HRO - Early Findings and Best-in-Class Talent Management Metrics -

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1 HRO - Early Findings and Best-in-Class Talent Management Metrics - Kevin Martin Vice President and Principal Analyst, Human Capital Management Aberdeen Group October 23, 2008 AberdeenGroup 2007

2 Human Capital Management Source: Aberdeen Group, March 2008 Workforce Management Talent Management Payroll Absence Management Time and Attendance Scheduling Benefits Management Talent Acquisition Onboarding Employee Performance Management Learning & Development Competency & Assessment Succession Planning Workforce Compensation Workforce Planning Workforce Analytics 2 AberdeenGroup 2007

3 2008 HCM Benchmark Reports (published) Onboarding (794) January 2008 Time and Attendance (333) February 2008 Recruitment Process Outsourcing (211) March 2008 Total Compensation Management (453) April 2008 Managing Employee Performance (927) May 2008 Workforce Collaboration (275) June 2008 Benefits Management (330) July 2008 Talent Acquisition Strategies (622) July 2008 Workforce Planning (250) August 2008 Learning and Development (535) September AberdeenGroup 2007

4 Aberdeen s PACE Methodology Pressures: external forces that impact an organization s market position, competitiveness, or business operations (e.g., economic, regulatory, technology, competitive, etc.) Actions: the strategic approaches that an organization takes in response to industry pressures (e.g. product/service strategy, target markets, go-tomarket, and sales strategy) Capabilities: the business process competencies required to execute corporate strategy (e.g., skilled people, brand, market positioning, viable products/services, financing, etc.) Enablers: the key technology solutions required to support the organization s business practices (e.g. development platform, applications, connectivity, user interface, training and support, etc.) 4 AberdeenGroup 2007

5 Objective: Determine Best-in-Class Performance Best-in-Class = top 20% of all organizations surveyed Industry Average = middle 50% Laggards = bottom 30% Key Performance Indicators (for RPO): Quality of candidates sourced Satisfaction rate of the hiring manager Candidate s experience / satisfaction with the recruitment process 5 AberdeenGroup 2007

6 6 AberdeenGroup Why Outsourcing? -

7 NOTE Aberdeen Insight - The 2008 Aberdeen Report Survey of 4,568 business executives revealed The lift and drop mentality dominating outsourcing engagements in the past is being replaced by a partnership mentality in which providers and end-users work together to add value to processes, improve efficiencies, and decrease costs. 7 AberdeenGroup 2007

8 8 AberdeenGroup RPO in

9 RPO By Size How RPO is Defined 80% 70% 60% 50% 40% 30% 20% 10% 0% 72% 63% Outsourcing of select aspects 19% 500-5,000 5, % Outsourcing of the entire recruitment process (from sourcing to assessing to onboarding) 9 AberdeenGroup 2007

10 RPO Findings Top Pressures 60% 50% 40% 30% 20% 10% 0% 55% 44% Lack of internal HR resources 48% 41% Cost of attracting/ recruiting new employees 31% 27% Meet anticipated staffing levels (i.e.surge) 21% 6% Inferior quality of new hires 10% 500-5,000 5, % 22% Fastchanging industry 7% Global expansion 10 AberdeenGroup 2007

11 RPO Findings Top Strategic Actions 70% 60% 50% 40% 30% 20% 10% 0% 32% 24% Strengthen internal resources where performance is sub-par 37% Outsource specific HR functions where cost and performance are sub par 45% 47% 38% 36% Improve company's brand / reputation as a great place to work 63% Focus key internal HR resources on core organizational competencies Best-in-Class Others 11 AberdeenGroup 2007

12 Knowledge You ll Come Away With Today Early findings from Aberdeen s November 2008 HRO research Best-in-Class Talent Management Metrics 12 AberdeenGroup 2007

13 - Early Aggregate Findings Aberdeen Group Research on HRO 13 AberdeenGroup 2007

