The right people power business growth. They allow an organisation to innovate, push forward and thrive. But while talent is often a firm’s greatest asset, it is also its greatest threat.
Today, competition for workers has never been higher. But with less spending power than multinational companies, middle market businesses are often left behind. As firms battle for talent, finding the right people has become a major distraction for management.
Looking forward, challenges will only intensify. Economic uncertainty and the rise of Gen Z workers - those born around the turn of the millennium – are set to cause new tenure threats. Businesses must tackle the challenge head on or risk stagnation and failed growth expectations. The time to act is now.
Think about the last person you made a manager. Perhaps you promoted them because they did well on a project. Or they showed high potential in their specialist area. But what about their ability to lead? Good managers are key lever for business success, but the reality is that few people are taught how to become good managers.
With capital expenditure largely focused on day-to-day operations, product innovation and business development, middle market firms often lack the spare capacity to invest heavily in HR and recruitment, or the resources to offer top-quartile salaries. On remuneration alone, they can’t compete with larger MNCs.
While all businesses struggle to hire top talent, the problem is perhaps most acute in the middle market.
With capital expenditure largely focused on day-to-day operations, product innovation and business development, middle market firms often lack the spare capacity to invest heavily in HR and recruitment, or the resources to offer top-quartile salaries. On remuneration alone, they can’t compete with larger MNCs.
With smaller teams and a higher reliance on key individuals, middle market businesses will also be disproportionately affected by looming tenure threats. Every significant staff departure will create a repeating cycle of risks: a significant knowledge drain, reduced returns on training investment and spiralling recruitment costs.
Over the short to medium-term, a lack of development opportunities will continue to be a key reason employees change companies. With management positions often gridlocked, middle market firms will have less capacity to help employees advance. As younger workers increasingly demand varied career paths, middle market businesses could be left behind.
A job is no longer for life. Over the past decade tenure has continued to fall as millennial workers increasingly swap jobs, companies or careers to get ahead. Over the next three to five years, Gen Z will enter the workforce; firms should prepare for more disruption.
A job is no longer for life. Over the past decade tenure has continued to fall as millennial workers increasingly swap jobs, companies or careers to get ahead. Over the next three to five years, Gen Z will enter the workforce; firms should prepare for more disruption.
Today, non-leadership workers typically spend seven years with a company. But average tenure is expected to fall dramatically as Gen Z intensify demands for fast career development and flexible working. Like millennials, they are expected to chase careers of convenience and regularly swap organisations if their needs for progression and a good work/life balance are not met.
As loyalty declines, firms must seek to extract maximum value from employees from the start. The so-called time to effectiveness must reduce. It typically takes new recruits up to five months to become proficient in their role. While employees clearly need time to learn a job, taking nearly half a year to become fully effective translates to 700 hours of dampened productivity.
To ensure talent does not impede growth, firms must improve internal processes to better support workers and reduce time to effectiveness. With the recruitment outlook becoming more challenging in the wake of Brexit, the consequences of doing nothing should not be underestimated.
Middle market firms are more agile than larger MNCs. Decision making is quicker and employees more autonomous. These strengths create an attractive proposition for new recruits; they should be actively promoted.
Businesses typically focus on workers with the right skills and experience, but personality and cultural fit should also be top considerations. When motivations are shared and values matched, employees feel more engaged and tenure increases.
An effective induction process allows new starters to quickly assimilate the organisational culture. They better understand business drivers and their role in achieving long-term objectives. Time to effectiveness is substantially reduced.
Automating repetitive or mundane tasks boosts job satisfaction as it allow employees to concentrate on more strategic goals. Big gains can be made by freeing up staff time in the HR and finance functions.
Fresh talent can bring fresh thinking. Encouraging a positive culture of progression, job rotation, secondments and talent mobility at the top can create development opportunities for younger workforces.
Apprenticeships can offer a cost-effective way to secure high-potential talent. But rules are changing in April 2017. Firms must start ensure their strategy can weather the implications.
