Retaining talent in the organisationby Jim Banks
From technical skills in disciplines such as finance and accounting to the budding leadership qualities of tomorrow's CEOs, employers are facing an uphill battle to get the best people with the right competencies into their organisations. And even those that manage to recruit good staff are finding that they face a new challenge - keeping them on board.
As the business environment becomes more global and demanding, the skills gap means it is a seller's market for candidates with the right experience and training. The pressure is on employers to understand how to target the right people and offer them the right rewards to stay and grow with the company.
The staff challenge
Many companies have taken the first step by raising the importance of talent management to the highest levels, realising the strategic importance of finding and keeping the best people. Companies taking a proactive stance towards HR are realising that creative thinking and concrete investment in long-term staffing continuity go hand-in-hand. The benefits may not make an immediate impact on the bottom line and so do not fit the paradigm of short-termism in which the evaluation of key staff, especially senior executives, takes place these days. For the long-term health of the business, however, they are invaluable.
Changing demographics and increasingly global markets mean that companies must be far more selective about the talent pools they target to fill key posts, whether at junior or senior levels. First and foremost, this often means casting the net wider in geographic terms.
More than money
Having targeted specific talent pools, companies must then ensure that the individuals on which they come to rely are sufficiently rewarded and challenged to want to stay for the long-term.
There was a time when this could be ensured by offering greater financial rewards, but those days are gone. Furthermore, the need to retain key staff has never been greater, so firms that find the right formula could create significant competitive advantage.
Kath Roberts, Managing Director at Michael Page International, a global specialist in mid-market and executive recruitment says: 'In a buoyant economy, employees take more risks in the knowledge that they can get another job. That is why retention is a massive issue in HR now. Research suggests that a 5% increase in staff retention can result in a 40% increase in productivity.'
Employees' newfound power in the marketplace means employers must understand their workers' changing values and provide the right environment for staff to develop and achieve their goals.
Roberts explains: 'The 1990s was a decade of cost-cutting and corporate scandals. Employees felt disenfranchised from their workplace. Generation Y people place greater importance on trust, ethics and pride. They do not believe in blind corporate loyalty. More often, they want to join smaller companies or start their own businesses. So employees prioritise work-life balance and the community values of their employer, not just job security.'
Kelvin Stagg, Group Financial Controller and Company Secretary at Michael Page International agrees: 'Such is the demand for what is an increasingly sparse population of skilled, competent and motivated people that simply improved remuneration packages just do not make the difference anymore. It takes an in-depth consideration of what the role and the company has to offer, married with a highly professional approach to career management, to secure the very best.'
Those companies that fail to develop such a professional approach will find that they incur not only the immediate costs of recruiting to fill vacant positions, but also a number of less tangible costs that, while less obvious, are just as harmful to the business.
If there is a single key to successfully overcoming the staffing challenge that will face every large company in the coming decade then it is to align staffing strategy with the overall goals of the business. This not only forces companies to clearly identify the skills they need in line with the long-term business plan, but provides the right environment for developing the leaders of tomorrow to ensure that succession problems do not weigh a company down.
To develop their top talent and prepare those who will eventually take over the reins, companies need to move individuals around the organisation so they can build a diverse set of skills and offer key people new challenges. This will help such companies groom successors from within by providing clear personal and career development plans. Most organisations, however, are lagging behind.
Roberts says: 'Many companies are still poor at training their own staff. The better companies are good at assessing potential and bringing it out through experience. They measure leadership potential, not just performance.'
Organisations that have recognised the need to address the strategic risk associated with the skills gap understand that the best practice is to focus on a more holistic, long-term view of staffing needs. They judge talent more on its potential than on quarterly results, and regularly review staff satisfaction to ensure that they are providing the necessary framework for personal development.
This can, in turn, create a virtuous cycle, where organisations that work hard to retain talent also develop as part of their brand the concept that they are good employers. This in turn comes to play an important part in attracting new people.
The skills gap is not going to disappear overnight, so the onus is firmly on employers to develop talent for the future.
This article is contributed by CIMA (The Chartered Institute of Management Accountants) and is an extract from the article 'Finders and keepers' published in CIMA's Excellence in Leadership Series: Strategic risk management'.