Many business leaders heaved a partial sigh of relief when they saw that the economic crisis meant, for a while at least, they could stop worrying about high rates of employee turnover and all the hassles that go with it. But while employers might have experienced a brief respite from the regular resignations and steady "brain drain" of recent years, the fact is that managing people in a downturn does not automatically become easier just because the external labour market is depressed and staff have fewer obvious opportunities to move on.
Right now, individuals may still view simply holding on to their jobs as the top priority. However, the majority will also be thinking hard about how well management has steered the company through the crisis and what the medium-term future is likely to hold. They will remember the unpaid overtime, extra responsibilities and financial sacrifices they were asked to make. And if past precedent is anything to go by, they will see no reason to remain loyal to an employer if a clearly better offer comes along a few months from now.
Good people are always in demand. So, if we are right in assuming that businesses are set for expansion as the economy starts to pick up, well-qualified candidates and those with undoubted potential will once again be able to pick and choose between opportunities.
Therefore, companies should now be putting extra focus on managing talent. We know that experienced individuals and well-run teams are ultimately an organisation's most vital resource. People make it possible to hit sales targets, meet strategic objectives and achieve consistent returns.
That means any lack of attention to managing the needs of the best and brightest, or any failure to give due thought to their expectations and development, will leave employers vulnerable to an exodus of talent when the market rebounds.
Now, more than ever, HR directors and divisional heads should be taking the time to retain and re-engage staff. They might naturally begin by considering recognised "stars" or those above a certain grade. But the whole purpose should be to ensure sufficient strength at all levels of the organisation and to build an internal talent pipeline capable of delivering longer-term business goals.
Academic research has shown that the optimal mix of talent management practices can yield significant, measurable economic returns. For example, more than 10 years ago, Mark Huselid and Brian Becker in The HR Scorecard: Linking People, Strategy and Performance found that firms with more effective practices for managing talent also had statistically higher levels of corporate performance. Going further, they estimated that appropriate changes to staff policy and practices could translate into increased market value of between US$15,000 and US$60,000 per employee. For a company with, say, about 1,000 employees, this would represent a considerable sum.
Mercer's own research has found that the best organisations not only focus on managing talent but also keep innovating and take a holistic approach. Fundamental to this is that they look well ahead, systematically identifying which skills will be scarce or critical, and closely align investment in training and development with the strategic aims of the organisation.
Logically, for any change in business strategy, there should be an attendant review of plans and basic assumptions for all staffing matters.
And since most companies are now in a position to reassess objectives for 2010 and beyond, they should be determining precisely the type of talent needed for future growth in terms of quality, quantity and location, and devoting more energy to ensuring engagement and commitment.
To get the most from finite resources, it is important to understand which individuals and teams consistently add the most value, and which measures have most impact in improving retention and motivation. With that in mind, it pays to address the following areas:
Board and executive team involvement The chairman, directors and executive team need to play a full part in the talent development process and to be accountable for its results. This can be done through activities such as mentoring, leading in-house seminars, actively participating in the interview and assessment process, and simply talking on a regular basis to staff throughout the organisation.
Talent management as a business priority Some HR units are still not part of the core decision-making team. To ensure the right people are hired and that everyone receives the appropriate training, HR should always be an integral part of the planning process. In that way, programmes will be relevant, skills will be up to date, and staff will be ready to deal with tomorrow's challenges, not just today's.
On-the-job learning No matter what job they hold or what their level of experience, employees want to keep learning. Formal training courses obviously play a part, but employers regularly make too little of the opportunities for on-the-job learning. There can be role switches, short-term secondments, coaching sessions and overseas assignments, all of which afford the chance to gain practical knowledge quickly and appreciate what else is going on in the organisation. Of course, this should not apply just for one group of management trainees or those thought to have high potential. Everyone can benefit, and the chance to keep learning generally has a marked positive impact on retention.
Rigorous talent assessment The success of any company is based on a strong foundation of employee competence. Therefore, it is important to have individual development plans for each member of staff and to track their progress by means of regular and detailed assessments. The development plan should clearly outline specific areas for improvement, learning goals, timelines and medium-term targets. The company's strategic objectives will not be achieved unless staff know what the goals are, understand their own part and receive the direction and encouragement to contribute fully.
Balance of organisational and individual needs To a large extent, development is a personal process. Individuals must want to learn and improve, something made easier when they don't feel like a cog in the machine whose own ambitions are repeatedly ignored. Therefore, employers should strike a balance between the needs of the organisation and the hopes of the individual. For example, if, after three years of solid service, someone in operations is keen to try their hand at sales, let it happen. Usually, such internal moves are easy to arrange, open up new horizons and often prove to be a resounding success.
Create talent pools Most companies think they have a basic succession plan. Worryingly, though, it often consists of nothing more than knowing, for instance, that the managing director or finance chief is due to retire in a couple of years. Someone will take over; it might be the next in line, it might be an external candidate, but no one seems too sure. Worse still, where internal candidates for the role should be obvious and the grooming process well advanced, nothing much is happening. To avoid this, companies should realise two things. Firstly, the best and brightest on the payroll won't necessarily wait around unless they have a clear idea of likely career prospects, And secondly, even the best-laid plans can go awry. So instead of identifying one candidate in proposed succession schemes, it is much better to create a talent pool and develop each person's innate potential.
This means there should be multiple employees who are groomed and ready to take over a variety of positions when called upon. The company will be stronger and able to react nimbly, and staff, even if they don't reach the very top of the organisation, will have enjoyed much more fulfilling careers.
Written by Brenda Wilson, Hong Kong business leader at Mercer's human capital business, and Stephane Michaud, principal consultant, Hong Kong and Singapore, for Mercer's human capital business. Mercer is a global provider of consulting, outsourcing and investment services.
