Friday, October 16, 2015

How to Measure Effectiveness of Talent Management to Reach Corporate Goals

The best performance management system needs to tie everyone in the organization to company’s profit and also company’s rewards.

People are always the most invaluable asset in organizations, and Talent Management is one of the most important, but challenging disciplines to accomplish. Talent management is studying people performance via assessments, utility analysis, and other methods which help companies evaluate the value they are getting from their people. However, many metrics is too transaction focused, not sufficient to provide management, especially top level executives a clear fact-based strategic insight on the most invaluable asset of an organization - People; so how to measure talent management effectiveness, link metrics to business strategy, and reach corporate goals seamlessly?

It makes sense to use the added value in terms of Human Capital as a KPI- not as a KPI for the HR function, but for the company.
In finance dominant organizational culture, people have been called human cost, human resource, human asset and human capital. Human Capital does make sense within the context of the goals of a company especially when you consider Human Capital is the largest intangible asset of a company. Some call it Profit and Loss for people and Learning (PLPL). Performance indicators need to focus on measuring quality, quantity, time, and cost, revenue growth, profit improvement, margin targets, product variety for stability, turnover, shareholder/owner return and talent sustainability are a very few. Whatever is not currently exceptional must be improved and that which already is brilliant must be maintained. Every function talent managers touch and activity HR handles have potential metrics for improvement comparison: engagement, cost control, return on incentives, recruiting efficiency, the number of stars rejecting outside offers, speed in revising performance objectives, clarity of organizational structure, depth of backups in succession plans. By tracking these measures, you can focus on where targets are not being met that support planned revenue and profit levels, and what actions might be taken to improve at the individual, practice and corporate levels.

The more aggressive performance indicators can be defined to measure the effectiveness of talent management at the strategic level.The typical HR KPIs like employee satisfaction index, attrition level, HR productivity, average employee age, average learning hours per employee, the average cost per hire, the average spend on employee welfare, average employee longevity etc, are all relevant, but some of them look a bit lacking in biting power. The more aggressive performance indicators can be defined to measure the effectiveness of the HR strategy, policy, frameworks, processes and structure on the floor as far as organization health, culture, conducive work environment and quality of resources are concerned. Therefore, some of the following parameters may be brought into the scope of HR corporate targets:

-HRM dispute density, no of HRM-related disputes registered in a year.

-Discipline index - no of disciplinary actions taken during a year per, say for internal purpose

Average time to dispute resolution.

-No of HR policy exceptions granted per year.

-No of breaches of statutory compliance per year.

-Average employee competency index (can be included in the annual report) – this is pretty complex – you can start with a definition and have to improve upon over time.

-No of HR innovations per year. How does one define or benchmark HR innovations?

Corporate targets as Performance Indicators often make more sense on a very high level of the organization. The ability to realistically impact that particular corporate target has to be within the sphere of the individual, because it otherwise will be an unreasonable objective to be measured on. On lower levels of the organization, the corporate targets should of course then be broken further down for the business units to accomplish the overall goals. As for specific KPIs, it very much depends on the business you are in. A somewhat generic KPI could be in terms of responsiveness and reaction to client requests, which could perhaps be applied to more or less all levels of an organization.Performance Indicators like employee satisfaction, absence, employee turnover, high performer turnover, safety, diversity in promotions for measuring people and organization. Some of the most important metrics are those that look at previous internal employee surveys and focus in on what needs to improve. If the people in the organization said that you didn't provide transparency, then that became a metric for improvement. What did they really mean, how do you work with the entire organization to improve it - leaders, managers, employees all need to be considered. Part of the role of a talent manager is to address what is not working in the employee experience, so adding these and making tangible changes will help achieve all of the other metrics. And it means there is always something new to be working on.

Too often consultants, HR professionals, and other well-meaning individuals deploy their favorite instrument in an effort to understand something about talent management. Sometimes organizations create their own measures with little understanding of how measurement works. The best performance management system needs to tie everyone in the organization to company’s profit and also company’s rewards, and at the same time, there are individual performance incentives which are measured against personal goals. This keeps all employees working together while at the same time push the individual to exceed their personal goals. It is a win-win for both individuals and the organization.


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