Hr Outlook Sep 2013_ Copy

Romanian HR Outlook Full results

September 2013, Bucharest

Agenda

Methodology 3

Human Resources Strategy 9

KPIs by Activity Type 15

Sample Characteristics Companies' Profile

4

Conclusions 23

Methodology

Research method B2B Survey

Target population HR Managers and HR Directors

Data collection technique Computer Assisted Web Interviews

Sample size : 87 respondents Responsible for: - Organizational Development: 67 respondents - HR Strategy: 73 respondents - Learning and Development: 73 respondents - Performance Management: 74 respondents - Recruitment and Selection: 85 respondents - Compensation and Benefits 75 respondents

Fieldwork 11th of July, 2013 - 6th of September, 2013

Sample Characteristics Companies' Profile

5% 16% 10% 9% 60%

Moldova Muntenia Banat Ardeal Bucharest

13% 8% 20% 60%

Under 50000 50000-200000 Over 200000 Bucharest

Page 5

The majority of companies participating in this research are large companies from Bucharest.

Base, N=87

City Size

Historical Region

G 7. Approximately how many permanent employees (FTE) does your organization have? Please consider only the employees who work in Romania. /G 1. What is the county in which your organization operates? / G 2. What is the locality in which your organization operates?

Number of Employees

48% 52%

under 250 employees

250 or more employees

9% 23% 66% 1%

1%

Small and Medium Enterprise

Large Romanian company

Multinational organization

Public Institution

Non-Governmental Organization/ civil society

Others

100% Romanian

capital 21%

100% foreign

capital 63%

Joint capital

16%

Page 6

Capital Origin

Most of the companies, Romanian or foreign, have the fiscal year identical to the calendar year.

Organization Type

D1. What do you consider as being a financial year within your company? / G 3. Which of the following forms of organizations best defines your company? / G 5. Which of the following statements best describes your organization?

January -

December 79%

April - March

21%

Fiscal Year Division Base, N=87

Yes

62%

No

18% Don't know

20%

Page 7

G 6. Which field does your organization activate in? / G 8. Approximately, which of the following categories does your organizations turnover for last year fit? / D1_p: Has your company reported profit for the previous year (2012)?

IT&C, Auto and Finance are the sectors mostly represented in this research.

IT&C or BPO 15%

Auto industry 14%

Banking, Insurance 12%

Production (other than FMCG) 9%

Media/ Advertising Agencies/ Media Professional services

8%

Distribution/ Logistics or transports 7%

Pharmacy/ Health 7%

Sales/ Retail 7%

Constructions 5%

Production of Food/ Beverages (FMCG) 5%

Utilities/ Oil and Gas 5%

Farming/ Forestry 2%

HORECA/ Tourism 2%

Other than these 3%

Industry Type Company Turnover

Companies with Profit

36%

18%

46% More than5,000,000 euro

Less or equal5,000,000 euro

Don't know

Base, N=87

41% of responding companies come from 3 industries

Q 2. Please choose out of the following HR areas those which are included in the activity of the HR department of your organization :

Organizational Development is the HR area least present within responding companies.

HR Department Responsibility Areas

98%

86%

85%

84%

84%

77%

Recruiting and Selection

Compensation and Benefits

Performance Management

Human Resources Strategy

Learning and Development

Organizational Development

Base, N=87

Human Resources Strategy

Almost all companies have budgeted Recruiting activities , followed closely by Learning and Development, but

S1. For which of the following HR activities within your organization have you allocated resources from the HR budget in the financial year 2013? / S2. How is the HR departments expenses budget distributed in the financial year 2013 between each of the following areas?/ S3. For each area, please fill in on the right side of the window how the percentage of budget allocated for the respective area has changed compared to last year (is higher/ equal or lower)

HR Activities by occurrence and budget allocation

N=87

HR Activities Budgeted in 2013

Share of HR budget for activity

*Base: Respondents who allocated resources for the HR budget in the FY of 2013

+12

+14

+14

+11

+16

+36

-10

+9

-25

% Difference between

companies with budget increase and budget decrease vs. 2012 N*=70

81%

75%

66%

54%

44%

41%

37%

13%

2%

3%

3%

Recruiting


Internal Communication

HR Administration

Other

Don't know/ No answer


Payroll


Industrial Relations

None

+12

+14

+14

+11

+16

+36

-10

+9

-25


companies with budget increase and budget decrease vs. 2012

81%

75%

66%

54%

44%

41%

37%

13%

2%

3%

3%

Learning and Development seems to be a key HR activity, accounting for a quarter of the HR budget on average.



N=87




Recruiting



HR Administration

Other



Payroll



None

N*=70

81%

75%

66%

54%

44%

41%

37%

13%

2%

3%

3%

Compared to last year, companies focused more on Performance Management this year and less on Administrative tasks.



N=87




+12

+14

+14

+11

+16

+36

-10

+9

-25


companies with budget increase and budget decrease vs. 2012

Recruiting



HR Administration

Other



Payroll



None

N*=70

52%

29%

10% 10%

less than 5% 5-10% 11-20% more than 20%

Reflecting the profile of large companies responding to this study, the vast majority of organizations have an HR budget no higher than 10% out of the Payroll Budget.

