Paradigm shift

Measuring the effectiveness of talent management remains a challenge

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Many business leaders struggle to articulate a clear link between people and broader corporate performance.

More than a fourth of high-performing companies think the extent of skills gaps determines effective talent management.

Part of the problem is that the metrics that matter are the most difficult for companies to capture. Our survey respondents mainly point to easily quantifiable outputs, such as employee satisfaction and retention rates.

Figure 6

Tammy Erickson, an expert on organizations and the changing workforce, argues that metrics such as retention rates do little to explain whether a talent management approach is effective.

“The fact that you were able to coax some mediocre person to stay with you for 20 years, even though they were never qualified for any of the jobs you asked them to do during that period, is a pretty useless statistic when you think about it,” she says.

“What you want to know is whether there is a gap between the person who filled the job and the ideal qualifications that the position requires.”

Skill gaps

Yet few companies focus on skills gaps. Even among the high performers in our survey, just 26% think the extent of skills gaps is an important determinant of effective talent management, and among the low performers, this drops to 18% (see Figure 6).

“The identification of skills gaps is a crucial part of workforce planning, but there are few companies that are able to capture this information effectively,” says Bill Leisy, Global Talent Management Markets Leader at EY.

“If companies had a better sense of the looming skills gaps, where and when they need those skills, then their senior management team would quickly understand that they should think more strategically about what they need.”



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