For any company, stopping to build a talent strategy is like stopping to change a tire when you should be going 75 mph. So 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 in 2023, check out our 2023 Global Talent Playbook. This report is a perfect resource for leaders in planning for 2023, as it provides high level insight into the biggest trends and developments we’re facing as we move into the new year.
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-tier talent in the most cost-effective, timely way. A strong talent acquisition strategy can help ensure companies don’t lose out on talent to their competitors and ensures that companies retain the talent they already have.
There are two key functions of HR responsible for driving a company’s talent strategy:
People Analytics, or the collection and analysis of workforce data that companies and organizations use 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. With that in mind, companies need a good talent strategy to ensure they’re building their business with, and spending those valuable dollars on, the best talent available.
When an NBA star negotiates a whopping $20-million-a-year contract, there’s often plenty of head-shaking. How could anyone justify paying someone so much just 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 big contracts. As a matter of fact, the actual value that a high-caliber player brings to a team is much higher than their salary. Think about it. Great players steer ticket sales, drive advertising dollars, and win games, all of which 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.
So here’s the point: 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 becomes even more costly when we have more demand for workers than we do supply – something we are currently experiencing.
Want in-depth insights on the current talent shortage? Read our research on The Demographic Drought. The research has been featured in popular publications like The New York Times, Wall Street Journal, CNBC, Forbes, and many others.
Regardless of the number of available workers, let’s dive into three talent pools you can source potential candidates from.
What kind of talent should you source?
So where do companies even begin to look for talent you ask? Let’s return to our NBA analogy for the answer.
Imagine you’re an owner looking 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 postsecondary system (NBA draft)
In basketball you can evaluate talent by watching a player while they work, but this is not practical in the business world. That’s why you need data.
NBA teams increasingly use data and analytics (more commonly referred to as “stats” in the basketball world) to refine their decision-making process and optimize their strategies. Great talents like LeBron James tend to trump analytics. However, even LeBron cannot win a championship by himself. 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 is information on the external workforce that helps us make strategic, tactical decisions on when to hire new talent, and when to build your internal talent.
So, let’s see how data can help you approach the three talent pools.
3 Targets for a Strong Talent Acquisition Strategy
1. The currently employed
Our economy is composed of approximately 150 million jobs spread across 50 states and hundreds of dense metro areas— some of which are bigger than entire nations, economically speaking.
With a labor pool this vast, 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
A proper evaluation of the currently employed workforce can help you make smarter decisions about the people you recruit—and where to go to recruit them.
It’s also important to consider people who already work for your organization 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 for the jobs but are currently employed in unrelated industries.
For the unemployed, you should perform searches with the state workforce agency to see who is available. In both cases, you are locating the people who are likely motivated and would be excited about the opportunities you offer.
3. Students in the postsecondary system
Finally, companies need to understand the students poised to enter the workforce. Who are they, where are they, and what are they learning?
Successful college recruitment depends on data in so many ways. How many students attended your organization’s events? How many are on track to graduate with the necessary skills to fill your open positions? Data can answer these questions, in addition to showing the ethnicity of grads, the outcomes of exams, and the market availability of the talent you’re searching for.
The Talent Planning Process: How to find the right people for your company
Utilize skills data
Develop a university recruiting strategy
Write the perfect job posting
Use market research data to discover a region with more favorable conditions and larger talent pools
Utilize global data to recruit internationally
What makes NBA franchises and major tech companies so talent-rich? Everyone wants to work for them! These companies don’t wait for talent to drop out of the sky. They acquire (and keep) the best people by building strong talent strategies.
As remote work and higher compensation goals drive “The Great Resignation,” having a comprehensive recruiting process that attracts top talent has never been more challenging.
In the rapidly evolving world of talent acquisition, hiring teams and recruiters can no longer rely on “gut feels” or outdated recruitment 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.
1. Utilize skills data
Skills are the secret sauce to any human resources or hiring manager’s success. Skills give us a granular look at what people can actually do, not just what we think they can do based on the program they completed. Sourcing talent using skills is critical for companies who want to 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 find out:
Where the hotbeds for those skills are located (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 comprehensive skill strategy is the future of HR and the time to adopt that strategy is now.
To help you get started, you can get API access to our FREE Lightcast Skills Library.
