In the olden days – think 10 years ago! – the search for talent was a straightforward affair. Not anymore! In the wake of the economic recovery and demographic shifts, companies in many global markets have gone from posting ads and passively waiting for résumés to struggling to fill job vacancies. The competition to attract and retain talent is especially steep in sectors like IT, engineering and health care, sometimes leading to a backlog of open positions.
The talent-deficit challenge is especially pronounced for SMEs and firms located far from major hubs, like many of Germany’s Mittelstand. With an aging populace and shrinking working-age population, Germany is suffering from widespread labor shortages, prompting the government to come up with new policies to keep people in the workforce.
In this new landscape, does it make sense for companies to continue to use traditional recruitment methods, focused primarily on remuneration packages and matching specific skillsets? A new approach is needed, according to Sebastian Reiche, Director of Managing People in Organizations at IESE Business School.
“There are a number of recruiting and retention strategies, but some, like higher salaries, pay raises and promotions, might only succeed in the short term,” says Prof. Reiche. “Companies need to ‘break the frame’ and broaden their perspectives when it comes to formulating candidate profiles and building their workforce. In this regard, Prof. Reiche urges firms to take steps to avoid employee turnover by ensuring that new hires support the firm’s culture and underlying values.
Indeed, organizations pay a hefty price tag when they take on employees who don’t mesh with the corporate culture, including weaker job performance and toxic work environments. On the contrary, when employees align with the corporate culture, a virtuous cycle ensues: they perform better, report higher levels of satisfaction and stay with the company longer.
“Firms will boost business outcomes if they embrace a holistic, long-term HR strategy,” advises Prof. Reiche. “In today’s market, HR decision makers need to be open to new hires who might not completely match the job criteria, but who fully support the firm’s core values. In terms of retention, it means staying finely attuned to what drives employee satisfaction and offering sought-after benefits that are harder to find in other firms.”
Human resource strategy is one of the core leadership areas addressed in IESE’s top-ranked Program for Management Development. IESE’s Munich campus will offer this part-time executive program starting in February 2020.