Yes, we’ve all heard it before from companies: “Our people are our most important asset.” If that’s the case, expenditure in developing people should be relatively close if not at the top of the investment list. But the sad truth that’s not usually the way it goes. In fact, many organizations make little or no investment in talent management programs. And, if there is occasional spending, it’s typically done on an ad-hoc basis. And that’s simply a big shame because research shows that there is a direct relationship between talent practices and improved financial performance.
For instance, within the financial services industry there is a strong correlation between employee engagement and business growth. According to Deloitte, one major retail bank found that a 5% increase in employee engagement led to 3% increases in customer loyalty and shareholder value. Tower Watson’s three-year study of 41 multinational organizations found that companies with high engagement levels had 2% to 4% improvement in operating margin and net profit margin, whereas those with low engagement showed a decline of about 1.5% to 2%.
Furthermore, some research indicates that a credit union’s growth is almost 100% correlated with the caliber of people it hires. Needless to say, this reinforces the need for organizations to hire the right people for the right jobs and keep them motivated, satisfied and engaged.
According to Deloitte’s study, “financial institutions and securities firms can generally ‘develop’ their workers by providing them with active learning opportunities, ‘deploy’ them by designing effective organizational environments, and ‘connect’ them by creating infrastructure to foster collaboration. As these demands increase, supply is short. Additionally, attrition among U.S. customer-facing retail bank staff is significant, with one in four of these employees needing to be replaced annually. This is a particularly concerning statistic, given the strong link between employee engagement, or the extent to which such staff commits to an organization, and customer loyalty.”
Employee engagement is key to achieving positive financial outcomes. However, boosting engagement and reducing turnover can be an expensive order given some of today’s labor challenges, which include an aging workforce, generational differences and increased competition for talent. When it comes to overcoming these challenges, talent management practices play a pivotal role.
Baby boomers have begun to exit the workforce, taking with them years of knowledge and invaluable skills that have taken a work’s lifetime to hone and perfect. Without good succession plans in place, some credit unions might find themselves hard pressed to identify and groom strong leaders.
Rather than waiting until a valuable member of staff retires or suddenly leaves, thereby creating a talent gap, managers should implement employee development planning well in advance. This ensures that someone with the right leadership skills is always on deck ready to take over. Here are the steps involved in effective leadership development planning:
• Identify the kinds of leadership skills the company needs.
• Identify employees with those skills.
• Develop an incentive program to interest and motivate them.
• Invite staff to participate in employee and organization development planning.
• Use training and mentoring to prepare employees for leadership roles.
At 70 million people strong, Gen Y is not only fastest-growing workforce segment but also the generation most firmly entrenched in frontline roles. A lot has been written about Gen Y but, suffice it to say, it’s a group that responds to different engagement drivers than previous generations. According to Filene Research Institute, compensation is important, but other high-ranking drivers include opportunities to innovate and be part of a positive and caring work environment.
Whether you’re dealing with boomers, Gen X or Gen Y, investing in talent management can boost engagement, reduce turnover and establish your organization as an employer of choice.
Address employee drivers of engagement such as need for ongoing feedback and recognition, opportunities and support for development and career progression.
Identify high-performing and high-potential employees so you can put specific retention strategies in place for these employees.
Identify knowledge, skill or experience gaps in your organization and put development and recruiting plans in place to address them.
If you plan or rather want to be around in the future, the talent-management-on-an-ad-hoc-basis approach simply won’t cut it. Your organization needs to implement best practices and strategic talent management planning now to ensure you have the top-talent today and in the future to drive the best outcomes for your credit union.
Karen Knox is the regional manager, financial services for Halogen Software.
Contact 613-270-1011or firstname.lastname@example.org