The Datafication of HR
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- Isaac Blair
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1 The Datafication of HR Graduating from HR Metrics to Workforce s Global competition for talent, outsourcing labor, compliance legislation, remote workers, aging populations these are just a few of the daunting challenges faced by HR organizations today. Yet the most commonly monitored workforce metrics do very little to deliver true insight into these topics. Leaders need to graduate from metrics to analytics, surfacing the important connections and patterns in their data to make better workforce decisions. Definitions Metrics Provide a standard system of measurement Measure single data points Provide information Guide tactics and operations State the past and present Provide tabular outputs of counts and rates s Provide systematic computational analysis of data or statistics Connect multiple data points Provide insights Drive strategy State the past, present, and predict the future Provide visual outputs of patterns and trends
2 2 RecRuiting effectiveness Recruitment is the HR function that has the most positive impact on revenue creation and profitability. 1 Yet common recruiting metrics, such as time to fill and cost to fill, do not answer strategic questions about the quality and of the people being hired. Rather, the following analytics provide greater insight, enabling HR to take meaningful action to improve recruiting effectiveness, driving revenue creation and profitability. New hire performance New hire performance by lead source Recruitment pipeline status Employee exits before 90 days service Determine if new recruits meet expected performance levels, and adapt your recruiting processes as needed Identify your best sources for top talent, more efficiently targeting your resources to find the next high quality hire Spot supply chain problems in your recruitment pipeline, and take remedial action before they become a pain Assess the characteristics of new recruits resigning in less than 90 days to improve your recruitment process PeRfoRMAnce Companies that excel at Talent Management achieve earnings that are eighteen percent higher than their peers. For a Fortune 1000 company, this can translate into hundreds of millions of dollars in additional EBITDA earnings. 2 To truly understand and improve on performance management, companies need to look beyond metrics, such as performance appraisal participation rate and median performance rating, to analytics. When it comes to analyzing performance to drive business success the following areas should be considered: Pay for performance Top talent characteristics Career progression Correlate total rewards, compa-ratio, and performance levels to determine if you are effectively rewarding performance top performers will revert to average or resign if they do not perceive themselves to be receiving a level of reward that recognizes their differential performance Analyze the characteristics, tenure, work experiences, and managerial connections of your top performers, leveraging your findings to grow future top talent Analyze the promotion rates, lateral moves, promotion wait times, and internal hiring rates of top performers to determine whether you are using the tools of opportunity to retain and maximize performance top performers will typically opportunities for career progression even more highly than their paycheck 1 Boston Consulting Group, From Capability to Profitability, July The Hackett Group, Companies with Mature Talent Management Capabilities See 18 Percent Higher Earnings, December 2009.
3 3 talent Retention With voluntary resignations at a five-year high, 3 the competition for top talent remains a constant, and retention of top talent is a key objective for most HR teams. Indeed, turnover is the single most prevalent HR metric. However, turnover does little to support strategic business plans. To achieve true insight a more in depth analysis is required. Predicting the risk of exit Resignation drivers Resignation correlations Resignation segments Identify employees at risk of leaving, based on analysis of key characteristics of past resignations, and take action to prevent top talent from leaving before they are out the door Determine what factors increase and decrease resignations, more effectively targeting and fine tuning retention strategies Correlate resignation with factors such as compa-ratio, promotion wait time, pay increases, training opportunities, and so forth, to make better and more cost effective decisions around changes to pay, benefits, and employee development Compare how resignation rates vary across locations, functions, tenure, age groups, diversity groups, and so forth, to ensure program investments are targeted where they will deliver the biggest results 8.2% Overall Resignation Rate Decreases rate Increases rate s, such as the key factors decreasing and increasing resignation rates, enable HR to more effectively target and fine tune retention strategies 3 Bureau of Labor Statistics, Job Openings and Labor Turnover Survey, October 2013.
4 4 employee MoveMent Organizations can be thought of as highly complex systems, which have both a structural element and a network element. The structure is the organizational hierarchy, distribution of work, and business units. The network is the relationships and connections between people within the organization. No matter how correct your structure, if the network element is missing then your organization will not perform at its best. The primary way in which this network element is created and perpetuated is through employee movement. The following analytics provide a greater understanding of the impact that movement has on an organization. Movement in and out of organizational units Build versus buy Leadership and succession modeling Ensure the business units that make the most difference to your business are increasing in talent quality, and not experiencing brain drain Track promotions, lateral moves, and the relative performance of individuals to achieve better results at a lower overall workforce cost internal candidates often perform better more quickly and stay longer than stars who are parachuted in from outside 4 Tracking employee movement, promotions, and key experiences provides insight into the organizational pathways that have developed your top talent, and allow you to identify other likely succession candidates research by Jac Fitz-Enz 5 found a direct correlation between better succession management and revenue Movement visuals enable organizations to analyze and optimize their workforce network 4 Boris Groysberg, Chasing Stars, Jac Fitz-Enz, Human Capital Report, 2009.
5 5 total RewARDs With compensation contributing to the largest share of total expenses, it is imperative to ensure that total rewards programs are competitive, yet also aligned with business goals. Typically compensation strategy and budgets are defined centrally, but allocations and decisions are distributed throughout the organization. This can create a disconnect between strategy and execution. The best analytics approach is to focus on the following areas: Total direct compensation dynamics Flexible workforce costs Employment movement impacts on compensation Understand the rate at which direct compensation costs are increasing and how this reflects the FTE (full time equivalent) count in the business if your costs are higher and rising faster than your competition, then you are at a cost disadvantage, which will impact profitability Identify effective cost management options by analyzing where people costs can be flexed to reduce expenses or speed up revenue creation (for example, overtime spending, budgeted salary for open hiring requisitions, forecasted bonus expenses, costs of contingent workers, and so forth) Understand how entries to and exits from an organization impact the total compensation expenses the DAtAficAtion of hr The challenges in today s business environment require new approaches to remain competitive in an ever-shrinking world of global competition. By graduating from metrics to analytics, HR professionals and leaders can better understand the contributing factors that are impacting their organization, and take the right actions to implement programs that will provide a true competitive advantage info@visier.com Visier, Inc. All rights reserved. Visier and Visier logo are trademarks of Visier, Inc. All other brand and product names and logos are the trademarks and registered trademarks of their respective holders.
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