March, 2008

               Best-in-Class Use of Metrics
                 in Talent Management
Identifying, recruiting, de...
Best-in-Class Use of Metrics in Talent Management
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recruitment process to investing in applicant tracking system...
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         tracked by measuring the retention rate of employees...
Best-in-Class Use of Metrics in Talent Management
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        to employees during one-on-one meetings. A manager mu...
Best-in-Class Use of Metrics in Talent Management
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        throughout the organization with at least one interna...
Best-in-Class Use of Metrics in Talent Management
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Clearly defined measurable talent management metrics enable c...
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Best-in-Class Use of Metrics in Talent Management


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Best-in-Class Use of Metrics in Talent Management

  1. 1. March, 2008 Best-in-Class Use of Metrics in Talent Management Identifying, recruiting, developing, and retaining top talent are at the top of Analyst Insight the list of organizational priorities. But human resources executives often Aberdeen’s Insights provide the struggle in determining the metrics that should be used to assess the analyst perspective of the performance of these initiatives. These metrics are vital for two reasons: research as drawn from an they are necessary for the program champion to gain senior management aggregated view of the research buy-in and support, and they are used to monitor the success of the surveys, interviews, and data program and allow visibility into whether it is working as intended. analysis Foundation for these Findings The information presented herein is the result of data collected by Aberdeen Group's Human Capital Management research practice from May 2007 through January 2008. During this time, Aberdeen surveyed thousands of organizations worldwide regarding their talent management efforts - specifically talent acquisition, employee performance management, competency management, learning and development, succession planning, and onboarding. The purpose of this Research Brief is to present the metrics or Key Performance Indicators (KPI) most commonly used by the organizations that achieved Aberdeen's Best-in-Class designation. Best-in-Class performers in each respective study consisted of the top 20% of all organizations surveyed that achieved year-over-year performance improvement across a myriad of KPIs that are specific to that element of talent management. Table 1: Best-in-Class Priorities by Program Talent Acquisition Onboarding "Quality" has become the gold Retention now trumps time-to- standard productivity Employee Performance Succession Planning The priority is to look within and to Clearly defined goals and extend development beyond the development plans are key executive level Talent Acquisition KPI In today's global recruitment war, implementing a talent acquisition plan has never been more critical. As the baby-boomer generation exits the workforce and the supply for skilled labor falls short to compensate for this exodus, companies are fiercely vying for new talent. From outsourcing the © 2008 Aberdeen Group. Telephone: 617 723 7890 Fax: 617 723 7897
  2. 2. Best-in-Class Use of Metrics in Talent Management Page 2 recruitment process to investing in applicant tracking systems, it is evident that companies are aiming to gain an advantage in the talent marketplace. Data from The Global War for Talent: Getting What You Want Won't Be Easy showed that Best-in-Class companies are willing to sacrifice gains in recruiting efficiencies for gains in the quality of those they hire: • Quality of hire. This is the top metric assigned by Best-in-Class pertaining to talent acquisition. In fact, 64% of Best-in-Class companies are reporting on this metric. This metric is not quantified equally across organizations. Organizations can use one or many factors to measure quality of hire. When asked about what elements are used to determine this metric: o 70% use output and performance of the employee o 58% use time-to-productivity o 48% use retention rate of the recruits • Time to hire: This metric is defined as the amount of time it takes to fill a vacancy - for a new or existing requisition. Twenty-nine percent (29%) of the Best-in-Class focus on reducing this metric year over year. • Cost per hire. This metric is derived from dividing the total annual cost of recruitment by the total number of new hires made over that same period. It is measured as currency (such as US dollar) per person. The study showed that 25% of Best-in-Class companies focus on reducing this metric year over year. • Job vacancies outstanding. Twenty-five percent (25%) of Best-in- "As a services company, our people are our most important Class focus on improving this metric. This number is the total asset and our competitive number of job vacancies a company has at any given time. The goal advantage. Ensuring we have of the recruiting strategy is to minimize this amount. the right people with the right Notably, among the bottom 30% of organizations that Aberdeen surveyed competencies and skills at the (Laggards) regarding talent acquisition only 38% measure quality of hire. In right time is paramount to our success." contrast, Laggards are more likely than Best-in-Class to measure time to hire, cost per hire, and outstanding job vacancies. By doing so, Laggards ~ Director, Global Human dilute their efforts to improve on the "quality" front. Resources, Mid-size Consultancy Onboarding KPI Eighty-six percent (86%) of nearly 800 organizations surveyed in our January 2008 study All Aboard: Effective Onboarding Techniques and Strategies agree that new employees decided whether they planned to stay with the organization long term within the first six months of hire. This highlights the significance of investing in an onboarding program that enhances the experience of the new hires and invokes a positive first impression for them. Best-in-Class companies gauge the effectiveness of their onboarding initiative by its impact on the following metrics: • Retention rate of new hires. Eighty-seven percent (87%) of Best- in-Class companies measure new hire retention. This metric is © 2008 Aberdeen Group. Telephone: 617 723 7890 Fax: 617 723 7897
