The last decade has seen companies around the world racing to bring new talent into their businesses. In an era of ultra-low interest rates and a comparatively rosy economic backdrop, making the case for new hires was much easier.
In 2023, that’s all starting to change and this ‘more is more’ approach to hiring has become increasingly difficult to justify. That means businesses everywhere are searching for new ways to get the skills they need. For many, that means moving from a strategy of talent acquisition to one of talent activation. So what does that mean for people teams and their employees? And what does an effective talent activation strategy involve?
➡️ From acquisition to activation
So what exactly is talent activation? According to author and business management expert Marcus Buckingham, it means “taking human potential and turning it into performance.”
On the surface, that might seem like a simple concept: to get the absolute most out of your employees. But as soon as you start digging beneath the surface, talent activation is much more complex than it might first seem. Done right, it involves a whole range of strategies, including learning and development, performance management, employee progression, and internal hiring.
So what does all this have to do with external talent? The logic is simple - the more you can get out of your existing employees (both today and in future), the less reliant you’ll be on a volatile external talent market in the long run. It’s all about empowering the individual contributors of today to become the managers and executives of tomorrow.
In the short term, this is a clear reaction to economic pressure. But in the long run, growing your own talent internally has the potential to be much more effective and sustainable. Research suggests that external hires cost about 18-20% more than internal ones, and are also more likely to leave the company over time. It can also take as much as six months for a company to break even on the investment they’ve made in a new hire.
Talent activation also leads to a happier, engaged, and more productive workforce. In fact, as many as 94% of workers said they’d consider staying at a company longer if it invested in their career development. It’s not difficult to see why: if a company invests in your future, you’re much more likely to stick with them for the long haul. So, long story short: talent activation pays dividends over time.
📈 Effective talent activation in action
For talent activation to work, you need a plan to make today’s individual contributors the managers and executives of tomorrow. Then, where possible, you need to deliver on it with promotions and internal hiring.
Take it from Stacey La Torre, who has been on her own talent activation journey at Nextdoor. Her plan is to achieve an internal hiring rate of at least 51% within five years. And to do that, Nextdoor is prioritizing L&D, upskilling, career progression, and much more.
But to be in a position to promote people in future, you need to start giving them the right skills now. So how do you do that? The trick is to put employees in the driving seat of both their learning and their careers, making sure the two are intrinsically linked. Here’s what that looks like:
1. 🛣 Create a structured career path
Career progression doesn’t happen in a vacuum. If you want your people to take the next step in their careers, you need a shared plan for what that looks like. The key word here is ‘shared’ - you need to think of your company and your employees as joint stakeholders in their future.
Here’s the challenge: too many companies treat progression as a natural consequence of employees being good at their jobs. But this isn’t always the case, particularly when it comes to those moving into management roles. Being a sales executive doesn’t necessarily give you the skills to lead the sales team. New skills have to be taught and that requires a structured learning path. Here’s what that looks like:
- Have regular one-to-one meetings, specifically to discuss skills and progression
- Identify the employee’s desired future role, including job titles and salary where relevant
- Agree a realistic timeframe for when they’ll be ready to take this step
- Identify the skills they’ll need to develop and the targets they’ll need to meet
- Include the relevant training in the employee’s performance targets
- Regularly review the employee’s progress and provide constructive feedback on their progress
Of course, a structured L&D process won’t look the same for every employee in every organization. But in general, it’s by far the best way to get the most out of your team. That’s because it puts your people in the driving seat of their own careers and directly ties any promotions to their learning and performance.
2. 💰 Give people their own personal learning budget
Once you’ve given your employees ownership of their careers, the next step is to give them the tools to achieve it. One of the best ways to do that is to offer employees individual or team learning budgets.
For many HR teams, low engagement in learning is a big issue. Often, companies spend money on learning tools that very few people are using. This is generally because these tools don’t encourage or empower employees to identify their own learning priorities and resources.
Individual or team learning budgets are a fantastic way to increase learning engagement and ensure your budget is being well spent. That’s because they give employees full visibility over what resources are available and full control over the right resources and formats to use them on. Ultimately, every employee has different learning goals, styles, and preferences. Individual or team budgets help ensure everybody can learn in their own way.
If you’re wondering what budget to set for each employee, we find an investment of $300-$500 per employee works best. But if this looks too high, don’t worry - you don’t need to spend a lot to get the benefits of a personal learning budget. Start with as much as you can justify and then consider raising the budget over time.
3. 🧺️ Don’t put all your eggs in one basket
Different people absorb information in different ways. Some might prefer private study, others thrive in a classroom or roundtable. So if you want to get the best out of your employees, you need to give them a range of options for how they’re going to learn - as well as what. Ideally, this should involve some combination of these three learning types:
⭐️ Self-guided learning - This includes online training courses, webinars, books, and any other materials that people can access and consume in their own time.
⭐️ Group training - It’s also important to have group learning opportunities like roundtables or lunch-and-learns within the company, led by experts with particular skills to share.
⭐️ Mentoring - You should also offer advice and mentorship that’s independent of people’s immediate teams and managers. This can be done through external mentoring or using an in-house buddy system that matches people up with relevant mentors from other teams.
No solution will work for every employee. So make sure to have a mixture of options and ensure everybody is aware of the programs and resources available.
4. ✅ Empower managers to give feedback
Feedback is the secret sauce for talent activation. But giving good feedback doesn’t come naturally - it’s a skill that needs to be learned just like any other. That’s why you need to invest in training your managers to give decent feedback.
Good feedback should be:
⭐️ Regular - Managers should develop a culture of always-on feedback; it’s not good enough to simply wait for the performance review. You need to provide constant, iterative feedback so employees always know how they’re performing and what to do to improve.
⭐️ Actionable - Unhelpful feedback can be uniquely frustrating for employees. Good feedback should always identify the specific area for improvement and make it clear what needs to change in order to get there.
⭐️ Honest - Giving positive feedback is easy. Telling people how to improve is much harder - but it’s possible to do this in a way that’s kind and constructive. Ensure managers know what good criticism looks like and how to deliver it.
If in doubt, the wise words of HR leader Kel Hartmann offer a great guide: “the secret to good feedback is - clear is kind, unclear is unkind.”
Unlocking the full potential of your workforce
For many years now, it has been easy enough for companies to get the talent they need, when they need it. But in many ways, it was always a short term strategy. Now, talent activation is a necessary response to a challenging economic climate, but it promises to be a much more effective way of working in the long run.
Companies that invest in the skills and careers of their people will reap the dividends in the months and years to come, when employees choose to stay and thrive, rather than shopping around for their next promotion or pay rise. The future is what you and your team choose to make it.
If you want to find out more about talent activation and how to make a success of it, check out this recent webinar with Stacey La Torre, Head of Talent Management and Development at Nextdoor.