Stopping to build a talent strategy is like stopping to change a tire when you should be going 75 mph. If you need a talent acquisition strategy but can’t afford to pull over, what should you do?
Relying on data is a great place to start. A data-driven talent strategy takes the guesswork out of the equation and speeds up your hiring process. Using data gives you the confidence that you’re hiring the right people with the right skills for the right price at the right time.
To learn more about the top skills, hiring, and compensation trends you need this year, check out our 2023 Global Talent Playbook. This report can help leaders plan with an overview of the biggest trends and developments we currently face.
What is a talent strategy?
Talent strategy (particularly when it’s data-driven) describes the talent management process companies use to find, hire, and retain top talent in the most cost-effective, timely way. A strong talent acquisition strategy ensures companies don’t lose talent to their competitors and that they retain the talent they already have.
Two key functions of HR responsible for driving a company’s talent strategy are:
People Analytics, or the collection and analysis of workforce data to improve people-related outcomes
Talent Acquisition, or the process of identifying, recruiting, and retaining the employees a company needs
Why is a good talent strategy important?
Employees are every company’s most valuable (and expensive) asset. Therefore, companies need a successful talent strategy to hire and invest in the best talent available for their business.
When an NBA star negotiates a whopping $20-million-a-year contract, there’s often plenty of head-shaking. How can you defend paying someone such a substantial amount merely because they're good with a ball? People may think the franchise owners have lost their minds—or at least their business sense.
But in truth, these owners know what they are doing and can defend those considerable contracts. The actual value that a high-caliber player brings to a team is much higher than their salary.
Consider this: Great players steer ticket sales, drive advertising dollars, and win games, which all increase the franchise’s value. For example, LeBron James’ return to Cleveland nearly doubled the Cavaliers’ value.
We see similar behavior at businesses like Facebook and Google. Granted, web developers aren’t making $20 million a year–but they can afford housing in the Bay Area.
The most vital, value-creating element behind any successful enterprise is talent – without talent, there is no product.
But if talent is so crucial, why do many companies struggle to find it? The answer is that they’re not utilizing data to make their decisions. Ignoring the data is like trying to find a hidden treasure without ever looking at the map – you will never succeed!
Ignoring data is even more costly when we have more worker demand than we do supply – which is what’s happening now. No matter the number of available workers, let’s dive into three talent pools to source potential candidates from.
What kind of talent should you source?
So, where do companies even begin their search for talent? Returning to our NBA analogy, we can find the answer.
Envision yourself as an owner with the goal to sell seats and win games. You have three main talent acquisition options to explore:
The minor leagues and out-of-work players
The NBA draft
The same principles apply in the world of business. To develop a good talent management strategy, you need to understand the following talent pools:
The currently employed (free agents)
The unemployed or underemployed (minor leagues and out-of-work players)
Students in the post-secondary system (NBA draft)
In basketball, you can evaluate talent by watching a player while they work. This is not practical in the business world, so that’s why you need data.
NBA teams use data and analytics (more commonly referred to as “stats”) to improve decision-making and optimize strategy. Great players like LeBron James tend to trump analytics, but even LeBron can't win a championship on his own. He needs the right players around him, which is where data becomes so valuable.
We’ll call this data market research for talent. Market research provides information on the external workforce to guide decisions on hiring new talent and developing internal talent. Let’s observe how data can help you approach the three talent pools.
1. The currently employed
Our economy is composed of approximately 150 million jobs spread across 50 states and hundreds of dense metro areas. In fact, some of these cities are economically bigger than entire nations.
Given the extensive size of the labor pool, it’s likely there are people you can hire. However, it can be hard to know:
Where they are
Who they are (age, gender, ethnicity, education, etc.)
What they’re doing now (the industries they work in and occupations they hold)
How much you would need to pay them to convince them to transition to your company
Evaluating the employed workforce informs better decisions about the people you hire and where to find them. Also consider internal talent who might have the transferable skills you need for a new role. We’ll talk more about transferable skills a little later…
2. The underemployed or unemployed
Companies should also look at data on the underemployed or unemployed workforce. For the underemployed, you should consider two primary elements:
Jobs that require similar knowledge and skills as the jobs you need to fill, but are below your pay rates.
