Factors impacting the resourcing and talent planning strategies

This white paper explains and examines the factors that are most likely to impact the resourcing and talent planning strategies in the current time and in the future to shed light on the labor market trends and key developments that might change the situation.

1.Labor market trends in Kuwait and the MENA region.

There are lots of elements affecting the labor market, but the main headline addressing the labor market is the acronym “VUCA”; Volatile, Uncertain, Complex and Ambiguous. Based on the Resourcing and Talent Planning 2013 Survey report, retaining employees has become an increasing challenge over the last few years. Just one-fifth of respondents reported they had no retention difficulties in the previous year (2013: 22%; 2012: 34%; 2011: 42%; 2010: 45%; 2009: 31%). thus, laborers are unsteady and have a high tendency to move to another employer for the sake of meeting their needs. Uncertainty is another challenge affecting employers, as they are not sure and cannot easily measure if the employee they are recruiting is capable enough to do the job up to their performance expectations or not. When it comes to recruiting labors and selecting them, we can say it’s a complex process from start to end. It contains lots of elements and considerations to take e.g.: Alcoholism, Smoking habits, Ethics, Equal Employment Opportunity, to name a few. Employment is not an easy task and it’s becoming much complicated with time. Ambiguous is the dark part over here, the employer as well as the employee wont knows how much both fit each other, even when minimum requirements have been met.

As per the Economic Times, the labor market’s definition is the place where workers and employees interact with each other. In the labor market, employers compete to hire the best, and the workers compete for the best satisfying job. The labor market is where the employer matches their demand with the supply of employees. Like any kind of market, the controlling forces are supply and demand where the buy and sell mechanism takes place. For HR strategy builders, they can either build their own resources from within the organizations or if they couldn’t, then buy from the market. The following is the labor market trends for Kuwait and the MENA region affecting the organizations and making it hard to recruit the needed resources:

Developments might change the situation.

With such labor market trends, organizations should be agile and focused on developing their own strategies creatively and with out of the box ideas.  Organizations may use different directions like: offering project base jobs and work from home with flexible working hours; due to time differences. In this case, resources don’t have to leave their mother countries, yet can use technology in extensive ways to meet the project deadline. Offshoring might be the other solution organizations use for nationalization leeway. With the increased pressure governments put into organizations to meet with nationalization percentages, operating full departments through offshore methods will be a better option. However, they still need to train those staff outside the original country and treat them very well. Needless to mention the better quality they’ll have and the fewer wages they need to pay. The operating call center offshore was the most successful move organizations did during the last decade; they have chosen a high population country with a high percentage of educating youth to operate their call centers. The quality of service went up, they got rid of localization quota issues, operating with a cost-effective budget, and kept laborers in their home countries.

Tight and Loose labor market.

The tight labor market is when organizations face difficult times to attract talents, and the loose market is when there are plentiful resources exceeding organizations’ demand. Organizations became selective during the loose market phase and tried their best to recruit and select the best-fit candidates. However, the issue is with the tight labor market where talent war is on its peak, and there is extremely fierce competition. Attracting resources in the tight labor market forces organizations to think differently; creating an employer brand which is a set of attributes and qualities, often intangible, that makes an organization distinctive, promises a particular kind of employment experience, and appeals to those people who will thrive and perform best in its culture. A strong employer brand should connect an organization’s values, people strategy, and HR policies and be linked to the company brand; CIPD employer brand factsheet 2015. As you know, all high-end brands attract certain kinds of customers whom offer extreme levels of quality or an elite prestigious level. Likewise, Employer branding works with the same concept attracting top talents who strive to work for this kind of organization. On another hand, organizations might change their direction towards inside and starts to develop their resources heavily to avoid tight labor market.

Retention strategies.

As we said earlier, during tight labor market phase, organizations are forced to think in different ways to attract and retain the best resources for their strategic goals. The first retention strategy would be creating a solid learning and developmental program that feeds into career development. The aim shall be enhancing staff skills to complete current tasks more efficiently and effectively and, training staff for the next position’s skills and techniques. Developing staff will always enhance retention strategy as they will feel valued, belonged, and part of the organization’s success. Staff is likely to put more effort and stay longer with the organization once they identify their career path and know what it takes to step forward. The second retention strategy is managing the psychological contract. As per the CIPD fact sheet definition, it’s “the perception of the two parties, employee and employer, of what their mutual obligations are towards each other”. It’s the relation between management promises and staff expectations, either during the selection phase or performance appraisal review. Although this contract is not written, it means a lot to the staff. The psychological contract can be a bargain or a deal between staff and management when staff does what is expected within a time frame or up to certain quality criteria, where management shall respond to the deal and do their part of the agreement, either promotion or salary increasement or development opportunity. Both retention strategies will respond quickly to a tight market phase and save the organization lots of costs.

Reasons why people chose to leave organizations.

