Many organisations fall at the first hurdle; making the distinction between high performance and high potential.

High performance can be measured against clearly defined goals and objectives that exist today. High performers deliver tangible results, are star performers in role, have expertise in a technical or functional discipline and see their careers thrive in a meritocratic organisation. So how is this different from high potential?

HiPos usually sit within the top 5% of talent in an organisation and can be clearly recognised as those who deliver game changing performance time and time again in a wide variety of circumstances, display broad acumen of the company business and contribute to the organisational strategy whilst living out their company’s values. They are characterised through more rapid career growth than their peers, spurred on by their drive, entrepreneurial thinking and mastery of emotional intelligence.

So are the high performers of today the high potentials of tomorrow?

Not necessarily.

An emotive debate and one that the most forward thinking talent centric organisations are set to tackle with not only the current but the long term future goals of the organisation at forefront of mind.

As organisations set out to increase the number of HiPos in their business against an uncertain backdrop where required “skills for the future” are still unknown but the challenges ahead couldn’t be more clear, we are seeing a shift away from technical skills and past performance as key hiring criteria and a renewed focus on the behaviours, traits, mental agility, emotional intelligence and embodiment of company values as selection criteria to meet the business challenges of tomorrow. Investments are being made not only in internal HiPo programmes (coaching, rotational placements and simulated situations) likely to leverage and convert the potential of current high performers but also in external programmes specifically targeting the HiPo talent of direct and indirect competitor organisations with particular focus on top MBA schools as a key source.

How organisations will measure the return on what they invest in these programmes remains to be seen but for now all they know is they can’t afford not to.

Good first impressions lead to increased retention and productivity, which is obviously good for a company’s bottom line. Employees start building first impressions the minute they make contact with a company, so it is important to start the onboarding process as soon as an offer is accepted. You need to make absolutely sure that your new hire feels welcomed, valued and prepared to do his or her job. To ensure your company gives new hires the best first impression possible, you should:

• Be ready for the new hire – What kind of impression will employees have if when they show up on their first day nothing is ready? Email isn’t set up; their new workstation is a mess; or paperwork they need to sign isn’t ready to go; all of which will leave a bad taste in their mouths. Make sure everything is ready on day one when your new hire starts. It not only helps in forming a positive opinion about the company, but also helps them become productive members of the team faster.

• Automate the administrative end of the onboarding – What’s even better than having paperwork ready for employees to sign on the first day? Having no paperwork for them to sign. Automate the process and go paperless, this way new employees can fill out all paperwork before the first day and hit the ground running.

• Immerse your new hire in the company culture – Get new employees feeling excited to be a part of your team. Let them know about the company’s policies and rules, and introduce them to co-workers that can help them get a better understanding of what the company is about.

• Make new employees feel welcome and valued as key players on the team – Make sure your new employee is included on meetings and is giving material to familiarize themselves with your business. Make a plan for someone to eat lunch with on the first day so they start feeling they’re part of the team and walk them around the office.

• Give them time to get situated and familiar with their new jobs – Don’t just go throwing new employees into “do or die” situations. Ensure they are giving proper training and not left feeling overwhelmed or confused.

As the saying goes, you never get a second chance to make a great first impression. Don’t miss your opportunity to engage your new hire and secure a loyal employee.

We would like to thank Jon Holden, Director at Silkroad this great guest blog.

The problem is this: unstructured interviews, where people trust their intuition to make hires, have almost the same ‘predictive validity’ (the chances of selecting someone for the job who performs well) as tossing a coin. Oh dear. So how did we all come to trust our intuition in the first place? I mean, given that most of us have endured strings of failed relationships after selecting completely inappropriate partners at various points in our lives, what makes us think we’re better at selecting people to be an accountant (or whatever)? Hasn’t experience taught us anything? Well, don’t worry too much, its human nature, and we don’t know any better. Studies have shown how people consistently over-estimate their own ability to make effective decisions. No-one likes admitting they’re a terrible judge of success in a given circumstance (least of all me).

But then I have had the benefit/curse of inhabiting the curious world of the assessment professional, which taught me very quickly the error of my ways. The chances are, if you ask an Occupational Psychologist ‘are you a great interviewer?’ you’ll get a mumbled response and a bunch of further questions. What kind of interview? What do you mean? Define what ‘great’ is? …etc. The thing is, a truly great interviewer is rather like an unemotional machine. An interview-dalek, if you will. Actually, if you could programme a dalek to ask behaviourally anchored questions and score people on a structured rating scale using objective evidence, they would be pretty close to what we understand the ‘perfect’ interviewer to be. Just remove the death-ray thing before putting it front of candidates.

