In an era where talent scarcity reigns supreme, companies are investing more to attract top talent. In fact, most companies overweight their talent and performance efforts on the hiring end. At the same time, the average company tenure is dropping. According to recent research by Aberdeen, the average organization’s talent acquisition spend outpaces its internal performance management by a factor of up to 2 to 1. Average tenure is now 1.2 years, while average time to recoup the investment in new talent is 2.2 years.
In short, this is not a sustainable practice. That much is obvious.
The solution, according to Aberdeen, is to manage the full employee life cycle by using redeployment as the bridge between hiring and performance management. This is, in fact, precisely what best-in-class companies are doing in growing numbers. Aberdeen’s research results and suggestions are captured in the report, Redeployment Extends the Value of the Workforce.
In a recent webinar, Your Top Talent and You: The Value of a Career Mobility Strategy, Aberdeen Human Capital Management Research Analyst Zachary Chertok, and Lindsay Witcher, Vice President of Practice Strategy at RiseSmart discussed the dilemma facing companies today, the data, and the direction organizations can pursue to promote a healthy pipeline of talent while decreasing their talent expenditures.
THE DILEMMA: CHASING DIMINISHING RETURNS AND DRIVING DISENGAGEMENT
Harvard University’s Managing the Future of Work project has developed four quadrants to explain workforce capabilities relative to demand. In the upper left quadrant is in-demand talent with high knowledge (soft skills) and high skills (hard skills, often specific to the company or industry). Not many individuals reside in this category. In the lower left and upper right quadrants, where most of the workforce is situated, are employees with either low knowledge and high skills or high knowledge and low skills. Companies have chosen, in recent times, to invest more heavily in automation, routinization of work, and digitalization than in developing the skills and knowledge of employees due to the sentiment that investments in technology offered greater return than investments in employees. In the lower right section is labor that is low in both knowledge and skills. Workers in this last quadrant have also been in demand as a greater number of individuals are going to college and taking professional jobs, and as baby boomers retire in large numbers.
Why is there a talent divide where the most in-demand workers are either highly skilled and highly knowledgeable, or neither? In short, we are reaping the results of declining investments in learning and development, including a corporate training infrastructure that has been largely dismantled. And it’s coming at a time when automation, digitalization, and AI are driving an increased need for workforce reskilling.
“The rate of change in competency needs inside organizations is outpacing the rate at which companies are confident that they can train or drive talent to fill those needs,” Zachary explains. “[By] 2008–09, organizations reached the end of a three-decade journey of cutting costs on learning and development (L&D). Without internal competency development, they now look outside the firm for motivated, self-starters who happen to want to work for someone else. Meanwhile, outside the firm, there has been a bifurcation in workforce quality as external training is not specialized to any one firm, technology, or privatized skills category, and emerging talent remains burdened with debt from hard skills training, [which has made them] unwilling to self-specialize at their own expense to satisfy one employer.”
It’s a matter of supply and demand: The shrinking pool of top talent drives up acquisition costs and salary expectations, thereby lengthening the payback period. Those at the top can demand more and are more likely to leave for a salary increase of as little as eight percent, according to Aberdeen. A decade ago, that number was 15 percent. About 40 percent of tenure expectations exceed actual tenure by two or more years.
Propelling discontent: A one-and-done approach to hiring new talent, as opposed to investing in the existing workforce, has led not only to a persistent skills gap, but also to higher rates of employee disengagement, Aberdeen says. In turn, companies are battling lower productivity and innovation rates. Employees who feel their employers aren’t invested in them are less invested in their companies and more likely to leave to seek greener pastures.
The key, says Lindsay, is to cultivate flexibility and resilience in a time of change, “whether that's people change, culture change, business change, or economy change. Maybe companies aren't breaking even with new talent because there isn’t a culture of resiliency and change. When companies are thinking about performance development, they need to be thinking about enhancing the resiliency of the people within.”
When companies are thinking about performance development, they need to be thinking about enhancing the resiliency of the people within. @Lindsay Witcher #SmartTalkHR @RiseSmart https://bit.ly/2kKqf22
Best-in class companies have already begun to pursue a path toward developing a more fluid and resilient workforce. “Our customers are becoming more interested in fostering the mobility of their existing teams,” Lindsay adds. “These organizations are recognizing they often have people who are in roles that are changing or who are underutilized, and they are investing in redeployment solutions to help ensure that they are creating mobility opportunities for their employees.”
While top talent may have more opportunities than ever, Zachary advises companies to ignore the doubt about unpredictable employee retention rates: “The top considerations employees weigh when staying with the firm are competitive opportunities for salary and career growth, the quality of employee and manager relationships and engagement, and access to defined roles within the firm—even if it means changing departments.”
