Talent Impact Score, a Critical HR Metric

The general underlying belief among business owners and leaders is that growing your organization by hiring more employees makes the organization more money. Or, simply, that each hire produces a positive ROI.

Would you believe that when we reviewed the data in our expansive database, we found that most companies are losing money every time they hire a new employee? That means that the average return on investment for a new hire is a negative number in these organizations.

Calculating Talent Impact

While the phrase “employee turnover” is a buzzword in business, very few organizations know the true cost of their turnover.  Most articles cite that it ranges from $4500 (under 30k salary per year) to over $200,000 for C-suite positions.  This lack of accurate, precise information on how turnover impacts their organization leaves employers with little to go on when making business decisions and strategizing for their workforce.

What if you could not only calculate the cost of each employee but tie it to their impact business?

Picture this, before you hire someone, you would fully understand the impact of this hire on your bottom line, both positive and negative. 

What is your Talent Impact Score and how does this impact your bottom line? 

Let’s dive in.

TeamRocket has developed the algorithm for calculating your Talent Impact Score, or TIS. The team takes into consideration the most important data points when calculating your TIS, including turnover values, cost to train, total annual pay, and the total revenue the employee's role generates or saves.

This number is calculated per role, providing you with the baseline data you need in order to set goals, bridge the gap, and move your TIS from a negative number to a positive number (or from a positive number to a higher positive number).

Leveraging TIS for financial success

TIS puts the control back in your hands by equipping you with invaluable data about your people, your process, and your profitability, and how all of this impacts your bottom line. This holds us and your teams accountable. 

Check out this example 

Let's say a friend approaches you and asks you to play a game. The rules are as follows:

The rules are as follows:

• If you roll a 1, he pays you $1

• If you roll a 2, he pays you $2

• If you roll a 3, he pays you $3

• If you roll a 4, he pays you $4

• If you roll a 5, he pays you $5

• If you roll a 6, you pay him $18

Do you play the game? 

You would likely need a minute to calculate the probability that you'll come out ahead of the expected value of the game. And if you did, you'd learn that you're likely to lose $0.50 every time you play. You'd find that it isn't in your best interest to play this game - although your friend could make a profit in a hurry.

Hiring employees can be likened to rolling the die. The more you know, the more power you have to tip the odds in your favor or to impart unconscious hiring bias. 

To demonstrate how TIS can be used to directly increase profitability, consider this case study:

We have a quick service global coffee chain that is running at 48% turnover for their entry-level employees, who are primarily baristas and bakers. When we calculated all of the expected revenue and expenses associated with a single hire and averaged it out, we found that their TIS score was -$497. That means that every time they hired a new barista or baker - and they hired thousands per year - they lost $497 per hire. 1,000 hires is $500,000. 

Another example was an enterprise software company where they had a TIS for $-1,247. But wait, how can this be we are making money, we are growing sales, our revenues are up. This is wasted dollars that are waiting to be allocated towards bonuses or new projects or…… You name it.

Once we have this important metric, TeamRocket is able to partner with the client to improve TIS and subsequently, improve the bottom line. In the case of the global coffee shop, reducing the TIS to -$300 would save the organization nearly $200,000 per year. To take it a step further, what if we could achieve the ultimate goal and transition that negative number to a positive number over the course of a couple of years? The impact on the bottom line could be astronomical. Think of all the ways they could reinvest that in their employees, in wages and benefits for their employees, further increasing the quality of hire and decreasing the risk to hire.

The business benchmark you need

Not achieving the profits you would like? A negative TIS might be the culprit. To stop guessing and start taking intentional and effective steps to grow strategically growing your bottom line, reach out to TeamRocket today. We can't wait to get started.