Tom Bonney is always recruiting. "I never stop," says the founder and managing director of CMF Associates, a financial consulting firm. "Even if I don't have a need, I am always looking."

Mentoring is also high on this Philadelphia entrepreneur's radar, whether it's teaching his com-pany's finance team about the business development cycle or having a quick meeting to talk about a new Harvard Business Review article. Bonney, 43, believes that employee development is central to CMF Associates' business strategy. "I'm in the service business, so my customers remind me every day about the importance of talent," he says. "You really have to have a well-oiled team." Bonney's company had just 12 employees in 2006--this year, it has 60.

When it comes to finding and keeping talented employees, however, many companies are a little rusty. Global management consulting firm McKinsey & Co. recently took a fresh look at how companies are managing talent and found that they really aren't any better at finding, motivating and retaining good employees than they were 10 years ago when McKinsey conducted its groundbreaking "War for Talent" research. While senior managers at the companies surveyed promote talent management as their number-one or number-two priority, according to the latest research, 60 percent admit that they don't spend enough time developing employees.

"You've got this schizophrenia in terms of how managers think about the topic," says Matthew Guthridge, an associate principal at McKinsey and co-author of the research. "And it's [passed] on down the organization to different managers."

At the same time, demographic upheavals are creating new talent management challenges for companies. Baby boomers are leaving as twentysomething Gen Yers enter the work force. Companies have gone global in their quest for new hires, creating training and cultural gaps. Then there's the work itself, which is more knowledge-based than ever, making the employees who perform these jobs even more critical.

The McKinsey study cites continual development as a motivator for employees to stay. Today's employees "want to know they're going to be upwardly mobile in some way," says Richard Davis, a management psychologist and consultant at global organizational psychologist firm RHR International.

Guthridge says growing companies have some advantages in today's talent wars, like being able to provide employees with greater autonomy, work variety and roles that have real impact. But small businesses also have drawbacks, such as weaker brands and broad job roles that don't always offer a clear career path and can be viewed negatively by younger employees who "are quite clear about the sorts of careers they want," Guthridge says. "The diversity of options within these small companies can be seen as limiting."

Last September, Ken Sawka got a crash course in developing Gen Y talent when he hired a twentysomething MBA graduate as an entry-level consultant at Outward Insights, his three-employee Burlington, Massachusetts, competitive intelligence and strategy consulting firm. Sawka, 43, laid out a six-month development program for this young employee that included formal conferences and workshops offered through professional groups as well as casual one-on-ones with Sawka, who viewed the employee's initial assignments as more about training and development than serving clients. Sawka also got a feel for the skills this employee wanted to learn and has given him increasing levels of responsibility. "It's worked well. His impact and performance project to project are steadily improving," says Sawka, who projects sales of $1 million for Outward Insights this year.

If you want to build the next Microsoft or Starbucks, you'll need a long-term talent management strategy. The McKinsey study suggests that entrepreneurs start by redefining the employee value proposition--the reasons why a smart, motivated go-getter would want to work for your company and contribute over the long term. Think about the ambitions and values of the demographic groups in your workplace, such as Gen Yers, Gen Xers, older workers, working moms, part-timers and so on, so each group's needs are met. "Each of these segments of talent often has different desires, interests and needs," Guthridge says. "Unless a company can offer that variety, it's quite difficult to attract and retain good talent."

Hiring middle managers capable of spotting and developing potential in employees at all levels is also central to a long-term talent management strategy. Bonney uses playbooks and templates to teach the company's B players--the solid employees who aren't on the fast track to getting management roles. "The business challenge for the entrepreneur is to have an A process with a B player to get an A output, and that's what we do," he says.

The most successful companies already know that talent strategy and business strategy are the same thing--that employees are the business and vice versa. "You cannot separate the need to grow from the number of people you need to hire," Guthridge says. "And that at the very basic level is the essence of what a talent strategy should be about."