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February 14, 2012
Why Analytics Matter: Measuring Talent
 
As protectors of our clients’ brands, we’d never recommend an integrated communications, marketing, or media campaign to any of our clients without well-thought-out ROI supporting it — or the “why” that justifies their investment and what project the brand lift they can expect to see as a result.
 
So why do we, in some cases, not put the same amount of rigor around the very talented people who are helping our clients and agencies achieve such great success?
 
Granted, many agencies are conducting great, and even “leading practice,” activities as it relates to talent. Some agencies have robust Talent, Learning, OD, and HR teams, while others have much leaner, yet equally effective, teams.
 
By no means is this meant to be a critique, but is meant underscore the importance of placing the same amount of rigor around people metrics that we apply to our clients’ campaigns. In doing so, we, as agency practitioners, similar to our clients, will be able to make fact-based decisions as it relates to people growth, acceleration and development. The following three metrics are a recommended starting point and should be able to help agency leadership answer some key questions, including:

1. What’s my people ROI? Do I have the right number of people? 
 
We all know that people are the single greatest asset and cost within the organization. According to The Human Capital Institute, the average Fortune 500 Company makes about a $3B plus annual investment on its workforce and can’t measure its ROI.1  

     Total Compensation Costs (all workforce, including contract & freelancers)
+   Total Benefits Costs
      Other Workforce Costs (e.g., training, IT, etc.)
      Total People Costs
 
Once you understand the Total People Costs, you can then begin to understand if you’re spending in the right areas and be able to benchmark across regions, departments, and against the industry average (which you can get from the AAAA’s) to ensure you’re competitive with the market. You can also begin to ensure that your agency’s strategy aligns to your people objectives.
 
2.  Is my department structured correctly?  
     
As agencies continue to look for opportunities to optimize client service in the most efficient ways, the question that always remains on the table is about structure, which is critical to supporting clients appropriately, preventing burnout, and ultimately avoiding attrition.  
 
Span of Control is the fancy term to understand, “How many people do I have reporting into a single manager and what is the distance between that manager and his/her team?” Are there potentially too many or too few based upon the work that needs to get done, the decisions that need to get made, and the levels on the team?  
 
For example, if you have 10 AAEs reporting to an MD, that’s likely not a very good ratio. The MD will spend his/her entire day coaching and won’t have anyone to whom to delegate. The AAEs will likely be cautious about posing questions and due to the MD’s workload, there’s likely going to be a backlog of work.
 
Total Population (inc. Management) / Total Management Population
                                                                                   (with direct reports)
 
The ratio, tracked over time, can tell you if the organization is too top heavy and who might be stretched too thin. You can adjust management as needed, depending upon the autonomy needed by different departments, functions, and types of workers and accounts. Span of control, like each client team and function, needs to be treated distinctly for each group and function.   
 
3. Are we retaining the right people?   
     
Everyone in our industry measures attrition. However, an additional metric that all agency leadership, managers, and HR personnel should be paying attention to is High Potential, or “All Star” attrition. According to Deloitte Consulting’s Talent Edge 2020 survey of 376 senior executives at large companies (annual sales of $500 million+) worldwide, 66% of survey respondents expressed a “high” or “very high” concern about retaining High Potential talent over the next 12 months.
 
Total High Performer Turnover / Average High Performer Headcount     
                                                                                   
Turnover alone only tells you how many people you’ve lost. The High Potential turnover rate helps to track the value of that loss and can be predictive by showing you where the loss is occurring (e.g., within a specific team or region). High Performer Turnover can also guide your strategy for replacing them, for High Performers help to attract other High Performers. 
 
So what do you do if you can only measure one thing right now?  
 
I’d recommend working with your leadership team to determine which one is most important to them. If you are on the leadership team, you probably have a good sense of what you need to pay attention to immediately. According to all data I’m seeing, including to the April 2011 Talent Edge 2020 report from Deloitte Consulting, 72% of Gen X employees are already looking for a job or plan to make their next career move (vs. 63% of Millennials).2 With this in mind, determining High Potential attrition and developing customized retention strategies might be a recommended first metric to take a look at. 
 
These metrics, in combination with any of the others you’re currently using, will assist you in making fact-based, data-driven decisions as they relate to your talent in 2012 and beyond. 
 
Happy calculating!

Sources: 
 
1. Human Capital Management Institute, 2011
 
2. Talent Edge 2020: Redrafting talent strategies for the uneven recovery. Deloitte Consulting LLP. 2011

The views expressed are the sole views of Robyn Lahlein and do not represent those of any current or former organizations or clients.

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Robyn Lahlein is a Talent Development and Organizational Strategy consultant who has worked internally and externally for clients and agencies within the advertising, marketing, media and financial services sectors for the past 10 years. She holds her Masters in Organizational Psychology from Columbia University and is a business contributor to TheDailyBeast.com. The views expressed are the sole views of Robyn Lahlein and do not represent those of any current or former organizations or clients.

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