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Why You Should Invest in Talent Management

August 9, 2018

It’s intuitive to believe you’ll see business benefits from enhancing the quality of new hires or enabling people to perform better through coaching and career development tools.  In the field of talent management, we seek to anticipate and take opportunities to improve the attraction, selection, development, and retention activities within an organization, i.e., any stage of the employee life cycle. Then, we seek to deliver a return on that investment via better business results.

However, it costs a great deal of time and money to make these kinds of investments in the first place.  It’s often difficult to convince senior stakeholders around the validity of your ROI predictions if there are no hard facts to back them up.  Updating to best practice in any one of the employee life cycle stages may also imply a major overhaul of current policies and processes, which might look like more effort than it’s worth.

The purpose of this article is to convince you that it is definitely worth the effort. We know this from research, led by practitioners and academics alike, into the commercial benefits of investing in all aspects of talent management. Here are some of the headlines, starting with attraction:

  • According to the Brandon Hall Group’s (2015) research, being more transparent and clear about your employer branding on your website’s careers page can lead to attracting candidates that perform three times better than previous cohorts on the same assessments.
  • Organizations that sync their sourcing and candidate relationship management tools are twice as likely to deliver a compelling candidate experience than if the process is unclear (Aptitude Research Partners, 2016).
  • Assessment toolkits that integrate multiple structured methods, not just rely on singular interviews or methods that lack structure, have the highest validity in predicting the best future performers (Schmidt, Oh & Shaffer, 2016).
  • Nearly 78% of companies report that individual performance goals are exceeded, and time-to-hire reduces when multiple assessment methods get integrated to provide more accurate evaluations (Brandon Hall Group, 2016; Cornerstone, 2016).
  • Organizations that make visible links between how people are recruited and how they are onboarded/developed (e.g. through a consistent competency framework and using assessment results for coaching purposes) have new employees that perform their jobs 63% better than when no onboarding strategy was defined (Aptitude Research Partners, 2016).
  • Organizations that invest in advanced people analytics tools (e.g., to monitor and use capability data to make strategic L&D decisions) can see up to a 93% increase in KPI achievement, and 74% of those organizations then saw an increase in organization-wide revenue of 1% or more (McKinsey & Co, 2017).
  • Developing a “strong learning culture,” e.g., integrating learning as an organizational value, upskilling managers to have effective coaching conversations, offering training programs that complement specific business needs, has been seen to result in organizations being 92% more likely to develop novel products and processes than competitors, being 17% more profitable than competitors, and being 56% more likely to be first to market with new products and services (Deloitte, 2015).
  • 70% of companies that swap out the traditional “year-end evaluation/appraisal” for more frequent (e.g., monthly), goal-focused conversations see their organizational revenue increase (Brandon Hall Group, 2014).
  • When succession planning activities contain an element of online automation, this has the potential to increase the number of internal hires against external hires by approximately 24% (Cornerstone, 2016).

In any of these examples, the scope and scale of KPI improvements or revenue increases will vary and depend on the size and nature of the organization. As the cited research demonstrates trends, you would have to go to specific case studies to see exact monetary figures.  For example, PSI enabled the three Fire and Rescue Services in Wales to save 203 working days, which were previously spent on shortlisting candidates. We did this by introducing an automated sifting process, including combined tests of situational judgement and behavioral styles reducing the cost per application by 96%.

It is possible to predict these kinds of impacts, regardless of which stage of the employee life cycle your work relates to. In the case above, all we needed to do was gather data on the current time investment of staff in the existing process, estimate how much time would be removed by implementing an automated process, figure what that translated to in estimated cost-savings, and then subtract the investment needed to design the bespoke product.

If you want any advice on how to make these kinds of estimates and enhance your stakeholders’ buy-in to your talent management suggestions, feel free to get in touch with the team here at PSI Talent Measurement.

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Jordon Jones

 

Jordon Jones is a Senior Consultant at PSI Talent Measurement.

Click here to learn more about PSI's Talent Measurement solutions.

Claire McCue Claire McCue is the Manager of Digital Marketing and PR at PSI. She specializes in content marketing for the talent management, leadership, higher education, certification, and licensing industries.