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6 Indispensable Talent Management Metrics

Jun 25, 2019


  • EDITORIAL TEAM Talent Management Institute
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Do you need to measure performance even when it seems to be going just fine?

All customers are equal. A multi-billion-dollar global technology giant held this motto close to its heart and fulfilled all customer requirements, kept its stock updated and ensured a speedy and smooth delivery. Things were going along just fine. Then came the metrics, with their lightening “aha” moment that quickly revealed only 20% of its customers were generating 80% of its profits. Everything changed. Chaos followed and efforts were diverted to these 20% of customers. What was the result? The company unprecedentedly improved its financial performance.

Coming back to our question - Should you measure performance? Yes, even when it looks fine. Because “That which cannot be measured cannot be managed or improved.” Talent, which is the source of competitive advantage needs to be consistently improved. With the copious amount of data that wasn’t available earlier, this doesn’t seem impossible anymore.

But here’s a word of caution: Data is a double-edged sword. It can guide you and misguide you; It can kill your enemy or you. Before you begin to seek answers, here are a few rules to follow:

  • Know the validity of the data source. Only 15% of organizations are assured of their data accuracy. Wrong data will lead to wrong results, not to mention a waste of effort and time. This isn’t even the worst of it. More significantly, it could lead to wrong business decisions in the long. We all know where wrong business decisions can take us.
  • Know what you are looking for: “If you don’t know where you want to go then almost any road will take you there.” But if you want to ensure success, know your destination and pick the right road. Though every metric has its utility, not all metrics are equally important. Choose the right one that gives maximum insight into the problem at hand.
  • Use lasting data: Data collected over one or two years can only give shortsighted results; for long term foresight, use data collected over a substantial period.

Metrics that matter:

Talent managers these days have a metric for everything. Thanks to our inquisitiveness. The relevance of these metrics changes with changing business needs. However, few of these remain universally and uniformly relevant. We list them here:


Reasons can range from burnouts, family care, disengagement and injuries to job hunting. Too many absences raise a red flag.

Absenteeism = Workdays missed/ Total workdays scheduled

Market Benchmark: Unhappy employees are likely to take 2.5 times more leaves than engaged and happy employees.

Time to start:

Use this metric to gauge the effectiveness of the recruitment process. If the time to start is high then it may indicate poor employer branding, lengthy recruitment process, slow marketing efforts, weak candidate experience, etc.

Time to start= Total days positions are open/ Number of filled positions

Market benchmark: Linkedin’s 2017 global survey says that time to start could be anything from a few days to four months.

Time to productivity:

The average time the new employee takes to become productive shows the effectiveness of the onboarding process.

Time to productivity= Total time between employee’s joining and satisfactory productivity/ Total number of positions filled.

Market benchmark: An average employee takes a minimum of 6 months to become fully productive.

Job satisfaction rate:

Efficient selling starts with internal customers, i.e. your employees. If your employees buy-in to your systems and process, then they will dedicatedly sell them to your external customers. The best measure to know this is employee engagement. Establish a baseline and measure how happy your employees are with reference to that baseline.

Healthcare cost/ employee:

For the past 6 years, the average healthcare cost per employee has been rising at a rate of 5% per year.

Healthcare cost per employee= Total healthcare insurance premiums/ Number of employees who sign up for healthcare

Market benchmark: Average healthcare cost/ employee is USD 15,000.

Return on training investment:

To know the effectiveness of training, compare the employee’s performance before and after training.

Market benchmark: An average period of 60 days post training is recommended for evaluation.

Other Important Metrics:

Top up your analysis with these additional metrics:

Cost per hire: Average cost to recruit and train a junior engineer ranges from $4k to $350k. Tony Hsieh of Zappos said that bad hires had cost them over $100 million.

Time elapsed since last promotion: Millennials expect a promotion every one to two years. Cost and ratio of HR/employee: Present average is 1.5 HR per 100 employees.

Employee turnover rate: Healthy average turnover rates vary from industry to industry. While industries such as hospitality have around 25 to 30% average turnover rates, banking and finance have 9% turnover rates.

Wrap up:

Talent management is changing from an operational to a strategic function. It is no more confined to “soft skills” and has smoothly blended in with the rigid analytical decision making. The conventional “bottom-up” approach has been replaced by a “top-down” approach. Metrics are indispensable now. Know your business need and choose the right metrics for maximum impact.

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