Moving beyond traditional talent acquisition and retention strategies

By Dr. Martin Hofmann, Executive Vice President of Human Resource, Orga & ITP of Volkswagen and David Plink CEO of Top Employers Institute

Executive summary

In this dramatic time of change, Top Employers must move beyond traditional talent acquisition and retention strategies to focus on economic value-based talent management. Regular organisational reviews as a way of adaption to business challenges, market impact and new technologies are forcing Top Employers across industries to rethink their human resource strategy and practices. Suddenly, there is an implicit challenge and criticism from employees to their employer, as cost efficiency, stricter performance orientation, a permanent exchange of competencies and, as a result, the steady renewal of organisational structures calls for new methods, tools, and processes. Managing the selection and separation of talents is becoming key for employers. Driving performance in the company to develop a high talent density organisation, applying new technologies with artificial intelligence to abolish inefficiency in processes and tools are core success indicators to keep the company a top performer and Top Employer in their industry. In this time, where major transformation has arrived in all industries, it is of utmost importance to every company to take care of the impacted talents in a professional manner. This needs new ways to define Top Employer excellence and correct the narrative that Top Employers are immune to professional separation management to maintain a dynamic, successful, and adaptable workforce.

Introduction

In today’s rapidly changing business environment, often called the “new normality,” driven by technological advances, globalisation, and evolving economic dynamics, the demand for skilled workers has skyrocketed, resulting in a growing talent shortage.  A Korn Ferry study from 2021 predicts that skills gaps could result in more than 85 million unfilled jobs worldwide. Meanwhile, according to a 2022 Glassdoor report, 75% of job seekers consider a company’s reputation before applying. Being seen as a Top Employer has had a significant impact on talents and within the relevant industrial community.

The Top Employers Certification is the way to prove that the conditions for employees to develop themselves are at an adequate, often best practice level. A key attribute was to be attractive to potential recruits in talent acquisition and during their life cycle on board. However, this is has changed significantly, in the last few years after the COVID crisis.. As the economic landscape evolves, the influence of new technologies has arrived in all industries. Moreover, geopolitical impact and the disruption of value chains due to a global separation of spheres push companies worldwide into a mode where new efficiency requirements impact human resource management. High talent density approaches to strengthen employee performance and quickly adjusting organisational structures to new market needs are now essential.

In these tumultuous times, company success through a more efficient and leaner workforce is at the forefront of employers’ agendas. This leads to debate and confusion. On one side, the question is whether the investment companies have made in becoming a Top Employer over the past decade can be retained to win more and more specialised talents with rare skills. On the other side, the question is how to drive workforce reduction and create professional separation management. This contrast of investing in talents on one side and separating from talents on the other side is part of the same coin. However, the compounded technological shift in labour markets and industries now poses significant challenges for employers to innovate and remain competitive in a globalised economy. The key question is: what is the definition of a Top Employer in today’s environment?

Key human resource professionals from a variety of industries were interviewed to answer this question and share the practices of market leaders. These interviews provide valuable insights into the strategies used by leading organisations and help to reflect on what is needed for an up-to-date Top Employer definition. Additional case studies and practical insights were analysed to prove and support some key findings. Using thematic analysis, it was possible to synthesise key trends and strategies, especially those of Top Employers who can maintain their position in these ambivalent times. Three key areas are shaping an impactful part of an updated narrative when it comes to a Top Employer definition: first, core economic value and talent management; second, a consequent review of organisational and individual performance; and third, professional separation management.

Core economic value and talent management

Talent management has emerged as a cornerstone of success. Insights from Smith in 2020 suggest that companies excelling in this area enjoy a boost in employee engagement, productivity, and overall performance. This is not just about human resources; “Talent management is a strategic imperative that drives organisational success.” It is about recognising that the right people, effectively developed and engaged, can be the difference between a company that thrives and one that merely survives.

Under these circumstances, strategic workforce planning becomes a helpful solution. In practice, strategic workforce planning along certain competencies mostly gives good insight into what is coming and needed in the next two to three years. However, in long-term planning, it often remains a theoretical and analytical exercise. This needs to be converted into organisational renewal and consequent management of measures related to workforce capability and size.

Strategic workforce planning requires organisations to consider both economic trends and business developments in a rational, forward-looking manner. By aligning workforce planning with business value, organisations can minimise workforce size while ensuring that the right skills are in place to drive growth and profitability. This rational approach, combined with cascading action plans into the last business unit and clear economic indicators for each planning cycle, helps to optimise the workforce. This ensures it is right-sized and strategically positioned to meet current and future business needs, supporting better financial performance.

