This document discusses measuring talent in organizations. It recommends using three metrics: return on investment (ROI) on manpower to evaluate costs versus profits from employees; revenue per employee to assess productivity; and workforce innovation index to gauge revenue from employee-suggested innovations. Tracking these metrics over time can help ensure a skilled workforce and identify areas needing improvement.

1. Measuring Talent
Posted by Dawn Advertiser in CAREERS, Management Theories, Professional Development

2. Peter Drucker, the founder of modern management once said:
“You can’t manage what you don’t measure”.
Since acquiring, managing and retaining the right ‘talent’ is the topmost priority for
most organisations today,
this quote takes on special meaning and to this end, talent metrics (indices that
quantify and measure the value of talent in organisations) are gaining traction
across Pakistan’s corporate sector.
Here are three talent metrics you should employ to ensure a dynamic, skilled and
talented workforce:

3. ROI (return on investment) on manpower
is calculated by dividing the organisation’s net income by the cost of
its management functions, which include employee recruitment,
interviewing, testing, orienting, training and rewarding.
An increasing ROI over time justifies your expenditures;
if the ROI continues to decrease for more than a year, it implies that
your workforce is dominated by redundant employees, unable to
meet targets and who need to be replaced.

4. Revenue per employee is calculated by dividing the organisation’s total revenue by the
number of employees.
This ratio indicates how efficiently the company is utilising each employee.
The higher the ratio, the more productive your workforce.
However, keep in mind that labour-intensive organisations (such as a textile factory) will have a
lower ratio compared to a service based organisation (such as a bank) and that the more
educated and skilled each employee is, the higher the revenues s/he is likely to generate.

5. Workforce innovation index is calculated by dividing corporate revenue by the cost of
employee-suggested product innovations.
A higher index indicates that your product innovations have been well-received in the
market and are contributing significantly to overall sales.
Production and operation experts believe that this index
should at least be 33% (irrespective of industry) to ensure
that your ‘new’ products are generating returns that are five
times higher compared to your standard product offerings.

6. – MehreenAhmed
The writer is a project coordinator at a multinational company.
mehreen.ah@gmail.com.
First published in the ADBUZZZZ Section of The DAWN National
Weekend Advertiser on October 12, 2014.