14 How Do You Define HRO? 70% 60% 50% 40% 30% 20% 10% 0% 64% Outsourcing of any HR element deemed necessary ( core or noncore and not limited to # of elements) 19% Outsourcing of core HR elements only (payroll, benefits, compensation, and HR administration) 14% Outsourcing of the entire HR function (end-to-end processes for all HR processes) 3% Don't know / Not applicable 14 AberdeenGroup 2007

15 Top Macro Pressures Driving HRO 50% 40% 43% 38% 30% 30% 20% 10% 0% Increased competitive landscape Compliance requirements (e.g. federal, state, union, corporate, fair labor) Current economic climate / uncertainty 15 AberdeenGroup 2007

16 Top Internal Organizational Challenges 70% 60% 60% 56% 50% 40% 43% 30% 20% 10% 0% Lower costs of delivering HR services Allow HR organization to focus on core business objectives Improved HR service to end-users (employees) 16 AberdeenGroup 2007

17 Most Valuable Actions to Ensure HRO Success 60% 50% 40% 30% 20% 10% 0% 53% Define agreed-to performance metrics (in terms of costs and services) that measure pre- versus post-hro results 27% 26% Conduct frequent analysis of HRO program effectiveness (with involvement from company and provider) Maintain frequent, scheduled communication with HRO provider(s) 17 AberdeenGroup 2007

18 Hurdles to Widespread HRO Adoption 50% 40% 47% 39% 33% 30% 20% 20% 10% 0% Proof of HR service improvement Proof of cost savings Ability to provide consistent acceptable levels of service from an outside entity Evidence of HR personnel s ability to make a more strategic impact on the organization 18 AberdeenGroup 2007

19 Has HR Become More Strategic Since HRO? 60% 50% 50% 40% 30% 26% 20% 10% 0% 12% 12% Yes Too soon to tell No Don t know 19 AberdeenGroup 2007

20 Determination that HR has Become Strategic 30% 25% 26% 25% 22% 20% 15% 14% 12% 10% 5% 0% Performance improvement in key talent management objectives HR is invited to participate in key corporate leadership meetings Performance improvement in organization s operational metrics Don t know Other 20 AberdeenGroup 2007

21 Elements Planned to Outsource CURRENTLY OUTSOURCE PLAN TO OUTSOURCE 50% 40% 30% 87% 75% 62% 15% 13% 58% 15% 50% 12% 47% 14% 20% 10% 13% 15% 20% 21% 26% 24% 30% 0% Employee performance management Leadership development Compensation management Training / Learning Competency and assessments HR Administration 21 AberdeenGroup 2007

22 Aberdeen s HRO Survey -live until Nov 4 th AberdeenGroup 2007

23 Talent Management Best-in-Class Metrics 23 AberdeenGroup 2007

24 The Talent Management Value Chain Recruit Onboard Performance Mgt. Learning & Dev. Succession Mgt. Offboard 24 AberdeenGroup 2007

25 Best-in-Class KPI for Talent Management TAS ONB EPM Comp ($) L & D S. Mgt Quality of Hire Time to Productivity Employee performance Retention Employee satisfaction Positions filled internally Management bench strength 25 AberdeenGroup 2007

26 Best-in-Class Metrics Talent Acquisition Quality has the become the gold standard Onboarding Retention now trumps timeto-productivity Employee Performance Clearly defined goals and development plans are key Succession Planning The priority is to look within and to look beyond the C- suite 26 AberdeenGroup 2007

27 Talent Acquisition - Metrics - 27 AberdeenGroup 2007

28 Metrics that Matter Most: Talent Acquisition 60% Best-in-Class Industry Average Laggard 50% 40% 30% 20% 50% 40% 30% 46% 40% 41% 39% 35% 24% 39% 37% 27% 33% 26% 27% 27% 26% 19% 10% 0% Quality of hire Time to fill / Time to hire New employee retention Hiring manager satisfaction Quality of candidate Cost per hire 28 AberdeenGroup 2007

