While all C-suite leaders stay focused on their bottom line and their enterprise’s key assets, savvy C-suite leaders understand that their people are the ones responsible for driving innovation, product execution, and customer engagement and satisfaction. That’s why attracting and retaining great employees, or talent management, spells financial success in a way that nothing else can for your business.
Costs of talent MISmanagement
Talent mismanagement carries a high cost in expensive turnover, yes, but it doesn’t stop there. Productivity and customer engagement suffers, too, when employees do not feel engaged with their work. Yet employee disenchantment is rampant... and costly.
- A Gallup report explains that “13% of employees worldwide are engaged in their jobs, meaning they are interested in their work and making a full effort on the job.”
- And the rest? “87% of employees are either not engaged or indifferent—or even worse, are actively disengaged and potentially hostile toward their organizations.”
Gallup shines a light on the eye-popping cost of employee disengagement in lost revenue here: “We estimate that actively disengaged workers alone cost the U.S. between $450 billion and $550 billion per year.” Let me repeat that: poor talent management means a loss in revenue in the U.S. alone of $450 to $550 billion every year.
A focus on great leadership and talent management produces serious ROI gains. Gallup offers data on enterprises that have successfully “engaged their workforces, seeing up to 147% higher earnings per share (EPS) compared with their competitors” - regardless of a sluggish economy.
The formula is straightforward: choose your talent wisely at every level and surround them with a culture that works to engage them. The data show that "a culture of employee engagement" can produce "up to 18% higher revenue per employee, for a total of 51% higher growth potential when combined with selecting the right managers and individual contributors.”
2 steps to successful talent management
The Gallup report outlines the two critical steps that will enable the C-suite to make the most of their talent management.
- First, start with your management team selection. Most often, people are promoted into management as a result of longevity or skill related to a particular product or service. Gallup advises that you instead hire managers with innate abilities to manage, since that is the skill you need in order to engage all employees.
I am reminded of Nordstrom whose customer loyalty is virtually unmatched in the clothing retail space. When asked the secret of their success, one supervisor revealed that they hire naturally friendly people regardless of what they know about clothing. The supervisor added that knowledge about clothing is trainable, but friendliness is not.
Similarly, people with innate management abilities tend to be encouragers and strong communicators who understand that their role is to help each individual, each department, and each team succeed. On the other hand, poor management, as Zenefits points out, may lead to the failure of entire departments and teams - beyond affecting a few individuals - resulting in an enormous business cost that includes everything from quality to safety to customer retention.
- The second step to successfully managing great talent is helping individuals play to their strengths.
Think of it as a kind of ju jitsu training, the Japanese martial art in which the trainees are taught to get the maximum effect using the abilities they have. If you remain focused on areas in which employees need to improve, a natural resistance emerges which does nothing to engage employees. If, on the other hand, you have hired wisely, and you focus on employees’ strengths and complementary abilities, employees will reward you with engagement, enthusiasm, and great teamwork, boosting your ROI and leading to the rewards your business requires.
The talent management bottom line
For your business to thrive, your talent has to thrive as well. How? Hire great natural managers, and develop a culture of employee engagement using, as Gallup says, “a strategy, accountability, great communication and manager and employee development plans,” based on employees’ strengths, “that are aligned with scientifically tested metrics and performance outcomes.” Your rewards will be “improvements in productivity, profitability, retention, safety, quality and customer ratings.” That’s a tangible return on investment that's worth the effort.
Wondering whether your employees are engaged? Please contact us for information and assistance on conducting an engagement survey and developing plans to address the results!