Managing Talent Retention

Invest carefully – Choosing the Right Employees to Receive Your Development Dollars

As training budgets are reduced and competitive pressures continue to increase, the demand for a targeted focus on specific talent groups has become important.  In 2008, organizations slightly reduced average expenditure per employee from $1,110 in 2007 to $1,068, reflecting a decrease of 3.8 percent and likely to be reflected in 2009’s data (ASTD, 2009).  Now is the right time for talent management professionals to adopt a strategic, accountability approach to developing specific, key individuals that can help contribute to the future success of an organization. 

 

A successful talent management system will have a clear process for identifying and developing high potential and key employees.  By focusing efforts on those individuals in jobs critical to the success of the organization, even the most limited development budget can yield big results and bottom line impact. 

 

Pitfalls to Avoid When Using Learning Scorecards

Three main challenges must be addressed in moving to a comprehensive scorecard to measure and track success.  The first challenge is to allocate appropriate resources for measurement and evaluation.  The scorecard can be developed and implemented for 5 percent of the total talent management budget.  However, cost savings can be realized when effective measures reveal programs to be eliminated so that budgets can be utilized more effectively.

 

The second challenge is to approach the task in a disciplined, methodical method.  This is difficult when not required by senior management. However, the responsibility for ensuring the process is utilized appropriately rests on the talent management team.

 

The final challenge is the actual use of the data.  While the data reveals successes, it potentially also reveals programs which are not effective. Treating the scorecard and the methodology as an approach to process improvement alienates the fears that some may have with this approach.   The good news is that developing a scorecard of program success, based on outcomes rather than activities, provides evidence that developmental opportunities for key talent are working within the organization.

Developing an Effective Learning Scorecard

Traditionally, a talent management scorecard would reflect the inputs and include items such as budget, spend per employee, and number of participants.  While this information is important to include in the overall scorecard, it is not the only data to include.  The scorecard should also include learning, application, impact, and ROI. 

 

The first step is to determine how many and which programs will be evaluated at the various levels.  Ideally, as many programs as possible will be measured at the ROI level.  Then, the data from each of the programs must be integrated to present an overall picture at the macro-level.  The end result will be a scorecard that represents seven major categories to include: indicators, each of the five levels of evaluation, and intangible benefits.  Below is a brief explanation of each category:

 

·         Indicators and Inputs – Indicators and inputs are the traditional input data.  These data are indicators of organizational commitment and investment.  It is important to clarify the most important indicators as it is easy for this section of the scorecard to contain too much irrelevant data.  The data that are included must be important to the executive team and are likely to include such items as the number of employees participating in the programs, the number of hours of learning activity per employee and the investment in learning broken out into different demographics. 

 

·         Five Levels of Evaluation – These sections will include the data collected at each of the five levels of evaluation, up to and including Return on Investment.  The five levels of evaluation are: Reaction, Satisfaction and Planned Action; Learning; Application and Implementation; Business Impact and Return on Investment. 

 

·         Intangible Measures - The final category to report is intangible measures.  These measures can be included in the business impact category as a sub-category or mentioned in a separate section.  Intangible measures are defined as those that have not been converted to monetary value, but are important to the program.  Examples include: customer satisfaction, employee engagement, and job satisfaction.  It is important that each of these measures could be monetized, but it is not always practical or desired to monetize them.  Sometimes intangible measures are reported voluntarily by participants, while at other times they are tracked throughout the organization.

Using Scorecards to Assess a Program’s Impact on Individual and Organizational Performance

In the past, training and development activities were assumed to work.  Reporting was focused on a number of participants in attendance, number or programs offered, and reaction and satisfaction data.  Today, things have changed.  There is a need to develop key talent so that their performance is reflected in bottom-line outcomes as well as other intangible measures.   Programs must be linked to business strategy and there are greater expectations to provide a comprehensive approach to measurement and evaluation. 

 

Much of this change is reflected in the way top performing organizations run their talent management function.  For example, the American Society for Training and Development (ASTD) has tracked the characteristics of the BEST, Award-winning organizations since 2003.  Award-winning companies are identified by their previous year’s financial and operational data such customer satisfaction, quality of products and services, cycle time, productivity, retention, revenue, and overall profitability.  The 2009 BEST Award winners continued to validate the same eight characteristics as identified in 2003, which include clearly defined processes to link learning strategies and initiatives to increases in both individual and organizational performance.  Additionally, the BEST organizations indicated that they used a balanced scorecard to assess learning’s impact on individual and organizational performance metrics by gauging key performance indicators or performance objectives (ASTD, 2009).

 

A scorecard is an effective way to provide critical information to client groups, including senior executives.  The scorecard also provides a useful way for talent management staff to track success and ensure their approach is focused on the key objectives of the business.  

Who Cares About Learning Data?

While there are many stakeholders, there are two primary groups: consumers and clients.  Consumers are the individuals who participate in the program; clients are those who fund, support, request, or approve programs.  Both groups have a vested interest in the scorecard and a recent survey shows that 22 percent of CEOs say they have a learning scorecard (Phillips and Phillips, 2010). 

 

To ensure that programs are effective, the talent management staff must have feedback in the form of data from the consumers of the programs.  Not only do they need to know to what extent the participants believed in the program, but they must also know that the participants learned new information and applied that new knowledge to their work situation.  Ideally, the talent management staff must also understand which programs are making an impact to the business and to what degree. Finally, talent management staff should gain insight on the return on investment (ROI) of the programs.  All of this data combined gives the talent management team important information they can use to develop, refine, and improve their approach.

 

The client group is interested in knowing how participants changed their behavior, the business impact of those behaviors, and the resulting ROI of the program for the organization.  They are also interested in knowing that there is a clear linkage between what the business needs and the program outcomes.  More often, senior executives are looking to see actual return on investment to ensure the programs have an important payoff for the organization. 