Page 13

33%

39%

15% 12%

less than 5% 5-10% 11-20% more than 20%

S8. Approximately, what is the HR departments expenses budget of your organization in 2013 in relation to the total payroll budget? Please express it both as percentage and amount (RON). / S9. Approximately, what is the HR departments expenses budget of your organization in 2013 in relation to the total expenses budget of your organization?

2013 HR Budget N*=33

Percentage of HR budget out of payroll budget

Percentage of HR budget out of total expenses

Average Value - Relative to Payroll Budget

Average Value - Relative to Total Expenses

N*=21

Treat data with caution due to small base size! *Base: respondents who give an answer, excluding dont know/ no answer

Number of

Companies

Number of

Companies

Turnover Rate is the HR indicator mostly monitored by responding companies.

Page 14

K1. What indicators do you use for measuring the HR department performance of your organization?

General HR KPIs N=84 HR KPI Usage

74%

52%

45%

45%

43%

41%

32%

12%

13%

Turnover Rate

Voluntary Turnover Rate

Productivity per Employee

Absenteeism Rate

HR Ratio

Number of Overtime Hours (expressed as FTE)

Profit per Employee

Other indicators

I don't know/We don't measure it

HR Departments use Turnover Rate

almost twice more than Productivity or Profit per Employee.

Key Performance Indicators by Activity Type

The time needed for a recruitment is a metric companies use more than metrics related to cost.

Page 16

Recruitment and Selection

K2. What indicators do you use for measuring the recruiting and selection activity?

*Base: Those who work in companies that include HR strategy and Recruitment and Selection in the activity of their HR department

KPIs Usage for Recruitment and Selection

N*=86

45%

40%

34%

33%

28%

22%

12%

0%

26%

Average Recruitment Time

Recruitment Rate

Turnover rate 6 months from the employment date

Internal Recruitment Rate

Average Recruitment Cost

Number of Interns

Refreshment Rate

Other indicators


Only 1 in 10 companies is

monitoring the Average Cost per

Recruitment differentiated by

position (specialists, non-specialists, and

managers).

Training Rate remains the most used KPI in the Development area.

Page 18

Professional Development and Training

K3. What KPIs do you use for measuring the Professional Development and Training activity?

46%

41%

41%

24%

3%

32%

N*=81

KPIs Usage for Professional Development and Training

*Base: Those who work in companies that include HR strategy and Professional development and Training in the activity of their HR department

Training Rate

Total Training Cost / Employee

Development Rate

Training/Turnover

Other indicators


Up to 25% of the companies

participating in this research are

evaluating the Training Cost by

position (specialists, non-specialists and

managers).

Almost half of the companies participating in this research use no Compensation and Benefits KPIs.

Page 20

Compensation & Benefits

K4. What indicators do you use for measuring the compensations and benefits activity?

*Base: Those who work in companies that include HR strategy and Compensation and Benefits in the activity of their HR department

37%

26%

49%

N*=82

KPIs Usage for Compensation and Benefits

Labor cost/ FTE

Benefits cost/ FTE


Up to 23 % of the responding

companies are evaluating the Labor

Cost by position (specialists, non-

specialists and managers).

A third of the companies doing OD activities are using a metric for measuring their employees engagement.

Page 22


K5. What indicators do you use for measuring the organizational development activity?

N*=78 KPIs Usage for Organization Development

35%

28%

21%

14%

12%

51%

*Base: Those who work in companies that include HR strategy and Organizational Development in the activity of their HR department

Employee engagement rate

Succession rate

Talent Management Rate

Planned Succession Rate

Talent Utilization Rate


Conclusions

Caveats

Results should be treated with caution, as they reflect the responses of only 87 companies.

The number of responses concerning the actual KPIs values targeted by companies were too few to allow us to compute a benchmark value. Except for the General KPIs of the HR Department, a third up to half of the companies do not measure any KPIs in specific HR areas.

Page 24

Key Findings (1)

Recruitment and Learning & Development are the activities most of the companies focus on, almost half (44%) of the HR departments budget being allocated for these two;

Generally, in 2013 there has been an increase of the HR budget compared to 2012. Performance Management is becoming more important to companies in 2013, as this is the area recording the highest increase of budget;

For 7 out of 10 companies, the HR department has a budget of up to 10% out of the Payroll budget, with a third of them having the budget no higher than 5% of the Payroll budget;

Turnover Rate is the KPI most companies use, while the Profit per Employee is the one used least;

Page 25

Key Findings (2)

Most of the companies are looking in this area at the Average Time to Recruit, followed by the Recruitment Rate;

On the other hand, the Refreshment Rate and the Number of Interns are KPIs that only very few HR departments use;

Moreover, a quarter of the companies responding to the survey mentioned they are using no KPI in this area;



Training Rate and Development Rate are the KPIs which companies mostly use for monitoring and evaluating activities in this area;

Although the Cost of training is monitored by 41% of responding companies, it is monitored overall, and not by the position type (non-specialist, specialist, manager);

Still, a third of responding companies do not use any indicators to measure the activities performed on this area;

Key Findings (3)

Half of responding companies are not measuring any Compensation & Benefits KPIs;

Labor Cost/FTE and Benefits Cost/FTE are used by a 37% and 26% respectively, of the companies responding to the survey.

