Building the Talent Advantage

Being a great place to work is the difference between being a good company and a great company - Brian Kristofek

It’s no secret that the best companies have the best talent, something we at Passionfruit have started to referring to as ‘the Navy Seals’ approach.

In order to be a renowned company, you need A players. To do this you need to ensure you’re attracting, retaining and developing your team. As mentioned last time from Index Ventures research - for early stage founders this means taking up around 50% of your time on people related work.

This week I’ll be running through:

• State of business - employee lifecycle health
• Why we shouldn’t use salary as the core driver (even though it’s tempting)
• EY’s explanation of the 5 puzzle pieces to building the talent advantage

State of business

32% of organizations with a more strategic, advantaged people function are 7.8 times more likely to say their company has successfully navigated external pressures, 6.5 times more likely to say productivity has improved significantly in the past two years and 5.8 times more likely to say they are overperforming significantly in the current economic conditions. - EY 2024 Work Reimagined Survey

This is pretty much as clear as it gets as to why investing in your people ops function is so important. With market conditions across the globe being a continual challenge, and businesses everywhere still downsizing, the importance of having a small but mighty high performing team is prevalent.

In addition to the external economic pressures facing companies today, we are staring at the foot of the mountain of what could be a resurgence of the great resignation in 2025, with 38% of employees say they’re likely to quit in the next year… Quite a significant increase from only 23% of employees in 2023.

As well as this, with the new government policies changing in the UK next year, it is likely we will see a more fluid workforce - so issues that may not have been an issue before may become one. Watch this space ??

Why we shouldn’t use salary as the driver (even though it’s tempting)

First of all - salary alone should never be the sole driver of attracting the best talent. There will always be a better and bigger pay packet, but you want to motivate them by the work they are doing, the mission they are driving, and the team they will be surrounded by.

Secondly, you risk pricing yourself out further down the line when you’re looking to hire more senior and impressive staff. If your precedent is already inflated compared to the market, it’s difficult to come back from when you’re regulating salaries and bands further down the line.

More than this, the EU Pay Transparency Directive (despite the UK not being in the EU ??) means companies will need to be more transparent with their salaries, bands and pay structures, especially with regard to gender pay gap reporting. This will have a ripple effect across non-EU countries, and will especially impact teams that are across multiple geographies. So again, tackling this early on will help as you scale to attract and retain the best talent.

Lastly and very minorly, the projected tax increase by the Labour government means that employers will be paying more National Insurance per employee - which may lead to smaller pay packages for employees across the board. You want to protect yourself as much as possible by not leading with inflated salaries as a value driver/differentiator.

Building the Talent Advantage?

Talent health

• Ensuring your team is happy and there isn’t an unhealthy amount of churn is the focus here. Factoring in work around building a strong culture, benefits and rewards schemes, and career development all contribute to talent health.

AI

• Employers that bring in generative AI usage early, and educate their team on it are likely to have a stronger talent advantage. The more of your team using this, the more time you’re getting back, therefore the bigger the gap is to your competitors.

Rewards & Benefits

• Comp designed to reward both team and individual performance - not based on tenure necessarily. Salary banding, workplace flexibility and benefits offerings (eg. healthcare) are all top rewards for the best performing companies.

L&D

• Training and development programs and working across borders are all exciting opportunities for talent advantage employees. It adds a reassurance that they will still be relevant and needed in years to come.

Culture

• Employee experience, employer branding, trust and empowerment - a few areas to touch on when looking to hire and retain the best talent. Those that rated the highest with a talent advantage were the companies truly boosting team connection (away trips are great for this).

What we’re reading

• Realising the talent advantage
• EY future reimagined report
• Unpacking 2024 layoff surge