It’s repeated so often as to be trite: people are a company’s most important asset.
Actually, according to accounting standards and theory, this is not true. As Harvard Business School professor Ethan Rouen points out, companies do not control their people, so they are not assets.
But what if talent leaders and the C-Suite could, at least to an important extent, control their employees? ‘Control’ not in the negative sense, but in the positive aspects of influencing and shaping the talent pool towards high performance and individual development and growth? If a company could do this, then by Rouen’s definition – and as a more accurate match to the well-worn but little understood expression – the organisation’s people would indeed represent its key asset.
But here’s the struggle: the output of employees, and the way they work, is not easily shaped or influenced.
Even leaders who value their people should pause before concluding that, in spirit, they can claim their workforce as an organisational asset. Why? Because the chances are they do not have the full picture. And without this knowledge, this clarity, there can be no genuine ‘control’.
Influence and shape your talent pool towards high performance!
There’s a phrase for this – the composite insights, data and metrics that provide an end-to-end view of the organisation’s people. It’s called talent visibility.
Knowledge is powerful
Talent visibility can be understood as a holistic view on the impacts related to the organisation’s talent – an in-depth understanding of the capabilities, experiences, skills and ambitions of the people who are responsible for maximising productivity and profitability.
This encompasses employment costs and inputs, the attributes intrinsic to the workforce, and the value generated by the talent pool either as a whole, earmarked to teams, or even down to individual people. Together, these comprise the company’s talent value chain, and in the same way that the enterprise invests in the transparency of its supply chain, there are advantages to an insights approach to talent.
Yet, surprisingly, HR leaders and the C-Suite often lack information when it comes to the talent value chain. Certainly, they will know the salary bill, the external cost for training sessions, the software license fee for the talent technologies the company implements. But there are likely to be blanks as to the full organisation-wide employment cost, including, for instance, recruitment costs, the opportunity costs of suboptimal onboarding programmes or L&D initiatives, and the wastage within what may be a weak talent retention ratio.
Other questions are likely to elicit an arched eyebrow because they are perceived as even more abstract: What are the most pressing skills gaps? Does the company have a strong employer brand?
And, even more unlikely to draw a coherent response, does the enterprise have a lens on the relationship between talent investments and value creation, specifically, and can it draw an ROI line all the way through to its financial reporting?
In other words, human capital should no longer be assessed in terms of what it costs. Instead, using data and insights, talent can and should be evaluated on the value it generates; the corollary is that these insights and measures can help refine people’s productivity and performance, thereby adding further value.
For instance, it is worth much to the enterprise to understand the composite elements of an employer brand, and knowing whether the company’s is sound or even powerful. Generally, it’s accepted that a positive employer brand attracts high-potential talent.
Which software architect wouldn’t wish to work at Google; which aeronautics engineer wouldn’t jump at the chance to join Lockheed Martin; is there an aspiring marketer who wouldn’t be flattered to be headhunted by Unilever?
However, this is not the full picture of how an employer brand creates calculable value. Admittedly, assessing the ROI of a strong employer brand is complex and requires tracking multiple measures such as employee engagement, the organisation’s culture shifts, and customer satisfaction over a trended period.
As just one example of the direct savings attributable to a sound employer brand, a 2021 LinkedIn study estimated that a strong employer brand, combined with leveraging technologies to automate the recruitment process, can save companies up to 43% on the costs associated with hiring.
It’s possible to get even more specific about how talent insights impact the bottom line – how they generate real financial gains.
How many new recruits does your company hire annually, on average? Let’s assume 25, at an average salary of R50,000. No matter how skilled and experienced these recruits are, every individual will need time to orient and reach full productivity.
This onboarding time-to-productivity varies by industry, organisation and specific role, but studies indicate it to be between 2-8 months. A report by global HR research firm, Gallup says it could be as long as a full year.
If we assume a wastage factor of 50% of each new employee’s cost for just their first three months at the firm, this amounts to an annualised hit to the income statement of nearly R2m in lost productivity.
With comprehensive talent visibility into the organisation’s onboarding, involving technology accelerators and enablers, KPIs that track output and achievement goals, and milestones towards full employee autonomy, it is absolutely possible to strip out much of this redundancy.
From human capital to business value
The pressure to perform, to achieve results and to improve makes it even more important to have full visibility of the value chain that comprises the organisation’s people.
Deep and wide talent insights enable strengths to be supported and built further, skills gaps to be identified, talent risks to be flagged, and opportunities to be capitalised on. In short, these insights are a window into how the company can do better, and a portal to unlocking further skills and capabilities.
In as much as there may be a lack of clarity about any and all aspects of the company’s talent function, this is simply not good enough.
Talent leaders do not need to convince the C-Suite about the importance of employee engagement.
As a catch-all word for employees’ buy-in to the organisation’s purpose, being aligned to the strategy, and motivated to work productively, engagement is crucial.
Low levels of engagement are synonymous with productivity dampeners such as high employee churn and quiet quitting, and are acknowledged as a worldwide problem affecting businesses in all industries and of any size.
But the CEO may respond to the HRM, how do we ensure we have good engagement levels? Leaders want their companies to be among the group of high-quality enterprises with engaged employees, because they perform, on average, significantly better than their peers – by 14% in terms of productivity gains, and by 23% in regard to profitability.
A smart talent leader understands how to answer and channel this question, not just in the boardroom meeting, but as a deliberate, ongoing talent approach which syncs with the business strategy and adds financial value.
Talent visibility – 360-degree, real-time knowledge of the strengths and weaknesses of the company’s collective human capital capabilities, employees’ workflow struggles, metrics about managerial churn, measures of its employer brand health, among myriad others – ensures better decision-making. In doing so it connects all the busy-ness of its people, the processes, systems and technologies buzzing throughout the year, to the company’s financial results.
Only full talent visibility will transform the performance of your people such that they will represent the organisation’s single most valuable asset.
By Michael Franks, Sales Multiplier Executive, Talent Technology division at LRMG
The LRMG Group of companies specialises in igniting the growth and performance of people. Get better visibility into your company’s talent value chain. Contact Michael Franks at michaelf@lrmg.co.za or contact LRMG: +27 87 941 5764 www.lrmg.co.za
