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This is the fourth and final part in my Analytics for Talent Management series. In this part I will cover what analytics I think should be used for standardized talent Management analytics.

I know that Jason Averbook holds the topic of standardized talent metrics closely to his heart – and I completely agree with the importance of standardized analytics – so I wanted to list a few analytics I think customers should be looking at.

Personally I think organizations need to be measuring the quality and success rate of their processes, particularly the processes around recruitment, compensation, succession, and development. I also think organizations should be measuring the cost of these processes versus the increase in operational performance and quality of the programs in place. While I know success is measured differently at different organizations, I believe there are common grounds for the way success is measured. I also believe that with common analytics must come common industry benchmarks, so that organizations can measure themselves against industry standards. Not all of the analytics are useful without some sort of context to view them by. And finally, I also believe that it is important – and even necessary – for organizations to be able drill down into analytics to find the specifics behind the analytics. For example, a Talent Management Specialist should be able to drill down into the analytic “Internal fill rate from succession plans” to find out exactly which positions are part of this percentage and which are not. I cannot stress the value that this type of functionality provides in order to support organizations in uncovering why particular situations are like they are and to help them correct these situations.

Below I have compiled my “starter for ten” list of standardized Talent Management analytics and why I think they are important. The list is quite lengthy, but I believe that organizations should be looking at these types of analytics over others because they help to measure the quality and cost of an organization’s Talent Management activities – both positively and negatively.

  • Average cost of hire per employee
    • Used to help drive down hiring costs through efficient on-boarding processes and hiring the right people
  • Cost of hire versus cost of development (key and non-key positions)
    • Measure the efficiency of internal development, as well as the cost of up-skilling internally against hiring already qualified candidates
  • Average time and cost to fill positions
    • Measure the success of the hiring process from start to finish in order to increase process efficiency and calculate if internal development is more cost-effective than hiring
  • Quality of hire (number of leavers versus performance of new hires)
    • Measure if the hiring and on-boarding process is sufficient for finding the right candidates and preparing them for the demands of the organization
  • Internal fill rate
    • Measure how many positions are filled with internal candidates to judge if development processes are creating the right people for internal roles
  • Internal fill rate from succession plans (key and non-key positions)
    • Measure how many positions that have succession plans are filled by one of those successors in order to judge the quality and success of the succession planning and development processes
  • Offer acceptance rate
    • Measure if the organization is making the right offers or is providing the right opportunities to potential candidates
  • Internal movement by destination
    • Measure the trends in internal movement to stem unbalanced interest by employees for particular functions or providing more attractive offers in other functions
  • Average compensation and merit awards
    • Measure the average payments made so that compensation can be tracked against industry benchmarks
  • Breakdown of compensation and merit awards versus performance increase
    • Measure if compensation awards are creating an increase in performance so that sufficient raises are given to the right people or in the right functions and unnecessary raises are avoided in the future
  • Breakdown of compensation and merit awards versus successor readiness increase
    • Measure if compensation awards are creating an increase in the self-development of employees who are planned as successors
  • Breakdown of Performance and Potential
    • Breakdown if performance and potential are increasing so that development activities can be assessed or provided
  • Breakdown of employees with development plans or learning activities that have increased performance
    • Measure if development plans or learning activities correlate directly with increased performance
  • Breakdown of employees with development plans or learning activities that have static decreased performance
    • Measure if development plans or learning activities correlate directly with static or decreased performance
  • Breakdown of successors with development plans or learning activities that have increased readiness
    • Measure if development plans or learning activities correlate directly with increased readiness of successors
  • Cost of succession planning (cost long-term development activities per successor per key position)
    • Measure the cost of investment in developing successors to understand the value and cost of developing successors per position
  • Breakdown of development cost of increased performance
    • Breakdown of cost of development plans or learning activities for employees with increased performance so that development costs can be measured against the increased performance
  • Breakdown of development cost of static or decreased performance
    • Breakdown of cost of development plans or learning activities for employees with decreased performance so that development can be evaluated if it does not increase performance
  • Breakdown of development cost of increased readiness
    • Breakdown of cost of development plans or learning activities for successors with increased readiness so that development costs can be measured against the increased readiness of successors
  • Breakdown of development cost of static performance with competency
    • Breakdown of cost of development plans or learning activities for employees with static performance but increased competencies so that development can be evaluated for its effectiveness
  • Cost of sustaining key positions (cost of succession planning plus cost of incumbent)
    • Measure the cost of investment in developing successors and their compensation so that the real cost of development versus the cost of hiring can be determined
  • Percentage of successors appointed to key positions
    • Measure how many successors are appointed to positions so that the success of the succession planning and development processes can be determined
  • Quality of succession by performance (performance of appointed successors versus performance of previous incumbent)
    • Measure if appointed successors performs as well as previous incumbents to determine if efficiency has increased or decreased
  • Quality of succession by competency (competencies of appointed successors versus competencies of previous incumbent)
    • Measure if appointed successors have been developed adequately to cover key positions to see if mitigation of losing holder was managed sufficiently
  • Cost savings in succession (cost of sustaining key positions plus appointed successor salary costs versus salary costs of previous incumbent)
    • Measure the real cost of appointing a successor and whether the appointment has reduced the compensation costs of key positions
  • Cost savings in succession with performance
    • Measure the real cost of appointing a successor and whether the appointment has reduced the compensation costs of key positions and increased performance
  • Average Bench Strength
    • Measure the strength of successors to understand if key positions are adequately covered
  • Average Bench Strength with readiness coverage
    • Measure the strength of successors and the readiness to understand if key positions are adequately covered with successors who are ready now
  • Breakdown of number of successors
    • Measure how many individuals are successors against the overall workforce headcount to measure if the overall quality of the workforce is good enough to progress
  • Breakdown of successor readiness
    • Measure how many successors are ready to become incumbents of key positions so that expectations can be managed and talent individuals utilized effectively
  • Total cost of development (development activities and learning activities)
    • Measure the total costs of developing the workforce, as well as component parts, to understand the cost to the organization
  • Breakdown of training courses taken
    • Measure the total number of training courses taken, plus cost per course, to understand the cost to the organization
  • Breakdown of development costs by type versus increased performance
    • Measure the developments costs of each type of development or learning activity (e.g. course, mentoring, management trainee program) to discover the most cost effective development methods of increasing performance
  • Average period from successor designation to appointment
    • Measure the average period of time from the assignment of a successor to their appointment into the position to better understand the period required to adequately develop successors to be ready
  • Average time to increase successor readiness
    • Measure the average period of time required to increase successor readiness, as a benchmark for development time for successors assigned with different levels of readiness
  • Percentage of incumbents of key positions that will retire within 5 years
    • Measure the number of incumbents of key positions who will retire within 5 years so adequate successors can be groomed for these positions

