The Business Impact Of Talent Intelligence
Talent intelligence is a key lever in today’s hyper-competitive world. Just as traditional business intelligence captures, extracts, and analyzes key data on an organization's hard assets, talent intelligence captures key
workforce and talent data to generate insights that can drive improved decision making and performance. Unfortunately, many organizations lack access to reliable talent intelligence data.
Leaders see the connection between talent intelligence and performance and financial results...
- "Do you agree that more awareness and insight regarding the talent in your organization can improve performance and relative financial success?": 1) Net agree - 98%; 2) Strongly agree - 82%; 3) Somewhat agree - 16%.
- More specifically... "Which of the following financial metrics would be positively impacted by leveraging more robust talent insights?": 1) Stock value - 15%; 2) Profitability - 58%; 3) ROI of employee development -
73%; 4) Revenue per employee - 60%.
But that is perception... What is the reality?
- 35 percent of those surveyed were classified as Data Proficient Organizations (DPO).
- 65 percent of those surveyed were classified as Data Deficient Organizations (DDO).
- Percent who agree HR uses workforce metrics to demonstrate its contribution to your organization's business goals and strategy: 1) DPO - 94%; 2) DDO - 50%.
- Percent who are satisfied with organization’s ability to analyze and make connections between recruiting and retention: 1) DPO - 78%; 2) DDO - 20%.
- In a sampling of nearly 80 companies from the survey data, DPO's outperform DDO's on key financial metrics, suggesting a connection between those organizations that use talent intelligence and financial performance
(keys: data proficient organizations; data deficient organizations): 1) ROA (data proficient organizations - 7.3%, data deficient organizations - 6.8%); 2) Price to book (data proficient organizations - 4.3%, data deficient
organizations - 2.5%); 3) Stock value percent change past 12 months (data proficient organizations - +4.6%, data deficient organizations - -3.0%).
Why might we see this correlation?
- Increase in knowledge work. According to McKinsey,"...knowledge workers have driven more than 70 percent of the economic growth in the U.S. over the past three decades, and 85 percent of the new jobs created in
the past decade have required complex knowledge skills".
- Intangibles as a percentage of company valuations. Intangibles such as IP, know-how, expertise, etc., which are directly related to talent, now account for more than 80% of company valuations.
- Given these various data points, one would expect to see this sort of correlation between improved talent awareness and management and business performance.
So which talent metrics are considered the most important by DPO's?
- Of the 37 metrics measured, the top 9 were: 1) Quality of hire - 77%; 2) Employee engagement levels - 76%; 3) Critical roles with no identified successors - 70%; 4) Competency/skills gap analysis - 68%; 5) Average
time to hire for critical roles - 66%; 6) Best sources to fill skill/expertise gaps - 66%; 7) Top performer retention - 63%; 8) Productivity - 63%; 9) Total turnover - 62%.
And how many organizations have access to reliable data in these most important areas?
- Notice that DPO's outperform DDO's in having reliable data access, but even DPOs have relative struggles in some areas (keys: DPO's % have reliable access; DDO's % have reliable access): 1) Quality of hire (DPO's
% have reliable access - 34%, DDO's % have reliable access - 11%); 2) Employee engagement levels (DPO's % have reliable access - 58%, DDO's % have reliable access - 36%); 3) Critical roles with no identified
successors (DPO's % have reliable access - 50%, DDO's % have reliable access - 21%); 4) Competency/skills gap analysis (DPO's % have reliable access - 34%, DDO's % have reliable access - 11%); 5) Average time
to hire for critical roles (DPO's % have reliable access - 59%, DDO's % have reliable access - 31%); 6) Best sources to fill skill/expertise gaps (DPO's % have reliable access - 73%, DDO's % have reliable access -
47%); 7) Top performers retention (DPO's % have reliable access - 50%, DDO's % have reliable access - 21%); 8) Productivity (DPO's % have reliable access - 42%, DDO's % have reliable access - 19%); 9) Total
turnover (DPO's % have reliable access - 84%, DDO's % have reliable access - 57%).
Why do organizations most often lack reliable access to data for these metrics?
- What are the barriers to using more robust talent insights in your organization? (keys: data proficient; data deficient): 1) Lack of tools/resources (data proficient - 29%, data deficient - 33%); 2) Lack of executive support
(data proficient - 13%, data deficient - 30%); 3) Cost (data proficient - 30%, data deficient - 16%); 4) Lack of analytic skill (data proficient - 6%, data deficient - 13%); 5) We already have an enhanced talent system as
defined (data proficient - 12%, data deficient - 1%); 6) don't need an enhanced talent system (data proficient - 4%, data deficient - 1%); 7) Other (data proficient - 7%, data deficient - 6%).
Taleo X | Download the full research paper The Business Impact of Talent Intelligence at taleo.com/researchpaper/business-impact-talent-intelligence | Access the five-part paper series on the importance of talent
management and talent intelligence for line of business leaders, covering such areas as hiring and onboarding, performance management and compensation, learning and development, and retaining and growing talent |
taleo.com/knows. Sources: 1. Unless otherwise cited, all data can be found in the The Business Impact of Talent.