Recession has changed talent management rules
Organizations must find ways to help younger workers advance their careers and climb the ranks, despite an economic climate that has older workers delaying retirement because of hard-hit retirement funds, according to a survey by consulting firm RSM Richter.
Not only did 70 per cent of the 803 18- to-25-year-olds surveyed worry they’ll miss out on leadership opportunities because of older workers staying on the job longer, 93 per cent preferred their leaders to be under the age of 50.
“Young adults like to see themselves, or their potential for their career, in their leadership,” said Lisa Fusina, HR manager at RSM Richter in Toronto.
The survey is a validation of RSM Richter’s decision to promote four workers — three of whom are under the age of 50 — to senior partner positions, despite the fact no senior partners are retiring, said Fusina.
Co-managing partners at the firm’s Toronto office, a managing partner of the Montreal office and a new audit and tax practice manager were groomed over two years for their new roles.
During that time, the older senior partners mentored the new executives and began including them in the strategic and management decisions of the firm, said Fusina.
“As a firm, we tell our clients succession planning is important for them so we figured we should practise what we preach. As our former executive leadership group was aging, we thought it best to continue to keep them around and pass on their vision but transition in a new, younger leadership,” she said.
The older senior partners are still with the firm and will continue to be active in the practice and act as sounding boards to the new executive leaders, said Fusina.
There are several ways organizations can provide leadership opportunities throughout an employee’s career. At RSM Richter, the focus is on providing challenging work assignments, said Fusina.
“Regardless of the economy, that’s something that can be done at anytime,” she said.
Companies are beginning to look ahead, to what will come after the economy improves. The majority of 175 companies in the United States surveyed by Watson Wyatt were more concerned about retaining top performers and critical-skill workers than they were before the economic crisis hit.
About one-half of respondents expected this difficulty will only increase in the next three to five years. And they’re probably right as employee engagement has taken a hit — dropping 10 per cent for all employees and 25 per cent for top performers, according to Watson Wyatt’s 2009/2008 U.S. Strategic Rewards Report.
During the 2001 recession, employees left organizations as soon as opportunities arose because of the way employers handled everything from layoffs and pay to employee communication, said Brian Wilkerson, Denver-based author of the Watson Wyatt report 5 Rules for Talent Management in the New Economy.
With data showing it takes 10 times as much money to lure away an engaged employee, according to Watson Wyatt’s WorkAttitudes, it’s never been more important to get talent management right and ensure employees are engaged, he said.
But the old way of doing things won’t work.
“Organizations really do need to look at talent management differently, start rethinking their strategies in a lot of areas,” said Wilkerson. “The rules around talent management have changed.”
Organizations never have enough money, even during good economic times, so it’s important to compensate high, low and average performers differently to get the best results, he said.
Organizations need to segment employees — by performance, scarcity of skills, impact of position on business — and concentrate compensation and rewards where they will have the most effect on the business, said Wilkerson.
Organizations also need to measure the effect of talent management programs.
“It’s a shift from, ‘This is the right thing to do,’ to making a clear linkage as to why this is a business imperative,” he said.
Data should also be used to drive hiring and promotion. Despite evidence of poor selections based on “instinct,” many firms lack systematically embedded, empirically based selection and promotion practices, he said.
Organizations can create talent profiles to identify the right hires by looking at who is successful in the company, who contributes to the success of the organization and what skills they possess.
Shifting the focus of performance management from goal achievement to measuring the business impact of those goals can go a long way to helping organizations build those profiles, said Wilkerson.
“It’s important to have a performance management process that really drives to your business needs, your culture, your environment,” he said.