Show us the money. Increasing pressure for ROI on talent management initiatives

Talent management is an integral part of the Human Resource role, but now HR professionals are being asked to provide some financial evidence. Four out of five (82%) of HR professionals are under increasing pressure to clearly demonstrate the financial return on investment of staff development a global study by Right Management has found. Although two thirds (65%) of UK-based senior HR executives believe that they are already highly effective at measuring the impact of their talent management initiatives, 85 per cent said that they are under rising pressure to demonstrate the outcome of these initiatives in monetary terms.

The increased demand for monetary-based metrics was felt most acutely in BRIC economies including India (93%), China (91%) and Singapore (93%). The pressure appears to be less severe in Western Europe but there is still a clear strain on HR teams with 61 per cent of German HR executives and 75 per cent of French HR executives reporting increased pressure to use metrics that indicate a clear return on investment.

Talent and career management specialist, Right Management’s global survey, examined the HR challenges of 2,500 senior executives in 14 different countries, and Mark Hodgson, talent management practice leader, Right Management says: “It’s a tough call to demonstrate the ROI on talent management initiatives. Typically, it’s been measured by collecting ‘happy sheets’ based on feedback from employees but this is a fairly light touch which is no longer enough to satisfy the board.

“Today’s economic climate is compelling HR executives to demonstrate that their talent development initiatives are worth the investment by using convincing metrics which indicate a substantial monetary ROI.”

Right Management has the following advice to improve organisations’ ability to demonstrate the ROI of their talent management initiatives:

• Establish criteria in advance – Before embarking on talent initiatives, establish what success looks like and what the quantifiable indicators of that success are in financial terms. It’s not always easy to apply metrics to people so it’s important to really consider what can realistically be measured before rolling out the programmes.
• Link strategic functions – Join strategic functions together so the talent agenda clearly links to the overall business strategy. By doing this, HR executives can develop an overall scorecard which clearly demonstrates that money invested in talent programmes adds value to the business.
• Review initiatives over time – In order to truly demonstrate that you’re making a difference to your business, you need to monitor talent trends over time. Are people in your organisation rotating within the business? Are they moving forward and being fast tracked in their careers? Doing strategic reviews requires time and investment which needs to be planned for at the beginning of the process.
• Tailor your programmes to individual groups – If your organisation needs an employee engagement initiative, it is important that you adapt your approach to suit different employees or groups within your business. Not everyone needs the same level of training or coaching and by making your programme relevant, you will be able to measure the progress in particular areas or departments. For example, you might consider a coaching clinic where a specialist coach would see a number of employees in pre-booked slots throughout the day. This provides employees with tailored advice in a one-on-one environment and enables the HR team to review progress against specific targets more effectively.