Measuring Talent

Posted by Dawn Advertiser in CAREERS, Management Theories, Professional Development

Peter Drucker, the founder of modern management once said: “You can’t manage what you don’t measure”.

Since acquiring, managing and retaining the right ‘talent’ is the topmost priority for most organisations today, this quote takes on special meaning and to this end, talent metrics (indices that quantify and measure the value of talent in organisations) are gaining traction across Pakistan’s corporate sector.

Here are three talent metrics you should employ to ensure a dynamic, skilled and talented workforce:

ROI (return on investment) on manpower

is calculated by dividing the organisation’s net income by the cost of its management functions, which include employee recruitment, interviewing, testing, orienting, training and rewarding.

An increasing ROI over time justifies your expenditures; if the ROI continues to decrease for more than a year, it implies that your workforce is dominated by redundant employees, unable to meet targets and who need to be replaced.

Revenue per employee is calculated by dividing the organisation’s total revenue by the number of employees.

This ratio indicates how efficiently the company is utilising each employee. The higher the ratio, the more productive your workforce.

However, keep in mind that labour-intensive organisations (such as a textile factory) will have a lower ratio compared to a service based organisation (such as a bank) and that the more educated and skilled each employee is, the higher the revenues s/he is likely to generate.

Workforce innovation index is calculated by dividing corporate revenue by the cost of employee-suggested product innovations. A higher index indicates that your product innovations have been well-received in the market and are contributing significantly to overall sales.

Production and operation experts believe that this index should at least be 33% (irrespective of industry) to ensure that your ‘new’ products are generating returns that are five times higher compared to your standard product offerings.

– MehreenAhmed

The writer is a project coordinator at a multinational company. mehreen.ah@gmail.com.

First published in the ADBUZZZZ Section of The DAWN National Weekend Advertiser on October 12, 2014.