You don’t need to be the biggest company on the block to get a 10 percent boost in profit and productivity. You just need a talent management strategy.
Less than a month after her start date, a new hire walked into her boss’s office, slapped down her office keys and declared, “I quit.”
To Talent Consulting Manager Bev Wise of The BB&T Leadership Institute, a good leader can prevent this true tale from happening at his or her organization. “There’s a saying in the talent management industry,” Wise explained. “People don’t quit companies. They quit bosses.”
Companies that manage talent well are rewarded with average annual revenue growth of 10 percent or more, according to a 2016 study, Mastering Talent Planning: A Framework for Success (PDF)(opens in a new tab), by the National Center for the Middle Market and several collaborators.
Yet talent management is very challenging – especially for midmarket companies.
Businesses with annual revenues between $10 million and $1 billion generate 60 percent of new jobs and employ about one-third of U.S. private sector workers, according to a 2017 Brookings Institution and National Center for the Middle Market report, Help Wanted: How Middle Market Companies Can Address Workforce Challenges to Find and Develop the Talent They Need to Grow(opens in a new tab).
Despite this outsized impact, midmarket firms often struggle with talent management the most – compared to smaller firms and larger ones – in the areas of recruiting, hiring and retention.
They understand talent management and know it’s important, but they don’t know how to go about it, Wise said.
Why not? First, they may not have evolved their talent approach as they have grown. Many midmarket companies operate with the same entrepreneurial grit that got them started: If there’s a problem, fix it. If there’s an open position, fill it. But that’s a reactive talent management strategy, not a proactive one, Wise said.
Second, midmarket firms aren’t top-of-mind for job seekers. Bigger companies have an advantage in snagging top talent because they’re more widely known and usually offer higher salaries and more attractive benefits.
Third, today’s nomadic workers are less likely to stay in one place throughout their careers. Their job life cycles average about 4.6 years, so talent recruiting, hiring and retention need ongoing attention.
What the middle market can compete on, Wise said, is offering employees jobs where they can have an impact.
“It’s not about free coffee and M&M’s on every floor at corporate headquarters,” Wise said. “I’m not saying that stuff isn’t nice. But employees want meaningful work. They want to make a difference.”
Product strategy? Check. Customer strategy? Check. Talent management strategy? Huh?
Your company probably has a well-defined product and customer strategy, Wise said. You know who your customers are, what they want and how to deliver those products and services. But you probably don’t have a strategy to find and hire the right people.
“A talent management strategy doesn’t have to be like a long whitepaper,” Wise said. “Sometimes it’s just a philosophy.”
Start by asking what kind of employee experience you want to provide – it must be one that meshes with your brand – to attract, hire and retain employees.
The answer is different for every company.
For example, one of Wise’s clients is in the service and sales industry. The kind of environment that client wants to create is one that’s focused on building strong relationships. That people-oriented focus fits the company’s sales-driven brand, too.
“So their ability to attract talent should be good in that they can attract employees who want a different kind of environment,” Wise said.
How is your organization doing? Six questions to ask yourself.
- How do you use your brand to attract talent?
- When recruiting, how do you tell if candidates meet your needs?
- How are you bringing new hires into the culture of the company?
- In order to handle growing business complexity, how are you developing employees and leaders?
- To retain talent, how do you measure employees’ engagement with your organization?
- Do you have processes in place to gracefully transition people out of the organization, including transferring knowledge when someone is retiring?
Get your organizational culture right
A company’s culture is “how things get done around here,” Wise said, paraphrasing from an article in the Harvard Business Review, “Why Great Employees Leave ‘Great Cultures’”(opens in a new tab) by Melissa Daimler.
It all boils down to behaviors, though, not words. You can say, “We believe in a work-life balance,” but if leadership is working people to the bone, there’s a disconnect, Wise said. If the philosophy and reality don’t match up, quitting keys will hit the table.
You might also have employee-retention issues if you stop paying attention to talent management after you find and hire a job candidate.
Oftentimes, a hiring manager shows a new employee to his or her cubicle or office, wishes him or her well and that’s it. The hiring manager doesn’t follow up and make sure the new employee understands his or her role and how he or she can have an impact.
But talent management extends across the entire employee life cycle, from the start date to, if you do it right, the retirement party, Wise said.
Assess your talent tactics
Drafting a talent management strategy can start when you get a state of the state in the area of talent. Specifically, write down answers to the following questions:
About Work Conditions
- Does our organization adapt to make working for us easier? Do we offer hires the option to work remotely, on contract or part time?
About Employees’ Growth
- What are we doing to help employees learn?
- What are we doing to help employees develop their careers?
- Are we identifying key talent?
- Is key talent at risk?
- Are compensation systems aligned with company strategy?
- What is the company’s philosophy about pay? What is done to make sure that philosophy is executed consistently?
- Is performance management a key component of the company’s salary system?
About Minimizing the Impact of Turnover
- What are we doing to make sure valuable company intellectual knowledge isn’t walking out the door without the transference of knowledge taking place?
- Are we developing succession plans? Are we updating them? Do we review them to note any overlap of candidates?
About Executive Structure
- What is the role of human resources – strategic business partner or mostly operational?
- How does human resources work with the executive team on talent management?
So, who’s ultimately in charge of talent management? The CEO.
Ideally, the CEO has a strong partner in the human resources department, but the CEO needs to require management to reach measurable goals in areas like employee retention and engagement.
If the organization is small enough, a CEO can walk around, talk to employees and ask if they’re happy. Midsized to large organizations can use yearly engagement surveys. Research has shown high employee engagement can lead to more productivity, Wise noted.
“Great CEOs know they can’t do it all,” Wise said. “They have to drive that accountability for managing talent down through the organization.”
Ultimately, talent management is also about creating an environment where people can tell the truth about their work lives, where they feel psychologically safe. The truer the response, the better the chance of improving company performance.
A final lesson: Learn from the talent that leaves
After the employee’s keys slapped down on the desk and the new hire left, the manager told Wise she made it a mission to empower her team to raise a red flag any time they noticed a mismatch between a potential hire and the job description.
It’s not necessarily saying to someone, “Here’s what the job is, are you willing to do that?” Instead, ask, “What gets you most excited about going to work? What makes you feel the worst?”
“You want a match that’s going to enhance a person’s energy, not drain it,” Wise said.
By Molly McGinn
Photography by Hoxton/Tom Merton, Getty Images
More insight from The BB&T Leadership Institute on talent management: