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#KPMGIgniteJoin the conversation
Human capital management:using your workforce to drive productivitySusanne DiCocco
Umair Pervez
Welcome
Susanne DiCoccoDirector, People & Change, Advisory
Umair PervezSenior Consultant, People & Change, Advisory
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Agenda
– Introduction
– What is evidence based human capital management?
– Evidence based HR in practice
– Questions
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Price of Oil2014 Jun
$105.152016 Mar
$30.64 $-70.80
Alberta Unemployment2015 Jan
4.6%2016 Feb
7.9% +3.3%
Alberta Cap Ex2014 Jan
$97.8 B2015 Jan
$74.9 B -23.4%
The current situation…
Source: Alberta Economic Dashboard, 2016
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
An evidence based approach results in improvements in productivity
Having the right people in the right functions with the right skills
Knowing how to identify waste in your organization
Ensuring a ROI on your people investments
Building a business strategy that ties Finance, HR, and SCM together
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
CEO issues are plentiful
Source: Evidence-based HR: The bridge between your people and delivering business strategy, 2015
Talent
Disruptive technology
Demands of the workforce
Regulatory requirements
Customer requirements
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
It’s important to reassess talent demographic changes
Source: Evidence-based HR: The bridge between your people and delivering business strategy, 2015
Traditionalist
DEMOGRAPHIC CHANGES MEANS ORGANIZATIONS STILL FACE POTENTIAL
SKILLS SHORTAGESUNLESS THEY ATTRACT AND RETAIN TALENT FROM ALL GENERATIONS
BabyBoomer Gen X Millennial Gen 2020
Demographic Change requires organizations to reassess their EVP and Reward Strategies
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
The time is now to refocus, reassess and repositionRefocus Reassess
Consensus is shifting toward a “u-shaped” or price recovery. This means we are in for a ‘new normal’
To prepare for the ‘new normal’ companies need to take a data driven to people decisions, even as they react to changes in the external environment.
8-20 year time horizon
3-10 year time horizon
Immediate – 2 year time horizon
‘U-shaped’ or ‘Bathtub’ (i.e. 1986)
Time
Oil
Pric
e ($
/bbl
)
Reassess
To prepare for the ‘new normal’ companies need to take a data driven to people decisions, even as they react to changes in the external environment.
Source: Evidence-based HR: The bridge between your people and delivering business strategy, 2015
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Defining evidence based HR
Evidence-based HR uses data, analysis and research to understand the
connection between people management practices and business
outcomes, such as profitability, customer satisfaction and quality.
Source: Evidence-based HR: The bridge between your people and delivering business strategy, 2015
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Top 5 benefits of evidence based HR
Source: KPMG International's HR Advisory 2015 Global Pulse Survey
1 2 3 4 559% 43% 32% 29% 29%Make HR
more strategicEnable HR to
pinpoint which people practices drive the most business value
Enable HR to become more
proactive in critiquing talent
Enable afact-based
assessment of the value of HR
Change talent management practices to align with evidence
% of respondents who indicated each choice as a benefit (top 3 picks)
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Early adopters of evidence based HRMcDonalds
– Through evidence-based HR, McDonalds now knows that having at least one employee over 60 years old dramatically improves customer satisfaction, on average, by 20% and boosts performance in a fast food outlet.
McGraw Hill Financial
– The HR team at McGraw Hill Financial can now instantly summon information revealing the profile of those most likely to leave the organization in the near future and target interventions accordingly.
RBC
– The Royal Bank of Canada was able to discover a major connection between the degree employees believed in the competitiveness of their value proposition and the performance of the retail branch.
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Let’s look at a data driven decision
Please use the device provided to select your answer for the following questions
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Evidence based HR decisions
QUESTION 1
What percentage of line managers find video clips and podcasts very useful for their learning?
A. 22%
B. 55%
C. 68%
Line Managers
L&D
Seven simple steps for evidence based HR
How does
it work?1Identify a business challengeA retail bank wants to improve branch
performance.
2Develop your hypothesis There may be a link between the types of
employee in a branch and its overall performance. 3
Identify what data you have and needWe have HR and workforce data; we
need financial performance and customer data.
4
Analyse the data: what is it telling you? Think about the best visualization of the analysis so that leaders understand the implications of the analysis
6
Validate the data and findings with internal and external sources. If its not satisfactory, go back to step 2.
5
7
Leverage the insight into business decisions. We may run a pilot to test our conclusions before going firm-wide.
