Why is talent management increasingly important for companies?
If you want to run a successful business, start with your talent. Capital investments can help you pay for licenses, software, and equipment, but it’s the people you work with who will really get things done. Implementing a solid talent management strategy ensures that your best people stick around, saving you money and further developing the brand culture around your team.
What is talent management?
How do you keep skilled talent around? Incentivizing employees with high pay is one thing; building an inviting culture that makes them want to stay is another. Talent management involves the recruitment, management, and development of your business’s most important asset: your employees.
Maintaining a talented workforce is no easy feat, but formulating strong recruitment and retention strategies can help you keep your best employees for a long time. In this comprehensive guide, we’ll cover the various concepts, steps, and best practices for ensuring your team is set up for success.
What are the main benefits of talent management?
- Stronger sense of community – The more you invest in your employees, the more they’ll give back to you. Proper training and team building activities can solidify the bonds between your workers, leading to more engaged employees, efficient processes and a happier workforce.
- Lower turnover – Losing employees can be costly- in terms of time, money, and morale. Work Institute’s 2017 Retention Report estimated that replacing a departing worker earning a salary of $45,000 can cost $15,000. These costs include recruitment, interviews, and onboarding. Why not just retain your best employees?
- Developing careers – The most effective managers the best out of your team. They don’t just get things done, they ensure your employees are growing towards their career goals. When employees have an opportunity to learn and develop, they can work more productively and creatively.
- Higher client satisfaction – Talent management indirectly affects your end-user or customer. These individuals all have an impact on the public, whether they’re developing the very products that they will enjoy.
Positive reputation – Who doesn’t love a company that treats its employees well? Take care of your team, and they’ll be sure to let their closest friends and family know. Neglect your team and it’ll come back to hurt your reputation.
The 4 Key Components to a Talent Management System
Each company’s Talent Management System, whether a small startup or a medium-sized enterprise, has four main components:
Talent management begins with the talent you find and attract. Whether it’s through a recruitment website, a job fair, or a referral, recruitment processes are always worth thinking about. Attracting the right talent means more than the right job experience or skills; it also means finding the right personality to fit your company’s culture.
As a leader, you have the responsibility of growing your team. Teach them new skills, introduce them to experts, and cultivate a passion for their work. A well-developed worker can bring more dynamic solutions to the table. Additionally, they’re less likely to leave since they have the constant opportunity to improve on their abilities.
Finding skilled workers is only one part of the equation. You also have to ensure they stay motivated and happy so they come into work every morning feeling energized. Develop a culture of inclusivity and empowerment, then reinforce it with team building and motivational activities. This might involve getting the company together for a team lunch, or recognizing an employee’s exceptional work in a public manner. Motivated workers have no reason to leave their company.
Employee retention involves more than relevant training and a strong culture. It means tracking the professional development of each person, providing regular feedback, and constantly empowering them to do their best work.
Talent management strategies
What are the main types of talent management strategies?
Let’s walk through the main types of talent management strategies:
1) Talent acquisition – This aspect of talent management centers around sourcing new hires— either as fresh graduates, or previous workers looking for a new opportunity. Job descriptions, interviews, and onboarding all fall under this category.
2) Talent development – This type of talent management focuses on building workforce skills and experience. What are the key success metrics you’ll use to track an individual’s progression? How will you encourage them to keep developing?
3) Talent empowerment – How do you plan to keep your employees happy and inspired? It’s important for your company to track the overall sentiment of an individual towards the brand.
4) Talent retention – Finally, we have a whole area of talent management dedicated to retaining existing employees. For example, what rewards can you provide more senior members? As they stay with a company, they’ll have more reasons to leave— what can you do to convince them to stay?
What are some talent management initiatives?
Align your recruitment objectives with your brand mission and culture
Create a plan. First, outline your company’s mission, cultural values, and objectives. Many skills are teachable, but it’s fundamentally important to find people who align culturally with your business. You can always train people to develop technical skills, but you can’t train a mindset.
On a more tactical level, spend some time to fully understand everything about the open position — not just the requirements, but also how the person will ultimately fit in the organization.
Once you have a solid grasp of how the recruitment syncs up with your organizational goals, you can start on the next step— reaching out to potential applicants.
