Talent Relationship Management

In future, many businesses will be faced with something which could easily be dismissed as a “first-world problem”. They will be anxiously looking for good, new staff. Many labour markets are becoming very tight, particularly in industrialised Western countries, as well as parts of Asia. We can now direct this problem to politicians, and demand a different family policy, relaxation of immigration laws, and, most importantly, investments in education for all ages. This is all well and good, and I would endorse it. But this book addresses the issue of what businesses can do in relation to recruitment. I will thus be adopting a micro perspective. I am often asked whether the “War for Talent” has arrived. And the answer is: yes, there is already an acute talent shortage, which is due to increase. But nowadays we only see a “war for talent” in isolated cases. Many businesses are still very ponderous, passive and unimaginative when it comes to their methods of recruitment. No one gets hurt; the focus is instead on the candidates’ interests. The right ones will come along at some point. Even looking at the latest literature on recruitment, you will see that most publications zero in on staff selection in this context. Yet the problem no longer lies in choosing the right candidates—it’s in getting the candidates in the first place.

The so-called “War for Talent” has been talked about since the mid-1990s (Michaels, Handfield-Jones, & Axelrod, 2001). In the meantime, the world has seen several economic crises, namely the collapse of the New Economy in the early 2000s, and the worldwide bank crisis a few years later. As I write these very lines, Europe and the world are still battling the effects of the European debt crisis. Each of these crises curbed the previously immense demand for specialists, but were followed by an all-clear. The upswing occurring after these crises also sees an increase in demand for talented, motivated staff. Apart from these rather short-term, cyclical fluctuations, however, there is the question of long-term development on the labour market. What must a country like Germany be prepared for over the next few decades? Short and mid-term developments play less of a role when answering this question, with the focus shifting to more general trends at a macro level.

The conventional approach to recruiting staff is to advertise vacant positions and then hope for applications—“Post and Pray”. An executive search consultant is hired in cases proving difficult to obtain applications. Companies attend career fairs or place image ads in certain media and at selected universities to increase the inflow of applications. This traditional method is more than adequate for many jobs. For others, however, it is stretched to its limits, due in no small part to the talent shortage mentioned in the previous chapter.

TRM always starts with defining the target group, i.e. clarifying which groups of people on the labour market you want to secure for specific positions. Target groups may be certain occupational categories, staff in specific roles at other companies, or even graduates from particular courses. In its broadest sense, this step is an element of strategic workforce planning, in which so-called key and bottleneck functions are of critical importance. An HR-based distinction is made between various company positions here (cf. also Becker, Huselid, & Beatty, 2009; Huselid, Beatty, & Becker, 2005).

I often run workshops with managing directors and HR managers on the topic of talent shortage, addressing how small and medium-sized businesses in particular can actively counter this. I ask the participants to jot down the main reason why the companies they represent are attractive employers. The exercise lasts no more than 5 min. We then have a look at the results, and it’s a regular case of déjà vu. It appears that, for around 50 % of participants, it is the first time they have actually thought about this question. Let’s now imagine a salesperson who sells hydraulic control elements. A potential customer asks him/her why they should buy these elements specifically from him/her, upon which the salesperson admits it’s the first time he/she has thought about this question. We wouldn’t rate his/her sales opportunities particularly highly.

The previous chapter addressed the promotional, communicative aspect of recruitment, i.e. the marketing side in the broadest sense. But, having formulated and conveyed a convincing Employee Value Proposition, we still haven’t found a single suitable candidate or potential new staff member. That’s what this chapter is about. After discussing some basic ideas and providing a brief overview, I will describe modern approaches to finding talent on the external labour market, ignoring the classic methods of placing job advertisements or hiring executive search firms. Particularly when filling key and bottleneck functions, it is becoming increasingly clear that these traditional, more passive approaches to recruitment are no longer effective.

Having examined the Employee Value Proposition and active sourcing strategies, we now come to the third component of TRM: candidate retention. The essence of the idea is quite simple. You usually only meet good people once in life, which is why employers should make every effort to hold onto any promising candidates they meet and deem suitable for their company. I will use an example to further explain this idea. A student has enjoyed an internship at a company, and was found to be a talented, motivated, socially involved person. The company would like to employ this student straight away, but he/she “unfortunately” needs to complete his/her studies. In this case, candidate retention would mean actively maintaining contact with this person so as to secure them at the company once his/her studies are over. But this is just one example to help clarify the concept.

The way we deal with applicants and candidates was forged during a time when there were more applicants than jobs, and our thoughts and actions are more engrained in this perception than we may initially care to admit. The term “applicant” itself implies that the potential employee has to struggle and fight for a job. But for some time now, we have found ourselves in a different era, where it’s the employer who wants something from the candidate, and has to go to great lengths to secure him/her, especially when it comes to key and bottleneck functions.

This final chapter will examine framework conditions for successfully implementing TRM. I have so far presented content-based concepts and approaches. But these are not implemented in an isolated manner; they are always implemented in a context which can be beneficial to varying extents. I specifically refer to five aspects here, starting off with the management’s obligation. TRM requires that the management back and actively support the associated measures. As already mentioned in relation to candidate retention, TRM needs a special organisational structure, particularly in the HR department, where there are certain roles and interdependencies. TRM also requires specific, often unusual skills of its major players. A technical infrastructure, namely information technologies, may also help with implementation. TRM is increasingly taking place in an international context, raising the question of how central or localised actions should be. Finally, we take a look at the monetary benefit of TRM. TRM measures will only be received well by the management if they promise some sort of benefit, which is expressed in the language best understood by the CFO.

Recruitment has changed drastically in recent years, and will continue to do so, even though many companies are still lagging well behind here, particularly when it comes to filling key and bottleneck functions. The increasing talent shortage creates a new power relationship between employee and employer. Previously, it was the applicants who had to impress. As part of their career plan, they had to be clear as to their preferences, strengths and talents, and what their motivation level was. They had to actively look for a job. They studied the careers sections of relevant newspapers, and browsed through online job boards. They tried to establish long-term relationships with interesting employers. In the end, they would do their best in the application process, and demonstrate their best assets, both at a professional and interpersonal level. All this—impressing, actively searching, building relationships and portraying a positive image in interactions—is what employers now need to learn. This is the natural consequence of the latest developments on the labour market, where those companies who act faster, more creatively and in a more self-contained manner gain massive advantages in the “war for talent”.