Return On Investment in Talent Management - A meaningful measure?

11 September 2009:

Talent Management has gained huge importance during recent years and has moved from the HR director’s agenda to feature among the top 5 items on the board room agenda. It is more important than ever for an organisation to recruit, develop and retain talent. However, it is difficult for anyone tasked with designing and implementing a new Talent Management strategy and system to build a credible business case that is based purely on quantitative information.
For many years, experts have come up with different methods to try to put a monetary value on human capital. All have been unsuccessful. A business case around Talent Management should try to answer the question “Is this investment I am making worthwhile?” without putting too much emphasis on numbers and values.
Whether a company has to choose between an entire Talent Management system or a new system to support one of the processes, such as learning the financial business cases are very similar and normally include two types of potential costs:

Tangible costs – e.g. reduction of administrative and support staff through introduction of new technology such as self-service, or reduction in training course development and delivery costs.
Intangible costs - e.g. improved resource management capability, improved service or potential reduction in contractors.

Tangible costs are relatively easy to measure and can be calculated quite accurately. Unfortunately, more often than not they do not create an attractive business case as they are only saving a fraction of the total cost base.

So, the true “value” from such an initiative will come from a change in intangible cost such as improvements in workforce productivity e.g. through a reduction in time spent travelling to a course, faster enrolment onto a course or better alignment of individual and team goals to the company’s strategy.