In 1997, McKinsey & Company principal Steven Hankin coined the phrase War for Talent. It quickly became a term that businesses and HR departments embraced as they grappled with issues of hiring and employee retention – even if the so-called war only amounted to slight scuffle. Today, however, things are different. And if there has ever truly been a war for talent, it is unfolding right now.
As return to work continues to be a hot topic, one thing it doesn’t mean is returning to business as usual. Our business instinct is to view return-to-work as a policy issue, but it’s not. It’s a people issue and a talent retention reality, and businesses that ignore this reality will find themselves at a disadvantage and even risk going out of business.
Because remote work has proved successful for many organizations, companies are being challenged to rethink long-held handbook policies. Employees are seeing their options expanding with regard to where and how they work. Gone are the days of office perks. This is the new bargaining chip that determines if employees stay where they are or seek new opportunities.
In a hotly contested market where there are more jobs than qualified people to fill them, the challenge for businesses is to figure out how best to win the talent war.
There are three strategic considerations around talent that I see as essential, not just now, but as part of any business talent strategy going forward.
REASSESS THE EXISTING TALENT POOL
Right now most company talent is vulnerable, and the rate at which people are being poached by other companies is reason for concern. It also warrants taking a close look at three tiers of existing talent to safeguard your personnel assets. Those tiers include: 1.) entry level workers and unskilled labor; 2.) mid-level employees; and 3.) top-tier talent. Any good and well-liked employee that leaves will be missed, regardless of skill level. But some departures will hurt more than others, and those are the ones you must protect. For example:
- Entry-level workers and unskilled labor perform essential roles within many businesses, but their skills are not irreplaceable.
- Mid-level employees have above-average impact, but they are not yet their optimal self; they are still growing.
- Top-tier talent harm the business in multiple ways when they leave, especially if they are:
- Highly respected by the rest of team and their reasons for leaving could damage the culture;
- A manager or above, they assume more responsibility and become tough to replace quickly; and
- Possess intellectual capacity that doesn’t exist anywhere else, creating an added burden for others to learn what that person knew.
It is accepted that entry-level employees and unskilled labor are typically the most transient group within your workforce. However, as a result of the pandemic, these employees have become difficult to find and employ. Hospitality and food services business are obvious examples where the demand for workers exceeds the supply of those who are willing to do the work – whether it be for pay, safety concerns, or other reasons.
In this environment businesses are having to contend with the “no breath vs. bad breath” analogy. No breath means there is no one to fill the role, which impacts operations. In a normal environment, businesses that value their culture would choose to forego employing someone who didn’t fit their culture. To expand on the food service analogy, it’s the inability of a restaurant to retain or hire staff that affords in-house dining (waiters, bussers, etc.), which forces the business into options like carry-out only. No breath restricts business opportunities. On the other hand, bad breath (a bad culture fit), affords a level of necessary business function even though it is not optimal. It might not be your desired approach or achieve the high standards set for the business, but it is what’s required in the short term to stay afloat.
PLAYING DEFENSE – identifying barriers to retaining talent
Money. Opportunity. Culture. This is arguably the trifecta of what all tiers of talent desire. With varying degrees of priority per individual, it can explain why most people choose to stay or leave.
Retention strategies shouldn’t be driven solely by market forces. Strategies around company culture and opportunities for growth must be present regardless of business climate, and will only take on heightened importance when the labor market is tight. Companies with weak cultures will feel this more profoundly than those with strong cultures. That being said, different conversations must be had with all three tiers of talent across your workforce to mitigate potential losses.
Consider these realities:
- Could a $1/hour pay raise be enough to lure your frontline workers away? Consider that some companies are increasing pay as much as $3/hour to attract workers.
- Would a bump in compensation be the difference in retaining or losing above-average employees in a tight labor market?
- What is the opportunity cost of retaining higher-tiered talent versus the replacement costs of hiring, training and building capacity to get new employees to a knowledge and performance level of the people they replaced?
- What cultural concerns do departures signal to the rest of the team about staying or leaving?
GOING ON OFFENSE – finding optimal talent outside your sphere of comfort
There is a self-inflicted fallacy around talent that keeps many businesses from hiring exceptional talent at the manager or above level who can manage people and get results: lack of knowledge of the business and industry.
All employees – including managers and top-level leaders – must commit to learning about industry insights and specific nuances on how the company seeks to compete and win. Therefore the priority shouldn’t be on business or industry knowledge. The crucial factor is – how much expertise does this person possess in producing results working through others?
The outside-the-industry hire
If your company is B2B in an industrial sector, you’re likely not considering B2C candidates from the hospitality sector, or vice versa. That could be a missed opportunity. Businesses want professionals who can manage teams, grow talent, and impact the bottom line over someone who simply knows the business and can apply industry know-how. But this isn’t how hiring often plays out. This prioritized thinking about talent can yield extraordinary hires – and results – when properly vetted.
The unlike-the-leader hire
When leaders have a say in hiring other top-tier talent, there is an inherent bias to choosing someone like themselves, with a similar mindset and managerial traits. However, smart leaders would be wise to choose candidates best positioned to deliver upon business goals. Candidates should backfill in areas where the leader lacks strength, supplementing their expertise rather than simply complementing it. While cultural fit and alignment is essential, too much of a like-minded business approach can prevent newly hired managers and leaders from addressing the blind spots that hold the business back.
TO WIN, ACTION IS REQUIRED
Weathering this employment storm doesn’t mean sheltering in place until it passes. Action is required. For all we know, this could very well be the new normal going forward.
Right now might be the best time to talk to people outside your industry, and with different leadership attributes, as they are more open than ever before to discussions regarding where and how they work.
Finding above-average talent and strong managers has always been a challenge, and retaining that talent has never felt more important. Those who are intentional about strengthening their retention strategies, and also willing to seize opportunities to bring on performance-driven talent they’ve traditionally overlooked, will be the ones best positioned to win – now, and long after a heated war for talent cools down.