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by Dean Callaghan, C. Psychol., Ps.S.I, Managing Director at Aon’s Human Capital Solutions
According to Aon’s Global Risk Management Survey, the fourth biggest risk organisations are facing globally is the Failure to Attract and Retain Top Talent.
What Is the Failure to Attract or Retain Top Talent?
Talented hires and top performers are essential to an organisation as they bring fresh perspectives, abilities, skills, and innovative ideas. Organisations can struggle to maintain their overall business performance if they consistently fail to attract and retain these employees.
Why Is the Failure to Attract or Retain Top Talent a Top Risk for Organisations Today?
Companies thrive when they have the best talent in each role across the whole organisation. Serious repercussions may result from the inability to fill these roles and retain top-performing employees. Today’s rising stars in an organisation can become tomorrow’s competitors.
Companies may lack skill sets necessary to keep up with market and industry trends without a steady flow of talent. Top talent is crucial for companies to bring in fresh thinking, new strategies, innovation, and creativity- all of which are critical factors for remaining competitive.
An inability to attract top candidates can also have a negative impact on those who remain in the workforce, because it can lead to more duties for them resulting in increased pressure which can lead to burnout, disengagement, and retention issues.
Talent strategy has been massively impacted by two key trends:
- Pay and inflation- Overall, salaries have risen considerably over the past two years. Even though wage growth is starting to cool, it is still high relative to previous years, and in June 2023 it surpassed inflation for the first time in two years. The global rise in inflation since early 2022 has spurred employees to seek higher pay. In addition, many countries and jurisdictions are implementing regulations around pay equity and transparency, giving employees visibility into salaries.
- Employee experience- The pandemic transformed employee’s perceptions of the workplace. Many employees had the option to work from home, and many have expressed a preference for the added flexibility. At the end of 2022, nearly three-quarters of companies offered hybrid-work arrangements. The emphasis on workplace wellbeing has increased along with the focus on what employees want out of work.
Why Is the Failure to Attract or Retain Top Talent a Risk in the Future?
In the past few years, there has been a significant shift in the workplace – an evolution that is likely to accelerate. The workforce will continue to be impacted by several trends:
- Although its effects on different roles will differ, artificial intelligence (AI) will change the nature of work.
- Growing geopolitical and economic unpredictability on a global scale could have an impact on continuity, growth, and the labour force.
- The introduction of remote and hybrid work will spur employees to demand more flexibility. If remote work is not an option, employees may demand other benefits to offset the lack of flexibility.
- The financial, mental, and physical wellbeing of employees will be threatened by climate change. Building climate change into the employee value proposition (EVP) may be a challenge given the unpredictable and multifaceted nature of threats related to climate change.
- A multigenerational workforce will have differentiated segments, each with its own distinct needs and preferences. Failure to identify and cater to the needs of each segment will mean failure to win and retain talent.
How Can Organisations Mitigate the Impact of Failing to Attract or Retain Top Talent?
Although pay is the primary factor that can affect decisions people and organisations make, increased pay is not always sufficient. The key to managing external factors such as inflation and employee expectation requires striking a balance. It’s important for companies to find the right balance between investing in the workforce to attract and maintain a talent pool while also keeping salaries, benefits, and other people-related costs within a manageable range.
Reimaging the EVP can be a key strategy an organisation can use to attract and retain top talent. Business leaders can use data-driven approaches to personalise employee benefits, to ensure that the diverse workforces needs are met and that talented workers have a reason to join and stay within an organisation. HR data supports decision making based on valuable insights of what different employees value and can drive a return on investment for both individuals and the organisation.
For example, using data, organisations can generate distinct personas and then categorise them by common characteristics and behaviours. Each persona will be attracted to a different aspect of the organization’s EVP, enabling the company to personalise its EVP (including rewards, benefits, and overall employee experience).
Organisations can remain competitive and mitigate key people risks by developing a personalised EVP. These key questions can help guide the process:
- Is our EVP in line with our business strategy?
- Does our EVP support our growth ambitions?
- Is our EVP enabling us to attract and retain the talent we want?
- What does HR data tell us about the needs of our employees?
- How can we balance business requirements and expectations of employees?
- Do we have a strategy for implementing EVP driven by data?
To learn more about how your organisation can attract and retain top talent, get in touch with Aon’s Human Capital Solutions Managing Director, Dean Callaghan at [email protected].