To maximise an organisation’s human capital potential, leaders need to see the full talent picture, says Michael Franks, sales multiplier executive, talent technology division at LRMG.
It’s repeated so often as to be trite: people are a company’s most important asset.
Actually, according to accounting standards and theory, this is not true. As Harvard Business School professor Ethan Rouen points out, companies do not control their people, so they are not assets.
But what if a company could do this? If it shaped the high performance and individual development of its talent, then by Rouen’s definition – and as a truer reflection of the well-worn but little understood expression – the organisation’s people would indeed represent its key asset.
But this is not easy to do. Why? Because in all probability leaders do not have the full picture. Only with composite insights, data and metrics that provide an end-to-end view of the company’s talent can they claim to genuinely orchestrate the performance of their people. What leaders need is talent visibility
Knowledge is powerful
Talent visibility can be understood as a holistic view on the impacts related to the organisation’s talent – an in-depth understanding of the capabilities, experiences, skills and ambitions of the people who are responsible for maximising productivity and profitability.
This encompasses employment costs and inputs, the attributes intrinsic to the workforce, and the value generated by the talent pool either as a whole, earmarked to teams, or even down to individual people. Together, these comprise the company’s talent value chain, and in the same way that the enterprise invests in the transparency of its supply chain, there are advantages to an insights approach to talent.
Yet, surprisingly, HR leaders and the C-suite often lack information when it comes to the talent value chain. Certainly, they will know or can access the salary bill, the external cost for training sessions, the software licence fee for the talent technologies the company implements. But they are likely to draw blanks as to the full organisation-wide employment cost, including recruitment costs, the opportunity costs of sub-optimal onboarding programmes or L&D initiatives, and the wastage within what may be a weak talent retention ratio.
Other questions are likely to elicit an arched eyebrow because they are perceived as even more abstract: what are the most pressing skills gaps? Does the company have a strong employer brand? And, even more unlikely to draw a coherent response, does the enterprise have a lens on the relationship between talent investments and value creation, and can it draw an ROI line through to its financial reporting?
For instance, it is worth much to the enterprise to understand the composite elements of an employer brand, and to know whether the company’s is sound or even powerful. Which software architect wouldn’t wish to work at Google; which aeronautics engineer wouldn’t jump at the chance to join Lockheed Martin; is there an aspiring marketer who wouldn’t be flattered to be headhunted by Unilever? Generally, HR managers bask in the glow of a positive employer brand, believing it works to attract high-potential talent.
However, this fuzzy feeling is not remotely the full picture of how an employer brand creates calculable value. As just one example of the direct savings attributable to a sound employer brand, a 2021 LinkedIn study concluded that a strong employer brand, combined with technologies that automate the recruitment process, can save companies up to 43 percent on the costs associated with hiring.
It’s possible to get even more specific about how talent insights generate real financial gains and impact the bottom line. Consider onboarding. The time-to-productivity of new employees varies by industry, organisation and specific role, but studies indicate it to be between two to eight months. (A report by global HR research firm, Gallup says it could be as long as a full year.)
Assuming, say, a wastage factor of 50 percent of each new employee’s cost for an average of their first three months, do the maths: companies hiring more than a handful of new recruits each year are taking a major hit to the income statement.
Talent visibility not only enables an understanding of the figure, but, more importantly, gives insights about how to sharpen onboarding. Using this information, together with technology accelerators and enablers, KPIs that track output and achievement goals, and milestones towards full employee autonomy, it is entirely possible to strip out onboarding redundancy.
From human capital to business value
The pressure to drive performance and to achieve results makes it vital to have full visibility of the value chain that comprises the organisation’s people. Deep and wide talent insights enable strengths to be supported and built further, skills gaps to be identified, talent risks to be flagged, and opportunities to be capitalised on. These insights are a portal to unlocking further skills and capabilities, and a window into how the company can do better.
Doing better: indeed, if there is one talent-related phrase which CEOs and the C-suite understand and, in its importance, keeps them up at night, it is employee engagement. They will know that high-quality enterprises with engaged employees perform, on average, significantly better than their peers – by 14 percent in terms of productivity gains, and by 23 percent on profitability.
So they turn to their HR managers to ensure the organisation has good engagement levels. A smart talent leader grasps how to do this as a deliberate, ongoing talent approach that syncs with the business strategy and adds financial value.
Talent visibility – 360-degree, real-time knowledge of the strengths and weaknesses of the company’s collective human capital capabilities, employees’ workflow struggles, metrics about managerial churn, measures of its employer brand health, among myriad others – ensures better decision-making.
In doing so it connects all the busyness of its people, the processes, systems and technologies that buzz, year-round, to the company’s financial results. Only full talent visibility will transform the performance of your people such that they will represent the organisation’s single most valuable asset.
