Introductions Paul Rains – IPP HR SYSTEMS PROJECT MANAGER
Dec 24, 2015
Introductions
Paul Rains – IPP
HR SYSTEMS PROJECT MANAGER
RAC People P&L - A Human Measurement Case Study
A roadmap to effective Human Capital
Management (HCM)
RAC People P&L – Topics
● Background
● Key Drivers
● Solutions considered
● Positive Outcomes
● Lessons Learnt
RAC Company History
Leading Motoring Services company in the UK, established in 1897
Services more than 7 million motorists, attending 2.76 million breakdowns last year
Headcount 11,646, FTE 11,182.03
Profit before tax* 2004 - £88.6m – Up 24.39% since 2002
Profit per FTE 2004 - £8,051.42 – Up 43.93% since 2002
Route to Current B.I. Solution
YEAR HISTORY EXTERNAL INFLUENCES
HR STRATEGY MEASUREMENT METHODS
1998 Lex plc implements Group HR system
Corvu installed as BI tool for HR Directors with drill down
1999 Lex plc acquires RAC
First Basic HR measures reported on
2000 Archie Norman advises plc board
Lex implements PS enterprise
KPI reports replicated on Cognos Impromptu
2001 Kingsmill Report
People P&L born P&L data collected manually
2002 Lex renamed RAC plc
A series of Impromptu reports created
2003 Accounting for people
Automate People P&L
2004 Data warehouse approach
Web based solution Cognos reportnet
Key Influencing Factors
Archie Norman of Asda fame joins plc board as an advisor after sale to Wallmart. Plc Board aspire to Asda’s achievement of the top UK company to work for.
C.E.O. 3 balls concept – People focused Happy people = happy customers = happy
shareholders
HR Director invited to join ‘accounting for people’ taskforce set up by the government
Employee satisfaction survey introduced
Plc Board ask for monthly report on People data as well as the usual financial information.
RAC Key People values introduced and linked to colleagues appraisals, PDP’s and Recruitment criteria.
HR elevated to highest profile in group
HR Director appointed to the Plc Board
Group HR System seen as strategic system as opposed to a business support system
HR given more responsibility to support the businesses at operational level
Additional HR resources recruited – Headcount trebled!
New HR structure to reflect new responsibilities
A Significant Culture Change
HR Structure
PLC Strategic HR
LVL Local HR
RAC Local HR
BSM Local HR
Lex Multipart Local HR
HR Board
Plc Board
Conceived in 2001 First Group-wide HR “Balanced Scorecard” HR measures package supporting
Turnover Stability Absence Retention Colleague Satisfaction
Strategic High Level KPI monitoring Delivered using a series of Cognos Impromptu
Reports
The Very First People P&L
Initial Operational Issues
Manual Process 300+ org units * 10 reports = potential 3000+
reports every month Huge workload Slow to collate Labour intensive
Lacked flexibilityLacked credibility, distrust of dataAffected HR System performanceLack of consistency in the data
Potential Solutions
Automate existing processes Evaluate B.I. alternatives
Report directly from HR system Data warehouse approach
Benchmark using other external company
Automate Existing Process
Positives
Cheap option
Negatives
Still meant a large volume of reports to produced and printed / distributed
No-online access for managers
Still impact on HR system performance
Reporting from HR System
Positives
Cheap option
Produces high level reports
A limited form of analysis
Negatives
Lacks depth and flexibility
Resource hungry Personnel, IT & HR
System
No single version of the truth
Single source data
Limited form of analysis Scorecarding Trending Predictive analysis
External Benchmarking
Positives
– Provides Peer comparison
– Can assist company's identify broad issues
Negatives
– Lacks Depth
– Doesn't identify where issues exist at the coalface
Data Warehousing
Positives
Greater depth and breadth
Easier identification of impacting and impacted measures
A measurement and management toolset
Encourages employee engagement
Multiple data sources
Single version of the truth
Information at the touch of a button
Negatives
Cost
Complex Structure
Additional hardware / support costs
The Chosen Solution – Strata HR Analyser
“Out of box” Kimball-based Datamart solution
Cost effective
Ideal fit to RAC HCM principles
Dimensionally rich
Broad range of measures
“Accounting for People” ready
Web based allows easy access for Line Managers to view reports / metrics
Implementation Timescales
Aug 04 Nov 04 Jan 05 Feb 05
Board Approval
Install Pilot Live
Solution Functionality
Data mart delivered a broad range of Dimensions and Facts Track values across time Provided baseline for all analysis Low level of granularity Basis for predictive analysis
HR and absence analysis studio
Easy and advanced reporting studios
Scheduled, stored, secured & audited reports
Scorecards
3rd Party Data Source capability
Extract Transform and Load (ETL) refresh
Key HR Metrics Measured in automated P&L
Employee Satisfaction
Employee Turnover Voluntary Both Voluntary and Non Voluntary
New Employee Retention
Internal Appointments
Absence
Key HR Metrics reviewed annually by HR Board
Your Voice
Colleague satisfaction is reported at PLC, division and department levels (where available). These statistics are sourced directly from the outcome of the latest “Your Voice” Colleagues Satisfaction Survey, which takes place annually during Q4. Therefore, this figure will only change once per year.
