Human Capital Analytics: Measuring the Impact of HR and Your Workforce on Your Business Greater Valley Forge HR Summit October 18, 2013

Transcription

1 Joanne Bintliff-Ritchie JBR and Associates Human Capital Analytics: Measuring the Impact of HR and Your Workforce on Your Business Greater Valley Forge HR Summit October 18,

2 Key Definitions Human Capital Analytics Evolution My World: Today and Tomorrow Value Proposition Key Elements Quantifying Impacts Deriving Analytics Human Capital Analytics Model 2

3 HR and Workforce Analytics Concepts Measures Fundamental constructs based on tabulation of data Employee Headcount Metrics Higher level constructs based on two or more measures Revenue Per FTE Analytics Converting metrics into decision supporting insight Turnover of High Potential Employees in Poor Performing BUs 3

4 Differences between HR and Workforce Analytics HR Analytics Purpose is to determine those aspects of HR management that must be prioritized and improved to allow HR to perform better Audience is HR and some line management. Workforce Analytics Purpose is to determine those aspects of people management that must be prioritized and improved to make the organization perform better Audience is Executives, HR and BofD 4

5 Past Measures Future Analytics Most organizations are here HR Effectiveness Workforce Impact Planning and Modeling 1995 Engagement and Benchmarking 1980 s Operational Reporting and Metrics Metrics 5

6 My world today Multiple disparate applications and versions, spreadsheets and databases Manual integration and organization of data Costly and time consuming manual reporting Difficult to access critical workforce information No confidence in the validity or reliability of workforce data and measures Little connection to business strategy, objectives, goals, risks 6

7 Lack of an analytic culture and competence Little credibility with C-suite Lack of understanding of the business Aversion to failure 7

8 What are the other metrics-related barriers you encounter in your organization? 8

9 Electronic integration and organization of HR and non-hr data Meaningful metrics that drive decision making and action User driven analysis and collaborative solution development Insight into the business impacts of workforce productivity and talent management practices Complete Human Capital Analytics Architecture 9

10 Evolution 10

11 Today vs. Tomorrow Establish consistency across the enterprise Continuously improve data management and quality Collaborate with IT, Finance, Business operations Examine the usefulness of every metric Think more strategically Link human capital to business strategy, objectives, and goals Understand your business context Focus on real business drivers Connect HR and workforce metrics to existing business metrics Speak the language Start with objectives and goals Metrics will be easier Measure, Analyze, Act Strive to succeed and be prepared to fail 11

12 Value Proposition Achieve results Solve problems Leverage opportunities Make decisions Identify gaps Measure performance Manage risks 12

13 Increase your use of analytics and strategic metrics Decrease use of operational metrics and reporting Focus metrics on key populations Most overall metrics are useless Set targets that align with objectives and goals Emphasize horizontal vs. vertical analysis This is how you find impact Challenge convention Strive for success; Prepare for failure Validate assumptions Replace we think with we know Share the Story 13

14 Use Analytics to Drive Strategy Support Business Strategy Inform HR strategy, priorities, investments, planning Optimize Solutions Design and evaluate Talent Management programs Identify and monitor outcome metrics Quantify impacts on people and business objectives, goals and outcomes Leverage data mining Support decision making and action taking Need to ask the data the right questions 14

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16 External Context Internal Context Metrics Analysis Workforce and HR Analytics 16

17 HR and workforce analytics are centered on what s important to your analytics consumer. Internal consumers include: > C-suite and BOD > Line and operations managers > HR leaders and staff > Employees > Investors and stockholders External consumers include: > Outsource partners > Insurers > Regulatory agencies > The press > Plaintiff attorneys > Labor market 17

18 Economic value Market reputation or brand, market share, customer relations, government relationships, employer reputation, and community relations Financial value Free cash flow, stockholder equity, and other monetary resources recorded on your income statement and balance sheet 18

19 Apply appropriate statistical techniques Comparisons (internal and external trends, targets, control groups), correlations, modeling Focus on key risks Are we losing people we don t want to lose and why What are the profiles of the people most likely to leave Where is it worth intervening What are the economic and financial impacts of absenteeism, turnover, poor health, bad management Find leading indicators What workforce and HR metrics are the best indicators of business outcomes 19

20 Strategy, Objectives, & Goals Assumptions & Drivers Metrics & Analytics Targets Grow organically Open new stores in targeted U.S. and international locations. > Open 2 stores/month Maximize profit contribution of new stores. >Achieve new store revenue goals >Achieve new store expense targets Assumptions: 1.Jobs are filled in time 2.Employees have skills, knowledge to do their jobs well 3.New hire turnover doesn t affect store performance 4.Mgt positions are filled on time Drivers: 1.Hire, train & retain employees needed to open new stores 2.Build management pipeline from which to select needed new store mgt staff Time to Start for new employees in new stores % of employees in new stores who complete new hire training % of new stores with 100% staff on opening day 30, 90, 180 day retention rates 30 days 97% 88.5% 90% in 30 days 75% in 90 days 65% in 180 days 20

21 Business Risk Objectives & Goals Solution Metrics Threats to strategy execution, market value, financial results, and stakeholder confidence related to unplanned executive turnover. Objective: Address critical enterprise risks related to unplanned executive turnover by creating a pipeline of ready internal candidates for executive positions Goals 1. Reduce adverse impacts to business related to executive turnover 1. Reduce recruiting time for key executive positions 2. Reduce external recruiting costs for executive position Succession management and high potential development program that creates: 1. Depth and Strength of bench 2. Fit of bench to needs 3. Fit of development programs to needed competencies Succession depth and strength % of Positions filled with Successors Successor and Hi-Po Retention Time to start and Cost per hire for executive positions Financial indicators Customer indicators Employment Liability Insurance risk rate 3. Retain successors and high potentials 21

