Since 1998 Watson Wyatt has set out to document the expected ROI on the full spectrum of HR functions. This year marks the release of their third report (following 1998 and 2002). The key theme from 2002's report was how superior HR today corresponds strongly to growth in shareholder value tomorrow. The 2005 report continues in that vein but with more specific commentary on exactly which HR practices generate the most ROI. Take a guess which of these HR functions tops the ROI list:
- Employee Development
Excellence in training, by comparison, boosts return to shareholders about 20 percent. And as reported here earlier, some kinds of training actually produce negative returns.
Watson Wyatt's emphasis on time-to-fill in general, and employee referrals in particular, is especially good news for services like Jobster, which aim to connect those looking to hire to the world of vetted candidates. My colleague Mal Watlington has been watching this space for some time and you can learn a lot about it by starting here and then browsing this. See also Mal's commentary on Watson Wyatt's 2005 report.
For another perspective on talent management, see this report by Robin Athey of Deloitte. I will say more about this in a future post.