People who are qualified but currently employed in unrelated industries.
For the unemployed, you should perform searches with the state workforce agency to see who is available. In both situations, you find people who are motivated and interested in the opportunities you provide.
3. Students in the post-secondary system
Finally, companies need to understand the students poised to enter the workforce. Who comprises this group, where are they located, and what are they learning?
Successful college recruitment depends on data in so many ways. How many students attended your company's events? How many are on track to graduate with the necessary skills to fill your open positions? Data can answer these questions, along with showing grad ethnicity, exam outcomes, and market availability of this talent.
What makes NBA franchises and major tech companies so talent-rich? Everyone wants to work for these organizations, so these companies don’t have to wait for talent to drop out of the sky. They engage and retain the best people by building strong talent strategies.
So how do growth-minded organizations know where to focus their recruiting efforts? How do recruiters learn what their competitors are doing to pursue the candidates they need?
The short answer? By leveraging labor market data.
This intel can help organizations set realistic workforce goals and make smarter hiring decisions.
You can narrow down the search for the right talent in a few of the following key ways.
Skills are the secret sauce to any human resources or hiring manager’s success. Skills provide a granular look at what people can do, not just what we assume they can do based on the program they completed. Skills-based hiring helps companies find the right people for the job – not just the people with the “right” job title.
Optimizing your recruiting process for the skills you need for a role allows you to market job postings that will attract the right person. Once you understand the critical skills you’re looking for, you can use them to take your search deeper and discover:
Where can you find the hotbeds for those skills (domestically and internationally)
Which of your competitors houses those skills
The compensation range for those skills
The demand for those skills (and for emerging skills you hadn’t considered)
The types of skills there are in the market (such as disruptive skills, digital skills, and survivor skills).
Not only do these insights expedite finding talent, they increase the likelihood of finding qualified candidates.
A tailored skill strategy is the future of human resource management, and the time to adopt that strategy is now.
To get started with your skill strategy, access our free Lightcast skills library.
2. Develop a university recruiting strategy
Knowing which schools produce the most and best talent for your industry helps when hiring interns or recent graduates. That way, you’re not wasting time and money recruiting at too many schools or worse, the wrong schools.
Whether you’re searching for schools that produce the most talent in any given occupation, fulfilling diversity or veteran initiatives, or writing a job description, education data is the best way to get that information—and quickly.
Using education data to inform your university recruiting strategy can help you:
Evaluate the current schools you’re recruiting at and find new ones you haven’t considered before.
Use diversity data to compare graduates from your target schools to similar universities at a program level
Benchmark groups of college candidates against the university makeup of current workers in target role
Target certain schools based on the gender you’re hoping to hire.
View program rankings according to U.S. News and World Report, and student body statistics like veteran and disability enrollment
Identify schools that have students from your hiring state as they are more likely to return upon graduation.
3. Write the perfect job posting
Writing a job posting is challenging. Recruiters have to find the perfect balance of skills to attract the candidates they want, whether a new job or an old job requisition.
Every industry’s talent needs are different. And their job posting strategies provide valuable insight into how they respond to their respective challenges. This can also be beneficial on a company level, allowing businesses to monitor competitor job posting strategies.
Deciding which skills to include is difficult. Will the included skills make your pool of candidates too broad, too narrow, or too expensive? This is nearly impossible to know without data.
You can extract skills directly from a job posting to compare them to the region and understand their demand as well as related skills. Make sure you also layer in supply, demand, and compensation to optimize your posting.
4. Use data to discover a region with more favorable conditions and larger talent pools
Use supply, demand and compensation data to find people with the skills you need who might want to relocate. If the competition for talent is too steep in your area, use data to find the regions that fit your needs and budget.
5. Utilize global data to recruit talent internationally
New markets can be ideal for your business to expand in or which ones hold promising talent. You can look solely at data in the United States, but why limit yourself to one country? Expand your view across the globe. Compare markets across borders, determine where your company might expand, and understand the skills landscape of other countries.
