Past studies have shown positive impact of HR on business performance. HR’s impact can be measured in terms of three categories of variables.
- Immediate impact measured through financial variables indicated by some of the financial results or measures attributable to HR.
- Immediate impact measured through talent management indicators as it is human talent that converts all the other resources into products, services, and contributes to the financial measures.
- Long term impact measured through contributions to intellectual capital formation.
Of these, intellectual capital formations measures have come into picture in the recent past. Intellectual capital of any organization is determined by subtracting the value of all fixed and tangible assets of the company from the market value at that point of time. HR has major role to play in contributing to intellectual capital and hence there is a need to measure the same. This section measures the same with the help of following dimensions.
- Talent Management
- Talent Attraction and Acquisition
- Talent Management: Induction and Integration
- Talent Management: Human Resource Utilization and Employees engagement
- Talent Management: HR Development or Competency-building and Renewal
- Retention and Separations Management
- Intellectual Capital
- Intellectual Capital Formation and Structural Capital: Customer Capital
- Intellectual Capital: Impact on Structural Capital Formation Attributable to HR Interventions
- Intellectual Capital Formation: Contribution to Human Capital Formation
- Intellectual Capital Formation: Contributions to Social Capital
- Intellectual Capital: Contributions to Emotional Capital
- Intellectual Capital: HR contributions to Relationship Capital
- Intellectual Capital: Contributions to Knowledge Capital Formation
- HRD Systems, Strategy, and Structural Capital
- HRD Competencies
- Values and Culture Capital
- Financial Measures
- Financial Performance Indicators Attributable to HR
Audit Talent management can be done with the help of following dimensions and criteria.
Talent Attraction and Acquisition
Indicators of this dimension include:
- High number of applicant and job seekers.
- High outreach to attract candidates.
- More competent people being recruited.
- Decrease in the average time taken between requisitioning for talent and availability of competent staff.
- High return on investment on recruitment.
- Process improvements like competency based interviewing, assessment centers, interviewer training, reaching out to more institutions and candidates, etc.
- Due diligence in pre-acquisition of soft asset.
- Good performance of newly hired applicants.
- High percentage is being hired on the basis of the validated selection test.
- Rise in number of qualified applicants per position.
Talent Management: Induction and Integration
This dimension can be evaluated on the basis of:
- Availability of new recruits and their readiness to contribute in short period of time after their joining to start performing.
- Awareness of all faces of the organization including its business, markets, customers, competitors, challenges, etc. among new recruits.
- Their awareness on KPAs.
- Reduction in number days within which new recruits are available for use.
- Satisfaction of new recruits about induction process.
- Participation of seniors in training new recruits.
Talent Management: Human Resource Utilization and Employees engagement
Indicators of this dimension are:
- Increased employee commitment or engagement as indicated by surveys, attributable to HR policies and interventions.
- More effective utilization of employees perceived by line managers.
- Increase in per employee revenue and profits.
- More effective utilization of organizational resources by employees.
- Increased employee satisfaction and morale.
- Increased efficiency due to talent utilization.
- Deceased bureaucracy.
- PMS is taken seriously and used effectively for performance planning.
- Percentage of poor performers gone down.
Talent Management: HR Development or Competency-building and Renewal
It can be evaluated on the basis of below listed grounds:
- Availability of internal talent as and when needed.
- Notional measurement of ROI by increased efficiency, effectiveness, time and cost savings, enhanced problem solving capability, and innovations and quality improvements.
- Change in employee mindset.
- Employee competency growth.
- Employee satisfaction with advancement in career opportunities.
- Extent to which employees have access to knowledge and information they need.
- Extent to which HR is helping to develop leadership competencies.
- Percentage of internal promotions to new recruits.
- Percentage of jobs filled from within.
- Extent to which average employee understands how his or her job contributes to the organization’s performance.
Retention and Separations Management
This dimension has following criteria:
- Regrettable attrition rates (attrition of good performers) as compared to the past or to the industry in the same sector, city, time, etc.
- Percentage hike in emoluments offered by new employers to those leaving.
- Pride and satisfaction with the company and the goodwill with which separation takes place on the part of those shifting jobs.
- Percentage of those who left wishing to return on re-employment.
- Percentage of separation of superior performers averted.
- Extent to which those separating made arrangements to take care of the gap created by this separation.
Methods of Assessment
- Interviews of the HR managers and Line managers/Functional Head: To avail insight on their views on the above aspects of the talent management.
- Survey Data: Survey can be conducted to get information on the above aspects. It can be exercised on managers as well as employees.
- Secondary Data: Information from PMS data, training records, Retention and Attrition records, Exit interview documents and other special surveys can be utilized for the purpose.