The term talent management is used often and in many different contexts, but what is it really? And why is it important to the success of organizations?
We most often think of it as an organization's efforts to recruit, retain, and train high quality staff members. It’s also been further defined as the science of using strategic human resource planning to improve business value and to make it possible for companies and organizations to reach their goals. The “why” of “why talent management matters” hinges on the intersection of these dimensions—and its potential to create business value.
In an age when banks keenly focus on creating value through optimizing their business models, technology platforms and customer experience, financial services leaders may not place enough of an emphasis on what might be the most important ingredient: the talent that enables these platforms. While managing the talent within the organization is often viewed as a cost of doing business, it can also serve as a source of great value creation. In BAI’s research that tracks multiple talent metrics, we see turnover in many banks that exceeds 30 percent (branch and call center) and can range as much as 15-20 percent for business banking and wealth management roles. We estimate that the cost of recruiting, hiring and training new staff varies widely by role but exceeds $5,000 per employee in some cases. There’s no question that even a marginal improvement in employee retention or reduction in recruitment costs can have a major impact on an organization’s bottom line.
There are also implicit costs that, while not readily apparent, can handicap an organization. These include lost productivity associated with turnover and the lost revenue attributed to open roles. Organizations often don’t have clear line of sight into these opportunity costs as they are hard to quantify. Even after roles get filled there is a ramp up period during which the organization fails to receive the full benefit of the role.
Last, but certainly not least, is the potential negative customer impact. Despite shifts in consumer behavior (especially towards mobile and digital), more than 70 percent of bank staff is still consumer facing. Ineffective talent management can cause employee morale to suffer and engagement to diminish. As colleagues worry more about their future in the organization and less about customer experience, it inevitably creates risk of bad customer outcomes.
So what can we do to make sure our talent management game is up to snuff, attract more of the right people and keep the people we want firmly planted in their seats and engaged?
Attracting talent: Group rethink
We have to fundamentally rethink how we recruit and hire. Building a brand in recruiting is just as important as building a commercial brand. Focus on forging a dynamic brand that engages and attracts talent and that can compete for mind share as prospects evaluate employment options. Active engagement through digital and social media is now table stakes.
But the bank must go further by clearly and openly articulating its value proposition, opportunities for career growth, and compelling work content to help prospects better connect with the brand from the outset. This can prove particularly challenging for banks that have long dealt with the perception of being stodgy, old-fashioned places to work—especially compared to tech startups, for example.
It also means speeding up the hiring process and making it more accessible:
- Is the application process mobile friendly?
- Does it require a resume upload?
- Are you willing to look at non-traditional backgrounds?
All of these are important questions to ask. Last, be intentional about hiring and promoting from within the organization and make it known. This has a positive impact in two key areas. First, it can lower recruiting costs significantly. Second, it increases employee morale and retention while making employees more likely to promote the organization to outside candidates. This can translate to more employee referrals, which equal a goldmine in terms of quality and longevity of employees.
Retaining and engaging talent: Strike up the brand
Another component of talent management today is engaging and retaining employees. Now, more than ever it is critical to create a compelling employee experience that ties talent to the overall mission of the firm. You can do this by making employees feel like they play an active role in their development and progression through the organization. Also make sure that their experiences, as much as possible, align with desired customer experience.
The bank should also incorporate employees in the brand to make them brand ambassadors wherever possible. These employees become thoroughly engaged, connected and committed. Make sure employees understand the corporate brand. Promote the ability for employees to build their own personal brand and be their “authentic selves” in alignment (and compliance) with the overall corporate brand. Then, connect the two brands whenever possible.
Enable success: The employee, empowered
Empower employees with the tools and technology to succeed, and enhance their ability to do their job effectively. There are a myriad of collaboration tools now available, many for free, that allow employees to more effectively collaborate and remain connected to each other and the organization. Many have the look and feel of social media platforms so that employees feel connected but not burdened. Similarly there are tools that offer sales automation, and social selling tools that provide platforms to support employee success.
In the end, effective talent management is critical to secure business success, create value, and provide an excellent customer experience. It has real impact as it flows to the organization’s bottom line through reduced cost, recaptured lost revenue, more efficient allocation of resources and increased employee engagement.
So often the job application process is thought of as a series of hoops prospects must jump through to secure a coveted position. Viewed another way, it presents a challenge for employers to turn hoops into brass rings that attract, hire and retain the very best team members to usher in new levels of success.
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Byron Marshall serves as director, research team at BAI.
Talent Acquisition and Retention will be a major theme at BAI Beacon, our upcoming financial services conference taking place Oct. 4-5.