Only few companies are also monitoring these two KPIs differentiated by position type (non-specialist, specialist, manager);

Compensation & Benefits


Just as for Compensation and Benefits, 1 in 2 companies answering to the survey do not use any KPIs to evaluate performance in OD;

The Engagement Rate along with the Succession Rate are the metrics mostly used by HR departments;

Appendix Definitions used

General KPIs

HR departments expenses budget = budget of expenses for services regarding/for employees, other than HR employees wages (e.g.: training, recruiting etc.); it does not include Occupational Health and Safety.

Payroll budget = total staff expenses budget (base salary + other payroll elements + benefits + company taxes).

KPI Name Computing formula Additional term definitions

Profit per Employee = Operational profit (EBITDA)/ FTE Full Time Equivalent (FTE) = Measure of the actual time

worked = No. of hours worked in a month/8 (standard

workload). Productivity per Employee = Turnover/ FTE

Turnover Rate = (Total Number of Employees who Left/ Average

Number of Employees per Month)*100

Total Left Employees = includes the no. of all

employees who have left the company: voluntarily,

involuntarily (initiated by the company, employees

whose employment contract expires on term retiree, fixed term)

Voluntary Turnover Rate = (Number of Employees who Left Voluntarily /

Average Number of Employees per Month)*100 Employees who Left Voluntary = employees who take

the initiative to end the employment

HR Ratio = Total Employees with HR Responsibilities/ Total

Number of Employees

Total Employees with HR Responsibilities = include all

HR departments employees, as well as the employees who are working on HR areas without technically

belonging to the HR department in terms of

administrative or HR cost center, e.g. trainer for sales

team; DOES NOT INCLUDE specialists in health and

safety

Absenteeism rate = (Number of absent days in a month/ Number of

days worked in a month)*100

Absent days (not worked) = for illness, personal,

unjustified, other reasons (excluding holidays, trainings

organized by the company)

Number of overtime hours

(expressed as FTE)

= Number of overtime hours per month /(number

of working days*8)

No. of hours worked over the standard 8 hours

workload. It is monthly measured



Recruitment rate = ((Number of Internal + External Recruiting)/ Total

number of employees)*100

Internal Recruiting = recruiting from within the

company

External Recruiting = recruiting from outside the

company Internal Recruitment rate =(External recruiting/Internal recruiting)*100

Refreshment rate = (External recruiting/Total number of

employees)*100

Turnover rate 6 months from the

employment date =(Number of Left Employees within 1-6 months/

Total Number of Left Employees)*100

Average Recruitment Time undifferentiated by position

= Number of days spent for the recruitment process

since the posting of the recruitment ad

(internal/external) until the signing of the contract

Average Recruitment Cost undifferentiated by position

= Total Recruitment Cost/ Number of Positions

Filled

Total Recruitment Cost= financial cost for recruiting:

recruitment ad, agency fee, tests etc. (does not include

the time of employees involved in recruiting process

e.g. HR, Manager of the position etc.)

Number of Interns =(Number of Interns/ Total Number of

Employees)*100



Total Training Cost/ Employee

undifferentiated by position =Total Training Cost/ Total Number of Employees

Total Training Cost = Training Costs +

Administrative Costs (accomodation,

meal, transportation, hall, equipment etc.)

Training rate = Total Number of Training Hours/ Total Number

of Employees Total number of training hours per year

Development rate = Total Number of Trained employees/ Total

Number of Employees

Training cost /Turnover = Total Training Cost /Turnover



Labor cost/ FTE undifferentiated by position

=Total Labor Cost / FTE

Total Labor Cost = Base salary + Other payroll elements (e.g.:

bonuses, commissions, overtime etc.) + Company taxes (all

payroll expenses should be included)

Benefits cost / FTE undifferentiated by position

=Total Benefits Cost / FTE Total Benefits Cost = Benefits cost + taxes



Employee engagement rate Engagement Rate is calculated by each

companys methodology

Succession rate = Number of Successors/ Number of Key jobs

Succession rate depends on the Succession

Policy of each company (number of successors

per key job)

Planned Succession Rate = ((Number of Existing Successors/ Number of Needed

Successors per position)/ Number of key jobs)*100

Talent Management Rate = Number of Talent Employees / Number of Key Jobs

"Talent" Employee = specific for each company.

The formula refers to all categories of Talent employees; e.g.: Employees with Potential,

Employees with High Potential etc.

Talent Utilization Rate = (Number of Talent Employees in key jobs/ Number of Talent Employees in regular jobs)*100

Other indicators. Which?

Thank You!

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Hr Outlook Sep 2013_ Copy