  3. 3. Best-in-Class Use of Metrics in Talent Management Page 3 tracked by measuring the retention rate of employees after three six, nine, and / or twelve months of employment. As Figure 1 shows, 59% of Best-in-Class companies that correlate retention of new hires to onboarding, measure retention even beyond 12 months after a new hire's start date. Figure 1: Best-in-Class Measuring New Hire Retention "Onboarding is the whole new- 18 months after start date 12% starter process from interviews and selection through to 12 months after start date 59% induction processes. It's actually the emotional bond we 9 months after start date 13% create to our work lives / places - it never stops. 6 months after start date 45% Onboarding is a continuous ever-changing cycle of needs 3 months after start date 48% being met." 1 month after start date 27% % of Best-in-Class ~ Learning Consultant, Large, Asia/Pacific-based 0% 10% 20% 30% 40% 50% 60% 70% Telecommunications Company Source: Aberdeen Group, March 2008 • Completion rate for onboarding tasks / activities. Fifty-six percent (56%) of Best-in-Class companies track this metric. The objective is to facilitate and ensure accuracy of the administrative aspects of the onboarding program such as completing forms (HR, benefit enrollment, etc.) assigning workspace, providing access badges and parking permits. This, in turn, helps promote employee satisfaction and allows the new employee to focus on their new job. • Time to productivity. Forty-five percent (45%) of Best-in-Class companies focus on improving this metric. This is defined as time from start date until the person achieves desired level of productivity and measured in days, weeks, or months depending upon the position. Employee Performance KPI In two of our studies, Learning and Development: Aligning Workforce with “We need to know how we Business Objectives and Competency Management: The Link Between Talent are all working towards the Management and Optimum Business Results, Aberdeen surveyed same goals, and we need to approximately 1,100 HCM / HR executives and business unit professionals know where there are trouble about how their organizations quantified employee performance. Our Best- spots, and where there are in-Class (the top 20%) use the following metrics to quantify employee successes. If not, we are performance: working blind.” ~ HR Specialist, $8 Billion • Percentage of goals attained. Sixty-three percent (63%) of Best- Media Firm in-Class companies use this metric as an indicator for employee performance. These are goals set by managers and communicated © 2008 Aberdeen Group. Telephone: 617 723 7890 Fax: 617 723 7897
  4. 4. Best-in-Class Use of Metrics in Talent Management Page 4 to employees during one-on-one meetings. A manager must define the expectations and goals, and then work with the employee on development plans to achieve them. These development plans must clearly set reasonable milestones and time frames. An employee is then rated according to the proportion of these goals attained. • Ratings in job-specific performance reviews. Sixty-two percent (62%) of Best-in-Class companies report on this metric. Performance reviews are used by most organizations to evaluate employees on a regular basis. Some do it annually but others more frequently. Most are conducted by managers evaluating those who report to them. Some include self assessments or multi-rater feedback mechanisms - also called 360-degree assessments, where an individual is given scores and evaluated by a supervisor and several other people including co-workers, subordinates and clients. • Output of the employee. One-half of Best-in-Class companies consider this metric when evaluating employee performance. This metric compares employee output to an assigned quota or against his / her peers. For example, a product manager working on a specific product or service is rated according to how quickly they get the product to market. On the other hand, customer service personnel may be evaluated on time-to-resolution. Employee performance management is vital to increasing productivity from the existing workforce. Furthermore, improving employee performance at the manager and lower levels of the company is a cornerstone to building an effective succession planning program. Succession Planning KPI Pressures to address the loss of high potential talent and to enrich the “The key reason for us to quality of the next generation of leaders are driving organizations to view pursue succession planning is to succession planning more as a critical retention and development enabler. support a hire from within philosophy; to ensure the best The 2007 November study, The Looming Leadership Void: Identifying, candidates are identified and Developing, and Retaining Your Top Talent revealed that Best-in-Class hired for key positions, reduce companies promote leadership development as a motivational tool to boost turnover, lessen the negative employee morale at all levels of the organization. When we asked Best-in- impact of turnover, and provide Class companies about the top metrics that their succession planning appropriate training before a strategy was able to impact, their responses demonstrated the focus on person is promoted.” increasing retention and growing leaders internally: ~ VP, Human Resources, • Percentage of key vacancies filled by internal candidates. US Healthcare Provider Two-thirds of Best-in-Class companies report on this metric to evaluate their succession planning programs. This metric is determined by dividing the total number of key vacancies (usually upper-management and above) by the number filled by internal candidates. • Bench strength. Fifty-six percent (56%) of Best-in-Class companies evaluate their succession planning strategy against this metric. The metric is defined as the percentage of key positions © 2008 Aberdeen Group. Telephone: 617 723 7890 Fax: 617 723 7897