Focus on recruitment messaging
Making a strategy is just the beginning. The next challenge is to make sure that applicants are on the same page. Though it might be clear to the company, the applicant may have a different perspective.
For example, a job description might suggest the need for someone that excels in communication skills and client relationships, but in reality, the client might find themselves working exclusively on spreadsheets and documents. As much as you may be tempted to augment the job description, transparency and accuracy should always take precedence.
“Every company wants to portray itself in the best light and use euphemistic words and at the same time capture their company’s strengths and challenges,” says Elizabeth Laukka, a recruiter specializing in placing advertising, public relations, and digital professionals. “So when writing a description I make sure candidates know what they are applying for and that our descriptions are attracting the right culture fit which is so important when hiring.”
Looking for some podcasts on all things recruitment? Take a look at the Recruitment On The Go podcast by Harver. Each episode is only about 10 – 15 minutes long but will give you plenty of insights on improving your recruitment messaging.
Developing a retention plan
First, calculate your retention rate. While you should always work on improving retention, you won’t know how serious of an issue it is until you start doing the math. Calculate turnover rate by taking the average number of employees, dividing it by the number of employees leaving, and multiplying it by 100. You can calculate this monthly or yearly. Learning your retention rate is always a good practice, especially if have a larger team, just so you can understand your retention relative to your competition or industry.
You may also want to conduct exit interviews with employees that leave. Recruiting interviews are typically thought of as the most important, but exit interviews are just as necessary. These interviews can provide valuable insights into why employees leave. You may discover new places for improvement within your organizational structure, workplace culture, or expectations. Additionally, exit interviews allow you to terminate the professional relationship on a positive note. Keep in mind that not all employees may be willing to share their thoughts upon leaving, but it is always valuable to ask.
Want to learn more about crafting exit interviews? We recommend reading Harvard Business Review’s article, Making Exit Interviews Count.
Check out this TEDx Talk by Stefanie Stanislawski about taking your recruitment to the next level.
The importance of culture
Culture is a collection of your company’s attitudes, mindsets, and values that create a unique brand personality. With a solid and motivating culture in place, employees will flock to your company and feel more connected to the entire organization.
But even today, some of the biggest brands neglect the importance of cultivating team culture. They fail to realize how culture positively affects retention, workforce satisfaction, productivity, and countless other aspects of a business. Culture is more than writing core values on a wall— your team should see those values in action every single day.
Why is culture important?
Even outside of work, culture is a positive motivating force in people’s lives. Culture influences how we work, how we interact with others, and how we see ourselves. But without a proper understanding of a company’s beliefs or intentions, also known as core values, the brand becomes faceless, the work meaningless. Let’s explore the ways culture impacts our daily work.
Culture gives your team something to believe in beyond the work they do. The people over at Starbucks know that their business centers around selling coffee, but their core values are built around “a culture of warmth and belonging, where everyone is welcome,” and “acting with courage.” Without these values, employees may not be aware of the greater impact their work has on the world at large.
Think about your favorite brands: companies like Zappos aren’t always groundbreaking with their products and services, but they have a firm understanding of the “how” and “why” behind their work. Their culture is based on mutual respect and trust for one another. As a result, their logos and brand names have become iconic in the pantheon of marketers. And it’s not just how they market externally— these companies have also mastered the art of internal branding. As a result, everyone throughout the business lives out the core values each day. That’s the difference between a promised brand culture and brand culture lived out.
Want to keep your employees around? Convince them! Often, culture will answer the questions, “Why should I stay” and “why am I doing this?” when the work starts to become overwhelming. Culture also builds employee loyalty, and creates a more collaborative community, reminding people they have friends and people to turn to in the office.
Recruiting top talent
Recruitment is often used interchangeably with hiring. The difference is that hiring focuses on finding the next employee, while recruitment is about finding the right employee. How can a company recruit successfully? Let’s explore.
Define your culture
We’ve covered the importance of culture, but defining your own culture is individual to each company. What makes your team unique? What are your ultimate goals? How do your mission and core values influence the type of people you hire? Once you have a firm understanding of your company’s differentiators, you’ll have a clearer view of the type of candidate you’ll want to recruit.
