In the grand scheme of human capital management, choosing the best talent for each job type that benefits the company is the bottom line. Paying a fair salary and offering benefits above what the competition is the other side of things. Yet, very often there are disparities in what top performing employees earn versus the employees who barely squeak by (at least from the perspective of employees who have not received salary increases for a long time).
Putting a Value on Human Resources
The question comes up in many leadership circles: How does an organization determine the actual value of talent? Talent itself has many facets, some that are obvious and others that require a much closer look. In the reality of a competitive business world, talent equates to future earnings of a company. The answer then depends on several value factors, which we will discuss here.
From an internal standpoint, it can be difficult to place an exact “dollar for hours” value on employees. However, there are a number of internal workforce metrics that can help any HR team to determine how their recruitment and onboarding efforts are producing profits for the organization. These can include:
- Reduced turnover among work teams that typically have retention issues
- Increased number of new hires who ramp up quickly to productive work
- Reduction in paid time off and sick day usage in high stress departments
- Training efforts that result in more promotions and succession planning success
- Improved employee engagement and intuitive promotion of the company culture by employees
Additionally, the value of talent becomes much more evident when it comes to the increased positive response from clients and prospects. When highly skilled candidates become part of your teams, they tend to encourage new ideas that can bring about the improvement of customer relations. Likewise, each new hire brings with him a number of referrals and fresh customer leads that the company can leverage. Just one new client can help increase the value of a hire.
Consider this: Having access to the best customer service, sales professionals, and technically skilled employees can increase the positive experience that your customers get with every contact. In turn, this helps create a more loyal customer base of repeat business. Thus, the dollar value of the talent you choose can be thought of in these terms.
Cost of Losing a Great Employee
When thinking about the value of talent, one must also think of the cost of losing a valuable employee. It has been estimated that the cost to replace just one high performing employee can be as high as 200 percent of their annual compensation. What you must consider in determining the value of your talent is what it will take to keep your top talent around long enough to get a positive return on your investment. What’s it going to take to pay your mid-level employees and your managers enough so they don’t start thinking about working for the competition?
While you do want to focus on fair and equal opportunities for all employees, having a clear picture of offering above-average salary and benefits to your key employees is what sustains the business. Even the loss of one subject matter expert in your company can be devastating, so start thinking about this cost and plan your compensation strategy around maintaining a great workforce. This is the true value of talent and what makes a business rise above the competition.
Learn more about retaining talent and managing turnover with this whitepaper from PayScale: Turnover, The Good, The Bad and The Ugly