Employees are a company’s most important resource. They can supercharge competitive advantage, turn disruption into opportunity and smash enterprise-level goals and targets. On the flip-side, talent gaps are consistently mentioned as one of the main reasons companies are prevented from achieving their goals and for the failure of start-ups.
PwC Australia’s recent, 22nd CEO Survey found that 71% of Australian CEOs feel that a lack of key skills is a threat to their organisation’s growth. Meanwhile, 62% say that people costs are rising more than expected due to this skills deficit, 41% say a skills gap has led to their being unable to pursue a market opportunity, and 35% claim it has meant they are unable to innovate effectively.
Yet for so many businesses, recruitment remains a reactive process focused on filling short-term needs rather than a strategic function tied to enterprise-level strategy and based upon empirical data.
What are the benefits of being strategic in recruitment?
According to a recent “Future of Recruiting Report”, 82% of recruiting professionals believe advising business leaders will become more important over the next five years. But if recruitment and HR wants a regular seat at the table and be trusted advisors to hiring managers and the leadership team, they need to get more strategic.
While reactive recruitment can be like taking a shot in the dark, a pro-active, strategic approach to recruitment can help provide a clearer direction by:
- Creating more alignment between organisational and talent future planning
- Identifying gaps between current talent and missing skills sets needed
- Better decision-making using “people data” and mapping
- Identifying recruitment and HR into the position of trusted advisors to business leaders
How does HR become more strategic?
‘Being strategic’ is something of a vague concept. It can mean different things to different people depending on their context: Founder and managing director of Recruiting Toolbox, John Vlastelica, believes being strategic in recruitment means focusing on speed, quality and diversity. For others, being strategic means making use of all available data, or focusing on tackling major challenges that others might shy away from.
This vagueness might explain the popularity of The Predictive Index’s (PI) Talent Optimisation model, a step-by-step process to closing the talent gap through strategic recruitment.
What is talent optimisation and how can it help?
Talent optimisation is a discipline used by recruitment and HR to align people and business strategies. It helps close talent gaps and build high-performing teams while serving long-term business goals.
Talent optimisation is based on four principles:
- It’s a design process used to achieve business goals: Talent optimisation is about creating a “people strategy” based on a wider organisational strategy, and is designed to help your business achieve its goals and targets. As such, there’s no one-size-fits-all talent optimisation strategy. Every business has a unique strategy and your people strategy needs to fit that situation. A people strategy will guide your decision-making process around hiring people, building teams and designing a workplace culture.
- It’s driven by people data: There are plenty of old-school recruiters who continue to hire because they “get a great vibe” during the interview stage, but modern business leaders understand they need more than a good gut feeling to support their decision-making. People data can be collected using tools such as behavioural and cognitive assessments to help predict performance, help you make objective decisions free from bias, and ultimately drive better hiring outcomes.
- It must be embraced by leaders at every level: No major process or cultural change will succeed unless it is adopted and supported by leaders, starting with the C-suite. This principle applies particularly to the “Inspire” aspect of talent optimisation, which we’ll get to shortly. But to be truly effective, talent optimisation needs to be embraced at every level. Granting people right across the organisation access to people data gives them “the gift of self-awareness and a healthier workplace”.
- It protects against disengagement: According to Forbes, disengagement can cost a company as much as 34% of an employee’s annual salary, with 37% higher absenteeism, 18% lower productivity and 15% lower profitability per disengaged employee.
PI’s talent optimisation model consists of four steps, or “aptitudes”:
- Diagnose: Measure what matters, analyse the evidence and prescribe improvement actions as needed.
- Design: Create and evolve a people strategy, including big-picture changes to organisational structure and culture. (See our previous article on Design Thinking in HR.)
- Hire: Use people data insights to write better job descriptions, hire better talent, and build higher-performing teams.
- Inspire: Use people data to improve retention through the creation of new career paths, leadership development, the creation of high-performing teams and reinforcement of your company culture.
Talent optimisation is a shared responsibility
It’s no coincidence that talent optimisation is a data-centric practice. Without understanding the data, organisations cannot hope to design, hire, or inspire intelligently. Getting to grips with your recruitment and HR data is the first step to optimising your organisation’s talent through a robust people strategy, and transforming recruitment from a reactive to a strategic function.
While talent teams can collect people data and use it to design a high-level people strategy, hiring managers and business leaders must take responsibility for mapping out the future direction to help recruiters close talent optimisation gaps.
Once leaders are equipped with relevant insights, they can hire better, design a smarter organisational culture, diagnose and address disengagement, and use a data-driven approach to creating high-performing teams through inspirational leadership.
Remember, however, talent optimisation won’t work unless it’s embraced by leaders at every level in the organisation.