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Why leaders should put more effort into developing their employees

Jobs are very much on the agenda in the U.K. this week. In a reminder of just how inter-connected the world economy has become, it is likely that yesterday’s good news on unemployment – the jobless rate was 5.1% in the three months to November, the lowest since the three months to October 2005 – will be overshadowed by the redundancies announced at what remains of the country’s steel industry, which come on top of the previously-signalled job losses in the North Sea oil industry and are, like these, not unconnected with the economic difficulties in China. And all this at a time when politicians are proposing curbs on skilled migrant workers that business leaders say will impose extra costs on them and dampen economic growth.

We should not read too much into the events of a few days in the business world. Nevertheless, there does appear to be something of a change in the wind regarding attitudes to employee training and development as opposed to talent buying. The Open University, the longstanding distance-learning institution, points out that, while the latest employment figures reveal that there are 588,000 more people in work than at this time last year, there has been a 6% increase in the number of unfilled roles over the same period, meaning that there are now 756,000 vacancies.

The organisation says this ongoing shortage of skilled workers is increasingly causing concern for businesses, which fear it will cause delays with developing new products and services. In an indication of the shift in mood, Steve Hill, director of external engagement at the university, says: “In most cases, the answer to this shortage is right under our noses.” With the appropriate training and development, people already in work can become the engineers, data scientists and high-skilled digital workforce the UK needs to compete on the world stage. He adds: “The challenge now is for governments and the academic sector to work together to develop courses that meet the needs of businesses, and provide the right support for those committed to developing their careers.”

Nor is he alone in this belief. A survey just published by the consultancy Mercer indicates that 73% of employers around the world are planning to continue with their current strategy of “building” talent from within their organisations rather than “buying” talent from the external marketplace. Kate Bravery, partner and global solutions leader for Mercer’s Talent business, says: “Attracting and retaining the right talent continues to be a challenge for companies as a result of the competitive job market, flat compensation budgets, shortage in critical skillsets, and a constantly changing business environment. Employers recognise that their employees are the key to success in today’s global economy. By focusing on developing and outlining career paths, they can influence employees’ growth potential within the company, improve retention efforts, and cost-effectively develop a workforce that contributes to higher business performance.”

Meanwhile, research by another consultancy, the people management business Penna, has found that organisations are at risk of losing key talent by failing to recognise their potential or doing insufficient to develop it.  It found that only 13% of employees described their organisation as doing a lot to recognise potential, meaning that valuable talent had either gone to waste or left the business.  Nearly three-quarters of employees surveyed said that they would be more likely to stay with an organisation that recognised their potential, yet nearly a quarter had no idea whether their company thought they had what it takes to succeed.

Lesley Uren, talent expert at PA Consulting, agrees that there can be a tendency for organisations to fall into the trap of thinking they do not have to worry about developing the people they have got because they can always find more outside. When the economy is expanding this can create problems – hence all the talk of talent wars – but, as Uren points out, even in recessionary times there can be skill shortages.

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She believes that one of the factors that has shifted organisations away from developing people is the perception of the changed expectations of the generation of workers currently in the early stages of their careers. It is generally thought that these employees are less interested in traditional careers and in being loyal to one employer. However, their desire for different experiences and for greater flexibility does not necessarily mean that they cannot stay with an employer. Professional services firms, such as PA, find it comparatively easy to offer employees these different experiences because they are essentially project-based, she accepts. And she also agrees that this is possibly one reason why they are so popular with graduate job applicants.

But there is no reason why other employers cannot adopt something of this approach. After all, their leaders are constantly talking about how even their work is becoming more like projects, with teams forming and then moving on to other things. With technology making many businesses increasingly co-dependent on each other, there is no reason why employees could not build up experience by moving between different organisations. The employees would benefit by gaining different experience and new skills while staying fresher than if they stayed in the same limited role, while the organisation would gain by having their different perspectives. Businesses that were able to make such an approach a reality could become “magnets for talent” Uren believes.

Keeping more junior employees happier and more likely to stay with an organisation can obviously help improve the levels of engagement – a concept that attracts a lot of attention from senior executives but is notoriously hard to achieve – but it can also have long-term benefits in terms of producing leaders. PA has conducted research that shows that in organisations where more than half of appointments to operating board positions are internal there is a far greater shareholder return over a five-year period than where there is not.

Now that is something for all those human resources professionals looking over the next hill or – increasingly – over the border for the next ideal candidate to consider.

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