In this Talent Management series (Part one: Do you have a lack of talent?, Part two: exploring the employee journey and Part three: getting confused with definitions?) we have defined Talent Management as a series of interconnected development activities that when executed thoughtfully, add value to the employee journey and the organisation’s brand.
As our sector continues to grapple with the VUCA environment and shrinking risk appetites from Boards and executive leaders, there has never been a more crucial time to invest in our organisations. This puts pressure on workforce leaders to provide evidence based measures of program success.
Typically, TM programs are seen as expensive investments and particularly in the nfp sector, these are usually funded by hard fought surpluses. While the business case for investing in TM is generally accepted across Board rooms, we sometimes find ourselves on the back foot when trying to provide tangible proof or measuring success of our TM efforts.
We often think about how to evaluate our programs once they are nearing completion. However, by this time it is often too late. The time for identifying measures for success is at the design stage. Once we have qualified what our desired business outcomes are, we can turn our attention to the most appropriate business metrics that provide independent metrics and standards. Without these, any evaluation and return on investment conclusions leave room for unconscious bias to take hold. The consequences of using incorrect data for decision making then speaks for itself.
With the right measurements as our focus, we are able to identify both employee productivity improvements and overall business improvements. So from the vast list of metrics that we can choose from, which ones are most likely to highlight the success or otherwise of our TM efforts?
One key business measurement to consider is Return on Workforce (ROW).
Return on Workforce = Operating Income
Total labour cost
TM programs aim to improve ROW percentages by positively impacting productivity, discretionary effort, increasing organisational knowledge, skills and capabilities, attracting and sourcing talent, to name a few. You will notice that ROW is outcome focussed and moves away from the traditional activity based reporting metrics. These still have a part to play in measuring success and go towards the direct and indirect labour costs for ROW. Here’s a sample of some of these:
- HR Cost per employee: How much are you spending on HR
- Cost per recruitment: Cost for recruiting, hiring and on boarding
- Time per recruitment: How quick is the recruitment process
- Employee turnover: Percentage of employees leaving employment with you for any reason
- Revenue per employee: Total revenue divided by number of employees
- Average performance rating: How well do employees ‘score’ in your performance reviews
- Identified TM employee retention rate: TM identified employees staying your organisation
- Bench strength: measures the depth of the succession pool for a key position
- Average retention periods: How long do your employees stay with you
- Employees eligible for retirement: Can include both voluntary and involuntary
- Employee satisfaction metrics: usually collected through surveys
Being able to draw from these metrics and make conclusions from data is just the first step in the evaluation process. Data in itself is inert, purely objective and provides hard evidence. What metrics do not do however, is supply us with the answers. We have to apply our knowledge, experience and wisdom to the metrics to critically assess the success of our TM efforts.
If you would like to know more about Talent Management programs, contact Andrea Collett.