Talent professionals find themselves in a whirlpool of acronyms: LMS, LXP, UX, TMS, TMP, and now TXP. They’re deeply entrenched in the war for talent, and they are getting to grips with the characteristics and benefits of all these systems and platform options.
The good and easy-to-digest news is that TXPs are the pinnacle of talent management, learning and user experience systems. As next-generation, all-in-one fusion platforms, TXPs are a 10- to 15-year culmination of advancing technologies in the science – and the art – of optimising both the employee experience and the company’s workforce productivity and potential.
Demystifying the terminology raises a less palatable issue: the struggle of talent leaders to influence the organisational technology landscape. This is indicative of the HR function’s inability to crystalise what it does and quantify the impacts it makes. The chief production engineer says a new machine will increase output velocity by 12.5%. The marketing director motivates for a new CRM system by showing how it will increase sales leads to customer conversion by 9%, and she updates the revenue target number accordingly. The CHRM says the recruitment KPI is “to hire good candidates” – but he’s proud to update the leadership team that “our talent platform got 35 likes last week.”
This fluffiness and the vanity statistics involving talent management are not good enough. HR leaders need to get serious about measuring what they do and quantifying its strategic value, because it is hugely important to the business.
Numbers games
Overall, the business case for TXPs as the ultimate talent systems is simple. Top talent keeps a company competitive and delivers results. The HR function, in attracting the right people, developing them, retaining them, and instilling a high-performance culture, is the engine room of a business’s success.
It’s straightforward to work out how much a TXP can save a large organisation in training costs. Online training notwithstanding, many organisations still need or prefer in-person and off-site sessions. A team of, say, 30 sales employees gathered for two days, including venue and equipment hire, meals and accommodation, plus the course trainer cost will amount to a conservative figure of R500,000. A TXP can fulfil the upskilling mainly in the flow of work – and its employee-centric prompts and applications will significantly enhance the retention factor of the learning.
But talent professionals need to persevere with numbers. In this example, R500,000 is not the full story of the TXP’s value. If these 30 employees collectively generate sales worth R250,000 in an average working day, the forfeited turnover of two out-of-the-office, unproductive days is a further half-a-million rand. HR needs to be careful not to undercut its value and impact – in this case, not understanding, and making the business case for, what a TXP brings to the business.
A question: What’s your company’s average time to hire? Perhaps you know the answer, but if the figure has been created in an Excel spreadsheet, based on information supplied by an outsourced recruitment agency, you should rethink its accuracy. More truthfully, many recruitment teams and talent managers shy away from questions such as this, with significant implications.
To illustrate, consider a company of a thousand people with a not unreasonable average annual attrition rate of 10%, so the recruitment team is hiring 100 new people every year. Knowing, and being realistic and forthright about the firm’s onboarding programme, the CHRM may admit that two weeks of initial time is unproductive.
Assuming the average cost-to-company remuneration of these employees is R40,000, this translates to R20,000 in onboarding cost wastage per employee. For 100 new people this equates to R2m per year in lost productivity. Could a TXP cut onboarding time by half? Most certainly (and it will also transform onboarding into ‘everboarding’). So the core business case is that a TXP will save the company R1m each year. Put differently, if the system costs R1m, a year after its implementation it actually starts making the company money.
(Finance people call this the payback period. If the CHRM were to tell the CFO that the payback period is one year, he or she would be very impressed by both the promising number and the CHRM’s understanding of bottom-line impacts.)
The actual figure can be calculated for any company based on real data, but the point is that this kind of returns-on-investment (ROI) assessment on talent management systems is not happening in many organisations. If talent professionals want to stay relevant they need to familiarise themselves with the technologies that can achieve these ROIs, and to start thinking about trade-offs, paybacks, the costs associated with talent issues, and the tangible gains of solutions such as TXPs.
But to understand the real benefits of TXPs, as part of the talent function’s effectiveness and business contribution, CHRMs should apply their minds to further analysis.
This requires digging deeper and analysing data over time, but it isn’t overly complex. TXPs are designed and engineered to create a positive, engaging overall employee experience, threading people’s journey with the company – from attraction and recruitment to ongoing learning and development and career progression. The metrics will tell a story: a year after implementing the TXP, what is the retention ratio? Two years, and then three years later? Continuing the above example, it’s entirely feasible that the TXP – carefully selected and diligently implemented – will have contributed to cutting the attrition rate to 7.5% or even 5%, adding another R1m or so to the bottom line.
The exploration can reveal even more critical insights which tie talent management to the business. What might the increased productivity factor of the TXP be? The platform generates data that can be used precisely to answer this question. Teams’ project turnaround times, individual employee activity, learning hours, new customers generated per hours worked: interrogating the data in this way will enlighten the organisation’s leadership and shift perception of the talent function.
Indeed, talent management systems and employee engagement platforms can no longer be motivated for under the hazy banner of corporate culture. How is the company’s culture monitored and measured? More directly, is it contributing to financial performance?
The assumption that culture, as vital as it may be, is intangible, is incorrect. A study by Oxford Economics determined that publicly traded companies with healthy cultures are one-and-a-half times more likely to report average revenue growth of at least 15% over three consecutive years, and two-and-half times more likely to improve their share prices each year.
The availability of such research can make the case for nurturing culture towards high performance. But talent leaders do not connect the dots between culture and financial performance. The data is inevitably there, but soft generalities are easier.
It’s time for greater accountability among talent leaders. The business case for TXPs does include traditional talent management and people-performance ambits. But championing people and prioritising the bottom line are both, and simultaneously, possible. A TXP, if it is strategically implemented and utilised smartly, is a pathway to all-round better outcomes for the organisation.
In many respects, making the business case for a TXP echoes the business case for the entire talent function.
A TXP’s payback is fast, its culture contribution is an ROI, it saves money and boosts productivity, bolstering the bottom line. Talent leaders need to start speaking this kind of business language.
Talk to LRMG to find the sweet spot for fusing talent and technologies, and see what it means for your organisation’s culture. We will be at the HR Summit on 13 September 2023, or contact us: +27 87 941 5764 www.lrmg.co.za
LRMG specialises in talent technology solutions. For guidance on how TXPs can transform your organisation’s talent, contact Riyan Silochan at LRMG on RiyanS@lrmg.co.za or +27 87 941 5764
