Measuring ROI of Competency-based Talent Management

We all know how difficult it is to effectively manage something you cannot measure. Like many other management constructs, measuring outcomes of Competency-based Talent Management (CbTM) can be challenging.

As a competency consultant, I often see HR or line managers not even consider results measurement, or get half way through their CbTM project before they even think of measuring results. And unfortunately, it can sometimes be too late if you are too far along in the project, as you need a baseline for comparison.

Measurement of results should really start the moment you identify a business need for a CbTM application, at which point you should identify the desired results and changes you are trying to achieve. It does not have to be complicated, and often can be as simple as qualitative feedback. On the more complex side, you can look at organizational performance measures, and how they tie to the CbTM initiative.

Measuring the results of competency-based HR applications is the only way to be able to prove success to top management. This requires measurement of current performance at the time the project is started, followed by a second or multiple measurements after the application is implemented and has had time to affect the workplace. By building measurements into the project from the start, the application can be designed to facilitate the collection of performance data, and you can more easily demonstrate real value to your management team.

Here are a few examples of measurement approaches an organization can use:

• Project Execution: A simple measure would be to review the project plan. Regardless of effectiveness, did the CbTM project team do what it said it would do? This establishes what, how well and how much was done.
• Qualitative Data Sampling: Conducting interviews with different functional groups of employees and managers on a specific HR application (training, career development, etc.). Their anecdotal feedback on its use (competency model, process, tools, etc.) can be summarized and reported back to the CbTM project team and top management. 
• Performance: Showing performance improvements by comparing it to a baseline data is more objective - for example, the performance impact of selecting employees for their competencies versus using traditional methods by looking at things like: output per person or per group; reduction in employee turnover within an organization; reduction in errors or client complaints.
• Business Results: Ultimately, a CbTM application needs to support business goals such as profitability, competitiveness, market share growth, efficiency, quick turnaround times, and increasing customer satisfaction among others. Business metrics that can, and should be included are things like: reduction in turnover that results in lower costs and higher profitability; reduction in production errors, increasing efficiency and speeding up time to market, etc.

So, when starting your competency initiative, think hard about what you are trying to accomplish and why, confirm this with top management, establish the measurement process, set up your baseline measures and then report regularly to determine whether the initiative is having the desired impact.

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