The Talent Secret - The Link between Hiring and Revenue
by SARAH BRENNAN
Sarah Brennan, CEO & Principal Strategist of Accelir is an industry analyst and consultant focused on changing the conversation around talent, technology, hiring and the impact on business. Currently finishing a book: The Talent Secret (looking to publish in 2016 ) on intersection of talent and revenue.
For more than a decade, she been developing, training and implementing strategies around talent and the impact on business for clients in industries including high-growth startups, Professional Sports teams (MLB, MLS), Auto Makers, Retail, Video Gaming, Banking & Insurance, Non-Profit, Distribution & Manufacturing.
Her wins on innovative talent strategy brought her into the HR Technology vendor side of the world both as an acting Chief Strategy Officer reimagining the product, brand and market offerings of an ATS into a full suite Talent Management Solution as well as Principal Analyst, Talent at Bersin & Associates (Now Deloitte). Her consulting practice has given the opportunity to work with more than 40 HR Technology Solution and Software vendors on research, product, acquisition/sale strategy, go to market strategy and market education.
Voiceover: Sarah Brennan is an analysis and consultant focused on changing the conversation around talent, hiring, and the impact on business. She is in the process of finishing a book on intersection of talent and revenue. She has been featured or quoted by NBC News, US World Report, Huffington Post, Bloomberg, Wall Street Journal, USA Today, Fox, ABC, HR Executive Magazine, and numerous other sites and magazines around the world. She has spoken at events like Mashable's London Event, Bersin's Impact, various SHRM conferences, recruiting trends, HR technology conference in US and Europe, iRecruit Europe, ERE, Social Recruiting Summit, Talent Net, Recruit Fest, TRU Events, as well corporate team engagements, national association conferences, vendor user conferences, and more. And now, please welcome to Elevate 2015, Sarah Brennan.
Sarah: Hi, I'm Sarah Brennan, CEO of Accelir and this is The Talent Secret, what profitable companies know about a link between talent and revenue. We look at people at work, their minds are filled with a million things, and being passionate about their job is pretty low on the list. In fact, when I traveled around and did polling throughout The US and Canada this year of nearly 550 HR leaders, not a single person rates their job or work as something that they were truly passionate about. Instead, we get so distracted at work. "Where did I put my coffee? Oh, I really like coffee? I wonder if I should try that new coffee? What happened to the Starbucks down the street? Who drank my coffee?" Or we are looking at our schedules and we talk about, "I have so many calls back to back. How do I get so much stuff on my calendar? When am I actually supposed to get my work done?" Or we are getting our work done and we thinking to ourselves, "I really wish somebody would take a few minutes to acknowledge what a great job I'm doing here. I wonder if they even know what a great job I'm doing? I wonder if they even care what a great job I'm doing?"
So our minds get in a mash of all of these other things. But at the core, we want to be passionate and how do I know? Because when we look at people outside of work, at least here in Wisconsin, they all have something they're crazy passionate about. Whether it's a sports team, or their kids or travel or knitting. Somebody, everybody has something that they're really passionate and really excited about. Why? Because at their core, people want to care about things. Again, it could be their kids, sports, brands, hobbies, travel, cars, friends, it could be coworkers, it could be their clients and it could be their career. Being passionate and being involved and part of something, meets a core basic human need.
Unfortunately, most companies simply don't understand how to make their employees really passionate and really engaged at work. Most engagement reward and development strategies, as well as the software that we pay a lot of money to use, are designed from the top down. They focus on the self actualization, the self esteem. First, as the priorities before looking at the belonging and the safety and the core physiologic needs. When you look at the facts that less than 5% of people will ever reach the point where self actualization is their primary motivating factor in their entire life, it's pretty silly that as organizations that one of the first things that we look towards to get more engaged.
Basically, companies make it really hard for employees to care about them. We keep asking them to and in fact, we tell them to care. We tell them to be engaged. We do survey after survey on why they aren't engaged. But most companies really don't know how to connect the dots to show employee why they should be engaged and passionate about their jobs.
