What if you knew the number one reason your employees were leaving? Or what the ideal team size was for avoiding turnover?
HR teams have long sought data points like these for good reason. The economy has been growing at a very healthy clip. Simply stated, it’s a job seeker’s market—there are more than 7 million openings posted today, and nearly a quarter-million new jobs were added last month. Unemployment is hovering at historic lows.
You might just call it too much of a good thing. With the booming economy, nearly a quarter of businesses say recruiting talent is their biggest problem. Nearly half reported that there were few or no qualified applicants for the positions they were trying to fill. What used to be a simple matter of posting a job opening on a job board has become a complex new process to attract passive candidates who aren’t looking to leave their current positions. We all understand the new reality is a shortage of individuals to fill the positions that are most capable of impacting a company’s results, in areas such as software development, management, product design, marketing, sales, etc. The result is a talent war, with those companies that are capable of attracting and retaining the best talent becoming the leaders in their respective market segments.
"The result is a talent war, with those companies that are capable of attracting and retaining the best talent becoming the leaders in their respective market segments."
Recruiting software has evolved from a simple applicant tracking function to a full-blown marketing and CRM function reflecting a funnel that is very similar to a sales and marketing funnel. At the top of the funnel, there is sourcing of passive candidates, then in the middle of the funnel companies need to nurture candidates that aren’t ready to leave their current position by staying in touch and keeping them engaged with interesting marketing materials. Then at the bottom of the funnel is a sales process to close the candidate. Companies are also finding that they have to spend time developing and promoting their talent brand, defining the attributes that make this an attractive place to work. (Completely different from the brand that their customer’s experience.)
Encouraging talent to stay in this environment is a huge challenge: U.S. employers can expect to spend $680 billion in turnover costs in 2020. Businesses, particularly those in the hyper-competitive midmarket, need to use every tool at their disposal to get ahead of turnover. They’re turning to innovative HR technologies for the data and insights needed to do just that. Industry benchmarking and HR reporting dashboards have made it possible for teams to see how their HR data compares to similarly-sized companies and where they need to prioritize retention. Technologies like these have the potential to cut turnover costs and drive a healthier talent profile.
There’s also a tremendous amount of buzz in the HR technology space around artificial intelligence. The biggest players in tech, including IBM, Oracle, and SAP, are reportedly developing supercomputing algorithms that can predict employee attrition with 95 percent accuracy. IBM’s CEO Ginny Romnety claims that “AI has so far saved IBM nearly $300 million in retention costs”.
But the midmarket companies powering the economy don’t have access to glass-enclosed supercomputers and data centers. “Watson” isn’t a reality on Main Street. The good news is that these dynamic businesses do have access to machine learning and data analytics through cutting-edge HR technology that already exists.
At the HR Redefined conference, I watched one practitioner demonstrate how he used a simple—and accessible—formula to predict at-risk employees at his midmarket company. Using his HR platform, he singled out employees who had not seen a recent title change or salary increase, were high performers, had long commutes, and had experienced a life change in the past year. He identified 12 at-risk employees—and within a month, five of them resigned. The data helped him retain the rest.
This kind of reporting has even greater potential than just predicting turnover. The data and insights gleaned from HR technology can empower teams and C-suite leaders to regularly check in on other critical metrics, like workforce diversity and even gender pay equity—two topics that have found their rightful place on the boardroom agenda. Greater literacy in these metrics has become an expectation of executives and HR teams alike, meaning the latter is now tasked with much more than just managing employee relations and compliance.
Faced with the steepest competition for talent, fast-growing midmarket companies are using technology to turn the tide. Recruiting software from companies like Lever and Greenhouse has evolved to handle the challenge of hiring the kind of skilled individuals who aren’t looking to find a new job (often referred to as passive candidates.) It’s been a thrill to see how these businesses’ HR teams have not only embraced software but have used it to literally redefine the state of their profession.
Over the last decade and a half, HR managers and generalists have welcomed “people analysts” and data scientists into their ranks. That focus on data has paid dividends on the profession’s influence in the boardroom, as now over 50 percent of senior HR leaders report directly to the CEO. If you are interested in looking at what kind of insights a good data driven HR IS system can deliver take a look at Namely’s Insights product which I believe is a leader in this space.
As unemployment continues to dip, the race to attract and retain talent will only get more competitive. Thankfully, the key to addressing that challenge isn’t out of reach. You don’t need to double down on artificial intelligence or hire a Harvard data scientist to analyze your people metrics. Modern HR and recruiting technology, paired with a deep investment in recruiting and HR teams, provides businesses with the edge they need to stay competitive.
If you are an HR leader who is interested in knowing how you can best impact your company, the answer is Talent. Understanding how to attract, retain, and motivate the best talent in your market segment is well understood by the CEO and the board as a fundamental core initiative to staying competitive and winning. This imperative is redefining the HR role, adding talent management on top of the back-office functions, and bring HR/Talent executives into the board room. CEO’s are looking for an HR leader that can help them assess and optimize their talent. From what I’ve seen firsthand, today’s HR teams are more than up to the task.