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The importance of employee selection and culture fit on competitive advantage

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A McKinsey report in 1997 first coined the phrase “war for talent”. Since then, this term has become instrumental in developing organisational approaches and academic interest in talent management.

Business leaders across the globe have considered winning this war for talent as their single most important preoccupation for decades, due to the perceived importance recruiting the best talent has on gaining sustainable competitive advantage. Indeed, talent management is now one of the fastest growing areas in the field of management studies. Its growth in popularity and relevance is reflected by the number of internet hits the term now generates, which has grown from around 8 million to more than 23 million over recent years.

Much of the current literature that surrounds talent management, however, focuses on the practices of global, privately-owned, and largely US-based organisations. With greater financial resources at their disposal, larger organisations adopt more sophisticated and socially responsive approaches to talent management and HR practices.

Meanwhile, it is SMEs that make up around 99 per cent of all the businesses operating in the UK and whose success is a key barometer for the growth and sustainability of the UK economy. For SMEs, despite limited budget and resources, attraction, motivation, development and retention of employees remain a major challenge and so the talent management practices adopted by smaller businesses have long been recognised as important contributors to their success or failure.

Effective performance in a SME is often measured by growth, rather than profit, which is generally the key indicator in larger organisations. With no place to hide, the speed at which a new employee can gain knowledge and become fee earning is crucial, particularly in one of our key markets, SME marketing agencies. Hence the link between managerial quality and performance in an SME is stronger and the emphasis placed on employee selection is greater.

Perhaps, due to the relative size of the organisation, the links between effective on-boarding, quality of line-management and performance in an SME is stronger than in a larger organisation. But it also means that poor selection decisions in an SME are amplified ten-fold and hence understanding the characteristics of future talent has such a strong emphasis in the employee selection process.

In recent research I carried out as part of my MBA last year, I investigated what talent management philosophies were being adopted by SME marketing agencies and why.

Although 100% of the organisations that took part in the research invested in training and development, it was clear that talent management is not formally recognised, but rather viewed as a collection of HR practices that focuses on all employees equally. The example of talent management in practice was as a tool for succession planning.

With ever-changing client needs and the rapidly evolving technological landscape, coupled with the emphasis placed on “culture fit” and attitude when recruiting and selecting employees, the majority of agencies demonstrated what the literature describes as an inclusive stable philosophy towards talent management. Stability being described as ability coupled with “culture fit” and commitment, which is categorised as “best fit” in the relevant literature.

In simple terms, this means that in general SMEs focus on the positive traits of every individual within their business (Inclusive) and define talent broadly in terms of ‘stable ‘characteristics, such as intelligence, personality, motivation, drive and feeling true to themselves, which are considered strong predictors of future performance. 

In practice, this means identifying strengths in all employees, utilising these strengths and matching people to their best job fit. In terms of future growth it suggests that businesses should seek to recruit and retain, rather than develop, employees that already possess these same attributes.

There is much evidence in the talent management literature and in my research to suggest that this particular approach to talent management is driven by a range of factors; economically SMEs have to spread their limited training budget wide and thin, while a resource dependency view dictates that requirement for future talent is driven by growth, that is largely as a result of a client win. Finally, in terms of an institutional view, it suggests that agencies seek to create a family feel to demonstrate an inclusive philosophy.

Of course, recruiting high-calibre individuals with proven talent, from a limited or well-fished pool, places even greater pressure on an attraction and selection process. And as SME marketing agencies grow sporadically, it becomes harder to identify key positions and so developing a suitable talent pool to fill these positions is difficult.

In a bid for competitive advantage, SME marketing agencies seek employees who add the most value. Therefore, examining your candidate attraction and selection processes is a key factor in determining what talent means to your business and how effective it will be going forward.

Henry Nicholas is a specialist marketing, PR, data and insight, tech, digital and creative recruitment agency that's dedicated to advancing careers and growing businesses.

Our success comes down to building meaningful relationships with clients and candidates. We asked some of our clients what specific, tangible and measurable results they realised by being a customer of Henry Nicholas. Take a look at what some of our clients say about our service here.

If you would like a free, no obligation talent review, please contact John Austin for more details.