Are You Watching These Five Indicators of Effective Talent Management?

by Shawn Price, president, SuccessFactors, an SAP company

effective talent managementExecutives have come to recognize that their most valuable resource is talent. But how can firms best manage this increasingly diverse, widespread, and changing resource in line with business objectives?

The field of talent management has become gradually more sophisticated to address this challenge, according to Talent Management MarketScape Reports from IDC.

  • Technology is now globally deployed and fine-tuned to meet local needs and bring a worldwide workforce together.
  • Human resources solutions are heavily integrating with company ERP systems, making it easier to align a company’s needs with HR’s ability to deliver.
  • Advances in analytics have allowed companies to maximize the return on employees and monitor a company’s strengths and weaknesses in human capital management (HCM).

With all of these advancements, I continue to see customers take on a more unified approach to talent management. They leverage more effective recruiting, performance management, compensation planning and learning systems – and they integrate each solution with the other. Implementing these technologies has given companies all the tools they need to be successful.

But truly effective talent management strategies need executives to capitalize on the insights that HR technology delivers about their team’s demographics.

Here are five key indicators that executives can monitor to ensure their organizations are engaged, productive, and staffed to perform:

  • Voluntary Termination Rate: The biggest indicators of job dissatisfaction are high turnover and low productivity.  Failing to identify these signs regularly results in the loss of high-performing employees. Being aware of these signs makes you better equipped to intervene through proven means of increasing performance and employee satisfaction, such as improved working conditions, job training, and leadership development.
  • Performance-based Pay Differential: High performers have been found to voluntarily terminate even when unemployment rates are high. Why? They expect a strong correlation between performance and reward. In fact, they require greater rewards to feel the same level of job satisfaction as low performers. To keep them, executives need to make sure that high performers’ inputs-to-outcomes ratio is equal to or greater than the ratio for low performers.
  • Return on Human Investment Ratio: Comparing operating profit to total compensation is a determination of how much profit you’re earning for every dollar invested in employees. This can help gauge productivity based on changes to workforce mix. For example, if you recruit more expensive talent, you might expect greater productivity from each higher-priced employee. While higher productivity is preferable, it is also important for organizations to check for warnings signs of employee burnout or under-staffing.
  • Male-to-Female Managerial Staffing Ratio: Firms with three or more women in leadership roles exhibit stronger organizational health and superior financial performance, according to a recent study by McKinsey & Company. Monitoring the gender balance within your workforce can promote diversity and help ensure a lack of gender bias in the workplace.
  • Quota Carrying-to-Non-Quota Carrying Ratio: This may sound complex, but it really shows the balance between people who carry the company’s most important key performance indicators and the number of people supporting them. If there’s a lack of support, opportunities are missed and the company cannot reach its targets. Conversely, if a company’s ratio trends heavy on support staff and light on quota carriers, it creates inefficiency in the organization.

The importance of connecting your people and business strategies to drive results has never been clearer. By leveraging HCM technology to keep touch with the key indicators I mentioned above, high-performing organizations are better able to identify pain points within their workforce early and act fast.

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