Monday, September 30, 2013

How to Measure ROI on Talent Management

The more definable "Return on Expectations” need to define what business results you are hoping to achieve.

People are the most critical asset in organizations today, business is also moving from treating talent as a human resource to thinking talent as human capital, not just the cost, but the investment for the future, and from extended research, there are clear linkages between strategic talent practices and improved corporate performance. However, what’re the guidelines to measure ROI on talent management effectively?

  • The values ROI delivers in talent management must be a subset of the organizations' own measure of created business value. Take a look at what is important to your senior team and figure out which metric to use. Any talent management initiative can be measured with ROI to reflect the key set of business value; In order to make TM a viable sought after area from the business leaders, build a Talent Scorecard with metrics that they care about is the best way to measure ROI.  It is the best way to measure success and keep key stakeholders engaged.
  • A good starting point is to look at what you currently do and where do you want to be. Sometimes a guided questionnaire can help framework your intentions and, therefore, demonstrate clear logics. Such as Why are you implementing talent management processes - what's the reason you're tasked for making the investment in the first place? What're the good mixes of character, mindset and skills enable the future of business growth. etc. Once you've defined those clearly in the context of your organization that should give you the critical factors you can measure progress on.
  • Macro approach vs. micro Approach. Take a macro approach to well align the talent strategy with the business vision and goals, then take a micro approach to identify programs and initiatives within your talent management strategy, learning and development programs, organizational performance goals, succession planning objectives. Establish benchmarks. For example, you might be investing in leadership development programs because business unit x is growing and don't have sufficient people to fill critical jobs there. If so, then the task is to look at the impact of that business unit being under-resourced. The more specific and linked to priority initiatives the better.
The more definable "Return on Expectations” need to define what business results you are hoping to achieve, and this is essential for all business units to be consistent with their goal setting and measurement (a function of the Vision and Alignment aspects of leadership). Thereafter, once you've designed your activities to meet those goals, measurement becomes a matter of determining, "How well did you meet collective goals. JUST trying to measure ROI often confounds your contributions to the top or bottom line with everyone else's efforts. ROE is more definable, and, therefore, more measurable.


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