22 Business Risk Objectives & Goals Solution Metrics Significantly increasing costs and lost productivity related to poor health of workforce. Support and promote positive employee health practices Reduce costs related to absenteeism, health benefits, and disability related leaves Raise productivity Enhance employee satisfaction and retention Wellness program that achieves objectives and goals using: Effective communications Effective incentives Programs match major health issues Management support Absence events/ employee Absence days/ employee Leave events/ employee Total leave time/employee Health care cost changes vs. national average ROI of program % of positive answers to related Qs on survey Productivity (may be position specific) 22

23 Phases Assess & Plan Development Link & Align Identify & Build Phases and Implementation Key Objectives Implement & Execute Evaluate & Enhance Key Objectives per Phase Understand the business Build plan Organize team Identify key workforce assumptions Identify key workforce drivers Validate your assumptions and drivers Determine metrics & analytics Make benchmarking decisions Build metrics & analytics Identify data & technology Address people impacts Execute delivery process Implement technology Implement communication plan Collect feedback Enhance additional data, metrics & users Identify HR & business impact Scorecard Building Tool Stakeholders HR Practices Organization & HR Impact Exec. Mgmt. IT Sales Operations Finance Risk Marketing External Strategic Mgmt. Workforce Planning & Employmt. Human Resource Dev. Total Rewards Employee & Labor Relations Risk Mgmt. SHRM Human Capital Analytics Model 23

24 Assess and Plan Acquire business knowledge Develop plan Change management and communication Feedback loop Develop team Involvement Avoid silos Evaluate & Enhance Implement & Execute Phases and Key Objectives Assess & Plan Identify & Build Link & Align 24

25 Link and Align Determine workforce assumptions in business strategy, plans, and objectives Establish the drivers that will link the workforce with the business and align priorities Validate your workforce assumptions and drivers Evaluate & Enhance Implement & Execute Phases and Key Objectives Assess & Plan Identify & Build Link & Align 25

26 Identify and Build Phases and Key Objectives Identify Metrics for each Workforce Driver Metrics for HR performance Definitions, formulas, dimensions, and comparators Data needed for metrics and analytics Build or acquire effective technology Evaluate & Enhance Implement & Execute Assess & Plan Identify & Build Link & Align 26

27 Implement and Execute Phases and Key Objectives Analytics process How, when, who, what Feedback loop Analytics tools Change management People Process Technology Evaluate & Enhance Implement & Execute Assess & Plan Identify & Build Link & Align 27

28 Evaluate and Enhance Feedback Additional data and metrics needed HR Non-HR Additional users Evaluate & Enhance Phases and Key Objectives Assess & Plan Link & Align New tools Business impact Implement & Execute Identify & Build 28

29 TAKE A STEP TOWARD TOMORROW 29

30 ADDENDUM 30

31 Practice Area Workforce Management Planning & Staffing OD Performance & Development Metrics Contingent representation, Demographic representations, Time lost due to absences, Days/absence, Cost due to absences, Involuntary separations due to absenteeism Net hire ratio, Cost per hire, Cost/fill, Cost/candidate, Time to fill, Time to productivity, Candidate satisfaction, Decline rate, Selection rate, Hires vs projections, Separations vs projections, Productivity differential, Recruiting cost ratio, Time to start, Time to productivity, New hire turnover Employee engagement, Total employee spend/total FTEs, Total workforce spend/operating spend, Revenue/total workforce spend, Human capital ROI Readiness, Performance rating distribution, Development spend/ employee 31

32 Practice Area Benefits Metrics Benefit spend, Spend/eligible employee, Spend change, Employee satisfaction with benefits, Retiree rate, Participation rates, Health related absences & days, Avg length of STDs, Avg length of LTDs, Avg cost/ employee, Change in healthcare cost vs benchmark, Reduction in costs related to chronic illnesses Compensation Safety Total pay, base, incentive, overtime spends, Spends/employee, Avg base salary change, Avg total pay at target, Place in range distribution, Avg. compa-ratio, compa-ratio distribution, Offer declines due to compensation Absence days/loas due to accidents, Penalty spend, Cost per accident, OSHA investigations and actions, Time lost due to accidents 32

33 Learning Opportunities Linked-In Groups Workforce Planning and Analytics Public Sector Workforce Analytics Workforce Planning and Analysis Google Alert Workforce Analytics Publications SHRM HR Magazine, IHRIM Workforce Solutions Review, Workforce Management, McKinsey Quarterly, HBR Seminars and workshops Cornell Center for Advanced Human Resource Studies Websites SHRM.org, HR.com, HCI.org, HRMInst.com 33

34 Beatty, Richard W., Becker, Brian E., and Huselid, Mark A., Workforce Scorecard: Managing Human Capital to Execute Strategy. Becker, Brian E., Huselid, Mark A., Ulrich, Dave, The HR Scorecard. Boudreau, Cascio, Investing in People: The Financial Impact of HR Initiatives. Boudreau, John W., Beyond HR: The New Science of Human Capital; and, Transformative HR Bucknall, Hugh and Wei, Zheng, Magic Numbers for Human Resource Management. Burkholder, Nicholas C., Golas, Scott, and Shapiro, Jeremy, Ultimate Performance: Measuring Human Resources at Work. Davenport, Tom, Analytics at Work: Smarter Decisions, Better Results. Fitz-enz, Jac, The ROI of Human Capital; and, The New HR Analytics. Phillips, Jack J, Proving the Value of HR: Why and How to Measure ROI. Sullivan, John, HR Metrics the World Class Way. Walters, Jonathan, Measuring Up: HR Measurement in the Public Sector Workforce Intelligence Report Workforce Intelligence Institute (Dr. Jac) CedarCrestone Metrics and Analytics Report. 34