Numerous reports suggest employee turnover has hit a high as workers reevaluate their relationships with employers. How can organisations keep on top of potential ‘flight risks’ and manage the costs of having to re-recruit and retrain? Get the best out of HR systems and make friends with finance, advises Michel Visser.
Hiring has always been one of the greatest challenges facing organisations but a perfect storm of factors means it’s more important than ever before.
As Good to Great author Jim Collins pithily put it: “People are not your most important assets. The right people are. Get the right people on the bus, the wrong people off the bus, and the right people in the right seats.”
The so-called ‘great resignation’ is placing more of an onus on HR departments to do what it says in their job description: get the best out of people and prevent the high churn rates that set companies on a hamster-wheel of recruitment, training and replacing.
Why is hiring even more critical today? First, because the world continues to digitise and virtualise, meaning more jobs fall into the knowledge worker bucket, so we need more skilled self-starters and team players with strong interpersonal skills and leadership potential.
Second, politico-economic changes are throwing a curveball at previously standard recruiting techniques and sources; the departure of the UK from the EU, for example, is crimping hiring patterns in Britain and across the continent. Added to this, regulations are impacting rules on worker rights, how people work, for how long and in what capacity.
At the same time, wage inflation is making it imperative for companies to do everything they can to manage costs and reduce factors that add to overheads such as employee churn.
Finally, the pandemic is changing attitudes to employers and employment with more employees joining the great resignation or demanding workplace flexibility, commitments to sustainability and attractive career trajectories.
Staying on track
So, there’s a lot of work to do, but how should organisations start to think about addressing these issues, attract great people and keep them motivated?
Of course, there are myriad human factors that include strong leadership, setting enjoyable work, and luring with the carrots of rewards. But it’s important not to underrate the ability of technology to calibrate and keep plans on track.
Human capital management tools can automate finding the right people for the jobs in hand as well as providing the right incentives, upskilling and providing an environment that staff say works for them.
But these systems do not exist in a vacuum and one technique here is to create a pincer operation where HCM and Finance departments work together.
This is the theme of a recent research note by Robert Kugel of Ventana Research, titled Building the Best Team and Reducing Turnover for Organisational Resilience.
By using integrated technology tools, firms can create a single window with a clear vista onto available finances, resources and value delivered, while managing goals, targets and satisfaction for employees.
This goes beyond the old, blunt tools of succession planning and organisational hierarchy planning to sophisticated analysis of skills intelligence and plotting talent mobility.
The trend towards FP&A (financial planning and analysis) is aligned with this. Finance departments can track expenses in real time and work with HCM to determine ‘flight risk’ staff, cause of departures and the cost of replacing them.
And, for these most uncertain of times, there’s also the ability to track in real time and reassess plans and progress on a monthly or even more rapid cadence rather than waiting for another financial quarter or even year to tick by.
By pooling the view from the CFO and the CHRO office, we can glean a granular understanding of what’s occurring, employee value delivery, opportunities for reallocation of duties and shifts, and all associated costings and risk factors.
Finance departments can track expenses in real time and work with HCM to determine ‘flight risk’ staff, cause of departures and the cost of replacing them.”
Churn is a particularly potent and disruptive enemy and as Ventana’s Kugel notes: “Turnover leads to higher costs because of the direct expense incurred in hiring and because new hires typically require some training and greater supervision.
“This productivity dip also can sap the competitiveness of the organisation. Organisations must ensure that total rewards are market-competitive, but also that all investments in employees are having the greatest impact on their engagement and retention.”
How can we retain employees?
Many organisations are still figuring out what’s next in employee retention and motivation in a hybrid-working world.
Gartner chief of HR research Brian Kropp has said that “hybrid work will create a permanent increase in employee turnover. Geography has become less of a barrier for employees given the ability to work from home, meaning they have far more opportunities in the job market.
“Meanwhile, hybrid work brings fewer opportunities for workers to build the social connections that are instrumental in keeping them at an organisation. Leaders will need to adapt their hiring processes and enhance the employee value proposition to adapt to this competitive job market.”
It’s surely true that a new world of work demands new tactics and new solutions. We can’t persist with old approaches such as annual reviews or aligning salaries with performance in an all-in-one meeting. Instead, we need to create a deeper understanding of employees, including what they want from us as much as what we want from them.
For that, we need to give and receive regular feedback, analyse and automate. Employee success templates can help but we also need to make better use of a new generation of software and cloud services that cut across departments and afford real insights in real time.