People are the most important asset in any business. Look after them, and they’ll thrive and propel the organisation from strength to strength. Neglect them, and you’ll potentially face an exodus of disgruntled employees — and a tarnished employer brand.
Talent management — a catch-all term to describe the methods and processes that businesses employ to attract, identify, develop, engage, and retain top talent — is the go-to people strategy for human resources departments across the globe. By touching on all key HR areas, from hiring to onboarding to performance appraisals, it aims to leverage strategic human resource planning and improve business value.
However, too many businesses are merely paying lip service to the most important element of talent management: people. By focusing solely on the financials, organisations will end up fighting an uphill struggle in the fiercely competitive talent market.
To be truly effective, talent management needs to be aligned with a business’ top-level strategic objectives and should be approached in a holistic, people-focused manner.
According to the Chartered Institute of Personnel and Development (CIPD):
“By managing talent strategically, organisations can build a high-performance workplace, encourage a ‘learning’ organisation, add value to their employer brand, and improve diversity management. For these reasons, HR professionals consider talent management to be among their key priorities.”
A happier workforce is a more productive workforce, which means more bottom-line profit for a business. So why are so many businesses floundering? In talent-short markets, businesses cannot afford to rest on their laurels. Without investing in people, long-term success will remain elusive.
Why are so many businesses struggling to attract the right talent?
83% of businesses have had trouble recruiting suitable talent in the last twelve months.
According to Paycor, the single biggest expense in business is payroll. To bring down costs, many leaders get lulled into the notion that employees are just another expense — instead of the assets they are. While fewer employees may bring down labour costs and increase profit in the short-term, doing so will also reduce human capital ROI. If people are not motivated or enticed to stay put, the business stands to lose out on money, employee potential and brand reputation.
Some leaders may argue that they cannot afford the tools and technology it requires to optimise their business’ talent acquisition processes. While this will inevitably cause the business to lose some of its competitive edge, it’s not the only reason hiring managers are struggling to find the right talent. Other reasons for low attraction include:
- Fierce competition for candidates
- Skills shortages across multiple sectors
- Uninspiring or misleading job adverts
- A weak Employer Value Proposition (EVP)
- An undesirable employer brand
While some of these factors are the result of general macroeconomic trends, others are down to businesses not being smart enough with their talent management.
With cross-sector skills shortages at acute levels, implementing an effective talent management strategy is more important than ever
Globally, 75% of HR professionals who are having difficulty recruiting believe there is a skills shortage in candidates for job openings — particularly for technical skills.
As an example, in the United States, the demand for healthcare practitioners exceeds supply by 44%.
According to economic forecasts, this skills gap is only set to increase. Last year, the World Economic Forum reported that “skills gaps across all industries are poised to grow in the Fourth Industrial Revolution.”
To complicate matters further, low unemployment is currently a fact of life in various established and growing markets: from the US to South Korea. In the UK, the unemployment rate is at a 45-year low, while the US unemployment levels sit at a lowly 3.5%. For employers, the reality of a skills-short, candidate-short market is inescapable.
With automation on the rise and traditional manufacturing jobs declining, the skills gap is only set to widen in the 2020s. In such a climate, companies need to be smarter than ever about their talent management strategy.
Talent management is more than a numbers game. For long-term success, the focus has to be on retaining and developing people
We’ve all heard the mantra “people are more important than ever.” All too often, however, businesses focus too much of their time on a particular kind of person: namely, potential candidates. With suitable talent few and far between, such a strategy carries no guarantee of success.
Instead of piling the majority of their HR budget into candidate attraction, smart businesses are realising that meeting the needs of existing employees and facilitating their development is a far more reliable way to consolidate a robust talent pipeline and increase ROI.
Developing internal people has long been overlooked, but this cannot continue for much longer.
According to the World Economic Forum, the widening skills gap means that more than half (54%) of all employees “will require significant reskilling by 2022.” In a fiercely competitive talent market, the onus will have to shift from hiring to investing in effective L&D programmes for employees.
Doing so will enable businesses to hold onto high-performing, engaged employees, as well as those with high potential. And by formulating an authentic, engaging Employer Value Proposition around these L&D or upskilling opportunities, the employer brand will be enhanced, too.
Integrating talent management into the wider organisation is crucial
This is all well and good, but who owns talent management?
As a key business strategy, the responsibility for talent management should not fall squarely on the shoulders of HR — though its increasing importance should enhance HR leaders’ standing and give them a greater voice within their organisations
With 21st-century candidate experience and employee experience encompassing a wide range of face-to-face and digital touchpoints, however, every member of the organisations bears a responsibility to attract and retain talent.
Talent management, then, has to be fully integrated into the wider organisation for it to work. This involves creating processes that enable quick and efficient information sharing on candidates, employee performance, and potential, as well as company updates. Talent management should be comprehensive and total.
The concept of total talent management also enables organisations to break down barriers between the permanent and non-permanent workforce through an all-encompassing outsourced workforce solution.
Investing in a talent management system will optimise HR performance and improve decision-making
Though SMEs and startups may be put off investing in HR technology they deem to be expensive and unnecessary, finding the right tool for a business can quickly enhance its people strategy.
Total management software is one such technology that gives everyone involved in the employee lifecycle a helping hand. From integrated HR tools to all-in-one HR systems, this technology will save time, speed up workflows, and collect vital data.
Having real-time data on employees (also known as talent analytics) can enable HR departments to develop long-term succession planning — identifying who to promote, who to upskill, and who to let go. It can also inform talent acquisition decision-making by offering better insights into candidates. For more on talent analytics, click here.
How workforce solutions providers can help businesses struggling to formulate and implement effective talent management
Historically, the needs of non-permanent talent was an afterthought for employers. In the modern economy, this cannot continue. As workforces become increasingly blended and complex, and with contingent talent becoming increasingly influential within organisations, HR and procurement experts face a difficult job in ensuring that they keep these valuable workers onside.
In such an environment, falling back on the expertise of your MSP provider might be the best solution.
The benefits of effective talent management are numerous. Developing a strategic, ongoing talent management system can help businesses:
✔ Attract and retain top talent
✔ Increase employee engagement and performance
✔ Upskill your workforce
✔ Improve client satisfaction
✔ Boost your bottom line
✔ Reduce the global skills gap
As the race for people with technical skill sets intensifies, effective talent management will prove crucial in the coming years. By fostering a better understanding of the talent within an organisation, strategic talent management enables businesses to identify areas of vulnerability and strength. These people-centric insights can then directly inform decision-making across a range of HR functions, from recruitment to employee wellness programmes.
When deployed in a holistic, strategic manner that values people as critical business assets, effective talent management can help consolidate company culture as a foundation of business strategy — aligning an organisation with its core mission, vision and values.
In this sense, talent management is not just a business strategy; it’s the business strategy.