The global talent shortage is one of the major concerns facing the financial services industry in 2015. The question that should be on every HR Director’s mind then is “How can I increase talent retention?”
The Shortage of Talent
The great talent shortage of 2015 is being discussed in articles across the web, in boardrooms and even more so in ASEAN. Companies in Asia are known to lament over being unable to find candidates that are equipped with the required job specific competencies as well as the soft skills that are a necessity.
The Global Talent Index Report: The Outlook to 2015, from The Economist Insights, states that 37% of respondents from Asia are unsatisfied with the quality of their hires over the last two years, and 32% of Asian respondents feel they may not be able to attract and retain the necessary talent in the two years to come.
Specific to Islamic finance, the Talent Development Survey 2014 by FAA & IFN indicates that 79% of respondents believed that the talent supply available in the industry was insufficient to meet industry needs.
The Surplus of Costs
Is there really a shortage of talent? Or are employees being poached and hence becoming increasingly difficult to find similar talent to replace them – at a reasonable cost? Human Resources should take note that costs involved in replacing talent are no longer confined to the cost of hiring a new employee but also to the loss associated with investing in the former.
According to Josh Bersin of Bersin by Deloitte, the actual cost of losing an employee can be as high as 1.5-2 times their annual salary. These costs can come in the form of lost productivity during the time it takes to find a suitable candidate from a recent vacant position, low engagement of other employees, and the negative cultural impact of a high turnover rate. Whereas the costs in hiring new talent are fairly evident which among the conventional ones are on-boarding and training.
Reducing your Talent Shortage through Learning & Development
The challenge then is two-fold, to decrease the costs of acquiring new talent as well as to increase talent retention. Both of these goals can be achieved through a strong commitment to investment in learning and development programmes.
The costs of acquiring new talent can be reduced by having learning and development systems in place that will markedly decrease the costs of training. The same learning and development system, when linked to compensation and career advancement, can act as a driving force for talent retention.
Reducing the Costs of Acquiring New Talent
A comprehensive, well-structured training programme to bring new employees up to speed on technical competencies can significantly reduce the costs of acquiring new talent. Many hiring managers focus on employing candidates with the right qualifications, but they often don’t come with the necessary soft skills. So instead, focus on the skills and knowledge you can develop, and hire based on what you can’t. It’s easier to develop technical knowledge than it is to teach soft skills.
In Asia, 60% of companies are allocating more resources to capacity development than they were two years ago according to The Global Talent Report Index 2015. Often, the difficult part for HR is delivering these technical learning programmes. Instead of taking on the costs of outsourcing training, companies can develop these competency-based learning programmes internally using a guideline like the FAA Learning Standards, which provide learning topics and clear outcomes according to job specific functions and roles.
Putting together a well-developed learning and development programme means that new, less experienced hires become a lot more affordable. And if an employee knows that you’re going to develop them professionally and will be rewarded for that, they are more likely to stay.
Retaining Talent through Professional Development
Instead of trying to increase employee retention and morale through team building programmes and motivational talks, structuring a well-defined career path coupled with attractive compensation package establishes employee confidence and loyalty to the organization.
According to an Oracle article on Talent Retention Best Practices (year), career planning is a key strategy in holding onto the right talent. Tying learning and development to performance and career advancement means that employees can see that there is a plan for their career, and the sight of progress on the horizon is one of the strongest motivating factors to stay.
Providing recognised learning and development opportunities to your employees is a strong method to retaining the right people. An employee that wants to grow and is capable of identifying the right opportunities that will let them do so, is the kind of employee that these learning and development initiatives are built for.
Does this mean that employees will stay forever?
Of course not. Employees will invariably move on. The days of 20-year tenure are long gone. But the beauty of a successful learning and development system is that if it’s working well, when employees do leave, you’ll have a ready pool of well-trained talent to promote from within. And if rivals are consistently trying to poach your talent, it’s a sign that you’re developing your talent well. Is an employee likely to be in a rush to leave an organisation that they know will develop them and enhance their career? Not if they’re the talent you want to keep.