The fact is we spend $720 billion on engagement in some form or fashion each year and the results? They really aren't that great. Seventy-five percent of currently employed workers are looking for new opportunities today. That is three-quarters of your work force, could potentially walk out the door at any time. Less than one in three workers is committed to the success of their organizations. And globally, only 13% of workers across 142 countries aren't engaged at work at all. The US is slightly better at 30% but that still means 70% of our works are not engaged. When we look at the best places to work, only 67% of them have engaged workers.
One of the biggest arguments when I start having this conversation with executives and heads of HR is that they say, "Yeah, but look how high performing our people are." The fact is high performers are actually less engaged than the low performers in your organization 42% of the time. Often it's because the low performers love working there because they're not actually required to do very much. They're not asked to have a lot of goals or expectations and the high performers continue to get more and more piled on with less reward.
Engaging your workforce poorly is really expensive for an organization. People that know The Talent Secret really understand this. Beyond the $720 billion that we're all ready spending, we can look at the impact just on turnover. Low engagement scores in our organizations result in a four times higher turnover rate than companies that have high engagement scores. The cost to replace a single employee can be as much as 200% of their annual salary according to SHRM. Just in The US, $11 million is spent on turnover every single year. Beyond turnover, there is a real impact on the bottom line. An estimated $550 million in revenue is lost just by the lowest 18% of engaged workers. Eighty-six percent of consumers have stopped doing business with a company because of a bad personal interaction with an employee there, again, often directly tied to an employee who just doesn't care. Sixty percent of consumers have said that they would gladly pay more money somewhere else than deal with a bad employee at a company.
But it also is going to impact the future and some of the new ideas that could be helping shift your company and change its course. Seventy-two percent of the millennials feel their organizations don't make use of their skills at all. That means nearly three-quarters of the young people and millennials now are well into their 30s, so nearly three-quarters of this 20 and 30-somethings that you hire and you pay, you are overpaying because you're not even utilizing their skills and often what they wish they would be doing, creating less engagement.
Seventy-five percent of engaged employees also think that they can reduce cost and improve your customer service. Nobody's even asking them for their ideas. Only 6% of surveyed participants feel that their current performance management process is worth the time it takes to even do it.
On the flip side, people that really understand the talent secret know that a culture of engagement can be really profitable, and I mean really profitable. Like two and a half time increase in revenue profitable between low and high engagement companies.
One of the main reasons for this is because consumers like to buy from happy people. They like to feel that where they're spending their money is treating their employees well because they want to be treated well at their own workplace. Seventy-five percent of consumers have actually given more business than originally planned simply due to great customer service. On the flip side, 60% of employees that feel valued by employer are likely to go out of their way for the customers and do their very best to make sure they can meet all of the needs possible.
One of the biggest areas of research on this topic is in retail. Companies with high employee satisfaction scores in retail have on average a 5% increase in their customer satisfaction ratings which is a huge increase and a huge percentage. If that's not enough, there is $1.6 trillion up for grabs, up 10% just in the last five years because people are open now to be brand switchers. For a long time, people were a little bit more brand loyal. Now people are much more likely to switch brands and to go to a competitor if they're unhappy with the company and particularly if they're unhappy with the customer service they received as a consumer with them.
How do you connect the dots to really engage your staff and see the benefits of working with a talent secret? Well, let's start at the beginning. Most engagement strategies look like this. You hire somebody. You tell the worker to be happy. You then start to all ready engage when you realize the employee's not happy, the person leaves, and you act shocked, angry, or you just make excuse why they left, and then the final step is you simply hire somebody new but you repeat the process over and over and over. What it really should look like is a little bit more like this where talent acquisition, hiring and onboarding, management and recognition and learning and development are all coming together to build a really strong engagement strategy.
Here's the talent secret. It's building engagement strategies from day -100. Ninety percent of companies are going to start working on their engagement after the employee gets hired. The companies that really know the secret on shifting this and really creating engaged, fanatical employees from day one, start building that engagement and building that brand loyalty way before the person even applies. Here's a little bit about what that looks like.
