We are in the middle of a generational shift taking place right before our eyes. With this shift, America’s workforce is changing, and rapidly. According to the Pew Research Center, millennials have surpassed Baby Boomers as the nation’s largest living adult generation. This trend will continue through the 2030s as the millennial generation continues to grow and join the workforce while boomers continue to age and retire. Nearly all segments of the economy are experiencing the impact of this ongoing transition.
Vast amounts of knowledge and experience are walking out the door as retiring employees look to start new chapters of their lives. In too many cases, this is happening without that valuable knowledge and insight being taught to the next generation of professionals. Leaders need to be thinking proactively and strategically about ways to effectively leverage experienced employees as a valuable resource and develop a succession plan to ensure future continuity within their organizations.
Due to the pandemic and shifts of the generations represented in the workforce, employers are grappling with unprecedented challenges in recruiting and managing a reliable workforce. Some key figures from a June 2021 Society for Human Resources Management (SHRM) study show:
Furthermore, the What’s next for remote work: An analysis of 2,000 tasks, 800 jobs and nine countries report from McKinsey Global Institute recently identified that 31% of government and administrative support work can be completed remotely without productivity loss.
To stay competitive in a tight labor market and retain current talent, organizations must take a holistic and strategic approach to talent management. Organizations need to be open to rethinking the status quo to differentiate themselves from other employers in the industry. There are four important focus areas to a successful talent management approach, which include talent acquisition, talent development, talent retention and talent sustainability.
Today’s market presents a fierce competition for talent. Organizations must employ a robust workforce planning framework that uses data to gain insight into the potential for position turnover through retirement or other attrition and to possibly add or reduce headcount based on service needs or demands.
Additionally, organizations should have a high-level understanding about filling critical positions internally when they become vacant. It is also critical to time these recruitments carefully and offer enough lead time for incumbents to transfer institutional knowledge to new hires to support and promote organizational sustainability.
Given the tight labor market, it is important to develop the talent organizations currently have to build a resilient workforce. Development begins with the onboarding process. Onboarding is more than helping employees select their benefits and set up their new computer. Rather, onboarding is the new hire’s first impression of the organization and sets the tone for the entire employee lifecycle. An effective onboarding process continues through the first 90 days of a person’s employment and touches on organizational culture, building relationships, technical job skills and internal resources.
Ongoing training and performance management prepare employees for success throughout their career. For example, one best practice is to regularly conduct a skills gap assessment as part of a talent management program and larger succession planning. A skills gap assessment enables an organization to catalog the skills needed to perform essential job functions alongside the skills currently possessed by employees. This assessment informs and highlights the organization’s training priorities.
Finally, a performance management system is a vital tool in every organization’s talent management strategy. There are many ways to enable performance management and the approach wholly depends on factors such as culture, maturity and organizational resources. The bottom line is that performance management should encompass coaching and mentoring, recognition of performance that meets expectations and accountability for performance that does not meet expectations.
Talent recruitment and development are the largest investments an organization will make in its employees and the organization.
Comparatively, employee retention programs are a fairly cost-effective way to maintain engagement in an organization. It is important to have highly visible leadership development programs and career pipelines in place. Such practices indicate opportunities for advancement and lead to organizations retaining high performing individuals.
Outside of leadership development and career progression, there should be other employee engagement programs in place. The sole purpose of these engagement programs is to create a positive, inclusive culture in the workplace, which helps employees more closely identify with the organization where they work. Organizations can tie their engagement programs to rewards and recognition initiatives to help build trust between employee and employer. As a result, when an employee gives their best to the organization, the organization gives its best to the employee, and vice versa.
All the human capital management strategies previously described play an important role in talent sustainment, but there are a few additional concepts that deserve attention. All employees should have a sense of belonging in the organization in which they work. When this sense of belonging is absent, employees quickly start looking for the next best opportunity.
Organizations should make sure they have a pulse on employee belonging by conducting professional surveys, asking for feedback and creating a space for employees to safely and openly share and report incidents that erode belonging. Despite any organization’s best efforts, employees do leave their organizations whether through retirement or other reasons. Ensuring systems are in place for succession and knowledge transfer softens the impact when employees do leave.
Succession planning is an annual activity that identifies critical positions and their likelihood for retirement or attrition, and then categorizes how prepared the organization is to fill that vacancy internally or externally. The result is a growth-based plan that incorporates training and development as well as recruitment strategies. A common misconception is that succession planning cherry-picks candidates for succession and gives an unfair advantage to a select few in the organization. When conducted appropriately, succession planning provides fair and more opportunities for all individuals in the organization through training and development programs.
Lastly, organizations should be prepared to transfer institutional knowledge in a timely manner by ensuring policies, processes, and procedures are well-documented and that job shadowing programs are in place for critical positions.
Organizational leaders are facing challenging circumstances in the labor market which may lead to difficulties in employee recruitment, engagement and retention. In this type of labor market, deploying new tools or strengthening existing programs can give organizations a competitive edge in the market. Baker Tilly’s human capital consulting team will help you develop a talent management strategy to address today’s challenges and tomorrow’s opportunities.
