One legitimate response is to concentrate on finding ‘good people', then develop these people in the skills they need to fill specific roles. Increasingly, though, organisations are focusing on internal talent as a priority.
High staff turnover can be expensive for a business, with replacement costs conservatively reaching 150% of the departing employee's annual compensation figure, according to a recent Talent Management report from industry analysts IDC. Estimates suggest that the cost is significantly higher (200% to 250% of annual compensation) for managerial and sales positions.
Concentrating on the talent and skills of existing employees also helps raise staff morale. If employees see that there are opportunities for career flexibility and advancement, they are more likely to feel positive about their career prospects in their current job.
However, if businesses are to develop internal talent successfully, they first need to ensure that they focus on retaining their best employees. This can be a difficult challenge. Many businesses have become leaner in recent years. Typically, they are asking their employees to take on more responsibility, without being able to reward them as handsomely as before. So retention strategies are becoming increasingly critical.
So, how can companies go about retaining staff? The most effective approach is to engage fully with employees to ensure they are given the best possible opportunities to grow internally and to formulate their own career objectives. It is also important to show staff the positive impact they are having on the company and to match their personal aspirations with career positions and career progression.
This message is starting to get through to businesses. Research indicates that point systems consistently fail to drive efficiencies within HR departments. To rectify this problem and ensure they have the right people with the right skills in the right jobs to advance their business goals, they must first ensure that key components, principally around learning and performance management, are in place. Second, they must develop a unified process around those components, enabling them to execute an effective talent development strategy.
By closely linking modules within performance and learning management systems and helping to combine otherwise isolated learning and performance tasks, businesses can help drive enhanced organisational productivity, reach their core objectives more quickly and effectively and, in turn, deliver better overall business results.
There are now real signs that organisations are beginning to understand the benefits of linking learning and performance management within unified talent development suites. It is a trend likely to continue during 2010.
This unified approach helps drive employee engagement by translating valuable performance reviews and ratings into career and leadership roadmaps and then following those roadmaps to bridge skills gaps and implement true succession plans. It also engages employees by providing clear objectives to work towards, recognising achievement and helping to show the employee how they are positively affecting the business by aligning their objectives with those of the organisation itself.
In summary, in today's hostile economic climate where there is a surfeit of people for employers to choose from but a shortage of true talent, organisations need to focus on retaining and developing the proven talent they already have. To do this, they need to engage effectively with their employees though a unified talent development approach that integrates learning and performance management.
Over the coming months and years, we believe we will see the unification of HR systems continue to pick up pace as organisations increasingly come to appreciate that point systems are failing to drive the business efficiencies they are looking for. The results of this increasingly enlightened approach will be overwhelmingly positive both for employees and for the businesses for which they work.
Erik Finch is talent development specialist at SumTotal Systems