Step one is build a talent brand, also called an employment brand, or a career website or whatever else you want to call it, but it's a talent brand that is authentic to your culture. That means have a website, make sure that it talks about you as an organization, what you care about, what you value, what your goals are, what your people do outside of work, who the people are that work there, what type of people work there, what type of people do you hire? Then look at how you're advertising your jobs. How are you representing yourself?
You wouldn't go to market with a marketing campaign that didn't put your product in the best light. When you're looking at your talent brand, your company is your product and you need to sell it just as hard to the candidate marketplace as you sell your product or service to the consumer marketplace.
Step two is make sure in the recruiting process that you're really sharing the story and talking the culture. That needs to carry through the messaging the entire way through the recruiting process. Every person they talk to should be able to tell the story of your brand, of your organization and what it's like to work there and why they love working there. It's a great way. Simply work with your employees. Guess what we have found? We have found that when we go in and we work with companies to help create these elevator pitches, that the employees that are involved in the practice get more excited and get more engaged about the organization. So it's really a win-win for organizations.
Step three is to support the story and engage through the onboarding process from the day they start until really around their first 30, 60, or 90 days, depending on the organization. Make sure that is being shown in every single step of that onboarding process and make sure that your brand stays consistent.
Step four is develop the brand of engagement through management. This is really where most people live when they're talking about engagement. It's about how you treat your employees that are all ready there. It's about how your management interacts. It's about how your rewards and recognition portion is there, but that really is just one step of the process.
Step five is another one that we forget in HR and in business when talking to our talent in general and that is really communicating regularly and sharing our goals and sharing them over and over and over. For those of you that are parents, I would wage to guess that you've never been able to tell your kid something once and they're going to remember it forever.
In some ways, employees, because humans are no different, we need to hear the story over and over and over. We need to have the goals. We need to understand what we're trying to achieve. We need to understand what our role is in doing it. Breaking down a little bit further, the first two areas, most companies, again, don't even talk about engagement here, but they're really, really key and effective for companies that really understand that talent secret.
Recruiting, tell them about the strategy and the bigger picture. Did you know only 40% of employees really know their organization strategy and goals? It's really hard to have high engagement and buy-in when 60% of your workforce doesn't even know what they're working towards or what their role is in it. In the onboarding, most new hires are going to decide within the first 30 days how long they're going to stay with the company.
Let me put that in a different light. By day 30, they have decided all ready how engaged they are going to be or not going to be with an organization. From there, if you've all ready got them engaged, you just have to be continuing to support that. If they decided not to be engaged, you're going to be spending a lot of resources to try to turn them around, or just lose them to non-engagement permanently.
On the performance side, again, where a lot of organizations live and where is key, because you have to continue all the work that you did up front. Highly engaged workers get feedback on their performance at least weekly. A lot of organizations are still doing their annual reviews and some research show that there are still a large number of people that only talk to their manager or get feedback on a quarterly, semi-annual or even an annual basis. When we're looking at the numbers, less than 20% of low engagement workers get weekly feedback. There is absolutely a correlation between the frequency of engagement and the frequency of feedback that a manager or leader is going to have with his employees and how engaged they are with the organization.
Again, wrapping it up, engagement should actually start here, way before the hire. It's not something you've probably heard and I'm sure it doesn't seem really...You want to have to keep thinking about it. I get it, but I can tell you, if you hire the right people to start with, you eliminate a lot of the issues that we talked about earlier on in the conversation. Start at employment branding or at the talent brand. Make sure it continues through recruiting. Use it through your interviewing process and it's going to pave the way for engagement success once that employee gets hired.
Here's quick tips to engagement success. One, The Talent Secret, it starts at employment branding. It's built through recruitment. It's supported through onboarding. It's developed through talent management and it's lost through silence and lack of communication. I am Sarah Brennan and this was The Talent Secret.