Organisations globally are working extremely hard to put values at the hearts of their businesses in order to try to meet the demands of growth, scarcity of skills, changing markets, increased competition etc etc etc. Aligning talent programmes to business goals, with people the key to achieving short, medium and long-term ambitions, leaders have had to live and demonstrate values like never before, with their most critical business partner; HR.

On September 14th Ochre House hosts its annual symposium at Wentworth and this year it covers the topic: “Re-defining Business Value through a Talent Centric Approach”. For the first time we have business leaders joining with HR leaders, as the two have come to work inextricably in those organisations that are leading the way in aligning business strategy and talent.

We have heard that Newspapers have struggled, are perhaps outdated with the advent of the internet, but is it such an archaic industry that the leaders can behave like luddites? I think not, and I sincerely hope the NI staff vote with their feet.

We already all know the reasons why direct hiring is key- protecting your brand, managing candidate experience, improving retention, reducing costs of resourcing… I could go on! But we also know that you can’t do without good agencies that work as partners and are still an essential channel in attracting new, niche, external talent. Your PSL is a key partner relationship so manage it carefully, within clear parameters, with clear communications agreed. Or risk paying the ultimate price!

And there is plenty of evidence to suggest that HR is still not helping itself. As Penny Davis, People and Talent Director of Balfour Beatty stated, referring to “the business” as if you sit outside it is not a good start! If HR is yet to overcome the legacy perception that it is providing HR services to support the business (and not a strategic partner) then it has to convince “the business” of that by being bolder and investing a great deal of time in developing the partnership and amongst many things, building expert local knowledge. “The business” won’t come to HR; HR must go to “the business” and start to demonstrate the value it brings. Finding the time? Strategic partnerships are obviously a great way to bring in expertise and bandwidth, but otherwise be prepared for the long haul.

The European people landscape up close is far more rugged and difficult to navigate and if it feels like the business doesn’t get it yet, or at least doesn’t see the value then there is only one answer: Get out to the business fast, because until they see the value then transformation across Europe cannot be realised and will cost the organisation competitive advantage.

Business has become global and skills are desperately scarce.  One of the results of this is that businesses are investing in Talent Management programmes that are global and very much future-focussed. Leading organisations are recruiting more and more on values and behaviours, investing large amounts of money in programmes that maximise internal mobility both sideways and upwards, and dreaming up more and more innovative ways of creating working environments that keep people in the business, whilst attracting the best of new talent.  If you are good, then you can almost map your own career path within one single organisation.

The result is that the best talent is really NOT on the move.  Jobs have become “partnerships” between employer and employee with clear mutual benefit, and with transformation ever-present the internal landscape for many employees is looking more and more exciting.

So if a candidate is looking to leave a growing or stable organisation after 2-3 years, then why?  Over the next few years it might not seem so crazy to view 10 years service as a sign of real quality.

Where was HR during the crisis? If HR is truly strategic and business partner, where were we when the going got tough?  Why do I argue this?  Whilst it is true that the culture and values of an organisation are set by the CEO, HR can play the role of ‘critical friend (the parrot on Long John Silver’s shoulder). If we are truly playing the role of conscience to the organisation, than we need to have evidence and data to influence the debate.

Let’s look at the reward framework for an organisation; HR can play the role of strategic and advisor and able to execute the policies. In the case of banking, for years there has been evidence that paying higher and higher bonuses does not encourage the right behaviours, nor necessarily retain top talent. But in Investment banking the argument has been lost. Does it now seem like a failure that government is now at the centre of the debate and potentially setting the agenda? Is this a function of the lack of influence HR has in an organisation or that the Banking giants really are out of control and need greater regulation?

If we leave it to government to set the terms of the debate, HR will once again be forced to play the role of reluctant executioner and be given a back seat in business.

In recruitment we can set recruitment frameworks and targets that ensure diversity, values and inclusion are better tested, measured, to ensure that outcomes are changed and inform better decisions. L&D can measure the changes in output and behaviours from certain interventions and outcomes. So does HR hide these factors from the business? Are we really forced to be on the back foot forever – because we really don’t add value?

Where HR departments have not only embraced metrics but used the analysis to influence the debate is surely the way forward. If business likes to use numbers to manage the business, why not HR, in managing themselves?  If we were measuring the number of disciplinaries, tribunals, grievances, and set targets to reduce them, we might get to the root cause of the problem and begin to tackle underperforming managers, systemic victimisation and improve engagement and ultimately output and productivity.

