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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, 2013
Key Definitions
Human Capital Analytics Evolution
My World: Today and Tomorrow
Value Proposition
Key Elements
Quantifying Impacts
Deriving Analytics
Human Capital Analytics Model
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HR and Workforce Analytics Concepts
Measures
Metrics
Analytics
Fundamental constructs based on tabulation of data
Higher level constructs based on
two or more measures
Converting metrics into decision
supporting insight
Employee Headcount
Revenue Per FTE
Turnover of High
Potential Employees in Poor Performing
BUs
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
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Metrics
Analytics
Operational
Reporting
and Metrics
Engagement and
Benchmarking
HR Effectiveness
Workforce
Impact
Planning and
Modeling
5
Future Past “Measures”
1980’s
1995
2001
2006
2008+
Most organizations are here
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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
My world today …
Lack of an analytic culture and competence
Little credibility with C-suite
Lack of understanding of the business
Aversion to failure
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What are the other metrics-related barriers you encounter in your
organization?
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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
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Evolution
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
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Today vs. Tomorrow
Achieve results
Solve problems
Leverage opportunities
Make decisions
Identify gaps
Measure performance
Manage risks
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Value Proposition
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
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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
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Analysis
Metrics
Internal Context External
Context
Workforce and HR Analytics
HR and workforce analytics are centered on what’s important to your analytics consumer.
External consumers
include:
> Outsource partners
> Insurers
> Regulatory agencies
> The press
> Plaintiff attorneys
> Labor market
Internal consumers
include:
> C-suite and BOD
> Line and operations
managers
> HR leaders and staff
> Employees
> Investors and
stockholders
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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
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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
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• 30 days
• 97%
• 88.5%
• 90% in 30 days
• 75% in 90 days
• 65% in 180 days
• 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
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
Targets Metrics
& Analytics
Strategy,
Objectives, &
Goals
Assumptions
& Drivers
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• 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
Metrics
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
Solution
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
3. Retain successors and high
potentials
Business
Risk
Objectives
& Goals
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• 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)
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
Business Risk
Wellness program that achieves objectives and goals using:
• Effective communications
• Effective incentives
• Programs match major health issues
• Management support
Objectives & Goals
Solution
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Phases and Key Objectives
Key Objectives per Phase
Organization & HR Impact
HR Practices
Phases
Strategic
Mgmt.
Human
Resource
Dev.
Workforce
Planning
&
Employmt.
Total
Rewards
Employee
& Labor
Relations
Risk
Mgmt.
Assess
& Plan
Link &
Align
Implement &
Execute
Evaluate &
Enhance
Understand the
business
Build plan
Organize team
Identify key
workforce
assumptions
Identify key
workforce drivers
Validate your
assumptions and
drivers
Address people
impacts
Execute
delivery
process
Implement
technology
Implement
communication plan
Collect
feedback
Enhance
additional data,
metrics & users
Identify HR &
business impact
Identify
& Build
Determine metrics
& analytics
Make
benchmarking
decisions
Build metrics &
analytics
Identify data &
technology
Stakeholders
Exec. Mgmt.
Finance
IT Risk
Sales Marketing
Operations External
Development Implementation
Scorecard Building Tool
SHRM Human Capital Analytics Model
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Phases and Key Objectives
Acquire business knowledge
Develop plan
Change management and communication
Feedback loop
Develop team
Involvement
Avoid silos
Assess and Plan
Assess
& Plan
Link
& Align
Identify
& Build
Implement
& Execute
Evaluate
& Enhance
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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
Link and Align Phases and Key Objectives
Assess
& Plan
Link
& Align
Identify
& Build
Implement
& Execute
Evaluate
& Enhance
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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
Identify and Build Phases and Key Objectives
Assess
& Plan
Link
& Align
Identify
& Build
Implement
& Execute
Evaluate
& Enhance
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Analytics process How, when, who,
what Feedback loop
Analytics tools
Change management People Process Technology
Implement and Execute Phases and Key Objectives
Assess
& Plan
Link
& Align
Identify
& Build
Implement
& Execute
Evaluate
& Enhance
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Feedback
Additional data and metrics needed HR Non-HR
Additional users
New tools
Business impact
Evaluate and Enhance Phases and Key Objectives
Assess
& Plan
Link
& Align
Identify
& Build
Implement
& Execute
Evaluate
& Enhance
TAKE A STEP TOWARD
TOMORROW
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ADDENDUM
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Practice Area Metrics
Workforce Management
Contingent representation, Demographic representations, Time lost due to absences, Days/absence, Cost due to absences, Involuntary separations due to absenteeism
Planning & Staffing
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
OD
Employee engagement, Total employee spend/total FTEs, Total workforce spend/operating spend, Revenue/total workforce spend, Human capital ROI
Performance & Development
Readiness, Performance rating distribution, Development spend/ employee
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Practice Area Metrics
Benefits
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
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
Safety
Absence days/LOAs due to accidents, Penalty spend, Cost per accident, OSHA investigations and actions, Time lost due to accidents
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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
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Learning Opportunities
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) www.humancapitalsource.com.
CedarCrestone Metrics and Analytics Report.
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