Stop Fretting over Talent-Management ROI Already

Pretty funny — yet telling — assessment in the latest HRExaminer report by Marc Effron of the current state of human resource leaders’ abilities to determine and defend talent management’s return-on-investment.

Dollar GatheringI was hooked into reading it — with a slight grin on my face — by the title alone: Talent Management ROI (Ridiculously Overwrought Insecurity).

Effron — an HRExaminer editorial advisory board member; president of The Talent Strategy Group, based in New York; author of One Page Talent Management; and overall well-respected HR expert — starts his treatise (I guess a better description would be his “sad chuckle”) by taking the reader to a recent breakfast, focused on talent management in the financial-services industry, where one participant said having better ROI would help prove talent management’s value.

“Unfortunately,” writes Effron, “my literal response was, ‘Those who worry about talent management ROI are insecure HR leaders who feel the need to justify their existence.’ ”

Pretty hard-hitting. So are his reasons for blasting “any concerns over a lack of ROI diminishing our ability to prove talent management’s value: 1) your CEO either gets it or s/he doesn’t, 2) your CFO won’t believe you anyway, 3) HR’s ROI calculations are often laughable and 4) broad claims [i.e., the ‘generalized research findings’ often used by HR] don’t yield company-specific benefits.”

And those reasons are almost as hard-hitting as his descriptions of the last two on the list, taking aim (for No. 3) at an ROI calculation he says he found on the Society for Human Resource Management’s website (“You can pass a solar system through the holes in this logic, yet it’s not unusual math in many HR departments”) and finding fault with a “Watson Wyatt” finding (for No. 4).

OK, I’ll admit, citing something from Watson Wyatt long after its merger with Towers Perrin to become Towers Watson seems a bit dated, but who amongst you can poke a single hole in what Effron concludes?

If you question the value-add of talent-management activities at your company, answer these questions:

  • Do you thoroughly understand your company’s business strategy?
  • Do you understand how your senior team wants talent managed?
  • Have you created talent processes that are being executed and that reflect the two questions above?

If you can respond affirmatively to those three, it’s likely that your talent-management activities will have a positive return on investment. That should help sooth any lingering insecurity.”


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