As any relation might reach the end, employment is more likely to reach its end in a way or another, either retirement, resignation, or termination. As per Billy Arcement article at biz journal, the “5 top reasons people quit their jobs” are as following:

1. Lack of professional development – when staff development is neglected by the organization, people feel unvalued and gain no new skills, thus leaving at the first opportunity.
2. Not happy doing the work – when a staff has unchallenged tasks and their work is much of repetitive nature, it’s likely that they will leave the job.
3. Lack of appreciation – everyone needs to feel valued and appreciated for the effort paid; a tap on the shoulder can do miracles. However, lack of appreciation will result in quitting the job.
4. Lack of support – when the staff doesn’t have the right tools to do the job, they will be mis-equipped and won’t be supported. The pride of accomplishing the task will be missing, thus the meaning of being in this organization will vanish.
5. Less payment – believe it or not, money came to be the last reason. No one denies that money is the fuel of life, yet it’s the means, not the purpose. However, having less than a market wage would result in quitting the job.

The cost implications of people leaving the organizations.

There will be always a direct and indirect cost incurred for losing staff. On some levels, losing staff will cost the organizations a fortune they can’t ignore. The direct costs are job advertisements, job fairs, headhunters as well as recruitment agencies. Moreover, training costs will be added up and calculated as a direct cost. On the other hand, the indirect cost will be the opportunity cost – delay in response to customers which would affect the business, the recruitment officers/line manage time and effort in finding and interviewing new candidates and losing staff to competitors which translate as losing competitive advantage.

Positioning Organizations Strategically.

As we have mentioned earlier, organizations attracting labor in the tight or loose markets up to their standards, where the skills of those laborers will match the organization’s brand. However, organizations position themselves strategically by defining two factors; rewards (the amount the employer will pay for its employees) and culture (how employees are treated and respected ethically). Higgs module illustrated below show the relationship between the rewards and the culture:

• Employer of Churn: treating staff harshly for long excessive hours and paying them poorly; turnover rates are high and positions offered are mostly in the loose labor market.
• Employer of Cash: treating staff quite harshly but compensating them by paying well. Staff retention might be around acceptable rate; however, this kind of organizations attracting new entrance of labor market forces, young people who consider money is the purpose at the beginning of their life.
• Employer of Values: treating staff very well in terms of job security, job enrichment, participating in many projects, and providing fair treatment; however, they paying them less than the market trend. This kind of organization usually builds a strong career path for their staff and retains them well, causing employees to know that they will receive a big jump when deciding to quit and work for another employer.
• Employer of Choice: this is where the two sides of the equation are equal, employers treat staff ethically and fairly, and pay them above market standards. Usually those organizations are in tight labor market trend, due to being highly selective and picky in terms of selection.

Although most organizations’ aim is to become an employer of choice, yet achieving this strategic position is quite hard and requires huge and consistent efforts from all stakeholders.

Government, employers and trade unions’ role in helping future skills are met.

We face baby-boomer issues in the market place with government or private sectors. The qualities of the old generation were built within their characteristics and attitude. Their eagerness to perform while maintaining the highest ethical standards are rare to find nowadays among generation X and Y. Government, employers, as well as trade unions, shall push the use of flexible working hours method with seniors in order to assure passing their priceless knowledge and skills to the current labors. Instead of forcing baby boomers to retire and stay at home doing nothing but fighting with their spouses, organizations may utilize their expertise in coaching and mentoring the current staff.

Steps to future skills.

Government agencies ,as well as the private organization, aim to achieve sustainable business, though private sector employers looking to increase profit and grow financially. In order to achieve this, organizations are striving to make sure resources are developed and equipped with the latest techniques. However, organizations need to consider different elements, in terms of ensuring future skills, where building a strong employee performance management system, based on Key Performance Indicators, SMART objectives, and competencies, are met. Appraisal review is a good chance for line managers to officially assist subordinates and help overcome their challenges. Moreover, organizations need to apply a broader view like 360 ° feedback. Such exercise will assure assessing resources objectively and identifying the strengths as well as the weakness areas for each staff. Nevertheless, employee development through a careful systematic approach would drive performance and prepare staff for future challenges. Deploying employees in the right positions and assuring equal job opportunities is essential. Having said that, the ratio of female vs. male in leadership and managerial positions, should be almost equal. Another step organizations need to consider in order to ensure future skills are met is, to create a job description and job profile based on the accountabilities. Such a step would conclude all skills needed to perform the job on contemporary design.

Embedding career and succession planning into organization strategy.

The old way of creating succession planning was to choose one or two candidates as the successors based on the line manager’s recommendation. Such exercise forbids other resources to get the chance to grow, needless to mention the biased approach. The new approach of succession management is choosing successors out of a pool of resources ,through assessment and development centers. The process is to expose every resource on the same battery of assessment to identify their strengths, weaknesses, and potential. Moreover, the old school thinks in a  monotonous manner, while the latest approach considers lateral, vertical, horizontal, and cross-functional approach. Career development is coming on later stage after disclosing the assessment results with the candidate to draw the plan in a holistic way.