The research above links talent management to improved financial performance, while Collings & Mellahi’s research in 2009 found that it enhances a company’s economic value by optimising its workforce. Brown, in 2019, echoes this, noting that such practices lead to higher employee satisfaction and retention. Moreover, Jones, in 2019, observes that effective talent management is key to an organisation’s agility and resilience, allowing it to bend but not break in the face of challenges. The research paints a clear picture: organisations that prioritise action-based talent management see the benefits in their cost structure and business value creation. But this is not just theory; real-world examples show the impact of these strategies. It is a testament to the idea that considering economic value in talent management is more than a nice-to-have; it’s a must-have for organisations aiming to stay actively ahead.

Looking into the practice of human resources management teams in  China within leading companies, it is demonstrated that management teams who manage their workforce with the principle of “right sizing to expected forward-looking volume” have faced severe challenges from both internal and external perspectives. Like many other top global companies, they have realised their overcapacity problem in the Chinese market in the recent past. They must take proactive measures to manage workforce structure under a new paradigm. Creating workforce flexibility while ensuring a stable supply of new competencies and having human resource strategies in place to adapt more quickly to shifting volume and competence demands is essential.

While the workforce must be planned forward-looking and more strictly according to product volume and competence demand, efficiency KPIs often do not allow contingency planning anymore. Active apprentice strategies, an ideal workforce structure of experienced senior and junior profiles, and innovative cells of internal talents and external experts need to be included in the planning to increase flexibility and adaptability during transformation times. As a result, Top Employers need concrete plans to size, up-skill, and re-skill their workforce, including necessary rotation if the structural aspect or competence level does not serve the business appropriately.

Consequent review of organisational and individual performance

An organisational review is not new to the Top Employer definition, as it linked strategic goals to the organisation for decades. However, the dynamic of how organisations structure their workforce and way of working is becoming a core criterion for success. Reviewing the current workforce structure helps identify skill gaps, inefficiencies, and areas for improvement. The overall organisation of work, processes, and decision-making structure amplifies success when reviewing Top Employer impact in different industries. Especially in disruptive industries, modern workforce and process structures are key differentiators of success in speed and efficiency.

Regular reviews and benchmarks help Top Employers make informed decisions about staffing, restructuring, and training. Make sure the workforce is adaptable to future needs. While this may be uncomfortable for units wishing for stability, it fosters operational efficiency and long-term growth. As Brown & Jones highlighted in 2019, regular assessments help identify inefficiencies and areas for improvement, leading to better performance. These reviews allow companies to assess their structures and operations, ensuring they are on track to meet both short- and long-term goals. Williams, in 2021, adds that companies that conduct these reviews are better equipped to identify new opportunities and mitigate risks, positioning themselves for success.

Companies should use a systematic, data-driven approach to conduct effective organisational reviews, including evaluating structure, employee performance and gathering stakeholder feedback. Researchers emphasise the importance of identifying bottlenecks, redundant processes, and skill gaps that slow performance. Continuous reviews, rather than one-time events, ensure organisations can fit market changes, improve efficiency, and refine strategies.

In practice, the final value of organisational renewal and restructuring always comes with reviewing and matching individual performance. Since organisations are composed of units, teams, and individuals, the questions come down to the core: who is the right person for the challenges ahead? Each function needs to be analysed for occupation or deletion. If there is a need to occupy the function, the question is, who can do it? In terms of competencies, skills, and performance, human resource strategies need to answer these questions during restructuring. Therefore, periodic personnel changes are essential to maintain competitive strength. A basis for this is not only excellent training and skill management but also a performance-driven culture, including a clear approach to differentiate talents. This includes the creation of talent relativity to award top performers and address low performers with the same distinction and clarity. Leaders and managers are crucial in this process but are often the weakest part of this value chain. It is essential for a high-performing organisation to address the right level of expectation and provide honest feedback to those who do not meet the set level. Human resources strategies need to support and select the performance and internal employability level in a revolving process.

Especially in challenging market situations, internal and external employability is key for talent development, which is not limited to the current position. Future companies that want to be Top Employers need to consider and address this openly and frankly, not just rest on good, solid, or acceptable performance in their current function. Taking transformation seriously and believing in the strategic role of personnel changes, most employees will likely be affected by new assignments, pivoting functions, or efficiency measures. As the organisation’s long-term health lies in its ability to renew and change, human resource strategies in this field are crucial to support high talent density in all aspects. Experience shows that managing resistance to change, especially during job cuts, is a critical success factor. The agility to change processes, tools, and methods is a differentiating factor for future Top Employers when assessing forward-looking, successful HR practices.

