How competitive is your organisation in the war for talent?

Few would dispute that the pandemic has changed us, both individually and collectively. When you step off the hamster wheel and have an extended period to reflect on life’s bigger questions, that naturally stimulates change.

We are already seeing the effects of this rethink across many aspects of life. For example, the BBC has reported a spike in breakups and divorces post-pandemic.[i] In a work context, the number of start-ups has grown significantly, with The Economist noting a ‘once-in-a-generation surge in start-ups’ in the US[ii]. For those who found working from home a pleasurable experience, there is a strong desire to retain those newly acquired benefits, especially in circumstances where a return to the workplace means facing the daily drudgery of commuting. Yes, the shift in attitudes as to how and where we work are already upon us; the precise nature of those changes and their lasting consequences remain to be seen, but they are unlikely to be insignificant.

Apart from these fundamental mindset shifts, as life slowly returns to normal, many organisations are faced with a more pressing employment challenge: across countries and sectors, staff shortages are now a widely reported problem.

Again, there are a multitude of factors behind this. In areas such as hospitality, over the past 18 months, many employees have migrated into other sectors like retail. In some economies, where pandemic employment supports remain in place, this is serving as a temporary disincentive to work. Then, there are country-specific drivers such as in the UK, where Brexit has undoubtedly added to the mix. Time, and data, will eventually tell us what really lies behind the current staffing issues, but for now, organisations can only respond.

For all CEOs, an ability to return their organisation to growth and profitability will be the defining measure of their reputation in the coming 12 months or so. Regardless of industry or location, people lie at the heart of successful enterprises – even where automation is high – so without the right quantity and quality of people in place, growth targets will be difficult to achieve. It is for this reason that CEOs must lead an urgent assessment of their organisation’s ability to compete in this new and likely prolonged war for talent. This holds true regardless of location, sector, or size.

In undertaking that assessment, both a short- and long-term focus is required. In the near term, adjusting pay levels will undoubtedly form part of the solution, but most businesses cannot significantly raise salaries and hope to remain competitive or profitable. Even where the current focus is primarily on wage increases to help bridge staff shortages, this is already causing unforeseen consequences.

For example, in the UK, where a shortage of HGV drivers is leading to major supply chain issues, one part of the fix has seen transport operators significantly increase pay rates to attract qualified drivers into their sector. This solution may well work for them in the short-term. However, other sectors, such as waste management, are already reporting a knock-on effect, whereby they are now losing drivers as they chase more lucrative salaries; a trend which if continued will potentially cause difficulties down the line with refuse collection.

The point here? When faced with an employees’ market, salaries inevitability increase, but it’s usually a short-term solution that ultimately has negative spin-off impacts, such as inflation. For the wider economy, salary increases merely move pieces on a chess board, and whilst staff shortages may reduce in one sector, they increase in another, especially when the overall availability of skilled employees is finite. 

In leading an assessment of your organisation’s readiness to compete for available talent, here are 10 questions to consider:

1. Do we have a viable people strategy that is aligned to our organisational goals?

A people strategy sets out the strategic direction for an organisation’s employees over the coming years, usually for a three-year period. Having a people strategy is clearly not going to fix the short-term staffing problem, but without an effective people strategy, your organisation will lack competitiveness in the long-term. A people strategy that is aligned to the wider organisational strategy will help to attract and retain the best people, increase employee engagement levels, and build an organisational culture based on diversity and inclusiveness. The strategy will ultimately lead to the creation of a skilled, motivated, and engaged workforce to help your organisation achieve its goals. Having a people strategy is not just a concern for large organisations, and will lay the foundation for becoming an employer of choice.

2. Do we offer a compelling Employee Value Proposition (EVP)?

This is an area that can be more easily enhanced in the short-term. An EVP incorporates everything your organisation does to attract and retain the best employees; it encompasses all aspects of the employee experience, including pay and rewards, benefits, the work itself (is it challenging?), the work environment, culture, leadership, teamwork etc. In short, it is the combination of factors that help an organisation to be seen as an employer of choice – people want to work there because the EVP is so compelling, and it helps to both recruit and retain employees. One area that all organisations can enhance at present, even when salary increases aren’t possible, is the wider EVP: for example, as indicated there are many benefits that employees have secured because of the pandemic (i.e. working from home, greater autonomy, fewer meetings etc) that can be extended, or a hybrid working model introduced, that will serve to better attract and retain the right people to your organisation.

3. Can we deliver more with less?

When faced with structural labour market challenges, many organisations will be forced to think again about how they deliver their offering and experiences. This is potentially a good thing. Through job redesign, can you do more with less? Can greater use of technology help to bridge staffing shortfalls? Might it be wiser to operate at lower capacity levels than normal for a period, rather than disappoint customers?

This last question leads me to a slight digression. In hospitality, frequently when you enter a restaurant or bar these days you see a sign asking customers to ‘bear with us as we are short staffed’, or similar. Of course, I get why owners and managers do this, but why should the customer suffer? Do they get a discount on normal prices because the wait times are longer, or the service inferior? Usually not. Hospitality businesses might be better off operating at a lower capacity until they can get the employees they need. Anyway, rant over. The key point here is that analysing how you do things, and why, can lead to more efficient processes that reduce the number of employees needed without compromising quality.