Evaluate your success and recruiting challenges regularly, even when talent supply is high (monthly, quarterly, or semi-annually). What worked last year may not prove successful today. Using objective data equips you to simultaneously tackle recruiting challenges and optimize your business strategy.
How to retain your workforce
The current labor market is tight. With more job postings than people available, acquiring talent is more competitive and expensive than ever. Internal upskilling is an emerging way to combat these new conditions.
The percentage of remote positions doubled over the course of a few months in early 2020. Since then, that number has more than tripled compared to pre-COVID, and continues to climb.
Along with the rise in remote work, people are resigning at rates the country has never experienced before. This shift has forced employers to modify their talent acquisition strategy from buying external talent to incorporate internal upskilling.
Upskilling is investing educational resources to help build upon and advance your employee’s current skills. Many organizations often use this tactic in learning and development. It helps with internal mobility and succession planning, keeping the talent pipeline flowing.
Training employees is nothing new, but upskilling employees at scale can be challenging for many companies. Our suggestion is to start by understanding the skills that currently exist within your four walls.
3 steps to creating actionable skill profiles for your roles:
1. Normalize your job titles using this free title taxonomy
This means translating your internal language for the outside world. Normalized titles represent the most relevant, utilized language across the industry. This allows you to quickly compare skills your company houses against the industry (including your competition). With this, you can strategically position your business for the future.
2. Identify skill profiles for your roles
Talent intelligence tools can automatically sort through your normalized titles and tag them with the associated skills. Use these skill profiles to get a full picture of which skills exist (and how widespread they are) throughout your company.
3. Analyze and refine your roles
Using skill profiles, you get an objective, granular breakdown of where your company skill gaps are so that you can make plans for improvement. You can even create benchmarks so that you can compare how your company’s skills match up against your competitors. Save and come back to these benchmarks to check in on trending skills across the industry. When you identify emerging skills, you can stay ahead of the competition by recruiting for them immediately.
As work has become more specialized, job titles have not kept up and do not describe the skills needed for a role. Companies have a lack of visibility into skills data to use for role planning, mobility, and talent development. Assessing the current skills of your workforce helps with retention and development, as well as improves employee experience. So what kind of data should you be looking at to build a strong talent strategy?
Compensation, sometimes referred to as wage, is the total percentile earnings for an occupation in a region divided by the number of jobs in the occupation. This provides an average measure for earnings in that particular area.
Along with compensation data, you should also consider advertised salary data for your talent strategy. Use this information to understand differences in compensation by job title, company, region, and skill sets. However, it is not necessarily the actual salary the employee receives—only the salary as advertised.
Job posting competition
Job posting competition shows which cities, industries, and companies posting the most frequently for a specific job or occupation. Observing this data allows employers to fine-tune recruitment strategies to align with long-term business goals.
Analyze and benchmark your diversity standards by using demographic information by age, gender, race, ethnicity, and geography for every occupation in the U.S.
Use this information to compare your DEI goals against what actually exists in the market. Understand if your initiatives are realistic when observing the diverse talent supply in your market, industry, or specific occupation.
You need education data in a couple of different ways when creating or optimizing your talent strategy. The first is detailed enrollment and graduation data from schools that will help you recruit the right talent out of college. The second is data that focuses on available talent and average compensation based on education level (master, Ph.D., etc.).
Location data provides context for business decisions by offering insights into the environment you’re operating in. It helps you understand the available workforce, along with its growth and concentration. You can also gauge your current market presence, growth potential, and the availability of local graduating talent.
Location data helps you assess the performance of your industry relative to others in the area. This guides you to determine if you are in a favorable market, or if you should explore alternative locations. When you know the context of where you are, you can make more strategic talent decisions.
With the location complexities surrounding COVID-19, it is important to consider remote work. Companies are making jobs permanently remote, which could radically impact the white-collar office market and supporting industries. If you can work from anywhere then, logically, companies can hire from anywhere.
How to Develop the Best Talent Strategy
So after all this information, how do you develop a strong talent strategy? You USE DATA! A data-driven talent strategy takes the guesswork out of the equation and speeds up your hiring process.