2. Develop a university recruiting strategy
If you’re looking to hire interns or recent graduates, it’s helpful to know which schools are producing the most (and best) talent for your industry. 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 hard. Whether it’s a new job or an old job requisition you have on file, recruiters have to find the perfect balance of skills to attract the candidates they want.
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 the job posting strategies of their competition.
But how do you know which skills to include? Will they make your pool too broad? Too narrow? Too expensive? It’s nearly impossible to know without data.
To optimize a job posting you can extract skills directly from a job posting and compare them to the region to find how in demand those skills are, and what skills are related. Don’t forget to layer in supply, demand, and compensation. Need to write the perfect job posting? We can help!
4. Use data to discover a region with more favorable conditions and larger talent pools
Utilize supply and demand data along with compensation analytics to discover people with the skill sets you need that might be interested in relocating. 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
It’s important to know what markets to expand your business in, and what markets hold promising talent. You can look solely at data in the United States, but why limit yourself to the talent and opportunities from 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.
Even when the supply of talent is high, you should evaluate your success and recruiting challenges regularly (monthly, quarterly, or semi-annually). What worked last year may not cut it today. Using objective data equips you to simultaneously tackle recruiting challenges and optimize your strategy..
Creating a solid talent acquisition strategy can seem overwhelming. We’ve put together a few simple ways to use data to make a big impact.
How to retain your workforce
The current labor market is tight. With more job postings out there than people available (or wanting) to fill those roles, acquiring talent is as competitive and expensive as 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 solely buying external talent to incorporating internal upskilling to fill their hiring needs. Upskilling is investing educational resources to help build upon and advance your employee’s current skills. Often thought about in a Learning & Development context, this tactic not only helps businesses transition employees into open roles, but also keeps their talent pipeline flowing by building up the next generation of talent.
The concept of training your employees is nothing new, but upskilling your employees at scale is a big lift for most companies.
“Companies need systems that can continuously identify the skills that drive success, organize and arrange these skills so people can find them, and systems that help individuals and managers develop themselves for the skills of the future” – Josh Bersin
It can be intimidating to start building an upskilling system for your company. 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. This is important because when your titles are normalized, they become the most relevant, utilized terminology across the industry—giving your team the clearest lens for analysis. This allows you to quickly compare skills your company houses against the industry (including your competition). Using that information to strategically position your business for the future is where the power of analysis comes in.
2. Identify skill profiles for your roles
Once your titles are translated, there are labor market tools that automatically sort through your titles, and tag them with the associated skills. Use these 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 know which skills are hot and emerging, 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. With a look into the skills that already exist within your company, you will be able to retain and train employees, thus creating healthy employee mobility.
Key metrics measured in a talent strategy
So what kind of data should you be looking at to build a strong talent strategy? We’re glad you asked.
Compensation, which is sometimes referred to as wages, is the total percentile earnings for the occupation divided by the number of jobs in the occupation in the region.
Along with compensation data, you should also consider advertised salary data for your talent strategy. Advertised salary can be used to understand unique variances of advertised compensation by job title, company, region, and even skill sets. It is not necessarily the actual salary the employee receives—only the salary as advertised.
Job posting competition
By looking at job posting competition, you will be able to see the cities, industries, and companies posting the most frequently for a specific job or occupation.
Analyze and benchmark your diversity standards by using demographic information by age, gender, race, ethnicity, and geography for every occupation in the U.S.
Using a program and institution/region to see diversity breakdown by race, ethnicity, and gender, and identify how this institution/region stacks up against the nation as well as how it compares to the current workforce for target occupations.
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 across the United States that will help you recruit the right talent out of college. The second is education data that helps you narrow down available talent and average compensation based on education level (master, Ph.D., etc.).
Location data represents the environment that you are operating in and gives you the context of the market nuances to base your decisions on. Understanding a location’s labor dynamics and economic landscape helps you know what labor is available, how it’s growing, how concentrated it is, how much of the market you’ve already hired, if your location can sustain growth projections, and if there are enough schools to draw fresh talent from. Location data also allows you to know how your industry is doing compared to others in the region, and if you’re looking at a good market or need to look elsewhere.
Without location data, you’d essentially be playing chess without a chessboard; you can make a lot of talent decisions but they are not strategic unless you know the context of where you are.
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 of 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. 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.