Only 1 in 10 Companies Measure ROI on Critical HR Functions

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Only 1 in 10 Companies Measure ROI on Critical HR Functions

Despite a growing reliance on data and evidence-based decision making for planning and forecasting, sales, marketing, quality control, and safety, many employers still do not take analytics seriously when it comes to human resources.

A new survey by ACT Bridge found that the majority of U.S. Employers Fail to Measure Return on Talent Investments.

According to the survey, only 44 percent measure the return they’re receiving on their talent investments (RTI). This is unfortunate because research shows that organizations that do track the return on talent investment do perform better compared to their peers.

What is RTI? Simply it is the return of a talent investment divided by its cost.

Equally troubling is that among those employers who do measure the return on their talent investments only 42 percent measure the RTI of their education and training programs and 32 percent measure the RTI of their HR information management tools and systems. Even worse, twenty-five percent or less measure the RTI of the recruiting firms, job boards, social media sites and other key resources they use. That means that only 1 out of 10 employers actually measure results on critical business functions like recruiting and fewer than 1 out of 4 companies measure the return on training.

Even the tools used by many employers to measure talent lack reliability. Just 33 percent use software. Seventy-one percent use spreadsheets. According to the survey report, “spreadsheets are not the most reliable tool employers can use. At many organizations spreadsheets are updated infrequently, filled with errors and inaccuracies, and not always understood by peers who receive them as reports.”

When asked “Do you know specifically how your talent investments impact the following?,” 53 percent lack metrics to monitor its impact on customer satisfaction, 61 percent lack talent data and its impact on profitability, and 59 percent do not know the impact of talent on the company’s growth.

Ironically, 70 percent of the employers surveyed said they took steps to strengthen their pipeline for new talent and 80 percent to improve the quality of job candidates. Unfortunately steps to ensure a positive return on investment do not follow: only 54 percent took steps to improve their applicant-to-interview ratio while 65 percent plan to maintain or increase their talent investment over the next 12 months.

Clearly Human Resources must improve its performance when it comes to talent analytics and evidence-based decision making.

The complete results of the ACT Bridge survey are available in a new report that the company is offering as a complimentary download.

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