THE DATA: COMPANY PRESSURES AND EMPLOYEE NEEDS
Aberdeen’s report reveals the top pressures faced by best-in-class companies in comparison with all other organizations:
Weak talent pipeline
Persistent skills gap
Low employee engagement
Low innovation rates
Best-in-class companies recognize turnover as the core issue because they have spent time analyzing the big picture. And the turnover leads to a host of other problems, including low innovation rates due to more risk-averse behavior, a poor reputation that makes it more difficult to find top talent, and an increase in employee dissatisfaction, which in turn lowers engagement and productivity. The end result: an emerging or persistent skills gap.
On the other side are employees, who seek the following, according to the research:
Competitive career growth
Visible growth opportunities
Defined roles and skills needs
Relevance to the organization
Support for ideation
The data reveals that employees seek upward talent mobility within their companies, want management to define key skills so that training and development map to real advancement opportunities, and want to feel their work is relevant and valued. Employees view management support for ideation and innovation as a hedge against the risk they take in promoting new ideas.
“People thrive in an environment where they have safety, growth opportunities, and a commitment from their employer,” Lindsay says. “Companies need to redefine safety and resilience in their organizations, and partner that with a cultural shift that is clearly communicated and includes a robust career mobility program.”
Companies need to redefine safety and resilience in their organizations, and partner that with a cultural shift that is clearly communicated and with a robust career mobility program. @Lindsay Witcher #SmartTalkHR @RiseSmart https://bit.ly/2kKqf22
A NEW DIRECTION: REDEPLOYMENT AS A TALENT MOBILITY STRATEGY
Building out a skills development program that aligns with a redeployment strategy provides a strong foundation for long-term career retention. According to Aberdeen, redeployment focuses on skills-based promotion by connecting performance data with position-based skills requirements to help managers understand the existing talent that may be able to fill open positions anywhere in the firm. Employment opportunities become uncoupled, leading to internal job mobility and career pathing on a company-wide scale, rather than just limited to a department or geography.
Redeployment comes in several flavors:
Internal mobility – Promoting or moving existing talent into new roles from inside the organization when filling positions or closing skills gaps.
Phased redeployment – Starting from an employee’s current position, managers chart different paths to growth based on different skills development, while employees chart their own growth based on different defined phases within those paths.
Internal matrix – Managers and HR leverage core improvements in the metric definition of top talent to drive performance-based retention. When top performers leave the organization, HR retains anonymized performance data to continue building an organizational profile definition of top talent.
Purposeful redeployment – As defined by RiseSmart, this approach involves developing a program that prepares and connects internal employees impacted by change with open positions throughout the organization. It includes transition coaching, interview preparation, internal networking, resume optimization, assistance with finding the best-suited roles, and internal recruiter connections.
“Our research has uncovered a 14 percent increase year-over-year in companies offering redeployment programs,” Lindsay says. “While 82 percent percent of companies we surveyed in our severance study encourage employees to apply for open positions within the company, only 24 percent feel they are doing a good job of matching employees to open positions.”
Among the best-in-class companies, 68 percent are pursuing a redeployment strategy to fill up to 40 percent of their roles. Redeployment is often integrated with an L&D strategy and in partnership with the hiring team. As time goes on, 43 percent of these organizations shift entirely to a “hire internally first” model, while 23 percent actively recruit from both inside and outside the firm.
Best-in-class redeployment programs incorporate:
- Individual skills as building blocks for role alignment
- Integrated talent placement that combines existing and legacy workforce data into the talent acquisition system(s) to serve as a bridge between talent acquisition and performance management
- Integration of performance data and emerging job descriptions in an L&D framework in order to configure learning tracks that enable open internal positions to be filled quickly
- Redefinition of top talent within the context of the company’s existing performance indicators, enabling HR to design programs that enable internal talent to grow and develop the potential to work in a spectrum of emerging roles
- Adaptation of data insights to target coaching that facilitates redeployment
- Regular assessments of internal talent to ensure alignment between an employee’s development goals and management’s goals
- Services for employees impacted by change to help them redeploy, including job matching, coaching, and resume services
THE PAYOFFS OF REDEPLOYMENT
Redeployment enables employers to engage employees in their current roles, and train and transition them into new roles—all the while keeping them as full-time employees and promoting company stability.
The benefits of redeployment have bottom-line impacts. For every one percent of investment in redeployment, the research shows organizations see a multiplier effect across several areas:
- 84 percent more likely to realize increases in revenue per FTE year-over-year
- 72 percent more likely to see increased internal retention and engagement
- 52 percent more likely to realize reduced turnover
- 20 percent more likely to see productivity increase year-over-year
HR professionals have a lot to consider given the seismic changes of the past decade: Changing demands, the retirement of the baby boomers, the aging of senior management, job instability, automation, digitalization, and specialization. Redeployment programs provide a path forward—and lessen the pressures HR faces—by balancing the cost of hiring with the return opportunity provided by retention.