Business Case/Financial Benefits of Talent Management
There are pros and cons of every management philosophy and the associated processes. Talent management is no exception to it. While many organizations simply decline to have it under their umbrella because it costs the exchequer, still others approve of it equally strongly as an effective people management process.
Before we discuss the financial benefits of talent management the following may be of our interest and worth a thought:
- Most of the organizations are short sighted, when it comes to people management.
- People management may not go well with pure capitalists.
- Organizations and industries are growing at a fast pace, faster than the rate at which talent is produced.
- There is dearth of talented and skilled professionals both at the top as well as bottom.
- Due to cut throat competition and a consequent lack of talented professionals the attrition rates have increased across all industries, especially so in services industry.
- Poaching has become common place; employee retention has become the Achilles heel of corporations.
All the above mentioned statements clearly indicate that the talent is unable to keep pace with the growing industry and also that the industry has failed to breed the pool of talented individuals as per its requirements. A fast industry growth meant that there would be a need for talented professionals for upcoming avenues and unfortunately corporate seemed to miss out on this. Business houses nowadays have diversified interests in different industries, employment opportunities are fast coming up but unfortunately the talent pool is shrinking. This tells upon the finances of an organization in a big way.
Let’s see how.
Less attrition means lesser expenditure on hiring: BPO’s and start ups, for example where the attrition rate is the highest remain occupied in searching for people every now and then. Now this incurs financial losses to the organization. An organization not only pays an employee for his/her work but also spends a considerable amount on their training and development. There is transfer of skill and expertise and when the same employee leaves after a brief stint with the organization, it costs the latter.
The problem gets even worse when such a scenario occurs at the top level. An unoccupied executive position can cost an organization dearly. The solution – a proper talent management in place can solve this problem. The following facts become worth consideration here:
- New employees cost the company 30-60 % more than the existing employee in terms of compensation only.
- There is an additional cost incurred on training and developing the new individual.
- The process of recruitments itself costs an organization in a big way, right from advertising a post, to attracting talent and finally short listing and hiring someone for the job. Often there is a compromise in hiring when the need is urgent.
Organizations clearly need to look inside for solutions and design and develop better employee retention, rewards and recognition strategy. Performance management needs to be taken care of, and seriously too.
To your success….
Talents and Skills Africa Team