Had these principles been applied, might we have avoided the banking crisis? Maybe not but….It’s food for thought…

Our guest blogger this month was Jon Hull, Resourcing Manager at Electrocomponents plc. Thank you for your great insight.

Furthermore, in April, IBM predict that their current employee based would be reduced to 1/3 of its current size by 2017 through contingent labour and the concept of crowd sourcing.

Why the growth in contingent labour? Business leaders usually cite three reasons:

1. It allows access to expertise quickly, especially that which is difficult to recruit. This is especially true with professional level contingent labour which may be substitutes for consulting organisations.
2. It enables flexibility in the labour cost base; by being able to turn resource ‘on’ and ‘off’ as required. However, this is more a theoretical benefit as the loss of knowledge can be a challenge in many organisations. Furthermore, the replacement of a relational commitment between employee and employer with a transactional one between a supplier and customer can actually reduce organisational agility; ‘suppliers’ are less likely to buy the vision and go the extra mile.
3. Overall costs can be reduced – especially true in labour arbitrage plays where the contingent solution may actually be achieved through business process outsourcing.

What’s the implication for talent?

So what does the rise in a contingent workforce mean for the individuals? In my view, there are three key factors:

• Individuals will increasingly need to understand and communicate their value to prospective customers. As mini enterprises, every individual will need to have a clear value proposition and be effective at communicating this to their target market.
• Depth of expertise will be increasingly valued. In order to differentiate from the crowd, individuals will need to demonstrate a unique selling point and this will increasingly be realised through their expertise. This can only be a good thing for individuals (who will have to constantly reflect on and build their strengths) and organisations (who will benefit from this higher level of expertise).
• Career development becomes an individual’s problem. Building on the theme above, individuals not organisations will take responsibility for development. Whilst this may take a cultural shift (especially in organisations that have struggled to modernise their HR practices) it does ensure individuals maximise value from the development (wouldn’t you if it was your own money?).

Good or bad?
So as an employer or employee, how do you think the rise of the contingent workforce will affect you?

The best organisations can clearly articulate their recruitment cost as a ‘cost per hire’ or ‘cost as a percentage of salary’. The second, more perplexing question is ‘how do you measure it’?

Most organisations will include the cost of recruitment agencies (the predominant source of the cost). Some will also include advertising, travel costs and the cost of the recruitment team but few will go beyond this, which can be a mistake.

Our research uncovered that more than 50% of recruitment costs are indirect. This predominately includes the cost of hiring managers and HR’s time in the process, which is an important role. However when managers are conducting 10 interviews for each hire, it’s easy to see how the costs stack up (we calculated the Hiring Managers time usually cost on average £2500 per hire). Whilst business leaders accept that interviewing is an integral element of a manager’s job, those who are directly revenue generating / working on billable hours will soon resent the cost of the lost earning opportunity. However the indirect cost in only the ‘tip of the iceberg’.

What isn’t measured can’t be managed!

Many organisations will rely on contractors / contingent workers to support their operations. However, a number will also use a contractor as an alternative to permanent recruitment and this is where the costs really mount up.

Firstly, we need to explore why managers choose the contractor route over permanent. Our research uncovered two key reasons:

- Headcount approval – usually hard to achieve for permanent hires but surprisingly easy for contractors

- Talent availability – managers frequently comment that it’s easier to secure a good quality contractor over a good quality permanent employee

Back to the costs; let’s assume most contractors charge a 30% premium to their equivalent permanent salary and that an agency margin adds another 20%. On average therefore the cost of recruiting a contractor over a permanent can easily be 50%. And if the contractor stays for many years so does the cost. Our analysis suggests that the margin paid to contractors can be upto 5 times their annual spend on permanent recruitment. Add in the premium contractors charge and most organisations will be wasting many millions. If that wasn’t enough, many organisations are poor at tracking their contractor headcount.

We’ve undertaken numerous projects with customers to help assess and understand the true cost of contractors. In a recent engagement we identified that the actual number of contractors was 300 percent that which the client was aware of. In monetary terms, over £60million was been spent on contractors which the business was unaware of; £20m of which was as associated with the contractor premium and agency margin.

Brining this analysis through to its logical conclusion, we can see that the organisation was spending £20m on recruitment which it could have saved.

This begs the question; do you really know what your cost of recruitment is?