Human Capital Analytics: Measuring the Impact of HR … · Human Capital Analytics: Measuring the Impact of HR ... development program that creates ... and, The New HR Analytics.

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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

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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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