Ever since two McKinsey consultants coined the phrase ‘the war for talent’
back in the 1990s, employee commitment has dropped dramatically. In the last two
decades, we have witnessed growth of what is euphemistically described as the
‘X’ and ‘Y’ generations – who strive for work life balance and are prepared to
make career choices that most of us born before 1970 would not consider.
The professional goal of most graduates is no longer necessarily to get to
the top. These days it is more likely to be to get the most from life. Today’s
job seekers are more likely to define ‘career’ as a series of jobs that will
provide for the life that they want outside of work. And finance professionals
are no different from any other group in this respect.
There is a changing expectation about where work (rather than career) fits
into the grand scheme of things. The psychological contract, whereby employers
provide security and care, and employees contribute energy and commitment, has
all but died out in most organisations. In many places it has been replaced by a
situation where both parties are trying to squeeze the most out of each other.
For businesses who spend millions of pounds recruiting the best people, but
often very little retaining their existing talent, this transformation of the
psychological contract has come at a price.
Increased employee turnover has resulted in a massive hike in recruitment
costs. Losing a single position can cost a business anywhere from 30% to 150% of
annual salary, according to a study by PwC, the Saratoga Institute and HR
consultancy Hewitt Associates.
That effectively means that a 10,000-employee company with a 30% turnover
rate will spend more than £70m to fill those positions. Driving down staff
turnover by just 10% would results in savings of £25m.
The costs of paying recruitment agencies combined with the time taken to make
a new employee effective and to manage the recruitment process internally,
aren’t the only overheads to consider.
A dearth of internal successors to key posts requires companies to bring in
untested people from other organisations (usually on higher salaries). But
constantly recruiting externally rather than promoting from within can impact
morale, with the knock-on effect on customer service.
Some organisations do a much better job than their competitors when it comes
to managing the recruitment and retention of staff, by applying the principles
of talent management, whether informally or formally, to forecast demand for the
people they need, have structured processes in place to identify and retain good
internal talent and measure the impact of their efforts.
To emulate their success, there are a number of questions you should ask of
your organisation to get the ball rolling.
Firstly, how do you define what talent is for your business? The debate
between ‘talent’ being excellence in finance and the ability to run a business
is a difficult one for most finance professionals to manage and therefore one
that often gets avoided.
How do you identify and nurture talent to maximise its impact on your
business and to fully realise the potential of individuals? This needs to be
seen to be done fairly and objectively at a local, regional, national and
How do you know if you are managing your talent effectively? And how do you
link talent management to other processes in the business, particularly
promotions, appraisals, pay reviews and training? How can you build on the
existing processes within the business?
Good talent management requires structured processes to identify internal
talent and ensure good staff do not leave your organisation. There are various
practical approaches to talent management that have been shown to work well
within a finance function. Each of which has different benefits.
Offering secondments to clients is a good way of retaining staff by offering
them new experiences and the opportunity to develop new skills (and to see how
they measure up). It can also help to build relations with client company and
can improve the interface between the two finance communities.
Perhaps ironically, another effective strategy revolves around developing
your people so that they move on to new roles. FDs and managers who build a
reputation for being good people developers will always be
attractive to work for and be a pull when recruiting good people. Those who
demonstrate good people skills will find it easier to move out into more
commercial roles. Others will see that they have more to offer than excellent
Job shadowing has also been shown to work well. Finance professionals who
have spent time ‘out in the business’, whether shadowing, on secondment, or in
non-finance roles, are more likely to be able to move out into general
management and COO type roles.
Having a shadowing programme in place has the added benefit of helping to
break down the barriers that often exist between finance and the rest of the
business. It can help FDs build a reputation within the business as being open
to ideas from others, looking for improvements and of being good people
It is understandable why some businesses become overawed by the potential
complexity of any talent management programme, particularly when you bear in
mind the need for it to interact with existing systems and policies and the cost
of hiring specialists and suppliers. Concerns are often magnified by a lack of
understanding of the business case for talent management.
The use of talent scorecards is one method companies have used to help them
understand the impact of the talent management on the business, to forecast the
demand for talent in the future and how to develop talented people. This is an
area where finance and HR can work together, putting real numbers together to
measure the impact of the organisation’s investment in its most valuable asset –
Simon Brittain is a partner at business psychologists Kiddy &
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