Category Archives: HR analytics

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.”


Latest Hackett Study on “World-Class HR”

world class HRIs your HR department world-class? Would you like it to be? It wouldn’t hurt to check out the latest Book of Numbers research from the Hackett Group, which has been putting out these reports for the past 17 years. Hackett defines “world class” as “companies that achieve top-quartile performance across a weighted array of efficiency and effectiveness metrics.” The findings are based on detailed benchmarks of Global 1000 companies over the past two years.

World-class HR departments make far greater use of self-service for payroll, training, total-rewards administration and staffing services than typical companies do. They also focus on keeping it simple: they use nearly 70 percent fewer job grades, 40 percent fewer health and welfare plans and 40 percent fewer compensation plans than typical companies of their size. They have 20 percent fewer managers but with greater spans of control, which leads to streamlined management, reduced costs and quicker decisionmaking, says Hackett. They’re also better at outsourcing than typical companies, retaining fewer internal staff associated with processes that have been outsourced, which helps them realize greater cost benefits from the arrangement than other companies, which tend to make few internal changes after outsourcing.

World-class HR departments are heavily focused on employee development, says Hackett. They dedicate 15 percent more in spending and allocate more staff than typical companies do to strategic workforce planning and tend to have more staff skilled in areas such as anlytics and modeling. They’re focused on identifying skills needed by their company today and in the future, and often take a “multi-year” perspective that lets them develop needed skills internally. They have nearly twice the number of internal placements than typical companies, and are able to recruit staff externally much more quickly when necessary. They also take a rigorous approach to employee engagement, measuring it regularly and equipping managers with the skills they need to guide people effectively.

In addition to being more tightly integrated with business strategy than their counterparts at typical companies, world-class HR departments are more engaged in managing and facilitating organizational change. And, while 20 percent of typical HR departments report metrics for HR-managed projects, world-class HR departments do this three times more often, and close to 80 percent report organizational metrics for change initiatives. Doing this, says Hackett, “helps HR leadership build credibility with executive management.”

What’s the Big HR Analytics Holdup Here?

134209528--analyticsYet more concerning news on the HR analytics front. This time in a recent survey from ACT Bridge (free with registration) finding 56 percent of employers are still failing to measure the return they’re receiving on their talent investments.

Equally troubling, its release states — is that, among those employers who do measure the ROI of their talent invesments (they call it RTI to account for the specificity), “only 42 percent measure the RTI of their education and training programs, 32 percent measure the RTI of their HR information management tools and systems, and 25 percent or less measure the RTI of the recruiting firms, job boards, social media sites and other key resources they use.

As Kurt Ballard, ACT Bridge principal and chief marketing officer, puts it:

These findings are disconcerting for two reasons. First, organizations that actively measure RTI gain a quantifiable metric that can be tracked and used to establish critical performance benchmarks that are instrumental in making decisions that produce desired results. Second, measuring RTI is a powerful way to establish and reinforce the strategic value of HR to senior management — which is especially meaningful in today’s data-driven, cost-conscious business environment.”

This is certainly not the first time we’ve caught wind of a troubling hesitancy — or inability — on the parts of employers and their HR leaders to accurately track and analyze all the data they’re now collecting — talent management and otherwise.

Our most recent look on our magazine’s website, HREOnline, comes in this December news analysis by Senior Editor Andrew R. McIlvaine concerning a KPMG survey that shows all the specific analytical merits of tapping into a centralized data source, yet also shows the continuing foot-dragging by most organizations’ top leaders.

Much earlier in the year, in April, Web Editor Michael J. O’Brien wrote about this survey by Taleo and the Human Capital Institute showing only 43 percent of about 600 polled employers believe they’re adept at analyzing workforce data.

Here’s another interesting piece we ran on our website from A.T. Kearney, likening the mistakes of baseball talent managers of years past to employers’ current mistakes in using the talent-management data they’re collecting correctly.

This Leader Board blog has been frequented by similar findings as well: in this May post by Editor David Shadovitz about compensation professionals’ apparent lack of skills in analyzing data for their function, and in this post — also in May —  from O’Brien on the need for HR professionals to learn how to better “tell the story” of the HR analytics they’re collecting.

There’ve been other reports through the years (I recall writing a few clarion calls for better HR analytic skills myself). Just can’t figure out what the real holdup is, with so many experts calling for this change.