Define your audience (ideal candidate)
Just as you have specific customer audiences in mind, you should also define a specific candidate that will best fit your brand. If your candidate has impressive experience but is not a cultural fit, then you’re not likely to see them stick around for too long.
Position your brand
Brand positioning refers to the strategic act of creating and controlling the customer’s perception of a brand. For example, Aldi positions itself as an eco-friendly, cost-effective alternative to Whole Foods and Trader Joe’s, while Apple positions itself as the luxury lifestyle brand compared to HP or Windows.
Positioning also affects your potential employees’ perception. Websites like Glassdoor can help you understand how your company is seen compared to competitors in the industry. You won’t be able to go after all the talent, but by carefully positioning your brand to your target employees, you can better understand the best channels and messaging to use to reach them. We recommend checking out this blog post by HubSpot on brand positioning.
Leverage your employees’ connections
Job sites are great, but if you really want to be selective with your recruitment process, start with your employees’ connections. Your internal network can be highly effective at selecting culturally-aligned candidates because they already have the insight into what kind of person fits within the company. And since they’re responsible for the person they’re onboarding, they’ll make extra sure to mentor and develop them throughout their stay.
Hire different types of workers
Full-time employees are invaluable but don’t forget about finding remote workers, contractors, and partners as well. Top talent can take shape in many ways. Some of the most effective workers have limited schedules or live abroad. Looking for tips to hire freelancers? Check out Workable’s in-depth blog post on the topic.
Tips for interviewing potential employees
You’ve successfully posted the job listing and received a solid pool of applications. Now it’s time to narrow it down— here’s where the interview comes in.
At this point, it may be wise to review your recruitment strategy and your job description. Understand what the team is looking for and remind yourself of exactly what the applicant read when they applied.
Check out the image below from TalentLyft that shows a few best practices for job ad optimization.
Asking the right questions
Most phone interviews are about 15 minutes long, while others can run up to an hour. Make sure you spend each minute trying to find out as much as you can about the applicant’s motivation and experience. In other words, ask the right questions, and ask a wide range of questions.
Below are a few questions that will keep the conversation more dynamic than the typical “Tell me about yourself”:
- What kind of work excites you and motivates you to get out of bed on Monday morning?
- How do you deal with different personalities in the workplace?
- What personal or professional mistakes have you’ve learned the most from?
- If you were our CEO, what’s the first thing you would do?
- If you get the job, what do you hope to accomplish in your first week, month and year?
For more powerful job interview questions, check out this recruiterbox article.
How can you make an interview more effective? According to the Society for Human Resource Management (SHRM), it is best to ask a combination of interview techniques.
The importance of structure while doing an interview can have a major impact on the responses you hear, so tailor it to match the type of work you do.
- Structured interviews follow an established list of questions. These are the most common types of interviews you’ll see where the interviewer (or interviewers) asks the applicant about previous job experience.
- Nondirective interviews are more impromptu and open-ended. They’re more conversation and involve subjective responses. For example, one question might be “Tell me what you know about this company.”
- Situational interviews pose hypotheticals for the applicant to consider, such as “what would you do if you had a conflict with a coworker?” This interview technique forces the applicant to be creative in their problem-solving approaches.
Structured interviews are typically best for entry-level retail or hospitality positions. Nondirective interviews allow managers and leaders to share their feedback and speak their mind freely. Situational interviews are recommended for creative or problem-solving oriented roles. Interview structure can have a major impact on the responses you hear, so make sure it matches the type of work they’ll be doing.
Ongoing ways to build employee loyalty and advocacy
The turnover problem
The turnover rate in the United States hit an all-time high last year at 19.3%, up almost a full percentage point from the year prior. It’s no secret that companies have a hard time keeping talent around, but the issue has become even more salient in the past five years.
So, what’s behind the rise?
- Better opportunities – other businesses are luring talent away with higher pay, more inclusive cultures, and stronger benefits.
- Burnout – traditional business models, particularly those used in hospitality and manufacturing industries, is quickly exhausting its workforce for little pay.
- Lack of advancement – some individuals would like to move up in the career ladder, but feel stuck in their position or constantly get ignored.
