In today’s tight labor market and with digital technologies changing the skill sets needed by employees, every organization needs a talent strategy for its workforce to ensure profitable growth.
Organizations with a good talent management strategy can attract, align, motivate, develop, and retain, especially the best talent in the long term.
Treating your employees like a cost to be eliminated — as opposed to an asset — leads to a dead end.
Before COVID, many employers stated that employees were their most valuable asset, although I wonder if all executives believed that sentiment. During COVID, employers implemented light touch management with their employees. In many cases, they eliminated performance appraisals and showed more than usual patience. In more recent months, however, many companies have pursued relentless cost cutting and process improvements. More recently, many have begun implementing Artificial Intelligence initiatives with little regard for employee involvement or training. AI implementation, of course, is most successful when a human centric approach is used.
Employees Have Become The Least Important Asset
In his book Our Least Important Asset, Wharton Business School professor, Peter Cappelli, asserts that financial accounting and its focus on unabating cost cutting over asset investment is hurting organizations and employees. He argues that the following trends generally reduce the quality, productivity and creativity of workers:
- financial accounting’s emphasis on costs per hire, over the quality of hires,
- the replacement of regular employees with “leased” workers,
- the shift to unlimited vacations (which in reality leads to employees taking less vacation ),
- the transition of hiring from professional recruiters with effective practices to more expensive and inexperienced line managers. It undercuts the evidence about what works to hire great employees.
Cappelli goes through extensive data that shows how real wages have staggered or declined for most workers, how job insecurity has increased, and how retirement incomes is uncertain. He further points out that while work for white-collar employees has increased steadily, opportunities for advancement have withered. He also offers evidence for the negative effect workplace stress has on health.
Is it any wonder that 83 percent of workers report suffering from work-related stress? According to the American Institute of Stress, depression-induced absenteeism costs US businesses $51 billion a year, as well as an additional $26 billion in treatment costs. The main causes of workplace stress are workload (39 percent of workers), interpersonal issues (31 percent), juggling work and personal life (19 percent), and job security (6 percent).
It should not surprise anyone that developing talent is less expense than replacing talent. Replacing talent is expensive. Replacing factory workers (average US pay of $62,400/annually) can be 20 percent of annual salary ($12,480); for engineers, 50 percent of annual salary (for engineers that cost an average of $100k a year, the cost is $50,000. And replacing executives can cost 200 percent of annual salaries.
On the other hand, the cost of developing employees, according to the Association of Talent Development costs is an average $1,250 per employee per year.
There is a better way. Investing in your employees and creating the culture and work environment that allows employees to do their best is a way to help your organization to profitably grow. It takes a talent strategy.
Talent Strategy
Like any strategy, talent strategy is long term. It is tied to the business brand and model.
The best talent strategies begin with a talent brand: the reasons employees should join your organization out of college or later in their careers. Is it to work on game-changing technologies? Develop treatment or cures for disease? Commitment to reducing climate change? Serving the unmet needs of cancer or heart patients? Having a career and working in a dynamic and innovative culture?
What ever talent brand fits your business brand needs to have legs and should have an impact on the following:
Knowledge and skills you need. Every organization should identify the skills they need for their organization over the next two to five years. Everyone wants to attract and develop skills to apply artificial intelligence, such as data scientists, but what else? The answer will depend on your industry and business strategy.
Recruiting strategies and tactics to attract this talent. If your organization is in health care, I don’t need to speak with you about the shortage of doctors, nurses, and social workers. What recruiting strategies will give you a leg up over your competition? College or medical school recruiting? Traveling nurses? Dedicated internal team or external search? What are your goals for the length of time to fill jobs? Costs per hire? Will you focus on novices or experienced hires?
Recruiting strategy is not stand-alone. It is hand and hand with your organization’s values, compensation, career development, and work flexibility strategies. I know from firsthand recruiting experience that job candidates will ask about many questions:
- the values of your organization,
- pay (see my blog on pay transparency),
- what happened to the job’s incumbent?
- the promotion rate
- development opportunities
- investment in employee training to keep skills current
- how many days a week they can work at home
Job recruits today will also want to know the latest work technologies you have invested in for them to use.
Organizations that have articulated strategies for each of these issues shared on their career sights will have the advantage recruiting over their competition.
Cultural Onboarding is Critical
You have 90 days to retain employees. If, after 90 days, your employees do not believe the culture and work environment described in the interviews is the reality, they will begin to look for a better job. This is especially true for your best hires.
It is essential that each manager make a personal connection with their new hires and set them up for success. Managers should assign each new hire with coaches and training to be sure they know how to use the enterprise systems and that they quickly understand how work is done and how decisions are made in the organization. Managers should also allow employees to meet with their co-workers and internal clients to develop relationships. Investment in this type of culture onboarding can improve employee retention by 82 percent and year-over-year improvement in revenue by 60 percent.
Transparent feedback and ongoing development
Another hallmark of organizations with great talent strategies is ongoing feedback from managers and coaches and career development. The trust, training, and coaching built during onboarding does not end there. It continues throughout their careers. According to Harvard Business Review, professional development is the best way to improve company culture. In fact, 93% of employees said they would stay at a company longer if it invested in their careers.
While many organizations have performance management processes with quarterly updates and annual reviews, organizations with talent strategies discuss development and career development with their employees just as often.
The labor shortage in the US (and western democracies) is not ending soon due to structural factors. Intelligent organizations who treat their employees as assets and have talent strategies that fit their business brand and model will win today’s war for talent over their competitors and enjoy profitable growth.
About Victor
Victor Assad is the CEO of Victor Assad Strategic Human Resources Consulting and Managing Partner of InnovationOne, LLC. He works with organizations to transform HR and recruiting, implement remote work, and develop extraordinary leaders, teams, and innovation cultures. He is the author of the highly acclaimed book, Hack Recruiting: The Best of Empirical Research, Method and Process, and Digitization. He is quoted in business journals such as The Wall Street Journal, Workforce Management, and CEO Magazine. Victor has partnered with The Conference Board and the US Department of Energy on innovation research. Subscribe to his weekly blogs at http://www.VictorHRConsultant.com
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