Investing in a talent operating system is not merely buying software. Rather, it is a move to invest in a company’s approach towards talent management – discovering, nurturing, staffing, and keeping one’s employees.
Measuring the success, however, is a difficult task as well. Common HR tools tend to show data about people who join an HR platform for instance, or who leave after some time or complete a task on it. Although these are useful, they do not really translate how good a business has done.
A solid return on investment (ROI) model ties workforce intelligence data to actual operational or financial figures.
Start With the Business Problem
Before working out the ROI, it is good practice to set up what the company expects to be a result of implementing this change.
Talent Operating System (TOS) could help the organization deal with fragmented skills tracking, slow internal career mobility, inconsistent talent development, limited visibility over the workforce, and disjointed talent processes.
Laying down metrics pre-implementation is one of the ways to ensure that the changes brought by TOS will be measured correctly. Such metrics can be the number of days required before an employee reaches the productivity level of regular employees (“time-to-productivity”) or employee turn-over rates, rates at which internal candidates are chosen for positions, costs of learning, and so on.
Without a baseline, it is impossible to quantify improvements.
Measure the Cost of Talent Decisions
An area where the benefit of investment can be made very visible is the loss a company suffers because of making unwise hiring decisions.
In cases when a suitable employee is available internally, external recruitment is a costly decision. The company will not only have to pay a high percentage of fees to the recruiter but also cover training costs, time that job goes un-filled, and finally, loss in productivity.
Assuming that better knowledge of skills of employees leads to internal filling of more positions, one can calculate the difference between the current cost of hiring external candidates and the cost of employees moving internally within the organization.
This would allow you to provide a much stronger financial story than just talking of how many people use the platform.
Quantify Productivity Gains
Another area where one might witness a return comes down to whether there are any real productivity increases due to the TOS. But this will be a case of measurement, not imagination.
Managers can look in real time through TOS to find out what areas of capability are lacking, what training is going to be personalized so on and so fourth and thus help them to give a chance to the employees in getting opportunities related to what they do. This over time can shorten the time when employee and organization spend looking for skills or figuring out processes of talent management.
The company can track the number of hours to gain competency, time to be fully productive, how many hours a week manager spend on administration, and how efficiently project staffing is being done.
These metrics can even have a major impact financial-wise if you extrapolate them to a company-wide level and multiply them by the number of people there!
Track Internal Mobility and Retention
This is another way to demonstrate value from the use – if you look at it as a change in the level of the organization’s capacity to keep employees or internal employee movement to different roles or job areas.
If your employees do not have enough information about the future in terms of jobs, that is likely a reason they will leave your company. So you need to know where to go if your skills/abilities fit and what are the options available on the job. This visibility can not only increase internal mobility but also the employee development aspect of the career.
Watch how many internal promotions there are, the number of external hires, etc., as well as the percentage of critical talent retained, the level of “regrettable attrition” and employee movement across business units.
Technologу is not everything here, so we should not make it a claim that our employees would not leave due to technology alone. The idea is that with better information of employees’ skills, managers will have the ability to make talent decisions resulting in a better workplace which is also more productive and less expensive one.
Evaluate Learning and Development Efficiency
Based on their learning and development (L&D) goals, departments can assess whether talent intelligence helps the organization better spend its L&D budget or not.
Where once the HR would just roll out generic training sessions, they can now look at the company’s skills data and figure out which gaps there are between the capabilities of the employees and the ones needed for the job. Then, they will focus on development programs where they can have the biggest impact on company results.
Tracking how much trainіng was used, how many trainіng programs were completed by an employee, when was a skill acquired or when was it lost and whether a trainíng was redundant is how they measure these changes.
If the company is using L&D to make people more capable, training activity is probably not a very useful measure anymore, whereas capability outcome is.
Build a Financial ROI Model
You can start by using a simple return on investment formula that everyone is going to understand easily, like:
ROI = (Financial Benefits – Total Investment) ÷ Total Investment x 100
Add costs of installing, licensing, integrating, maintaining, change management, and other regular costs of the operation in the calculation of Total Investment.
Besides savings on hiring from outside, the benefits would be savings on replacing people who left, increased productivity, saved hours of administrative work and so on. You would also calculate what was the amount of money saved on less than efficient L&D spending.
Using this model will help you to relate all changes in a TOS platform with concrete numbers representing a business outcome when you are assessing platforms like Infopro Learning (for example).
Look Beyond the First-Year Number
The most convincing case will be where a set of financial and strategic KPIs are used simultaneously.
TOS will deliver the cost saving at the same time it will help you increase the level of flexibility and the depth of understanding on the skills of your employees which will result in the readiness to take over roles of important positions in the company (i.e. your succession plan) and the quality of talents in your work decisions.
Hence, top executives will not only see what happened and how well a product was rolled out, as shown by its ROI, but will also be able to track progress along the way. They can be confident that any changes implemented are based on real, tangible evidence that will drive performance over the years. One of the things which they might also do is take stock of the business case in relation to the current circumstances each quarter to decide on whether they should or not.
The big question that the company must answer is that it is not enough for the people to know about the platform but that through its use a transformation takes place in the way that the company handles people’s development and retention.
The company is finally getting an indication of the true value of an investment in a system of that sort through its results on the business side of activities.
