The Business Case for Talent Management

ROI Talent ManagementMost managers I know hate doing performance reviews. I regularly hear, “This is the worst part of the year. I hate doing these.” And I hear many employees saying something very similar, “I hate this time of year. We all get the same rating so what does it matter?”

So why do it? Because companies that learn to do this well, that apply it in connection with an integrated overall strategy of talent management tied to strategic business planning, see better financial returns. The results impact the bottom line meaningfully.

In 2009, Ernst & Young surveyed 340 global companies about a variety of management practices and compared the answers to the reported financial performance of those same companies. The question they asked companies about talent management was simply:

Is talent management really worth the investment?

A.    Yes, we measure and know the value of our investment
B.    Yes, but do not formally measure our investment
C.    No, but it’s something we are considering
D.    No, never really thought about it
E.     Don’t know

The answer is YES! The 5-year average return on equity for companies with strong talent management focus in their business is from 20% to as much as 38% greater than others, depending how well integrated and aligned the focus may be (source: Ernst & Young presentation on outcomes from it’s 2009 Global Workforce Survey).

ROI on Strong Talent Management

From Ernst & Young Presentation, “Talent Management, A blueprint for executing your business and workforce strategies,” 14 September 2010 and news release 24 May 2010.

Companies that have talent management aligned with their mission, values and business objectives get part of the overall benefit. When companies fully integrate talent management programs to additionally include thoughtful workforce planning, succession planning, training, and strong leadership development, substantially greater benefit can be achieved.

In our next articles, we’ll discuss how much of this is accomplished. It is not that hard, but it does require commitment and thought.

For links to other articles in this series, see the introduction: Effective and Proactive Talent Management.

When employees drive your business success…
You need to talk with me.

Schedule a time for our conversation by
emailing me via the Contact page or calling me at:
804-396-3726
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www.RRushtonPaul.com

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