  5. 5. Best-in-Class Use of Metrics in Talent Management Page 5 throughout the organization with at least one internal candidate that the organization has identified and is willing and qualified to succeed. • Employee satisfaction / morale. One-half of Best-in-Class organizations focus in this metric. One of the most common ways to quantify this metric is through employee satisfaction surveys. With today's technology, crafting and sending these surveys out to personnel is a relatively easy task. Promoting leadership development to lower level employees has a positive impact on morale and thus plays a tremendous role in retaining employees. Competency Management Aberdeen views competency management as a critical factor for talent management. Whether an organization seeks to hire better quality employees, develop and retain high potential workers, or plan for potential vacancies, the common denominator is comprised of competency management. For once an organization understands the composition (based on skills, knowledge, attributes and behaviors) of the people who succeed most in a role or within its organizational culture, it can target more exact pre- and post-hire efforts. With this knowledge, organizations can determine who in their companies is able (or can be prepared) to take on new roles. Assessments can then be utilized to determine where gaps exist in terms of required knowledge and the current state of readiness among the existing workforce. Development plans can then be generated that place employees on appropriate career paths, and enable the company and the employee to set career goals and milestones. In pre-hire efforts, it is imperative to clearly define the competencies required for each position to better target candidates in the selection process. In return, employers can select those who best fulfill them, thus decreasing (or even eliminating) the competency gap. In post-hire efforts, and specifically in leadership development, organizations must be able to pinpoint what competencies are needed for the key positions (whether vacant or anticipated to be vacant) and then choose a candidate for succession who aligns most with them. Developing this person then becomes less difficult and enables the company to enrich its leadership pipeline internally and shorten the time needed to fill these key vacancies. In addition, if the company determines there are limited or no succession candidates, they can then proactively work to fill these needs via the recruiting process. Conclusion Embarking on any HCM initiative is costly. It requires buy-in from the senior ranks and a clear understanding of the business issues that can be addressed, as well as anticipated measurable return on investment. © 2008 Aberdeen Group. Telephone: 617 723 7890 Fax: 617 723 7897
  6. 6. Best-in-Class Use of Metrics in Talent Management Page 6 Clearly defined measurable talent management metrics enable companies to continuously improve their practices in recruiting, retaining, and developing talent. The metrics we have outlined and described herein are recommended based on Best-in-Class practices in our recent research studies. They are not specific to company size, industry / sector or geographical location. Hence, they are an appropriate indicator to gauge the success of these initiatives and to help make results more tangible. Things for HR to Keep in Mind… When seeking to identify the Key Performance Indicators (KPI) that will be assigned to your organization's talent management initiatives: • Identify the business problems that can be addressed via an element of talent management • Understand how those problems correlate to company goals • Involve respective business unit management in determining current state as the means to measure progress • Regularly assess the performance of your talent management initiative • Communicate progress widely and regularly For more information on this or other research topics, please visit Related Research All Aboard:: Effective Onboarding Learning and Development: Aligning Techniques and Strategies; January 2008 Workforce with Business Objectives; The Global War for Talent: Getting what September 2007 You Want Won't Be Easy; June 2007 Competency Management: The Link The Looming Leadership Void: Identifying, Between Talent Management and Developing, and Retaining Your Top Optimum Business Results; August 2007 Talent; November 2007 Authors: Kevin Martin, Research Director, Human Capital Management. Jayson Saba, Research Associate, Human Capital Management. Since 1988, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.2 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500. As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targeted marketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte- Hanks (Information – Opportunity – Insight – Engagement – Interaction) extends the client value and accentuates the strategic role Harte-Hanks brings to the market. For additional information, visit Aberdeen or call (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc. © 2008 Aberdeen Group. Telephone: 617 723 7890 Fax: 617 723 7897