While it is important to measure these analytics, I also think that multiple criteria should be available to further break down analytics by different variants:

  • Current year
  • Previous year
  • Previous 5 years
  • Any time period
  • Organization structure
  • Cost Center
  • Company Code
  • Functional Area, Job Family and Job
  • Personnel Area and Subarea
  • Employee Group and Subgroup
  • Payroll Areas and Pay Scale Groupings
  • Demographics (Gender, ethnicity, disability, nationality, etc)
  • Career Type

There are various other actions that can be made based on these analytics, especially if they can be broken down at a very fine level. For example, if there are many ready successors then the organization needs to look at how it manages the expectations of people who may be aware that they are ready for a more senior position. The important thing is that these analytics are interpreted and used in a way that provides the organization with enhanced performance in the future.

Please note that the term key position includes “normal”, leadership and executive positions that might not officially be marked or identified as key within an organization’s talent management processes. In SAP HCM Talent Management best practice, these positions would normally be marked as key positions.

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2 Comments

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  1. Nico Thirion

    Hi Luke,

    The list is very long and some metrics look  complex and somewhat subjective. If you should pick 5 top metrics, where would you focus?

    Employee turnover is a huge cost and could be for the most part managed via the hiring process. I like a simple few metrics that focus on the true costs, and adapting the process to manage and bring these costs down. The true hiring cost is seldom measured in full as the actual recruitment fee might be easy to recognize but doesn’t take the into account the additional time spent on the process as well as the onboarding and first few months to get to full production. Tracking the 5 top metrics over time, against the hiring and onboarding process is simple and gives a manageable target.

    Kind regards,

    Nico

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    1. Luke Marson Post author

      Hi Nico,

      Thanks for your comments and I apologize for taking such a long time to respond. The list covers the enter discipline set of Talent Management, and maybe I should’ve broken it down into each discipline (although some are cross-discipline). I agree that some look complex, but in order to obtain maximum value some of them require this level of complexity. And I also agree that they can be subjective because different organizations and different HR leaders have different visions about what they need to know about their business and what direction they want to take it.

      Picking 5 depends on how many talent processes you are using. For example, if you only really use recruiting and performance then the development or succession-based analytics are not of much use. If a company is using multiple talent processes then I would recommend focusing on measuring:

      • On-boarding costs
      • Quality of hire
      • Cost of development versus overall performance
      • Retention and turnover
      • Efficiency of succession planning

      Generally these type of analytics will help you identify common costs of recruiting, on-boarding, developing and retaining talent. Efficiency of succession planning will help to measure whether your succession planning program is really delivering – it can be a costly process, especially if no value is being delivered – and often it takes 3 to 5 years before you can understand whether it has been a valuable program to operate.

      Best regards,

      Luke

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