By Dr Anthony Hesketh, Senior Lecturer, Lancaster University Management School
One of the first conversations I have with any executive I first meet turns on the direction of travel of their people. By this I do not mean the extent to which they might be coming or going – although I will be coming back to this in a moment. I mean the direction of travel of the value of their talent.
It’s actually a more difficult question to answer than you might think. People might well be your greatest asset. But how great, and how do you know? Is your talent asset growing? How do you know? This is what I mean by the direction of travel. How might you answer the question?
The current favorite amongst HR directors is the extent to which employees are engaged. The more engaged my workforce is, the higher their productivity. How much higher, and how do you know? Silence.
This is not a particularly helpful conversation, I know. I am not intent on being a pedantic academic seeking to stick my intellectual pin in management’s largely inflated balloon. I’m with you: I am merely expressing my frustration with the state of academic research exploring the relationship between talent and company performance.
The best ‘science’ on the table suggests good HR can account for around 5% of the variation in performance between companies. Given that people represent anything between 20 – 80% of operating costs, wouldn’t a smart CEO focus time and investment in those areas that generate the other 95% of value from less cost? Or perhaps they might reach the same conclusion I have: that the best science on the table is in fact far from ‘scientific’, and that what we need is a much better way of understanding the value of our talent? Which brings me neatly back to those replacement costs of my talent assets walking out of the door …
View the new CIPD research report: Valuing your Talent: resourceful assets?
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We will follow this Valuing your Talent project intensely. Founding our company Katch (MyKatch.com) is very much built on the question of how to measure the intangible (we've started now with measuring the 'soft skills'), how to express this measurement in a useful way, and how to take people, teams and organizations to next levels? My strong personal view is that most talents people have come to the surface and flourish when people relate to others, are triggered by others, i.e. in a social context. Why should I develop my skills 'as such'? I believe myself, that I want to develop my skills in relation to my (working) life with other people. The social context at work is what makes me tick, and I believe that goes also for people in general. Skills as such, and improvement of skills as such do not create value, only in relationship with the people one relates to and collaborates with. Social context is relevant in measuring talent.
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