Turnover can be costly. Turnover can also affect morale within the team and even with customers and clients. Why stick around a team that loses so many of its great employees? In turn, low morale can negatively impact worker productivity. That’s why the importance of talent retention cannot be understated.
What factors affect retention?
A guide by SHRM indicates 7 best practices to increase employee retention. They are as follows:
4) Training and development
5) Compensation and rewards
7) Employee Engagement
Let’s dive into how each one can affect your company.
Your hiring practices directly affect your retention plan. Make sure your new hires know what they’re getting themselves into when they sign on. The more accurately the position is represented, the faster they can decide whether the job is suitable for them.
The selection process in your recruitment can be pivotal in determining turnover. Previous work and leadership experience can predict an individual’s loyalty to a company. For example, who are you more likely to hire— the applicant who has worked a decade with one company, or someone who has changed companies each year for a decade?
Do you know what can make an impact on a person’s decision to stay with a company? The people! Socialization and team-building practices can make new hires feel like they’re part of a strong community, in turn making them more likely to stay. Activities like company outings, team lunches, and mentorship programs build a sense of community that is imperative to any positive office environment. Consider an office design that fosters collaboration, instead of division. Ditch those outdated cubicles for a more open space, either a coworking space or a shared suite.
4) Training and Development
Invest in your employees’ future, and they’ll repay you with loyalty. From the moment you recruit a new employee, make each day a learning opportunity. Help them to develop new skills, attain certifications, and meet industry leaders. When you combine that with cultural education and team building, turnover becomes less and less of a problem.
5. Compensation and rewards.
Money isn’t everything, but it can certainly influence recruitment. All things equal, people will tend to go with a higher paying position. And why wouldn’t they? Money leads to options. However, getting a salary just right can be difficult. A low paying salary means your talent may be swayed by more lucrative options. However, a higher paying salary may not guarantee an employee that’s happy to stay.
One solution is to reward your employees for seniority. That may take shape in the form of additional vacation hours, opportunities to work from home, or even stock options. These incentives make staying at your company even more attractive with time.
Recruited individuals need some sort of leadership support when they have questions or suggestions. Since supervisors are the ones that manage teams, their effective communication is key. Watch out for abusive supervisors— those that tend to argue or blame. Needless to say, abusive supervisors can lead to higher turnover.
7. Employee Engagement
Show your employees how important they are to you! When you do the same thing day in and day out, it can feel like a meaningless and monotonous routine. Everyone needs a purpose to feel inspired–help your employees find theirs and guide them to become their most productive selves. Change your team’s perspective on work and empower them to see the impact they are capable of.
Five Employee Retention Best Practices
- Track retention rate – Measuring retention is the best way to determine the severity of the problem. Without tracking the data, you won’t be able to even answer why your recruits are leaving. Tracking is the first step to improving retention rates.
- Promote a healthy work-life balance – Your employees’ personal lives affect their work lives, so empower them to get enough sleep, eat healthily, and have time to spend alone or with their families. By taking care of themselves mentally and physically, your employees will be better equipped to focus and put in hard work in the office.
- Train the best supervisors – Supervisors will be the ones managing your recruits. So, find and train ones that care about their job, that inspire and empower instead of blaming others.
- Develop an effective hiring process – The best recruits don’t just appear, they’re carefully selected after a long and thorough process. Make sure you know your reasons for recruiting and take the necessary steps to perfect it from start to finish.
- Reward your employees – Whether it’s through additional benefits or higher pay, show your employees that you care. Reward them for a job well done whenever you can and continue providing feedback for their work, and you’ll only see better results over time.
Retaining employees takes work and commitment. It involves collaboration with people from different departments and investing in changes that may not have immediate effects. But a company is only as good as the people that help run it. By focusing on recruiting the best of the best, you can set your company on the path for growth.
Think long and hard about how you will find your ideal worker, and how you intend to keep him or her around. The answer won’t be immediately clear— it may take years and countless conversations to get there. But the health and future of your whole company depend on those who invest their time into it. Even in a business with over a thousand employees, one individual’s diligence and ingenuity can ripple throughout the whole organization.
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