4. Do we manage our recruitment process in line with best practice principles?

When the market for employees is tight, recruitment needs to be as effective as possible. The recruitment process spans every activity, from job analysis to onboarding and appraisal. The process is deemed successful not when a new employee is hired, but rather when they have settled in and are performing well; this verifies that the recruitment process has been successful in their case. Applying best practice principles simply means managing each stage of the recruitment process to the highest standard. Examining all elements of your current recruitment process may identify areas for improvement which, if addressed, can ensure that you at least recruit the best of the candidates that do apply.

5. Do we offer a comprehensive onboarding programme to all new employees?

Onboarding, or induction, in old-fashioned speak, is the process of helping a new employee to fully integrate into the organisation and its culture, as well as providing them with the skills, knowledge and information needed to become a valued and productive employee. Sadly, during times of staff shortages, onboarding often gets curtailed and new employees are frequently thrown in at the deep end, especially in smaller enterprises. Unfortunately, this can lead to new hires leaving after a short period which exacerbates staffing problems. Onboarding should be a defined process covering the period from Day 1 up to the first appraisal, and it should never be scaled back.

6. Do we regularly upskill our employees based on defined development needs?

Upskilling is a broad term that covers any structured activity that is designed to help employees build their capabilities. Again, when an organisation is under-staffed, upskilling often gets side-lined, which is the opposite of what should happen. If you have less people than you normally require, you need each employee to be highly productive, and to do that they actually need more development, not less. Sure, finding the time for upskilling when short staffed is undoubtedly hard, but that is where on-the-job training and coaching comes into its own. Learning must be integrated into the working day, not separate from it.

7. Do we formally and objectively appraise employee performance?

This is another activity that frequently falls by the wayside during pressurised times. The goal of appraisals is to help employees develop, but also to acknowledge their value and importance to the business. Additionally, appraisals are designed to ensure that employees deliver on expectations too. So, it is a two-way street. An effective appraisal process is good for employees and the organisation, so regardless of the prevailing circumstances, you need to find the time to make them happen.

8. Do we actively involve and engage our employees?

In an organisation that truly values its employees, the management mindset is very different. In this context, employees are seen as partners in achieving the stated goals, and because of that, managers seek to actively involve and engage them every day. Of course, managers must still manage, but where appropriate they include employees in decision-making, get their ideas and suggestions, listen to and respond to their views, and generally involve them to the greatest extent possible. During stressful periods, leaders should increase the levels of involvement and engagement to demonstrate the value placed on employees and to give them the chance to ‘vent’ so that they can let off steam about how they are coping. When employees are feeling over-worked, that is the time they need to feel more involved and engaged.

9. Do we recognise and reward employees for excellent performance?

Naturally, employees are paid for the work they do, and being competitive salary-wise in your sector is clearly the first step here – but it shouldn’t be the last. At times when salaries are rising, employers often mistakenly believe that this will serve as the sole driver for employees, but at best, money is always only a short-term motivator. In looking at this issue, it can be helpful to separate recognition from rewards. Recognition can take many forms, from a simple thank you to formal employee recognition schemes. Rewards can be monetary, or some other form of additional benefit (time off etc.). The important point is that whilst you should always recognise good performance, rewards should be focused on acknowledging truly excellent performance. When short-staffed, the employees you do have are carrying a greater burden and heavier workload, so there must be recognition and indeed rewards for that.

10. Do we formally measure employee engagement levels?

All research shows that employee engagement is a key driver of success in any modern organisation, as it leads to higher quality and productivity. Formally measuring engagement levels means you have processes in place to periodically assess levels of engagement amongst your employees, and that you track that performance over time, using the results data to guide decision-making on how to improve engagement. Again, there is a temptation to forego employee surveys etc during difficult times like these as there is a fear that the feedback will be negative; but that feedback is potentially even more valuable right now, as you can then do something about it. If you don’t listen to employee feedback, they’ll likely just walk, and there are plenty of employers that will be happy to take them.

To close, as you assess your organisation’s current positioning against the above questions, keep in mind that whilst you may well be forced to increase pay levels to compete in the war for talent, that will not be the defining factor in whether you are considered an employer of choice. The smarter organisations, whilst addressing the immediate salary challenges, will focus strongly on the other building blocks mentioned here to ensure that over the longer term, they not only compete in the war for talent, but win.

I would love to hear your thoughts on this article and to continue the conversation, so please feel free to contact me directly at [email protected]

Regardless of the size or type of your organisation, no doubt you currently measure and track financial performance, for not to do so would be unthinkable. Yet, many organisations still do not track non-financial areas like employee engagement levels, even though it is impossible to excel without engaged people. If you do not have non-financial data to guide you here, then you cannot continuously improve the employee experience to enhance employee engagement levels.

[i] https://www.bbc.com/worklife/article/20201203-why-the-pandemic-is-causing-spikes-in-break-ups-and-divorces

[ii] https://www.economist.com/united-states/2020/10/10/the-number-of-new-businesses-in-america-is-booming

Reflections from business leaders