The era of the ‘Great Resignation’ has drawn to a close as companies explore strategies to weather recessionary pressures in markets around the world. Having been engaged in a war for talent for the past year or so, financial services institutions may again be forced to contemplate a downsizing of their workforces.
During the Great Resignation, and throughout the past two years of a rapidly changing ‘new normal’, the expectations and priorities around talent has seen some dramatic shifts. Employees are valuing work life balance and flexibility above salary. Managers are seeing a more ‘human’ side to their employees, with dogs and kids and artwork in the background of Zoom meetings.
While the future may not be an out-and-out ‘employees’ market’, with individuals feeling confident enough to leave their job without a new offer in hand, there are lessons to be learned regarding the employer value proposition and what people are looking for in their careers. Changing macro environments may mean there is not the same competitive demand to enhance the employer value proposition in order to acquire or retain talent. But does that mean we should let employee-related considerations fall by the wayside?
How do we maintain a focus on mental health, work life balance and empathy as we build the workforce of tomorrow? Equally, how do we balance employees’ desires with the tough decisions companies must sometimes make around workforce optimization? What does this all mean for employers who are still catching their breath from the past two years of pell-mell pandemic-induced recalibrations?
Certainly, novel approaches to talent management, performance measurement and training will be required to ensure a resilient workforce is equipped to meet emerging opportunities and challenges, whatever they may be. Here then are some key considerations when building a future workforce ready to weather times of change.
WORK IS CHANGING, BUT PERFORMANCE METRICS ARE LAGGING
It is understandable that an organization wanting to get full ‘bang for their buck’ from the employees that they’ve hired, retained and engaged will look at which individuals are adding value versus those who are not.
However, if you are looking just at individual performance, you may be missing the bigger picture and potential opportunity for your people and organization. Particularly if you are measuring against legacy criteria incorporating ‘old school’ job descriptions and skillsets. The blunt tool of merely dispensing with the bottom 10% of the workforce based on your last performance cycle is arguably an even less optimal strategy in the context of fast-evolving customer expectations.
The way we approach organizational design/redesign and the target operating model must be more holistic and people focused. If you are evaluating a change to the way a team is structured, why not take a moment to pause and look at what is or is not working in terms of the structure itself. Are you organized by region? By functionality? By product? What is going to be optimal to ensuring teams can meet their goals?
This will require leadership to directly address the question of what these teams are trying to achieve. What targets have been put in place? Is the structure set up to successfully deliver that outcome? This way a review of your current org chart is not about how you can reduce headcount and workforce costs, but rather considering broader strategic moves and identifying opportunities to improve outcomes and surface efficiencies. It comes down to clearly understanding the difference between the performance that is needed today, and the performance required tomorrow.
To cite a recent example, where Capco worked with an asset manager with USD2 trillion assets under management who had recently acquired a company almost equal in size. The Capco Talentology team worked with the joint leadership team to review the structure of the newly formed Marketing team. There were redundancies across roles, ineffective spans and layers, and very different ways of working.
In determining the new organizational design, we looked not only at potential cost reductions, but working efficiencies and impacts through automation and team structure. Pivoting the teams from a regional model to a product based ‘pod’ style model put subject matter experts closer to the business, as well as presenting opportunities for generalists to have meaningful career growth through being embedded in the pod and advised by a community of practice.
The result was not only USD20 million in cost savings across what was a 1000-strong division, but also increased levels of customer service, enhanced collaboration, and the retention of employees with the necessary skillsets to adapt and change in parallel with the company’s own evolution.
BEYOND PERFORMANCE METRICS: IDENTIFY AND INVEST IN HIGH-POTENTIAL EMPLOYEES
In our work we are seeing a many clients moving to embrace agile or shifting from project management to product management. We know those are fungible skillsets and there can be a learning and change plan to create success in that transformation. When you’re assessing your employee, you are ideally not just looking for evidence of how they previously performed a skill that may soon be outdated – rather, you are looking for the people who are able to learn and grow with the organization.
An important aspect when assessing your workforce is figuring out what a high potential employee looks like. What are the sought-after behaviors and the observable outcomes? If you are not defining those, there is a real risk of bias towards those who may just be extroverts, or who have confidently had a seat at the table for years and years. This may be detrimental – potential must be based on measurable outcomes and not just gut feeling.
Redefining what performance and potential look like at your organization should not be a “one size fits all” solution. Performance should be evaluated by the impact to the business, and therefore needs to be connected to your business strategy. Potential is connected to the desired mindsets and behaviors and therefore needs to be connected to your company culture. This outlook towards career growth should be personalized and relevant to your people and your business.
In defining performance metrics, our Talentology team works with company leaders and employees to understand the unique needs of the business, balanced by externally-facing benchmarking of what is working well (or not) in the industry. We look at the technical skills needed to competitively perform the task at hand, as well as the soft skills that will help your company grow in the future. We work to understand what motivation looks like in your organization, and the unique elements of your culture that should be measured and incentivized.
If performance management does not evolve alongside skill and behavior requirements, you risk falling foul of Kerr’s Folly1 – rewarding for A while hoping for B. For example, if you are asking your support teams to be more customer-centric, you cannot have a performance management process that only measures – and hence incentivizes – efficiency. Support teams should instead be incentivized to resolve issues and create positive customer impacts, not focus merely on a speedier resolution. If you are looking for teams that can adapt to changing technology, learning agility, creativity and intellectual curiosity should be rewarded in addition to technical proficiency.
This is especially important since, given careers no longer only go ‘up the corporate ladder’, career development frameworks need to reflect this new reality. Remember the Wonkavator in Willy Wonka & The Chocolate Factory? “Elevators only go up – the Wonkavator goes up, down, sideways and every other which way you can think of going”. Similarly, in addition to upwards progress employees are looking for lateral or diagonal movements that enhance the depth and breadth of their experience, and for new roles that may not be feature in a traditional ‘school job fair day’.
Your performance framework should offer sufficient guidance so that employees understand how to meet and exceed expectations, but not be so prescriptive that it limits a more personalized meaningful career path for team members. To this end, we take a top-down, bottom-up, outside-in, and inside-out approach to co-design your talent and culture strategy.
As you focus on maintaining a competitive advantage when hiring or drawing up retention plans, keep in mind those individuals whose learning agility and intellectual curiosity will allow them to keep up with your organization’s change trajectory. From there, it becomes a matter of figuring out how you can best reward and incentivize those soft skills and behaviors with a view to enhancing creativity – and the value placed upon it – within your workforce.
1 On the Folly of Rewarding A, While Hoping for B” Steven Kerr Ohio State University