Today’s leaders face many challenges requiring an effective talent strategy. These include: a prolonged labor shortage in the US, competitive pay issues, big reskilling gaps for AI and digital technology transition, stressed-out workers, finding the balance between hybrid and in office work and providing enough career opportunities for all employees and especially the organizations top talent. These are the top 20 percent employees that drive 60 to 80 percent of the performance.
I was discussing these challenges with a friend of mine who leads an executive search firm. He agreed. “The problem with a talent strategy,” he said, “is nobody knows what it is. Business and HR leaders have a recruiting strategy, pay strategy, training strategy, but it’s all in pieces. They don’t put it together so it becomes an advantage in attracting, motivating, and keeping great talent.”
I thought he said it well.
But, here is the kicker. It doesn’t begin with any of the pieces he mentioned. It begins with an employer brand. Then the pieces fall together to create the whole.
Employer brand
An employer brand articulates a value proposition that goes beyond the job’s duties and pay. It clearly articulates an organization’s reason for existing and purpose in improving humanity. It should cover the cool work your employees do (preferably in the words of your employees). It articulates the long-term career, economic, and work-life balances to your job prospects.
If you have read my columns for a while, you know I often quote the Medtronic Mission and its tenants as a great example of a successful employer brand. Employees loved the idea of working with a company that would develop new therapies to alleviate pain, restore health, and prolong health. You don’t have to have be a medical device company to have a great brand. A San Francisco trash hauling company, Recology created a fantastic brand, “a world without waste” to distinguish itself among the labor force and attract and retain talent.
Let’s now talk about the pieces, or if you prefer, the components, of an employer brand that attracts, motivates, and retains your talent, beginning with collaborative organizational culture. The other pieces are a talent skill plan, employee learning and career development, hybrid work, pay compression and transparency, as well as retaining, developing, and rewarding your top talent.
1 – Collaborative organizational culture
Too much of last year has seen executive versus employee conflict over Quiet Quitting, Quiet Firing, and Returning to the Office. Rather than focus on issues that divide managers from employees, executives should focus on a strategic issue that unites management and employees: a culture that enables employees to align with the organization’s mission to serve customers and achieve a higher good for humanity. Again, this is your employer brand.
Research on the positive effects of developing culture is overwhelming. Longstanding empirical research demonstrates how agile corporate culture improves organizational innovation, productivity, and profit. Evidence is emerging that healthy organizational cultures are also the best way to beat turnover. This includes research from Harvard’s John Kotter, James Heskett, and C. Brooke Dobni Ph.D. of InnovationOne. (Full disclosure: I am a Managing Partner of InnovationOne, LLC.).
In 2024, MIT researchers discovered that a toxic organizational culture drives employee turnover 10 times more than pay. This was startling news during the Great Resignation three years ago when employers had significantly improved pay and benefits to reduce employee turnover.
We know from empirical evidence that in organizations with agile cultures (transparency, collaboration, and trust), not toxic cultures (yelling bosses and destructive competition among employees), workers are more productive and happier.
Research shows that building thriving cultures is a sure way to reduce turnover, subdue quiet quitting, and improve productivity and innovation.
2 – What is your talent skill plan?
Most organizations are wise to assess how their business model changes and product and service mix changes affect the skills they need from their workforces. If certain products are being phased out what will become of that workforce? Can they be repurposed to other parts of the organization? Is it necessary to upgrade their skills (which is often cheaper than laying them off and hiring new skilled workers)? Assessing these changes every year and having a thought-out plan to move and train talent and to hire or outsource the talent necessary to do the organization’s future work is critical.
Digital transformation has dramatically increased the need for workforce planning. While digital technology transformation has been on our door step the last several years, it has been overrun with speculation on generative AI. According to Microsoft, the use of generative AI has nearly doubled in the last six months, with 75 percent of global knowledge workers using it. Many employers, however, do not have a plan for how to deal with it.
The International Monetary Fund predicts that AI will affect almost 60 percent of jobs in advanced economies, eliminating some jobs, making the work of other jobs easier but requiring new technical skills, and perhaps lowering the demand for labor, therefore lowering wages paid to workers.
If you don’t have a talent skill plan, it is time to get one.
