Talent Management Metrics Get an "F"

If employees are a company's most important asset, few organizations are anywhere near realizing their full potential, according to the latest talent management study by the Institute for Corporate Productivity (i4cp). The study, which examined the extent to which organizations are measuring and gauging the success of their talent management programs, found that only a quarter of companies surveyed have systematic talent management practices in place.

However, it's clear that high-performance organizations - companies that have outperformed their competitors in profitability, revenue growth, market share and customer satisfaction over the last five years - are much more focused on talent management metrics. Top organizations were more than twice as likely to emphasize the measurement of talent management (37%) than low-performing organizations (16%).

The study was recently conducted on behalf of i4cp's Talent Management Accelerator working group, made up of 15 world-class companies seeking to discover the best ways to measure talent management effectiveness. The group is using i4cp research, best and next practice collaboration, and expert guidance to learn how high-performance organizations utilize certain human capital metrics to achieve better business results.

"There's an old saying from Peter Drucker that what gets measured gets managed," said Kevin Oakes, CEO of i4cp. "While talent management is one of the hottest topics in human capital, at the same time, it is one of the most mysterious. Companies understand the general concept and the benefits, but are struggling with implementation and execution. Effectively measuring components of talent management is an important step toward taking the mystery out of what works and what doesn't."

i4cp research has consistently shown that high-performance organizations place more emphasis on human capital, and effectively measuring human capital initiatives has been a hallmark of these companies. Exactly what to measure, though, is often open for debate. When gauging the success of talent management practices, high performers indicated they were more likely to use employee engagement as a measurement to a high or very high extent (52% vs. low performers at 32%), followed by measuring leadership success (48% to 29%), and management satisfaction (41% to 27%), among many other measurements.

In turn, more than half of these organizations said their talent management efforts are successful, while only a third of lower performing organizations reported the same. Nearly 43% of high-performance companies said they can demonstrate success, whereas only 29% of lower performing organizations said the same.

i4cp also asked participating companies about the use of metrics for the purpose of managing talent better, and the extent to which they felt they should be using these metrics. The gaps between "does" and "should" were prominent, notably in regard to such metrics as high-performing employee separation rate, ROI per employee, time to full productivity, and controllable separation rate.

i4cp member companies and Talent Management Accelerator participants have exclusive access to the full results of the study, as well as the Interactive Data toolkit and other information on how these metrics are being used to measure success. The Talent Management Measurement survey was conducted by i4cp in April 2010.

Companies participating in i4cp's Talent Management Accelerator program include:

• AAA Auto Club South
• Adobe Systems Incorporated
• Board of Governors of the Federal Reserve System
• Booz Allen Hamilton
• Defense Intelligence Agency (DIA)
• Hertz Global Holdings
• Intuitive Surgical
• Kaiser Permanente
• McKee Foods Corporation
• Microsoft Corporation
• OGE Energy Corp
• Pratt & Whitney
• SHRM
• TD Bank Financial Group
• Wells Fargo & Company