Many CEOs will tell you that their workforce is their strongest asset. They write mission statements and hang their carefully crafted values on the walls of their entrance lobbies and conference rooms. They profess their commitment to hiring the best employees and offering them great careers.
While all this may be great, it’s often just lip service. Too many organizations treat their workforce as a commodity, a necessity of business that can be bought or sold on any number of exchanges. They believe their employees are mostly interchangeable. That is their biggest mistake!
Their employees and middle managers know, however, when executives are serious about the value of their workforce, or when they are just paying lip service. They know by their work environment, the transparency of their leaders, how they are treated, the sense of achievement they feel, and the collaboration of their peers.
It’s too bad, really. Because the companies that put powerful, integrated talent strategies in place not only enjoy higher employee retention, they also have an easier time attracting great employees. They benefit from higher levels of discretionary effort, productivity and innovation.
These companies also have better financial performance, according to the conclusions of top research organizations, including McKinsey and Company, The Hackett Group, and Penn State University.
Too many companies delegate talent strategy to their human resources departments. But they are complacent to limit the focus of their human resources departments to payroll and benefits administration, recruiting, performance management and compliance. These are the basics, which need to be done well, for sure, but they are not the powerful talent strategies that can drive superior financial performance. They don’t steer the effective implementation of business strategy, empower new innovation, or lead to higher profitable growth.
When you want to take something seriously, you need to have a purpose, a vision for it and a plan to achieve it. You need to know what it will look like when you are finished. You need a plan with strategies, tactics, supportive technologies, measures, analytics and the ability to quickly take corrective action.
What drives the extraordinary effort of employees, superior performance and financial performance are talent strategies that:
- Align the passions of each employee to the mission, purpose and strategies of the organization.
- Provide principles for leaders, working together and serving clients.
- Are performance based.
- Create dynamic, collaborative cultures of innovation that transcends hierarchy, arrogance and barriers.
- Provide employee development and career planning.
- Develop managers who build trusting relationships with employees and provide a sense of achievement by giving timely feedback, coaching and recognition.
- Create a work environment that allows employees the flexibility to work when and where it makes sense for the team, with great technology, and to attend to the needs of their personal lives.
When you don’t engage employees, they hit a tipping point and eventually leave—especially the best ones. Or worse, employees stay and disengage. The cost of employee turnover is high -16% of annual pay for retail and manufacturing companies. It can be as high as 50% for engineers and high potential talent in other professions. It can be 200% for key executives.
The cost of disengagement is even greater! Disengagement is when employees put in the minimal effort necessary to keep their jobs, offer few suggestions, or worse, create dissent with gossip or by undermining colleagues. Disengagement eats at your organization’s culture like an undetected cancer. According to Gallup, the disengagement costs the U.S. economy an estimated $450 billion to $550 billion a year.
Unfortunately, the standard accounting practices used today do not pick up the reasons for a company’s decline in productivity, slipped new product development schedules, rise in scrap and rework, higher absenteeism, higher workers’ compensation costs, and lower profits.
Yet, it happens nonetheless.
I can empathize with the challenges of companies with demanding quarterly financial goals, ongoing operations to manage, stiff competition, and too much bureaucracy. I have been there. And, that is the point. Companies that want to improve their financial performance, productivity, and innovation, need to put powerful talent strategies in place.
The status quo is a failing business strategy. When a company focuses on cost control and operational efficiency, it squeezes out its employees’ sense of higher-purpose, individual ambition, creativity, and innovation. Those organizations stagnate and fail to grow.
Are you launching new talent strategies or upgrading your old ones to compete in today’s tight labor market? I would love to hear from you. Join the discussion. To learn more about how to implement powerful talent strategies, order my free whitepaper, The Seven Mistakes Companies Make with Talent Strategy.
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and is a Managing Partner of InnovationOne. He consults on innovation, global talent management, developing agile leaders and teams, and other strategic initiatives. Questions? Please e-mail Victor at firstname.lastname@example.org or visit www.victorhrconsultant.com. For innovation visit www.InnovationOne.io.