Last month I hopped on a plane to the HRO Summit in Amsterdam, one of the largest annual gatherings of senior HR professionals in Europe and a handy opportunity to find out what they are expecting from the coming year. What I had confirmed for me was that the executive of leading organisations have put talent at the centre of their business strategies, which has meant HR functions have been thrust, somewhat unexpectedly, into the spotlight.

The problem is, however, that they have arrived at this position in the wake of a major economic downturn and in many cases find themselves under-resourced to accomplish their given objective – the alignment of talent management with general business strategy.

In the light of this, the presentation given by Dr Anthony Hesketh of Lancaster University Management School at the Summit attracted more than a little attention. Why? Because he is a passionate believer that HR now has the tools at its disposal to demonstrate a direct and quantifiable link between the effective management of talent and business performance.

For those organisations contemplating outsourcing elements of the talent management spectrum as a way of tackling a shortage of internal resources this may be vital. After all, providing corporate boards with figures that show a compelling business case for a major ‘people initiative’ like this may be the quickest and most effective way to gain their attention. And, as Hesketh points out, “There have been no major HR cuts since 2007 in those organisations that have already outsourced.”

The measurement tool that Hesketh has developed is called ‘Return on Invested Talent’ or ROIT for short and one of its most attractive features in an age of increasing complexity is its relatively simple and straightforward methodology. ROIT establishes how much money an organisation makes, how much it has to spend on people to achieve that and the ratio between the two. But Hesketh believes that expenditure on talent needs to go much further than the salary bill and direct recruitment costs. “What you pay your employees only forms part of the equation,” he says.

“You also have to provide people with the tools and equipment that enable them to carry out their work and that needs to be factored in.” Elements such as depreciation and amortization are therefore also added to the employee side of the scales. He argues that it’s important to use the tool on a continuous basis to show how talent management influences financial performance and to employ it to gain buy-in for major HR projects such as partnering with an outsourcer.

Used properly it can , he says “Reveal an accountable, evidence-based metric to initiate the conversation about how organisations can leverage their greatest intangible asset – talent.” However he also points out that numbers are not the end point of HR’s case, but its beginning. “ROIT shouldn’t dominate every conversation,” he says, “so don’t just blindly follow the numbers, use them to strategically enable what they tell you.”

Damien Stork is a director at recruitment outsourcing and talent management specialist, Ochre House – www.ochrehouse.com