The digital age is changing the way that we manage talent. I don’t think there’s anyone in HR or recruiting today who would disagree with that statement and there’s more and more evidence that companies that aren’t adapting are losing any chance of an advantage in attracting top performers.
A recent article form the McKinsey Quarterly outlined the path these changes are leading us down and the benefits some companies are achieving by getting ahead of the competition in adapting to this new reality.
In an article entitled, Managing Talent in the Digital Age, in the March 2016 McKinsey Quarterly, Susan Lund, James Manyika and Kelsey Robinson discussed what they call online labor platforms and the opportunities and threats they hold for companies trying to recruit, retain, develop and engage top talent (or any talent).
Online labor platforms can be external – think LinkedIn and Monster.com – or internal. They define internal platforms as a collection of integrated tools that help companies put the right person in the right job, develop and engage employees, and identify future leaders. A lot of the focus of internal platforms is about utilizing big data that exists within the company and bringing it together in one place. It’s also about systems that move traditional HR decision making, which is often about human judgement, in a direction that allows for more data-driven decisions. According to McKinsey Global Institute research, companies making use of these platforms can increase productivity by up to 9 percent, reduce employee-related costs by up to 7 percent, and increase profit margins by up to 540 basis points.
Those are some pretty impressive numbers, but it’s a double-edged sword. External platforms like LinkedIn make it much easier for your competitors to find and recruit your high performers. This makes it that much more important to use every tool available to help address these challenges and turn them to your advantage. Let’s have a look at the different ways companies can use these platforms and the kinds of benefits they can achieve. I’ll break it down by the four key areas of talent management that the authors discussed in the article: Recruiting; Onboarding and Training; Employee Engagement; and Leadership Development.
The article cites one company that has used its systems to do an extensive evaluation of IT roles and determined that education plays little or no role in predicting success. This has lead them to discount education as a candidate criteria. This aligns with what we’ve learned regarding the 3 Levels of Assessment used to assess the likelihood a candidate will succeed in a given role.
Level 1 elements, which are essentially your first impressions, are very weak predictors of performance, but often get too much emphasis by hiring managers without the right systems in place. Level 2, which would include education, experience, etc., is basically what you’d find on a resume. As the company mentioned above discovered, this usually has minimal value in predicting future performance. Level 3, which includes temperament, motivations, behavior patterns, the capacity to learn, etc., is the strongest predictor of future performance. It’s also the hardest to get at without the right tools.
The article points to online tests or assessments as an important tool to improve hiring. It cites one example of a company that reduced attrition among new hires and increased productivity by three to four percent by using a 30-minute online test that compared candidates to top performers. This is an approach we strongly recommend for clients using our assessments: setting up an initial target profile for the system to compare candidates against. Some of our clients have reduced turnover by 75 percent, or more by doing so.
Onboarding and Training
For effective onboarding and training, the article points to the importance of providing personalized onboarding experiences that allow new employees to become more productive more quickly. That’s definitely an important factor in effective onboarding. Any time you can make an experience for an employee personally relevant to them, the impact will be greater. We discussed this and provided some tips in our ebook, The Ultimate Guide to Effective Employee Onboarding.
Ongoing, self-directed learning is also an important aspect of current talent management, the article notes. As so many industries become knowledge-intensive, employees’ skills need to grow and adapt to technology and the market. Pushing this type of training into an online platform allows for this flexibility and provides an opportunity to reduce the costs associated with in-person training.
There are a number of companies that offer predictive analytics to assist in employee engagement. That’s a fancy way of saying they can look at data you’re amassing and use algorithms to identify engaged or disengaged employees, identify trends in sentiment, even flag employees at risk of leaving.
One company cited in the article used data analysis to identify the qualities of an engaged, high-performing employee in a specific role and then screened new candidates for those characteristics. This is very similar to the method we advocate for our clients to use when creating a job profile.
The article suggests that these platforms can assist in creating what the authors call an employee journey. Companies now use data to create customer journeys to better understand how a customer interacts with them and improve that process. Why not use a similar process to design an employee journey that will improve the employee experience? It could be used as an incentive for high potentials and create more internal mobility.
Align an employee journey with a succession management program that identifies future leadership needs and employees that have the potential to develop the right traits (like this), and you have the potential to increase engagement, reduce turnover and fill your leadership gaps before they occur. Wouldn’t that be nice!
One of the biggest points that I took away from this article was this (you can read the complete article here): While individuals are using external platforms, like LinkedIn, to improve their opportunities; it’s up to companies to use these same platforms in combination with internal platforms to create a talent management strategy for the digital age. It can be done by building it internally, looking to outside suppliers, or a combination of both. Those that act first have the potential to build a significant competitive advantage.
What do you think? Is your company ready to manage talent in the digital age?
Image courtesy of Flickr CC and Justin Morgan