News outlets have trumpeted how the talent war is over, how the battle for the best and the brightest employees has finally come to a ceasefire. But has it really?
Let’s step back and take a quick look at how this whole “talent war” situation began. In the second half of the twentieth century, there was a surplus of talent available thanks to the “baby boomer” generation. During this time, organizations had a plethora of options when it came to employees with there being enough talent to go around. Because of this surplus, turnover was also regarded not only as a normal part of business, but almost as a necessity.
Then the baby boomers started to retire. This is when the “first” talent war began. This HR conundrum forced many companies to re-examine what it is that they could do to engage their employees and create a great workplace culture in an attempt to keep them on board. Turnover became something that should be “examined, measured, and eliminated.”
Despite the increasing number of baby boomers retiring, at the turn of the century, turnover seemed to become once again acceptable. Perhaps this was out of the sheer frustration that employee retention remained at rock bottom and finding talented new hires put traditional hiring methods to the test. Whatever the cause, as of 2015, there is about to be another talent war and companies are finally taking turnover more seriously.
The Pending Talent War: A Look at the Numbers
They say that we learn from history, and HR is scrambling to train themselves up on the lessons taught by the last talent war in preparation for the next and likely far more significant one. Today a fair number of baby boomers have retired or will be retiring within the next five years. For this reason, the McKinsey Global Institute has estimated that there will be a 13% shortage of highly skilled individuals by 2020. This is 38-40 million fewer skilled workers than are currently required to keep things running at optimal global levels.
In this tumultuous employment climate, turnover is no longer acceptable. Here is why:
- Replacing a single employee is costly. It has been estimated that turnover be as high as 150 percent of one’s annual salary.
- Training is expensive. Training itself is resource intensive. But missing one well-trained employee puts greater strain on your existing staff. Training a new hire may cause existing staff to be less productive in other areas of the business as they compensate for that missing person.
- Disengaged employees cost billions. $450 to $550 billion dollars annually, to be exact (Gallup, 2012).
- Majority of staff is disengaged. According to Gallup, only 30 percent of employees are engaged in the workplace.
- Turnover is avoidable. It has been estimated that up to one-third of all employee turnover is preventable.
The Internet and Its Impact on the Talent War
The Internet has revolutionized how companies are choosing employees—or more like, how employees are choosing companies. With websites like Glassdoor and Quora offering behind-the-scenes peaks into every day action around the office, employees have more insight than ever about your organization. These sites, along with social media, allow them to determine:
- If your company is a good cultural fit.
- If your company has good managers and leadership who they want to work with.
- What level of work-life balance you offer or encourage.
Information that was once extremely limited has now been blown wide open and is freely searchable by talent from all over the globe.
Winning the Talent War
So, what it comes down to is company culture. The employees of the twenty-first century do not simply want a paycheque. They want to work in a place where they feel like a contributor, where they feel valued, and where they feel at home—and it all starts with leadership embracing a culture of innovation.
So how can innovation help engagement? Using idea software, employees are empowered to contribute and share their ideas. Your idea program is the catalyst to building a collaborative culture where leaders can speak directly to employees working on the frontlines that they would never have been able to interact with before. Read more about it in our case study.