4 Reasons Talent Management Is Vital to Your Business
Talent management ensures its future health. Learn why it's so important for companies.
The HR function provides the backbone of any organization, through disciplines like payroll and benefits. But it’s talent management that provides the lifeblood that circulates throughout the company and ensures its future health.
Whenever I hear the phrase ‘talent management,’ I’m always left with an image of a creaky Hollywood type with a desk full of headshots and Rolodex (ask your parents) of industry contacts. In this case, the talent isn’t a model or an actor; it’s you – the employee.
Talent management refers to strategic hiring, retaining and developing the best employees available to help a business reach its goals. It’s not only about filling vacancies. It’s concerned with the employee’s entire life cycle, from searching for and hiring the best person for a position through onboarding, training, optimizing performance, and identifying opportunities for the employee to develop and advance their career. You could argue that talent management is how a company brings its employee value proposition to life.
Done well, talent management is a marathon, not a sprint with an emphasis on the business’s long-term success over short-term gains. It requires a strategic vision. However, this can also be one of its significant challenges. While CEOs understand the value of talent management, the impact can be long-term and hard to measure. That can see talent management slipping further and further down the list of organizational priorities as other burning platforms hit the board table.
We want to help make sure that doesn’t happen in your company, so here are some compelling arguments to take to your leadership to make sure that talent management remains one of their top priorities.
Before COVID, the global economy was in rude health and international unemployment rates were low. Fewer people looking for work tends to stagnate the job market somewhat, creating a war for talent. For high-quality talent in critical positions, that battle still rages.
1. It’s tough to find top-level talent
That all makes hiring top talent a long and increasingly expensive process, with vacancies now more costly to fill than ever before.
A strategic approach to talent management creates an organization that attracts more talent, which reduces the time and money spent advertising for or actively seeking candidates for the role. It also reduces a lot of the administrative time and effort of getting people into your organization.
It’s vital that you consider the entire hiring process as a critical communication channel. Your relationship with an employee starts long before they come in on their first day. LinkedIn discovered that 83 percent of people consider a negative job interview enough to make them change their minds about working for a company. In comparison, 87 percent think more positively about companies they previously doubted if the interview experience is an especially good one.
The benefits are tangible for the organization too. Providing a favorable candidate experience improves new hires’ quality by 70 percent, getting the right people into the role and up-to-speed faster.
2. Retaining talent is enormously beneficial
If attracting the right people is important, retaining them is critical. It’s arguably the most meaningful contribution that talent management plays is keeping employees, developing them and advancing them.
That process starts on day one. A comprehensive, well-structured onboarding experience delivers a retention rate bump of 69 percent. Given that it can cost as much as 250 percent of an employee’s salary to replace them, retaining employees is money in the corporate coffers.
Onboarding simultaneously provides the organization with engaged employees who are up-to-speed and productive sooner. It also reduces the longer-term demands made on HR and onboarding managers. Successful onboarding is a holistic experience that goes beyond the responsibilities of the role. Almost two-thirds of new-hires claim that, while they receive instructional training, they get no training about company culture, which is a big miss at a vital moment in an employee’s lifecycle.
However, training mustn’t end once an employee has been successfully onboarded. Investing in the continuous training and development of all your employees is crucial for future-proofing your business. More than 70 percent of CEOs in Australia say that their organization lacks key skills to the point where it threatens future growth. Sixty-two-percent of those CEOs are experiencing ever-rising costs in trying to plug those gaps.
Continuous training of your workforce provides ongoing coverage of critical roles, with employees ready and able to fill skill gaps as they come up. That represents significant resource savings. It also ensures the company adapts flexibly and fluidly with minimal impact on customers.
The good news? Employees want to be invested in too. Forty percent of millennials leave their companies because they feel their career goals aren’t aligned with their companies’, or they consider their current company lacking in career opportunities. Almost 80 percent of employees say they would remain with their employer longer if they saw a clear career path.
In many cases, development opportunities exist but are poorly communicated by managers. Almost two-thirds of companies fail to have regular conversations with individual employees about their career goals, growth and opportunities. Managers scheduling regular one-on-ones with their direct reports could efficiently address this issue.
3. Talent management is the art of boosting performance and engagement
There are a multitude of reasons why employee engagement has become the organizational holy grail. To cut to the chase and translate all of those into C-suitese (C-suitican?, C-suitish?), let’s remind ourselves of the Gallup research: companies with highly-engaged employees outperform their rivals by as much as 22 percent in profitability and 21 percent in productivity.
That same Gallup report surmised that companies who adopt a more continuous, always-on approach to performance management and employee development see a 90 percent direct uptick in employee engagement.
Engagement starts at recruitment and having a clear recruitment strategy that prioritizes an excellent cultural fit over pure skills and experience is vital. Good fit employees can be trained, developed and advanced, whereas bad fit employees will inevitably end up in performance reviews and issues.
The organization then needs to balance a future-focused view of the hard and soft skills it may require to make sure that good fit employees are adequately developed, while the company doesn’t throw away money teaching unnecessary skills that won’t be of benefit. The development process should be democratic and transparent to keep engagement levels high.
The final step in the talent management cycle is practical succession planning, ensuring that good employees are ready and able to take the next pre-identified step in their careers. Bear in mind that the next step may not always be up the organizational chart, as some employees may desire a sideways move into another part of the business or may not see themselves as people managers. Others will be perfect management material and it’s their manager’s job to make sure they’re primed once an opportunity arises. And then the circle of corporate life starts over again.
4. Your customers love you for your talent management
If you see talent management as a wholly internal affair that may reduce operating costs and increase retention, but has little impact on the business’s commercial performance, you’re very much mistaken.
A well-executed talent management strategy impacts your customers in multiple ways:
So, if you want to be part of an organization that is better to work both for and with, make sure your executive leadership is aware of all these multifaceted benefits and values talent management highly. Or you can recruit and develop leaders who do believe in talent management to take their place.
To get more stats on how employees’ challenges and priorities with career development, download our research study, “Career Development in a Pandemic.”