March 1, 2017
Middle market companies tend to be reactionary in their talent-planning efforts, but a new report shows the impact of setting up a talent game plan
Middle market companies, not unlike small and large businesses, want the very best employees.
Despite the obvious importance of getting strong candidates on their teams, less than half of middle market firms are currently implementing talent-planning strategies.
A new report from the National Center for the Middle Market outlines the impact of having a solid talent-planning strategy. The report found companies with an annual revenue growth of 10% or more are significantly more likely than slower-growing organizations to say they perform very or extremely well at talent-planning initiatives, which include identifying critical positions and players within the organization and engaging senior and line management in the talent-planning process.
“We think that this is probably going to be one of our most impactful white papers that we’ve done since the launch of the center,” says Doug Farren, managing director of the National Center for the Middle Market. “This is an issue a lot of middle market companies struggle with and we think it’s a topic that’s pretty evergreen.”
Farren says talent planning goes beyond hiring efforts, that it’s an overarching process that encompasses a range of activities, including identifying key positions and talent within the organization, identifying high-potential performers and thinking about how to back-fill if important players leave.
The report from the National Center for the Middle Market and Vistage surveyed 400 C-level middle market executives who are actively involved in attracting and retaining talent for their organizations. Of those surveyed, more than 40% gave themselves a grade of “C” or lower for their talent-planning efforts.
Farren says talent planning can be bottom-of-mind for many middle market executives. It’s something they deal with on more of a reactionary basis, rather than proactively.
“I think that creates a barrier,” Farren says. Succession plans and employee development are often considered on an ad hoc basis. “It’s actually a series of activities that can be thought of cohesively,” he says. “As our data proves, companies that actually do that tend to perform better overall.”
There are a number of key talent-planning activities the survey respondents say they aren’t doing as well, including identifying current and future skills gaps; lining up successors for critical, can’t-lose players and mapping the process for identifying and developing high-potential employees.
The report also performed some segmenting within the middle market. Unsurprisingly, middle market companies making more than $100 million in annual revenue put more resources toward talent planning than those companies making less than $50 million in revenue. The challenges for middle market firms across the size spectrum often stem from linking the talent-planning process with the overall company strategy as it pertains to growth, new product lines or expansion.
Middle market businesses with private equity investment were found to be more likely to follow guidelines for talent planning, the report found, while many family-owned businesses keep the process relatively informal.
Often when private equity companies invest in middle market firms, they bring a lot of processes with them, Farren says. “They could bring in a new leadership team, a new accounting system or a new supply chain planning system. But what they also bring with them is some of this talent-planning framework.”
Creating a Framework
The report offered some talent-planning solutions for middle market companies by way of the ABLE Framework. The framework includes a checklist that focuses on aligning talent planning with strategy, building processes to enable successful talent planning, leading by example and engaging the organization.
The more activities a company undertook from the checklist, the greater their performance, the report found. “That is what drove the 10% or 15% difference in performance,” Farren says of companies that implemented seven to nine activities, made a plan around them and integrated them into the culture of the organization.
Leah Burdick, vice president of marketing at talent solutions provider Hudson, stressed the importance of tying the company’s workforce plan to the business strategy and where it’s growing. She says employer branding can help generate excitement about working for an organization, and she recommends looking to competitors to see how they promote their talent-seeking efforts.
“We recently did a global candidate study, and candidates said they look at the company website, the LinkedIn company page and Glassdoor before their first interview,” Burdick says. Nearly 99% look at the company website. “Even adding a ‘Why work for us’ page can make a difference. HR and marketing are getting together the way marketing and technology did 10 years ago.”
Burdick says it’s important to get marketing on board with talent planning and explain to them the competitive advantage for the company to hire “A” performers versus “B” performers. The company’s leadership needs to understand why talent planning should be a priority, Burdick says, and some companies could benefit from using a consultant to identify benefits, look at competitors and enhance the employer brand. Businesses can promote their benefits, leadership training opportunities, educational opportunities, mentoring and volunteer work or even showcase a day in the life of an employee by using their website and social media platforms.
Burdick recommends internal communication as a cost-effective way to find great talent, such as using the employee newsletter, putting up posters in the breakroom and offering an employee referral program with bonuses. Candidate studies suggest some of the highest-quality, longest-tenured employees come from other employee recommendations, she says.
Anthony Martin, executive vice president of recruitment process outsourcing and talent management at Hudson, says having a pipeline or a talent pool to draw from is extremely beneficial, particularly those with transferrable skill sets.
“Your competitors in the market or … channel partners you work with that understand your product or your service and your company culture, those types of organizations are good grooming or breeding grounds to bring talent into your company,” Martin says. “Make sure your HR department and the business managers are keeping a warm contact with some people they’ve identified as top performers or people they want to bring into the organization.”
As the job market tightens up, Martin says having developed sourcing channels, can speed up the talent-planning process.
“Talent planning is no different than an operational area or an IT area or a finance area,” Farren says. “It needs to be managed and the more you can put a process around it, the better the results will be.”
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