them the money
Step 3: Understand the different ways to prove business impact - there are seven ways to do this, which Sullivan lists in his article
Step 4: Focus on the talent management programs that are likely to directly impact revenue

Talentonomics is an involved process albeit relatively simple. But in tough economic times, the money spent on putting Sullivan's theory to the test, might be well spent if it can help employers hire the best possible candidates. There's no quick fix and there's no easy answer. Each company has to figure out for itself what coping method works best for both the company and the employees.