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You and everyone else are competing for top talent-so what should you do?

Talent management has become much like trying to fill a bucket with a hole in it. According to Vistage and our clients at TalenTrust, more than 70 percent of small to medium-sized businesses plan to add headcount this year. While you're out there competing for new people on the market, 71 percent of your existing employees are busy looking for a better opportunity says the Society for Human Resource Management. Smart employers are developing new strategies to find and keep their people. Two of the most interesting strategies I’ve seen to overcome these dual challenges are: switching your top priority to retention over recruiting; and doing more internal, home-grown hiring. Both strategies are worth a closer look.

Win new people by keeping the ones you have

Joe Galvin, Chief Research Officer at Vistage, puts it like this: “While adding headcount is essential to growth, retaining, developing and engaging existing talent is critical.” Because high performers prefer to work with other high performers, putting your focus on retention “sets the foundation” for finding the right people to join your team down the road. Many factors impact retention, and none more than culture.

Culture is the overriding issue for today’s up-and-coming workforce; the opportunity to grow professionally is one of the defining factors that employees look for from their organizations. An engaging culture today goes beyond the obvious things that the best companies have always offered, like paying competitive salaries and offering generous benefits.

Employees today want you to see them as “whole” people and support them in achieving their personal work-life balance as well as their professional goals. You can support them in a big way by ensuring that training and development of all kinds permeate your culture. Employers have forever dealt with the conundrum, “What if we put all of that money into training and they leave?” versus “What if we don’t train them and they stay?” You can now put these questions behind you. Just train them!

Employees also want purpose, respect, fairness, flexibility, and transparency from employers—things that too few companies have defined as cultural values and have not traditionally considered part of their recruiting and retention efforts. Employees’ expectations around workplace culture have already changed. In order to stay competitive, organizations should make sure they stay on the same track as their employees.

Continually evaluate your culture; get feedback from employees about whether you’re giving them what they need and want; and make the necessary changes (or provide a good explanation as to why you can’t) to ensure that your people are fully engaged at work. People are looking for a cultural experience that’s as much, or more, about how it makes them feel as it is about how much they get paid. Make them love to come to work, and you’ll create your best source for top talent: referrals from current employees. Employee referrals are gold to your business, especially in reinforcing the culture you’ve worked hard to develop.

The pros and cons of hiring inside and out

There are three costly results when your people are recruited away or quit for whatever reason: lost knowledge, lost productivity, and the resources it takes to recruit and train a replacement. When you invest in training and development you boost your employees’ skills and productivity, and increase the likelihood they'll stay with you. You also help convince more top talent to join your team by demonstrating a culture supportive of employee growth and opportunity. So, when should you promote from within, and when is it best to hire from outside?

A rule of thumb is that you should hire from outside your company in unsettling situations like turnarounds; during major strategy shifts when current employees may feel threatened by change; or when the skills you need are not available within your organization. Recruiting from the outside can bring in fresh ideas, diverse perspectives, and innovative approaches as well as new or specialized skills. Conversely, you cannot be certain that external hires fit into your culture or will perform as expected, until after they’re hired.

Hire or promote an existing employee when your company is thriving (why rock the boat?); when you have an evolved culture embedded with training and development and succession planning; if the position requires company- or industry-specific skills; and if you have the right talent to draw from. The benefits of home-grown hiring have convinced many businesses to look internally first.

One important reason to recruit from within is that it’s usually a faster and cheaper process. Another is that current employees are known quantities: you understand their strengths and weaknesses, know they fit culturally, and see that they can succeed in your environment. Maybe the most important reason to hire internally is that you are demonstrating support for your employees, creating an engaging culture that gives employees something highly valued: new challenges and opportunities.

The Upshot

Given our increasingly low unemployment rate and competitive environment for winning top talent, it’s critical that you both find and keep the people best able to help you succeed. This quote says it all: “Remember there’s a difference between somebody who wants you and somebody who’d do anything to keep you.” ( Your employees know the difference. Show them that you do too.

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