3 – Employee learning and career development
According to Pew Research, only 44 percent of workers are satisfied with the training and development they are offered by their employers for new jobs. When conducting employee surveys, I found that training is a top priority for employees. (Employees want to know how to incorporate AI into their work too!) They want to learn new skills to stay abreast of the demands within new technologies.
Also, the constant change and introduction of new digital technologies further underscores the need for more training.
A good place to start is with the new-hire orientation. Studies have long found that onboarding including cultural adaptation skills and job training greatly improves the productivity of new hires and reduces turnover. Employers need to offer coaches to new hires to teach the ropes and provide excellent training on unique job skills and using the enterprise system. New-hire orientation that provides such training and coaching allows new employees to reach job mastery much faster.
Employees also want to develop their careers at their companies, much like a decade ago. In a Pew Research survey, 63 percent of respondents who left jobs in 2021 cited a lack of advancement opportunities as a reason. And a 2022 McKinsey study noted that a lack of career development and advancement was the most common reason given for quitting a job. Too often, executives ask employees to chart their career paths under the guise of empowerment, but this often only leaves the employees aimless without a place to start.
Every organization should encourage managers to lay out a career path for their employees, and update it at least twice a year. This is a critical element of performance management. An article in the MIT Sloan Management Review suggests that employers make opportunities and pathways visible for employees. One way to do this is through career maps. Another is through employee videos where legacy employees describe to new hires how they got ahead in their careers. HR should provide alternative career paths and the skills and experiences employees need to develop their chosen careers. Team assignments and formal job rotations can be beneficial, along with thorough coaching and feedback.
Training and career development also provide an excellent return on investment.
4 – Hybrid work
Sadly, hybrid work has become enmeshed in the US’s political divisions. The return-to-work movement has stalled. According to a Stanford economist, return to the office is “dead” due to a remote work preference among workers, especially women. The New York Times reported on October 16, 2023, that occupancy rates now were 50 percent of the February 2020 levels, and the levels are nearly the same in East and West Coast areas and North and South areas. After a spike at the beginning of the pandemic, Americans still spend about a third of their workdays at home.
Hybrid working is so popular among employees that, according to the NYT, employees equate a mix of working in the office and working from home to an eight percent pay raise. Employees who work some or all their time at home don’t have to deal with the daily hassle. In fact, the process of getting to work is more despised by employees than the need to work.
Research has long shown that employees are 20 percent or more productive at home and when offices are redesigned for meeting places, customer interactions, and training, the cost savings to companies soar. The smart executives are taking the savings from discarding unneeded office space to invest in marketing, R&D or other worthy business investments.
Still hybrid work is not right for every office job. Learn more here:
5 – Pay, pay transparency and pay compression.
Before COIVD, a pay strategy mostly consisted of deciding to pay to market rate or above market rate to attract the talent you need. Now pay transparency laws have exposed pay compression in most companies, as employers have struggled to keep the pay of their workers equal to the market pay for their jobs.
Earlier, I wrote that culture drives retention 10 times more than pay. It is true, but you cannot allow your pay to fall off the rails by not paying at market levels. If your talent strategy is to recruit engineers from the best engineering schools and management for the best MBA schools, you will need to pay at above market prices to get this talent.
Whatever your pay strategy is to fit your employer brand, you need to address the pressing issues of pay transparency and pay compression. Learn more here.
6 – Retaining, developing, and rewarding your top talent who have potential to move up
Your top talent includes your top performers, and the top performers who have the potential to move up in the organization. I am more interested in the latter, who are often called a” high potentials” or “top talent.” This talent has better productivity, teamwork, ideas, and commitment than others. You need to reward them accordingly, by offering exciting career opportunities, and larger pay raises, bonuses, promotions, stock awards. Otherwise, they will leave to work for another employer who will pay them their value on the marketplace. For most employers, 15 to 20 percent of the workforce are top performers with the potential to be promoted two or more levels. Hopefully, your performance management system is accurate in identifying them and you have a succession planning system to assist in providing exciting and developmental career development to your top performers. Learn more here.
Some argue for equity in rewards. If you provide equity, you will retain your average employers, but loose those who drive the higher performance.
Employers today are facing vexing challenges. Those who succeed will have articulated a cogent employer brand that articulates their mission and the good they do for humanity, and then have the talent strategy pieces to make it whole and real for their employees.
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