Are you set to grow your business in 2021? Probably not…
Whatever you are doing to get ready for 2021’s success, there is one thing you are not paying enough attention to: talent management. And you probably worry about employee performance… a lot.
In fact, most business owners worry more about their people than any other part of the business according to Margaret Heffernan, a successful tech entrepreneur. They worry about hiring the right people, employee productivity, and keeping top performers. But even though they worry a lot, she says they usually don’t take concrete steps toward successful talent management.
Your workforce is the number one driver of success regardless of the size of your company. Competitors can figure out how to copy your product or service, but it is just about impossible to copy the talent your employees bring to work every day. Not only is talent your biggest success driver, it is your biggest expense, too: for most companies, 60 percent (or more) of business expenses relate to people.
But with everything business executives have going on, it is easy to overlook the people part of the success equation. According to Zur Shapira, a professor at NYU’s Stern School, “They may believe they’re doing all that’s called for,” he says, “but in chasing growth, it’s easy to overlook the people issues. The truth is, too many are not likely paying the amount of attention that’s called for.”
While 80% of executives believe having the right talent is critical to growth and that their employees have a direct impact on revenue, most have neither a strategy nor a budget for managing talent. Only about one in 10 business owners say that their talent approach matches their business strategy and only 18% say they know they have the talent they need to grow.
So, if managing talent, hiring the right people, and building a world-class team are so important, why don’t more businesses get it right? Often executives aren’t sure what actions are likely to work. Here is some help: five resolutions to make you more successful in 2021!
1. Resolve to outperform competitors.
2. Resolve to create performance clarity.
Tons of research proves that clear goals and well-defined performance expectations lead to higher performance…every time. So set clear goals!
The best goals are stated simply, they are measurable, and they are balanced, including both financial and non-financial measures. In top performing companies senior managers report that non-financial measures are more effective motivators than just financial measures alone.
Make sure goals are specific, are do-able, include a number metric, and have a due date. Write goals down so everyone can refer to them and evaluate their own progress as they are working.
Once goals are set, make them part of regular (once a month works best) executive discussions with senior managers. When executives act like the goals are important, performance improves every time. (For more on goals see With Goals, FAST Beats SMART.)
3. Resolve to hire the right people.
Every executive says that their people are their most important asset. But can you explain why would anyone want to work for you? What makes your company a great place for people to work? Begin your hiring by answering those questions - if you can’t explain why people should work for you rather than for your competitor, figure it out!
Hiring is worth thinking about because it is one of the most expensive management activities – hiring a new employee costs anywhere from 20 % of annual salary to over 100% for senior team members. Most companies never calculate or report the expense related to hiring, but the cost is high for every company. Just ask your CFO for an estimate.
Now think about your hiring practices – make sure they make the most of the money you spend on hiring. Resumes and interviews do not predict a candidate’s future success on the job1 so use tools that give you reliable data about who the candidate really is. Incorporate a valid pre-hire assessment before reading resumes or interviewing. Assessments deliver the most accurate, un-fakeable, and reliable candidate data that helps predict their level of success in your job. We all know that candidates lie on resumes and in interviews, but they cannot trick an assessment.
Use candidate data that is accurate and your efforts will be paid back with faster hiring, quicker new employee training, and higher new hire productivity. (Learn more about the science and technology of hiring here www.affintus.com.)
1Correlations between future success on the job and resume info and interview results are between .10 to .18 for those who like that sort of thing.
4. Resolve to retain top performers.
If one of your star performers was thinking about leaving your company, what would you do? Would you even know your star was eyeing the exit sign before you see the resignation? Remember top performers can deliver up to 12X the results of average or low performers. If you think there is nothing you can do to keep your best employees, think again.
People love to learn and employees stay longer when they have the opportunity to learn on the job, so offer training and development programs, both internal and external. Top performers will begin to look for new opportunities as soon as they feel they have stopped learning. Two other actions that help you keep the best employees are moving some decision making to the team and individual level and offering flexible working hours whenever you can.
Top performing companies know who their top performers are and do whatever it takes to keep them. Ask your managers to make a list of top employees, the ones you do not want to lose. Now, make managers responsible for keeping them in the company. Regularly talk with managers about how important it is to effectively manage their stars – and that means engaging with them every day.
5. Resolve to reward senior managers on the strength of the teams they build.
Management is active, not passive, and all the important talent management actions have to be modeled by executives.
Executives in top performing companies around the world use management practices that are proven to work. The most successful execs and senior managers routinely discuss performance targets as a team and identify development opportunities for the most talented employees (you have identified those, right?).
If an employee is not performing to goal, they take action, including moving employees to positions where their skills and talent are more appropriate. Jerks are removed from the organization, even if they are “top performers” because research shows that the cost of the havoc jerks wreak is never offset by their results.
Expect senior managers to actively manage employees and reward them for their results. Set clear executive-level goals and have monthly conversations about outcomes and action plans for continuing to improve performance. Measure senior manager’s effectiveness, analyze performance data routinely, and coach / teach managers focusing on their performance management results.
Improve your company’s financial success in 2021 by using good talent management and hiring practices. If you do, the reward will be a more prosperous new year!