How CHROs can Prevent Top Talent from Leaving
November 16, 2022 – The COVID-19 pandemic, rising economic uncertainty and geopolitical risk, and the increasing emphasis on environment, social, and corporate governance matters all have important leadership implications. As advisors to the C-suite, Russell Reynolds Associates has been closely monitoring these trends and advising leaders and teams through this tumultuous time.
The search firm’s Netila Demneri and Harsonal Sachar interviewed 12 CHROs and talent leaders across sectors to better understand what strong HR and talent organizations are doing to differentiate themselves to attract and retain the best talent. The recruiters heard diverse perspectives and found that the workforce has changed permanently; as a result, the skills needed to manage it has also shifted. Moreover, while data from Russell Reynolds Associates’ Global Leadership Monitor showed that CHROs largely felt unprepared to respond to the talent shortage, the firm’s conversations uncovered how the best people leaders were getting ahead in the war for talent.
The Russell Reynolds report found that a majority of HR leaders feel unprepared to respond to the talent shortage. Seventy-two percent of leaders cited the lack of availability of employees and leaders with key skills as the highest ranked issue for global business leaders this year, up from 59 percent last year, as outlined in Russell Reynolds’ second annual Global Leadership Monitor. The battle for talent landed ahead of other key challenges, such as uncertain economic growth, health threats, and geopolitical uncertainty. More importantly, while boards seem more optimistic, only 29 percent of CHROs – and 23 percent of CEOs – said they feel prepared to respond to the talent shortage.
The best HR leaders are reinventing talent acquisition amid high churn, according to the Russell Reynolds report. CHROs have highlighted the need to reinvent talent acquisition in the face of high churn, the rise of hybrid work, and changing employee needs. Certain skill-sets are in high demand and those who have them are leaving for significantly higher pay and sign-on bonuses, or benefits like extra time off. Further, employees have more options, due to many roles being location agnostic. Seventy-six percent of CHROs shared that employee turnover had increased in their organizations over the past 12 months.
Netila Demneri is a member of Russell Reynolds Associates’ financial services sector and human resources officers capability. She is based in Toronto. Ms. Demneri works with clients in the asset and wealth management, banking, capital markets, and insurance industries to find leaders with functional skills in technology, finance, legal, compliance and marketing.
The Russell Reynolds report found that the savviest organizations and leaders are thinking differently about talent acquisition and have a solid pitch to win great talent This includes:
1. Having a unique employee value proposition. Several leaders noted the importance of a differentiated pitch to help attract external talent. One CHRO noted that today’s workforce needs more meaning and purpose in their work, and that it is important for leaders to translate existing business mandates into something more meaningful. Another leader noted that a solid value proposition can set a company apart when attracting top candidates.
2. Being flexible on where roles should be located. While most companies are still finding the balance between in-office, hybrid, and remote work, HR leaders that Russell Reynolds interviewed underlined the clear advantage of opening key value-driving roles in the organization to hybrid work models. This not only allows companies to gain access to a broader talent pool, but it also attracts talent that happens to be in the same location. Recent McKinsey & Company research found that 52 percent of employees desired a hybrid work model post-pandemic, up from 30 percent pre-pandemic. At the same time, leadership teams are far from unanimously agreeing that hybrid work is the best strategy. As a result, the Russell Reynolds report found, HR leaders are currently walking the tightrope between influencing CEOs and the C-suite to shift their thinking around flexible work while also managing workforce expectations.
3. Running a more streamlined hiring process. A number of HR leaders noted that in today’s fast-paced talent market, companies that put executives through lengthy hiring processes are more at risk of losing them. The pandemic proved that leaders can be hired and onboarded remotely, and many companies have since become more comfortable making hiring decisions without meeting talent face to face. HR leaders Russell Reynolds spoke with also shared that the right search partner is critical in the face of talent shortages, hybrid talent acquisition processes, and wildly varying compensation expectations.