29 Top Three Metrics that Matter Most 60% 50% 40% 30% 20% 10% 49% 35% 48% 37% 34% 34% 34% 33% 33% 24% 0% Quality of hire Non-HR HR Quality of candidate Overall hiring manager satisfaction New employee retention Time to fill / Time to hire Source: Aberdeen July AberdeenGroup 2007

30 Quality of Hire - Disaggregated - 30 AberdeenGroup 2007

31 Top Four Indicators of Quality of Hire 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 81% 65% 51% 69% 56% 52% 44% 39% 38% 43% 37% 29% How quickly the new hire performs on the job productively Retention rate of top performers Candidate's first performance review rating Character / personal values Best-in-Class Average Laggard 31 AberdeenGroup 2007

32 How Quality of Hire is Calculated 80% 72% 70% 63% 60% 50% 53% 55% 48% 42% 44% 40% 33% 30% 20% 10% 0% How quickly the new hire performs on the job productively Retention rate of top performers Character / personal values Candidate's first performance review rating Non-HR HR Source: Aberdeen July AberdeenGroup 2007

33 Onboarding - Metrics - 33 AberdeenGroup 2007

34 Best-in-Class Metrics: Onboarding Best-in-Class Retention Rate for New Hires = 87% Laggard Retention Rate for New Hires = 48% Completion Rate for Onboarding Tasks = 56% Completion Rate for Onboarding Tasks = 16% Time to Productivity for New Hires = 45% Time to Productivity for New Hires = 9% 34 AberdeenGroup 2007

35 Metrics Defined more details Time-to-Productivity Must be job-role specific Must be tied to key performance objectives (reinforced in quarterly reviews) For example a sales person who is able to begin calling prospects earlier will improve their quota achievement and customer satisfaction New-Hire Retention Measured at 1, 3, 6, and 12 months 35 AberdeenGroup 2007

36 Metrics that Matter Most 80% 73% 60% 61% 52% 58% 42% 40% 30% 20% 0% New employee retention New employee productivity Company reputation / brand in recruiting top talent HR Non-HR 36 AberdeenGroup 2007

37 Performance Management - Metrics - 37 AberdeenGroup 2007

38 Metrics Assigned to Performance Management 80% 70% 60% 50% 40% 30% 20% 10% 0% 76% 61% 54% Employee performance 61% 42% 37% Employee satisfaction / morale 58% 51% 43% Employee retention 48% 43% 42% 32% 29% 31% 25% 27% 25% Percentage of goals attained Employee Engagement Revenue per employee Best-in-Class Industry Average Laggard 38 AberdeenGroup 2007

39 How Employee Performance is Measured 80% 60% 40% 72% 61% 57% 69% 75% 72% 48% 46% 34% 40% 37% 29% 20% 0% Percentage of goals attained Ratings in job-specific performance reviews Ratings in projectspecific performance reviews Efficiencies produced (i.e., decreased production time) Best-in-Class Industry Average Laggard 39 AberdeenGroup 2007

40 40 AberdeenGroup 2007 Succession Planning

41 Succession Planning Defined A combination of process, tools, and disciplines that enables an organization to plan for anticipated leadership needs as well as identify, develop, retain and allocate key talent. Pre-hire through Post-hire 41 AberdeenGroup 2007

42 Best-in-Class Metrics: Succession Planning Best-in-Class % of Key Vacancies Filled Internally = 63% Bench Strength = 49% % of positions w/ qualified and willing successor Performance of Successor = 40% In terms of results and leadership Laggard % of Key Vacancies Filled Internally = 29% Bench Strength = 21% % of positions w/ qualified and willing successor Performance of Successor = 21% In terms of results and leadership 42 AberdeenGroup 2007

43 43 AberdeenGroup 2007 Q & A

44 Thanks for your interest in Aberdeen s research! Kevin Martin Vice President and Principal Analyst, Human Capital Management AberdeenGroup 2007

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