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Essential Tactics for Optimizing Organizational Talent

An Article for The Distributor Board
By Tom Schaul, President, Insight People Solutions 


Why is it so important for a company to optimize employee talent?  
 
In a recent survey of business owners, 89% stated that their top priority was to increase their company's profitability and 76% said their second priority was to increase the value of their company. These two goals can best be achieved through the optimization and management of human capital throughout the entire organization.
 
By taking the proper steps in optimizing your talent, you will significantly improve your people's performance, your company's financial situation, and the value of your company.
 
How does this best apply to the distribution industry?
 
Done properly, effective talent selection and management will improve your company's gross margins.  Improving your human capital, whether by new hires, re-deployment of current employees, or by more effective training and education efforts, will produce better overall results. You should see improvements in productivity and a reduction in errors which will reduce your pick, pack and ship costs.  This will also have a positive effect on customer satisfaction since more orders will ship correctly the first time.
 
Employee performance in average distribution companies falls into the following categories:
 
      16% are under performers
      68% are average performers
      16% are top performers
 
In high performing distributors, the employee performance breakdown has less under performers and more top performers. It just makes sense that this would be the case.
 
By identifying and developing more top performers, you also reduce costly turnover. Having said that, turnover can work both ways. Some companies have too much turnover and others don't have enough. People can become complacent without accountability measures in place, causing both productivity and profitability to suffer.
 
A company's overall success is contingent on the talents of their employees. When a company properly optimizes each employee's talent, they can reduce turnover by 15-20%, increase productivity, and at the same time improve employee engagement.

Why is this fact so important?  Keep in mind, as the job market opens up, one of the top challenges on the horizon for all companies will be to retain their top performers. No one wants to lose their top talent to their competitors and at the same time, all companies are striving to acquire top talent to strengthen their organization. Creating creative compensation programs for this group of people will be one of the keys to the retention. Another critical component of your retention efforts should be leadership training. Statistics show that 85% of employees leave due to a conflict with their direct supervisor.
 
What are the essential tactics or best practices in optimizing talent?  
 
To create a more productive company, one needs to incorporate a strategic workforce plan as a new way of managing their talent. According to research most companies focus their talent management efforts solely on senior executives.  To fully optimize your human capital, employees in all positions should be assessed and considered under the same process.
 
To conduct this assessment properly, you should deploy clear metrics that can be supported by facts rather than subjective opinions. You should use unbiased scientific assessment processes which incorporate key performance measurements. This vital data will give you the building blocks for the development of a comprehensive workforce plan that will help to create top-tier talent. A new strategic human capital plan should include:

A strategic plan with specific goals and objectives.  

An inventory of current employees' talent and experience within the company.  

Assessment of your employees - Do you currently have what you need, to get you where you want to go?

Identification of your current top performers - How to best use them and create more top performers. 

Identification of  the talent gaps that exist.  

Placing the right people in the right positions to fill those gaps based on performance models.

Processes centered on  training, communicating, and developing processes focused on the appropriate retention goals. 

Initiatives focused on training, communication, and development processes to meet the appropriate retention goals.

Investment in current employees through the use of individual management development plans.

In closing, are there any other considerations in optimizing employee talent?
 
Successful companies identify their target customers; the time has come to use science, technology, and data to identify your target employees. Research has shown that success on the job has little to do with experience, age, race, gender, or education, but has everything to do with proper job fit.  In support of that, here are some interesting facts: 
 
46% of employees prove to be the wrong hire within the   first 18 months. 

43% have not been properly educated or trained in the position they currently hold 

67% of those currently employed are unhappy in their current position  

50% of an employee's rating of their satisfaction at work is directly related to their relationship with one's supervisor 

Disengaged employees are 53% less productive than their engaged counterparts 
 
By strategically optimizing one's workforce, you can improve the retention rate of your top-tier talent while raising the level of accountability through the creation of clear expectations with measurable results. Combine this approach with a system of best practices for targeting new hires and you have a formula for success!
 
The bottom line: The better your people are, the higher your profitability, resulting in an increase of the value of your company!

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