 

The needs of both the consumer group as well as the client group can be met through a scorecard.  Collectively, the needs from these different target groups create a demand for a measurement system that will collect, distribute, and interpret the necessary data on a routine basis.

Measurement: Crucial for Today’s Talent Management Professionals

The 2008 global financial crisis forced many organizations to re-think the way they manage and develop talent.  After organizations responded to the initial crisis by making significant cost and headcount reductions, many talent management professionals scrambled to demonstrate the value of talent management related programs to the organization.  More importantly, executives recognized the urgent need to quickly innovate after cutting costs in order to retain market share and speed ahead of the competition.  The role of the talent management professional emerged as an important piece in the organization’s ability to survive the recession and thrive beyond the crisis to succeed in the future.  Talent management professionals continue to be faced with a challenge to demonstrate the monetary value of talent development investments targeted to the right people, at the right time, and for the right reasons.  The key to success is in measurement.  Without measurement, talent management professionals are at risk of failing to demonstrate value. 

 

For example, consider the OD leader of a large healthcare provider whose entire team was eliminated because the leadership was unable to see the contribution the work of this team made to its competitive advantage or the bottom-line.  Or, think about the training leader of a regional non-profit whose role and team were under consideration for elimination because the head of the organization had no data about how the work of this team made a difference to the operational efficiency of the organization.  The ability to demonstrate the value the talent management team makes has never been more critical than it is now.

Call for Talent Retention Case Studies

With the pressure for organizations to increase revenues, gain market share, reduce costs and improve profit margins, one of the greatest variables for success is the talent within the organizations. This increased pressure requires that HR professionals deliver specific solutions that produce results and ensure value is created. This is particularly important for expensive, high-profile, and highly visible (even controversial) talent retention programs. Value must be expressed in terms that top administrators and executives understand. Today, this means impact, sometimes monetary value and intangible benefits, and, yes, the financial return on investment.

 

While Managing Talent Retention: An ROI Approach provides a framework for measuring the impact of talent retention programs or initiatives, it is often helpful for organizations to have examples of how others have accomplished this to provide them with additional tips or inspiration.  Because of this we are currently working to create Managing Talent Retention in Action: A Collection of Case Studies, a book which will outline several successfully implemented talent retention initiatives or programs.

 

Publishing a case study in Managing Talent Retention in Action: A Collection of Case Studies is an excellent way to show the great work of many HR professionals. It provides recognition and respect to the important and valuable retention projects. It is also a great way to recognize those individuals who make the difference in designing, developing, implementing and supporting retention solutions.

 

If you would like to submit a case study for publication in this upcoming book or for more information about what is required, please view the Call for Talent Retention Case Studies Submission Form.

Recruiting Star Performers – How to Determine if It Really Pays Off

As the economy continues its slow recovery, many organizations are looking for ways to stay competitive, gain market share, and be the first to innovate a new product or service.  One way organizations are accomplishing these goals is by leveraging talent, including recruiting top talent, or stars, way from their competitors.  However stars come with a hefty price tag, so often organizations must ask themselves the following questions:

Does it really pay off to recruit top talent in today’s economy?

What can be done to ensure that these star recruits will have the same success in our organization? 

Both of these questions can be answered by using the ROI of Talent Retention Methodology.  Using this approach provides organizations with a framework for calculating the true cost associated with recruiting star talent and uncovering the root causes related to star talent that may not be performing as expected.  The methodology also helps organizations analyze the success and financial benefits of programs or initiatives that are put into place to help address these issues, including return on investment which will help them determine if recruiting top talent really is work the final cost.

Recruiting Stars: Does It Really Pay Off, published last year in the Journal of Corporate Recruiting Leadership, provides a more detailed example of how this approach can be used to determine whether recruiting a star performer pays off. 

Talent Departure's Impact on the Organization

Although every manager and team member is aware of problems associated with turnover, a review of its major consequences puts talent retention in the proper perspective. There are several categories that frame the major negative consequences of the departure of top talent. 

First there are the obvious consequences resulting directly from an individual’s departure such as the financial cost of hiring a replacement, productivity losses and workflow interruptions, loss of expertise within the department and possibly other exit problems or issues such as litigation depending upon the situation. 

Beyond these initial consequences there are several other ways in which the departure of top talent effects an organization.  Productivity and work flow interruptions often result in a drop in service quality and can cause the organization to lose business opportunities. Job satisfaction of remaining employees generally decreases when key talent leaves.  Social and communication networks are also often disrupted, causing administrative problems and further decrease in employee satisfaction.

If the departure is highly publicized, or if several key individuals leave an organization with in a small period of time, the image of the organization can be damaged, impacting its ability to attract new talent.     

Together these consequences can result in a loss of competitive advantage and can ultimately effect the survival of the organization itself.   

Human Capital is the Last Major Source of Competitive Advantage

Most of today’s organizations have easy access to two of the key success factors for businesses: finances and technology. 

Financial resources are available to almost any organization with a viable business model, even during economic downtimes.  One company no longer has an advantage over another to access the financial capital needed to run a business.

Access to technology is equal; a company can readily adapt technology to a given situation or business model.  Inexpensive or even free software for everything from website development and hosting to marketing databases and financial planning is available via the internet.  It is difficult to have a technology advantage in an information technology society.

With such prevalent availability of both financial and technology resources, organizations are left with only one real competitive advantage – the people that work there.  The realization that the only major difference between the top company and all of the others in a specific market is their human element - the ideas, strategies and talents of their employees - makes it clear why focusing on talent engagement and retention is more important than ever for the success of an organization.