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Calculate a talent’s roi to improve all hr

Why HR in companies hate any question about ROI? They say that they do a talent management and any ROI measure cannot be applied. Well, that's not true. They work with talents and the ROI can be applied. The question is if HR professional can link the his activity and activity of the talent to end objectives of the company. In

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Calculate a talent’s roi to improve all hr

  1. 1. Calculate a Talent’s ROI to Improve All HR KPIs by BASED ON
  2. 2. Why we need Talent ROI • Are you measuring cost to hire? • Are you measuring turnover? Stop using pointless KPIs BASED ON
  3. 3. ROI Formula • ROI (%) = (Net profit / Investment) * 100 • • • • • Investment in the case of HR stands for the sum of all costs associated with an employee: Cost to hire Cost of training Workspace and equipment costs Cost to manage Compensation BASED ON
  4. 4. How to put a dollar value on a talent? • Net profit is supposed to show the benefit that an employee contributed to the organization. • This approach might work for positions where employees are involved in sales or where their results can be directly linked with sales. BASED ON
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  6. 6. Align actions with strategic objectives • We need to start with an ultimate objective of the company and go deeper in the details in order to understand what do we need to accomplish in each perspective of the business in order to achieve the desired objective. BASED ON
  7. 7. Align action plan with KPI • An employee will be assigned a goal that is aligned with a company’s strategy (in other words, it is focused on outcomes that company wants to achieve). BASED ON
  8. 8. Calculating the ROI for an employee • Talent ROI (%) = ((Dollar value of objective’s impact * Employee Progress according to the KPI, %) / Investment)) x 100 BASED ON
  9. 9. Example of calculating a Talent ROI • Talent ROI (%) = ((Dollar value of objective’s impact * Employee Progress according to the KPI, %) / Investment)) x 100. • Talent ROI (%) = (($200,000 * 1) / $25,000)) x 100 = 800% BASED ON
  10. 10. Conclusion • With ”Talent ROI, %” company’s top manager and HR can make informed decisions taking in account financial impact of hiring and keeping a talent in a company. • Resources: late-a-talents-roi-to-improve-all-hr-kpis.htm BASED ON