Related: High Demand for CHRO Within the Private Equity Sector
Reinvigorating Talent Management
Top HR leaders are reinvigorating talent management to respond to evolving employee and business needs, according to the Russell Reynolds report. Leaders noted that bringing people through the doors of the organization is only half the battle. Retaining, engaging, and developing talent is – and continues to be – a top concern. “Today’s workforce has more agency, and people and talent functions are figuring out how to design jobs to make people stay and thrive, while optimizing value for customers,” the Russell Reynolds report said. “Ultimately, companies exist to serve their customers, and that is not lost on the leaders who want to optimize employee experience. The evolution of talent management reflects these trends. It is becoming more personalized in line with the increased agency of today’s workforce, more intentional about talent development, and more data-driven to better understand today’s hybrid workforce.”
Harsonal Sachar leads knowledge for Russell Reynolds Associates’ human resources officers and legal, risk & compliance officers capabilities. She is based in Toronto and joined the search firm in 2012.
HR leaders Russell Reynolds that spoke with shared their advice on creating a sound talent strategy:
1. Create a culture where talent thrives: Several leaders talked to Russell Reynolds about the importance of strong corporate cultures, particularly in tough times and with hybrid workforces. HR leaders cited inclusive and sustainable cultures as essential, sharing several examples—one CHRO spoke of creating an environment where senior female executives held courageous conversations around topics like fertility and menopause. Another talked about culture being a strategic pillar they examined closely; specifically, which aspects should be kept or developed post pandemic, like embracing change or leading empathetically.
2. Personalize your talent strategy: Leaders cannot assume the workforce is homogenous and should instead design talent strategy to address the unique aspirations and demands of employees. Several conversations focused on the need for a skill-based approach to talent management. One leader talked about the need to identify key skills the organization needs, and help high potential talent develop those skills via future projects, creating a symbiotic relationship between the employee and the organization.
3. Build an internal talent marketplace: The most forward-thinking organizations today are accelerating talent management by building internal talent marketplaces. Deloitte research defines an internal talent marketplace as a technology-enabled talent management program that connects employees with opportunities, enabling organizations to quickly deploy, motivate, develop, and retain employees. Setting an internal talent marketplace up successfully includes finding the right technology partners and data sources to identify key skills and talent and deploying them into other parts of the organization, according to the Russell Reynolds report. While the advantages to getting this right are undeniable, leadership buy-in continues to be a hurdle. One head of talent advised that educating business leaders on the benefits of an internal talent marketplace, e.g., skill development, talent retention, or higher morale, is a worthwhile effort.
4. Become more intentional about talent development for hybrid workforces: Several CHROs talked about the need to become more intentional about learning and development efforts in hybrid work settings. While some underlined the importance of ensuring that training delivery styles match work settings (in-office, hybrid, or remote), others talked about the need for more purpose-led and DEI-focused development efforts, such as programs on inclusive leadership. The majority agreed that making developmental experiences a part of careers in organizations is critical, and leaders must be held accountable to developing their teams.
5. Use data and technology wisely: After the COVID-19 pandemic began, several CHROs stepped in to redistribute talent to different parts of the organization to maintain business continuity in a fast-changing environment. It is not surprising then, that each of the HR leaders Russell Reynolds spoke with talked about the importance of the right data and technology to support talent management efforts. “The most forward-thinking leaders are gathering and deploying data to inform smarter decision-making or raise red flags on issues before they arise,” the Russell Reynolds report said. “For instance, some are using data and technology to identify and deploy their workforce’s skills effectively to parts of the organization that need them, while others are using it to identify gaps in employee outcomes, such as engagement and inclusion.” One talent leader talked about using bolt-on technology to enhance candidate and employee experience, while another talked about detailed diversity dashboards and integrated insights on turnover, exit interviews and “stay” interviews.
Pragmatic HR leaders understand that leadership models have evolved, and recognize their own role in bringing their CEO and C-suite along on this journey, according to the Russell Reynolds report. Several leaders the firm spoke with are walking the tightrope between differing workforce and leadership expectations on hybrid work, development opportunities, inclusive cultures and sustainability. They are also training their leadership on how to lead distributed workforces, how to have more of an enterprise (vs. siloed) mindset, and how to speak authentically to a range of topics that impact their employees, both in and outside the office premises.
“Ultimately, the most forward-thinking HR leaders must not only design innovative talent strategy, but also bring other leaders along on the journey to think about talent differently,” the Russell Reynolds report said.
Related: Hiring Top Talent in Unprecedented Times
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media