Professional separation management

One of the most common feedbacks during job cuts at Top Employers is the phrase: “Top Employers don’t lay off people.” However, the time to leave an organisation, voluntarily or involuntarily, is part of the employee journey. This process is necessary for Top Employers to maintain competitiveness, as it allows for the continuous renewal of the organisation with new influences, skills, traits, and competencies. This does not contradict talent retention strategies; rather, it complements them. Both parts underpin the need for companies to orchestrate healthy competition among talents based on transparent organisational and individual performance criteria and honest feedback.

When it is time to leave the organisation, effective separation management is critical to minimise the impact of employee departures on organisational performance and maintain a positive workplace culture. As Williams in 2021 points out, having professional separation strategies in place can significantly enhance an employer’s brand and reduce turnover rates.⁸ When managed well, separations can lead to higher employee satisfaction and morale, which in turn supports organisational stability. For example, one multinational company that implemented a comprehensive separation management programme saw a 10% reduction in turnover and an improvement in its employer brand. This example may be the best endorsement of this point of view. In addition, Smith in 2020 suggests that companies that implement professional separation strategies often report improved employer branding, which can attract top talent and create a more resilient workforce.

To achieve these benefits, organisations should establish clear, well-structured separation management systems, including well-defined policies and procedures to ensure fairness and consistency. Offering support to departing employees, such as career counselling or job placement assistance, can help make a positive impression and maintain strong relationships after they leave. In examining best practices, data from the Top Employers Institute shows a slight decline in the consistent use of formal offboarding programmes—from 85% to 79%. While most Top Employers maintain structured exit processes, this decline signals a potential concern. However, the increase in recognition of departing employees, from 50% to 54%, reflects a growing appreciation for their contributions. Similarly, the increase in post-departure conversations, from 18% to 21%, and alumni networks, from 16% to 18%, suggest an increased focus on maintaining positive relationships with former employees. These efforts can lead to a stronger alumni network, potentially aiding in rehiring and promoting the organisation’s brand.

While there is still significant room for improvement in this field across all industries, the trends observed in these practices point to a shift toward better recognition of departing employees and a greater emphasis on post-departure relationship management. Companies that excel in these areas are likely to experience not only reduced turnover but also improved employer branding and a more resilient workforce. The rise of more fluid employment relationships and the decline of lifetime employment are driving a shift toward long-term talent relationship management. Employers are increasingly focused on nurturing these relationships after employees leave, providing opportunities for future rehiring. Alumni networks and referral programmes allow organisations to stay connected with former employees, attract them back, or leverage their networks to identify new talents. This evolving approach reflects a dynamic and interactive talent ecosystem that extends beyond an employee’s tenure and contributes to long-term organisational success.

Based on other best practices, the approach to managing separations demonstrates a strong commitment to fostering positive relationships with departing employees while maintaining the integrity of the organisation. For managing separations, processes are needed to accompany this phase, starting with defining the ways to identify positions or functions that need to be abolished and defining selection mechanisms on the people side. Along with this first approach of a professional separation identification mechanism, it is important to integrate strategies for different incumbents in affected functions and positions. Best practices include programmes to facilitate departure for employees close to retirement age, programmes for re- and up-skilling, as well as measures of downgrading, ordered position transfer, secondments, and other assignments within the internal and external labour market. A significant trend among Top Employers is to invest in strategies to bridge this period and invest in this part of the talent lifecycle. It becomes clear that in challenging times, the last part of the departure process is as important as the talent acquisition part. However, not enough strategies are observable in the market.

A benchmark is a professional, clear, and structured process for separations, where the company ensures that both the management team and employees are well prepared for the transition and the ultimate decision of no longer working together. This is especially crucial in companies that have never experienced or applied a professional separation process. A key best practice was the on-site transfer hub, which allowed employees to cool off and maintain a connection with the company, creating a smoother exit process. In addition, the company’s focus on offering a variety of support options, such as on-site career consultations for employees, highlighted their care for departing employees, enhanced their employer brand, and fostered a resilient workforce. Furthermore, the company’s recognition of the importance of long-term professional relationships with former employees through alumni networks and referral programmes exemplifies a forward-thinking approach that not only aids in talent reacquisition but also strengthens the company’s reputation as an employer of choice.

Conclusion

Human resource management is no longer just about filling roles or managing processes. Companies must adopt strategic workforce planning, regular performance reviews, and effective separation management to navigate these challenges. These practices ensure that organisations remain competitive, driving growth and profitability. By focusing on core economic value and talent management, consequent review of organisational and individual performance, and professional separation management, companies can maintain their status as Top Employers and thrive in the “new normality.”