Continuously leverage an evidence-based HR approach. To bridge the ‘knowing-doing’ gap we will use best practices in our HR operating model
Source: Evidence-based HR: The bridge between your people and delivering business strategy, 2015
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Evidence based practice: contingent workforce analysis
Employees IC Suppliers
Conventional Contingent
Contractors Third PartiesT4
TempEmployees SP
Regulated&
Seasonal
EPC&
Maint.
Level of Visibility
The need to understand and manage the total workforce requirements, costs and demands is distressing our clients in the Energy sector.
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Source: KPMG
The value propositionYour workforce
SCM
+
BU
+
HR
Conventional T4EmployeesTemporary Employees
ContractorsI/C, S/P, Regulated, Seasonal
Third PartiesSuppliers, EPC Maintenance
Low Visibility
High Visibility
CostSavings
RiskMitigation
LegalCompliance
ProcessEfficiencies
Value Realization Categories
Do you know who all of your workers are, where they are all located, and what they’re all doing?
Do you know the costsand risks associated
with them?
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
The hidden relationship
Heavy Equipment OperatorsCrane Operators
General Labourers
Scaffolders
WeldersGasfitters
Telebelting
2013 = $22 million2014 = $38 million
+10% markup
+ Higher Rates+20% markup
+10% markup
+ Higher Rates+20% markup
100%
Client Company
Supplier 2
Supplier 1
Sub Contract 3
Sub Contract 5
Sub Contract 4
Sub Contract 1
Sub Contract 7
Sub Contract 6
EngineeringProcurement
Construction
Sub Contract 2
Heavy Equipment OperatorsCrane Operators
WeldersGasfitters
+ Higher Rates+20% markup
CW’s
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Source: KPMG
Areas of Focus Category Item Workers Impact per Year
Cost Savings Rate Inconsistencies $7.00 per hour reduction 34 workers ~$450,000 ($13,440 per worker)
Overtime Management $30.00 per hour removal 17 workers ~$650,000 ($38,000 per worker)
Over Specification $20.00 per hour reduction 10 workers ~$380,000 ($38,000 per worker)
Bill Rate Analysis $5.00 per hour 20 workers ~190,000
Bill for Incorrect Rate $5.00 per hour 15 workers ~145,000
Leased Car Removal $7,000 per vehicle 20 vehicles ~$140,000
Avoidance of Markup’s Savings of 10% per CW 25 workers ~300,000 ($11,000 per worker)
WCB Overpayments $2,000 per worker 50 workers ~$100,000
Risk Mitigation CRA Reclassification $21,000 per worker 15 workers ~$320,000 + soft costs + costs to CW
Employment Standards Obligations
$23,000 per worker 15 workers ~$360,000
Legal Compliance AIT Act & Regulations $15,000 per worker 20 workers $300,000 + stop work orders
Employment Standards Exposure to fines & penalties - -
Process Efficiency Savings through process improvements and increased efficiencies in workforce management
Assumptions:- CW's base rate = $60/hour and $115,200 per annum• 48 weeks of work per year
Overall Annual Savings Identified – $2+ MIllustrative Example
Savings determined for an organization with 400-500 CWSource: KPMG
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
How can we help you get there?Workforce planning follows a 3-step-process including strategy, planning and implementation (and additional components), starting with workforce segmentation and closing with the complete process and system integration.
KPMG offers an Integrated Workforce Planning Approach that is most flexible to handle different types of needs from straightforward to complex project requirements.
Source: KPMG
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
How do you setup a workforce analytics function?
1. Build the case for a workforce analytics function
2. Assess your current maturity in workforce analytics
3. Run a pilot project
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
There are still bumps in the road that we must face
Source: Evidence-based HR: The bridge between your people and delivering business strategy, 2015
Skepticism about HR
Disorganized data
Cultural resistance
Skills deficit
Over-reliance on science
Harmful impatience
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Three critical factors that organizations needs to address
1. Familiarity with data and analysis2. Greater knowledge of the industry and organization3. Reconfiguring HR functions
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Workforce productivity through human capital management In conclusion an evidence based approach can help you…
Align business strategy with HR
Recruit, retain and manage talent effectively
Determine ROI on your people practices
Find hidden costs and act to eliminate them
1 2
3 4
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Contact us
Susanne DiCoccoDirectorPeople & ChangeT: 403 648-7178E: [email protected]
Umair PervezSenior ConsultantPeople & ChangeT: 403 691-8023E: [email protected]
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.
Thank youDownload this presentation at:
kpmg.ca/ignite
© 2016 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name and logo are registered trademarks or trademarks of KPMG International.
The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.
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