Many people don’t realize that talent management is a key business strategy and is vital to a firm’s success. It begins with recruiting potential hires and follows employees throughout their entire life cycles with a firm. Since talent management has such a great financial impact on a firm, talent metrics should be used to show return on investment and to make informed business decisions. So, which metrics are the most significant?
5 Important Talent Management Metrics
- Cost to Hire
It is very expensive to hire a new employee. Up front, you have ad placement and sourcing costs. Additionally, there is the time spent by the recruiter and managers to interview and determine the best candidate from the pool. As much effort and time will be put into selecting and onboarding the right match for a position at your firm, you want to ensure the new hire is a good return on investment. You also want to assess whether your ad placements and sourcing tools are getting you the quality candidates you desire.
- Time to Full Productivity
Every new hire needs some time to become acquainted with the new position and learn the ropes. Generally, it requires several months before a new hire can be fully productive. However, it is imperative that your firm has an effective onboarding and training program to get new hires up to speed as fast as possible. The quicker a new hire moves to full productivity, the faster there is the return on investment.
- High Potential Talent
As part of your talent management plan, you should hire a percentage of people that you expect to provide more value down the road for the organization. This talent should be the best of the best. These employees will be the ones you pull from for future succession into higher-level roles. Making sure you hire talent with potential is necessary to avoid more costs of hiring.
- Talent Mobility
Retention of talent is another important factor to consider, especially when concerned with the financial impact of hiring a replacement. Employees need to know that there are opportunities for them to move within the firm, so they don’t stagnate in the same position after several years. Your firm should offer career paths for upward mobility for top performers who seek new challenges.
- Talent Turnover
Turnover is probably the most relevant metric of all. Your firm will want to keep this number as low as possible to reduce its financial impact. With turnover, you have the cost of replacing the position with a new hire and the loss of the knowledge gleaned during the years of service. Additionally, turnover stops the cohesive flow of business and causes efficiency to wane.
Manage Your Talent Well
Of course, there are cases where turnover cannot be prevented no matter what the firm does. Overall though, your talent should be chosen wisely, trained properly and given opportunities for mobility. When you manage your talent well, you will in fact reduce your costs because word of mouth is free and high potential talent will come to you.