Discussion around the aging workforce has continued to build over recent years as the baby boomer generation retires. According to the Bureau of Labor Statistics, 3.6 million more people are projected to leave the workforce during the 2010 to 2020 time period, in comparison to the previous ten years, “mainly as a result of aging and retirement.” Businesses across all industries, including distributors, will be affected by this shifting demographic. As a disproportionate number of skilled employees leave the workforce, how can companies find and keep top talent to replace tenured workers?
A large number of retiring employees poses several issues for distributors. Foremost, multiple open positions sustained over a substantial amount of time places a significant burden on distributors’ human resources (HR) departments. Recruiting and identifying ideal job candidates, conducting interviews and then making offers requires a significant amount of time and manpower. The longer it takes to fill an opening, the more likely it is that other employees will become hampered by extra tasks to compensate for missing manpower, which negatively impacts productivity and efficiency alongside employee satisfaction. Another point to consider is that established HR processes may prove to be ineffective, as they were not designed to accommodate such a large number of individuals leaving and joining the company’s workforce simultaneously.
In order to address these challenges, distributors should consider implementing a new technology strategy that will help them to evaluate existing procedures and standardize, consolidate and streamline new practices for recruiting and retaining top talent.
A New Solution
Just in time to accommodate the aging baby boomer population, solution providers have unveiled a new genre of human capital management (HCM) technology identified as talent science. Although job experience and skills are important when selecting a new hire, these attributes are not the sole predictors of an applicant’s success. Just like every company and position is unique, a candidate’s unique personality and behavioral makeup weigh equally as heavily on their ability to effectively fill a position. Talent science applications provide an opportunity to assess these internal preferences and core behaviors to determine which applicant is the best fit for both the job and the company.
Initially, the talent science platform is used to assess the incumbent population’s behavioral styles and characteristics. Results are then compared to performance metrics to identify which internal preferences define success. This enables the creation of a prediction model, allowing distributors to objectively identify applicants that are best suited for a particular position based on their responses to the initial evaluation. Each job is different and therefore requires a unique combination of results. For example, research has shown that successful account executives tend to be more flexible and energetic in order to successfully interact with customers, whereas a warehouse manager position would typically require more attention to detail and less sociability. By asking candidates to complete the talent science assessment at the beginning of the recruiting process, companies can narrow the pool of applicants using not just a checklist of skills, but also a proven scientific formula that relies on a combination of big data and analytics. By first creating an ideal profile, and then comparing future applicants using the system’s assessment tools, distributors can establish a degree of fit to help them capture the candidate with the highest performance aptitude.
Utilizing talent science technology can help distributors build a sustainable workforce comprised of individuals who are the best fit for their position and the company. This facilitates increased productivity and efficiency, and can lead to greater employee satisfaction.
From a financial perspective, a talent science application can generate cost savings by decreasing employee turnover levels. Each time an employee leaves the company, it creates extra expenses such as the hiring of a third-party recruiter or compensating team members for overtime spent handling the former employee’s tasks. According to the Society for Human Resource Management (SHRM), direct costs to replace a member of the workforce can “reach as high as 50 to 60 percent of an employee’s annual salary, with total costs associated with turnover ranging from 90 to 200 percent of annual salary.” Increasing retention both mitigates these costs and minimizes disruption to daily operations, helping distributors to avoid potentially expensive downtime. Talent science also gives companies a framework from which to evaluate existing HR processes by providing a holistic view of the employee lifecycle. With a unified system for hiring, onboarding, coaching and career planning, a robust talent science application can become the starting point from which organizations establish new, more efficient procedures.
A multitude of different roles comprise a distribution company’s employee base, which makes correctly matching the right person with the right position often seem like a daunting task. When faced with the possibility of replacing a significant portion of their workforce over the next few years, distributors can no longer rely solely on “gut feeling” hiring or resume scanning to make the best decisions. Companies should consider talent science to increase the likelihood that they will hire happy, productive employees who will remain with the company for a significant amount of time. By creating a workforce of satisfied and tenured individuals, distributors can not only save time and money, but also create a competitive advantage by differentiating themselves with a top performing workforce.