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Finding the right talent—and keeping it—has become a front-burner issue for the enterprise. Here's how companies are making talent management a key priority.
Not long ago, HR was one of those administrative disciplines that was a necessary cost center for handling employees, employee benefits, and compliance. HR managers were not typically invited to key strategic meetings. The HR systems were focused around benefits and salary administration and headcount tracking, taking this administrivia out of the hands of business managers who felt they had more pressing priorities.
But over the past few years organizations have begun to recognize that much of the talent they are seeking is scarce—and that you either find this talent in the marketplace before someone else does or you identity the rising stars in your own organization, develop them, and work to retain them. This isn't a job HR can do on its own, and it's not a job that other departments within the company can do. It requires a CEO and a board to back these efforts.
How do companies do this?
They enact change in their people practices by adding HR systems like talent management and they transform HR into an active and strategic part of the company. Internally, they open up job opportunities and invite employees to apply for them—and they offer temporary project positions to existing employees that allow those people to develop new skills that the company will need in the future.
This is what Whirlpool did. It recognized that its continued success depended on continuous innovation and that employees (or human capital) were a key asset.
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But Whirlpool went even further. It also conducted a risk assessment for employee retention—identifying those employees most likely to leave the company for another opportunity. It then took steps to ensure that employees stayed happy and fulfilled in their jobs and with the company. Managers in departments throughout the company were trained to be enablers of the strategy, and HR played a central role in the overall strategy enactment.
How important is employee development to organizations?
In the United States, the defense and aerospace, energy and utilities, manufacturing, technology, and transportation sectors are all having trouble finding skilled professionals. And as early as 2014, the UK was reporting 146,200 job vacancies that went unfilled because applicants had inadequate skills.
How important is employee retention?
To replace an employee, companies must spend 16% of the annual salary for a job paying less than $30,000 a year to refill the position. For jobs in the $30,000 to $50,00 range, that figure goes up to 20% of salary. And for highly compensated executives, it can cost a company 213% of salary. These are dollars that companies would rather spend elsewhere.
Companies get this.
"Beyond the HRMS (human resources management system), we identify a new value proposition associated with integrated Workforce Management, Talent Management, and Business Intelligence solutions," said Sierra-Cedar in a 2014-2015 HR survey of 1,063 companies. "Top adopters of all three solutions have higher HR, talent, and business outcome scores than those with lower adoption levels."
- What's the best way to ensure that your talent management efforts are on track?
- Include as part of your strategic planning a projection of the skills your organization will need five or 10 years from now, as well as right now—and develop a plan for meeting these needs.
- Use talent management recruiting systems that can more effectively position your company to identify and hire top talent from the outside.
- Get busy developing your own employees and their careers to meet your company's future needs.
- Include talent management as one of the performance criteria you evaluate your managers for.
- Don't forget about employee retention. It's expensive and demoralizing to replace a key employee. You're better off if you stay in touch with key producers and give them career paths that enable them to advance along with the company.