To build a successful business you need a combination of different key elements, among which people are one of the most important. Employees are the driving force behind a company’s operations. Hence, finding and retaining the right people is crucial for business success.
Although many people still haven't realised how talent acquisition benefits a business, companies are increasingly starting to understand the difference between recruiting and acquiring talent, and recognising how effective talent acquisition is vital for any business. To fully understand it, it’s important to draw a line between talent acquisition and recruitment.
The first big difference between them is that while recruiting delivers on a company’s short-term hiring needs, talent acquisition is centred on the organisation’s long-term goals in terms of HR strategy. The talent acquisition task is part of human resources (HR) and involves recruiters, sourcing agencies, HR professionals and hiring managers in the activities of sourcing, attracting, interviewing, hiring, and onboarding employees. Whereas recruiting is just one aspect of talent acquisition, that has to do with the selection and hiring of a candidate to fit a job vacancy. Instead of simply filling the positions that are open at a given moment, the talent acquisition process goes further and runs continuously to identify the best candidates for future positions that can be harder to fill, such as executive-level positions, leadership roles, or jobs that require specialised training.
How Talent Drives Business Value
According to this white paper, the formula for creating business value can be defined as an expectation of future cash flow driven by asset performance. Regarding assets, there are two types to consider: tangible assets (equipment, buildings, trucks, etc. — all of which companies report) and intangible assets (brands, customer relationships, IP, proprietary technology — none of which companies report unless they have purchased from another company). The white paper highlights how more than 90 per cent of the value of leading companies such as Facebook can be attributed to intangible assets, specifically to its people. It’s the human capital of a company that drives intellectual capital, which can be thought of as the valuable accumulation of employees’ output over time.
As such, it’s important to understand how value is created within a business to be able to measure the value of talent acquisition investments in a specific company. For instance, according to the white paper, for a company like Raytheon, it’s a relatively small team of engineers that creates the majority of value for the organisation. Whereas, for companies like Coca-Cola and Proctor & Gamble, the people creating the most value are brand managers and product innovators. So, it’s easy to see how making the best hires in these functional areas can greatly benefit the business. While bad hiring decisions can create elevated risk and be prejudicial to the company. With this in mind, companies need to take a more strategic approach to talent acquisition and focus on investing more in the attraction and selection of the talent that is most valuable to their business.
Building a Bridge Between Quality of Hire and Business Success
Understanding what makes a good hire allows companies to continue hiring to that same (or better) level and work to ensure their best talent is retained. This requires HR to be able to measure the quality of hire and to determine who is responsible for it. The best approach is to base it on business value delivered through intellectual capital rather than just considering it a metric that indicates the success of talent acquisition. Consequently, everyone from senior leaders to HR, talent management, talent acquisition, and front-line leaders should play a part in measuring, managing and improving quality of hire. Being able to understand how people contribute to business success is essential to maintaining a competitive advantage, given that talent is increasingly serving as a big differentiator. Hence, identifying what makes someone successful in their job allows companies to keep hiring people who have the greatest probability of succeeding. This insight is essential to creating and sustaining a high-performing organisation and must be part of your talent acquisition efforts.
The Ultimate Benefits of an Effective Talent Acquisition
Having an effective talent acquisition strategy gives companies the opportunity to attract the most talented and skilled employees available on the market, which contributes to the improvement of the organisations’ business performance and results. Check how that translates into major benefits:
1. Getting the Right People
An effective talent acquisition strategy focuses on finding the best candidate for the job rather than filling open positions as soon as possible. In light of that, candidates are evaluated on every aspect that matters for the job, from skills to future development to cultural fit, so that the most suitable person gets hired. This impacts not only the quality of hire (higher) but also the turnover rate (lower) of a company, for instance.
2. Staying Competitive
A company’s biggest asset is its employees. As said before, having the right people in place can benefit your business and generate great value. Hiring the right talent with the right skills and motivation is essential to run your business successfully and to keep innovating which will give you an edge in the market. On the contrary, poor hiring often results in unproductive and unmotivated staff. Having the wrong people on your team can create elevated risk and make your business struggle, harming your market competitiveness.
3. Saving Time and Money
One of the main reasons why talent acquisition is so valuable is that replacing an employee can be costly. That being said, hiring the right person for the job can save you a lot of time and money in the long run. Recruiting processes are composed of many tasks like job advertising, CV screening, candidate assessment and interviewing, among others. All of these tasks require a lot of resources and a big amount of the recruiter’s time and energy. However, if these efforts are applied to finding the right talent and to hiring for the long-term, the costs reduce significantly. An effective talent acquisition strategy can help you achieve that.
4. Preparing the Future
One of the most important aspects of talent acquisition is that it is forward-looking. Although replacing key roles in your company may seem impossible, a strategic approach to talent acquisition helps to ensure that the people you’re hiring have the skills and disposition to develop into leaders. This means that your company will not just hire someone to fill a position and do a job. Candidates will be rigorously screened and assessed so that when you decide to hire them you’re sure that they’re not only the right fit for their current positions, but they also have the potential to take on new roles in the future.
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