The Business Case for Human Capital Analytics

8/9/2019 The Business Case for Human Capital Analytics

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The Business Case for Human

Capital Analytics

Human Capital Management Institute


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About Human Capital Management Institute

Human Capital Management Institute 2

Workforce Assessment

Strategic Consulting

Training

Best Practices

Workforce Analytics and Planning

Benchmarking

- We Bring Financial Discipline, Standards and Rigor to the HR Function -

HCMI Background:

Specialized in HR analysis &measurement

Deep expertise in Workforce Analytics &Planning

Board made up of CFOs and HR heads

Over 40 years of experience

What We Do:

Measure the immeasurable in humancapital

Transform workforce data into businessintelligence

Provide tools and training so HR canpartner with Finance

The Human Capital Management Institute (HCMI) was founded on the belief that organizations can

and must, find better ways of measuring their investments in human capital. Our vision of the future isone in which human capital measurement and information is as integral to business decision making asfinancial information is today.


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The Need

Companies drowning in data, starving for insight


Need = Predictive analytics for a companys

Most Valuable Asset People

#1 Revolutionary Trend in HR Workforce AnalyticsDeloitte Human Capital Trends Report

Current BI software lacks Predictive Analytics

Where does Top Sales Talent come from?

What critical talent is at risk of departure?

What $ difference does a good Manager make ?


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Fitz-enz Levels of Analytics

- Prescriptive Actionable If-Then Analytics

- Workforce Planning + Financial modeling(HCF$)

- Workforce planning, scenario modeling- Multivariate statistical modeling

- Statistical regression analysis

- Forecast Leading(predictive) Indicators

- Trend reports- Metric scorecards

- Ad-hoc reporting

- Transaction and count reports

Level 1Descriptive

Level 2Predictive

VALUE

Level 3Prescriptive


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Why Analytics, Why Now?

Source: Bain & Co. 2013


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What to Include in a Business Case

1. Compelling Questions Ask the Right Questions

2. Objective Measures and Facts Historical Data, Key Metric Indicators, Segmented Data

3. Powerful Visuals Charts Chart(s) that Show Insight (i.e. Story) and Drive Action

4. Use Qualitative Story Telling

Two of our Top 3 Salespeople came from other industries

5. Link to Business Impact (ROI/Cost/Profit) The Cost Savings is a range of $1.0 to $3.0 Million

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Components of a Business Case

1. A Business Need or Imperative Why

A defined problem/opportunity or question(s) to be answered

2. Quantitative Analysis What

Current state assessment

Alternatives Evaluated, (be sure to include do nothing)

Cost Benefit Analysis or ROI What do we get

3. Risks List key risks what we miss out on (address What if we do nothing)

4. Timing, Resources, Process When, include roadmap or project plan (must have 90 day deliverables)

How, the process to be used (e.g. GEs six sigma process)

Who, document who will do it (champion, oversight, partners)

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Answering Complex Human Capital Questions


1. Is Workforce productivity improving? If so how much? How do we rank?

2. What size and cost of workforce is needed to support the strategic plan?

3. What $ difference can a good Manager make ?

4. What critical talent is at risk of departure?

5. What defines our best talent/performers? Is it better to build, buy or rent this talent?

6. What is the ROI of our training investment in the workforce?

7. What are Strategic critical roles (game winners) vs. Operational critical roles (keep usin the game)?


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Sample Business Case



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Sample: Identified Human Capital Risks

High Turnover Business Impact Risk

Growth Risk (delays finding/replacing high impact roles)

Service Level Risk (Low tenure = engagement challenges, constantly re-learning basics)

Attracting Key Talent Risk

Challenges in Hiring (i.e. IT, engineers, sales people )

Failures in selecting best fit talent (failure to find/hire successful high impact roles)

Stagnant Productivity Risk

Workforce Cost Pressure vs. Value Proposition (i.e. pay/benefits/hours/career)

Leadership and Development Risks

Mid-level and Front Line Leadership Mediocrity(i.e. leaders who are just good enough vs. highly engaged leaders who get more from their team)

Breakdown in Leadership Accountability cannot link supervisors to negatives(i.e. turnover, low engagement, absenteeism) vs. positives (i.e. talent scouts, motivators, mentors)



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Sample: Sales Analytic Business Case


1. XYZ Company Sales Force Optimization

We will Quantify $$$ sales-force productivity gain via:

Who to Hire -> Sales high performer profile, best fit best performance

What Training Works -> ROI of sales training / onboarding

Effective Sales Leaders, Who & How Much -> The ROI of top leaders

Drivers of Turnover, Performance & Engagement -> Practicesimproving productivity, retention & performance

2. Sales Force Workforce Planning -> Productivity Modeling Focus

How Many do we Need -> Growth, scenarios

How Long to Full Productivity -> Training optimization

Where is the Sales Talent > Talent Supply Analysis (Build vs. Buy)

Core


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Examples: Talent Analytics ROI


15% Productivity gain, reduced loss rate{Fortune50 Transportation Company}

5% Reduction in Cost of Workforce(TCOW){Fortune30 Technology Company}

Sales Training Predictive ROI {large retail Co.}

Predictive hiring metrics for sales stars{$1.0 Billion privately held bank}

Employee engagement revenue impact{$1.0 Billion public airline}

40% voluntary turnover reduction{public, financial services Co.}

ROI of internal vs. external hires {public bank}

$1.1 Billion Annual

$650 Million Annual

$250 Million Annual

$264 Million Annual

$96 Million Annual

$12 Million Annual

$6 Million Annual

Core


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Contact Information:

Human Capital Management Institute

Nathan Tan, VP, [email protected]

For more information on products and services:

www.hcminst.com

SOLVE Software Human Capital Training andFinancial Statements Consulting

Human Capital Workforce Data Workforce

Metrics Handbook Integration Blueprint Planning

Workforce Intelligence

Consortium Group@HCMI

mailto:[email protected]://www.hcminst.com/http://www.hcminst.com/mailto:[email protected]

Documents

The Business Case for Human Capital Analytics