The changing role of reward in managing the talent pipeline

talent pipeline

Need to know: 

  • High employment levels are forcing organisations to rethink their employee value propositions, progression pipelines and retention strategies.
  • Demonstrating a long-term commitment, nurturing talent and even providing secondment opportunities can help boost staff loyalty.
  • Flexible working options can be key to appealing to a wide range of employees, not just those with caring commitments.

Striking a balance between retaining experience and developing fresh talent presents a serious challenge to employers. But, by understanding demographic drivers and adopting a creative approach to rewarding talent, organisations can harness the benefits of a diverse workforce.

Although talent pipeline management is a perpetual issue for many organisations, the size of the challenge has certainly grown over the last decade. The removal of the default retirement age has resulted in older employees staying in the workforce for longer, and employment is at its highest since records began in 1971.

David Wreford, partner at Mercer, says this dynamic is forcing organisations to rethink their employee value proposition. “We used to get three or four calls a year about this, but it’s now this number every week,” he says. “Employers want to be certain they take the rights steps now to secure the talent they’ll need in the future.”

Offering opportunities

Providing the right reward to employees is essential. While younger employees tend to favour more short-term incentives such as pay and bonuses, Duncan Brown, head of consulting at the Institute of Employment Studies (IES), says that career progression is the top driver for engagement.

“There’s no evidence that paying above market rate delivers any additional motivation,” he explains. “Employees are much more concerned about how they can progress within an organisation.”

Unfortunately, as many middle management roles were stripped out to save money following the global financial crisis, these career paths have become less defined. Brian Kropp, HR practice leader at Gartner, says that the average time between promotions has increased from 2.5 years to four. “When it’s hard to move up in an organisation, employees leave,” he adds. “We’ve seen some employers bringing back these intermediate levels to support engagement.”

Staff development

There is now more focus on supporting employees with their career development, and Brown has seen employers overhaul their approach to the talent pipeline. “Organisations tend to have pockets of development, for instance graduate and senior management training,” he explains. “As this can overlook everyone in between, there’s been a shift to make development much more inclusive.”

There has also been a change in people management roles within some organisations, with Wreford saying that, rather than owners of staff, they are much more like their agents. “Their role is to nurture talent, so they will look for opportunities such as projects or training that are in the employee’s interest. This can help them develop within the organisation,” he says.

Some take this a step further, looking beyond the organisation for career development opportunities. This might be a secondment to a partner organisation, to help them gain new skills or, as Kropp explains, it can sometimes appear even more altruistic. “Rather than ignore the competition, some organisations are helping their employees develop skills to make them more attractive to other organisations,” he explains. “It sounds foolish, but demonstrating this long-term concern about their career actually makes employees more loyal.”

Retaining experience

As well as supporting the needs of those in the earlier stages of their careers, retaining the experience of the older segment of the workforce is also important. Having their knowledge and skillset is good for the organisation, and can also play an important part in developing fresh talent.

Kate Cooper, head of research, policy and standards at the Institute of Leadership and Management, says it is essential to think more creatively around roles.

As a starting point, she recommends employers break the link between status and the size of an employee’s team. “Managing a team of people is a job in its own right, and it may be better to use a senior manager’s experience in a more valuable way,” she explains. “Splitting the role can give a younger employee people management experience, while retaining the skills and knowledge of the more senior person.”

Once freed from the responsibility of managing a team, an employee’s experience can be deployed more effectively. This could include training roles, to enable their skills to be passed down, as well as specific projects.

“This enables [an organisation] to bring together employees from different parts of the business, which can help with development at all levels,” Cooper says. “But there’s also that lovely feeling of a job that can be finished, which isn’t something that necessarily comes with line management.”

Flexible approach

Although flexibility tends to be marketed at employees starting their families, being able to adjust or reduce working hours can also be attractive to older employees. Some may have other commitments or wish to explore new opportunities, need to care for a relative or partner, or simply want to slow down a bit.

Being able to move into retirement on a gradual basis also helps to combat some of the issues that can come with a more abrupt move. “It can be an awful cliff edge,” says Cooper. “Suddenly finding yourself out of work after 40 years or so can lead to mental health problems and depression.”

Reward, and especially the flexibility now available around pensions, can be particularly valuable tools at this stage. For example, rather than keeping to a five-day week, an employee might drop down to three days at age 60, using their pension to top up income. This could then drop to two days when they reach state pension age and retirement income increases again.

Wreford says that employers are getting smarter around this flexibility. “There can be administrative difficulties, but there’s no reason an employer couldn’t offer flexible working across the board,” he says.

Mercer’s Global talent trends study, published in April 2018, found that 51% of employees said they would like their organisation to offer more flexible work options, and with the workforce changing significantly as new dynamics such as automation and outsourcing come to the fore, employers must find ways to manage the talent pipeline more effectively.