From Labor ROI to Talent ROI
Executive summary
Retailers have long measured labor ROI—how efficiently each labor dollar translates into results. The real opportunity lies in spotting, growing, and retaining future leaders already on the sales floor. Doing so lowers turnover, reduces hiring costs, and accelerates performance.
From labor ROI to Talent ROI
Labor ROI is essential—it’s operational oxygen. But it only tells part of the story. To thrive long-term, retailers need to look at Talent ROI—a measure of how well investments in employee growth and development translate into stronger leaders and long-term organizational success.
The best predictor of future leadership success isn’t a title. It’s how someone leads when they don’t have one. As Harvard Business Review notes, leadership potential shows up in how individuals step up before being promoted.
Recognition over recruitment
A key barrier isn’t the absence of talent—it’s the lack of recognition. According to Talent Strategy Group research:
– 57% of companies have a formal recognition process.
– 43% have none at all.
That means many potential leaders are hidden in plain sight. Retailers often confuse strong sales performance with leadership potential, missing out on employees who inspire, influence, and support peers. As Farrell noted, sales performance does not equal leadership potential. Visibility is power, and future leaders deserve to be seen.
Leadership in the wild
Farrell reminded attendees to look closely at their own floors: “Raise your hand if you’ve seen someone rise to the occasion and realized, ‘They’ve got something special.’” These moments are the true indicators of leadership potential. The challenge isn’t talent scarcity—it’s making sure those sparks are recognized.
Why internal employee growth pays off
Promoting from within isn’t just good for morale—it’s a proven ROI driver. Deloitte data shows:
– 41% lower turnover when employees see growth opportunities.
– 34% faster ramp-up time for internal hires compared to external recruits.
– 30% savings on hiring costs when promoting versus recruiting externally.
Internal growth is low lift, high impact. It doesn’t always require new tools, just a new lens to evaluate talent.
Spotting the spark
Executives don’t need a new system to uncover leadership potential—they need to look at familiar data differently. The Emerging Sales Leader Report offers a roadmap by tracking:
– Peak performance during critical sales windows
– Schedule ownership and shift quality
– Flexibility and influence across teams
– Success in borrowed stores
– Availability fulfillment %
– Store success % with employee
– Employee success % during peak
Combined, these metrics highlight employees who go beyond individual contribution and demonstrate broader leadership value.
Building the next sales leader
Developing leadership isn’t about waiting for titles. It’s about creating opportunities to grow. A simple framework includes:
Onboarding | Equip new hires with skills in the first 90 days. |
6-12 months | Provide coaching and exposure to broader responsibilities. |
Promotion | Recognize and reward potential early. |
Coaching others | Encourage future leaders to share knowledge and support peers |
As mentioned in this session, your next great sales leader is already on your floor—waiting for you to see them, believe in them, and unlock their potential.
The real barrier: Visibility
Farrell was clear: the problem isn’t a lack of talent, but a lack of visibility. Success stories already exist in stores, but many remain unnoticed. Retailers don’t need new tools—they need a new lens. Internal growth is the fastest, most cost-effective way to strengthen teams, but it requires leaders to actively look for potential.
Three imperatives for talent ROI
The session closed with three clear imperatives for executives:
Spot the spark: Notice the moments when employees rise to the occasion.
Track beyond metrics: Look past sales numbers to behaviors that signal leadership.
Create spaces to learn: Give employees opportunities to grow and develop.
Takeaway for executives
For retailers, the path forward is clear: stop looking only at labor ROI and start measuring talent ROI. Spot the spark, track beyond traditional metrics, and create space for people to learn and grow. The payoff is stronger leaders, lower costs, and teams ready to deliver results well into the future.