PLC Targets: Red < 65% Amber 66 – 75% Green > 76%
Turnover
This measures the degree to which colleagues are leaving the organisation. NB: From 2005 the headcount figure used to calculate turnover is an average of the last 12 months, not actual headcount as at the present point in time (as previously calculated). Formula: Actual Number of Leavers in last 12 months * 100 = x %
Average of Total Headcount over last 12 months
PLC Targets: Red > 15% Amber 10 – 15% Green < 10%
Turnover FAQ’s
Frequently Asked Questions Yes/No
Are colleagues who transfer internally to other departments counted? No
Are temporary colleagues included (who are on our Payroll)? No
Are temporary colleagues included (who are employed via an agency?) No
Are colleagues on LTS or maternity captured within the headcount figure? Yes
Are redundant colleagues classed as leavers? Yes
Voluntary Turnover
An additional measure of voluntary turnover introduced to measure the degree to which colleagues have made a conscious decision to leave (as opposed to company enforced e.g. redundancy, restructure, dismissal). Other turnover (i.e. non voluntary turnover) is defined as: Forced RedundancyDismissalCompromise AgreementRetirement (but not early retirement)Divested / Sold Business
PLC Targets: Red > 12% Amber 8 – 12% Green < 8%
New Colleague Retention
This measure replaced the previous measure of “Stability” and is a more accurate way of measuring how many colleagues we are retaining within their first year of service. This measure differs from ‘Stability’ as it captures all colleagues leaving with <1 year’s service as a percentage of purely new starters, as opposed to a measure of the number of colleagues who left with <1 year’s service over the last 12 months as a percentage of the full headcount figure.Formula:- Number of colleagues within the Retention Cohort * 100 = x %
Number of Leavers within the Retention Cohort with <1 year service Retention Cohort – This is the number of new starters who joined the organisation within the last 12-24 months. Therefore, for January 2005 the retention cohort will capture all new starters who joined between February 2003 – January 2004 and out of these colleagues, we will then assess how many of them left with <1 year’s service.
PLC Targets: Red < 85% Amber 85 – 94% Green >= 95%
New Colleague Retention FAQ’s
Frequently Asked Questions Yes/No
Are colleagues who transfer internally to other departments counted?
No
Are temporary colleagues included (who are on our Payroll)? No
Are temporary colleagues included (who are employed via an agency?)
No
Internal Appointments
Previously, the only measure for internal appointments captured movement within the Leadership Group. From 2005 onwards, a new measure of “Internal Appointments” has been created to measure the degree to which talent is moving throughout the organisation (sideways as well as upwards).Internal move categories that are included are:- Job ChangeInter Company TransferPromotionSecondment made PermanentTransfer Promotion Formula: Internal moves___________ * 100 = x %
Internal moves + New Joiners
PLC Targets: Red < 35% Amber 35 – 45% Green > 45%
Sickness Absence
Absence is reported and entered into the HR system one month in arrears. Therefore, as there is no absence information entered for the most recent P&L month at the point the report is run, the absence rolling year period will look back an additional month. Sickness Rate Formula: (Average days, per person, per year)
Total number of days sickness over last 12 months = x daysAverage Headcount over last 12 months Daily Compensation Rate:(Gross Pay + Employers Ni + Employers Pension) / 260Average Headcount over last 12 months Total Cost of Sickness: Daily Compensation Rate * Average Headcount over last 12 months
PLC Targets: Red 10 days+ Amber 6 – 10 days Green < 6 days
Sickness Absence FAQ’s
Frequently Asked Questions Yes/No
Are colleagues on maternity / paternity / adoption leave counted? No
Are temporary colleagues included (who are on our Payroll?) Yes
Are temporary colleagues included (who are employed via an agency?) No
Are colleagues on LTS or maternity / paternity / adoption leave captured within the headcount figure?
Yes
Is Emergency Family Leave included? No
Is compassionate leave included? No
Example People P&L Report
Adobe Acrobat Document
People P&L Part 2
Production of a supporting document which gives basic monthly information by org unit which forms the basis of the People P&L. This document contains the following: Actual headcount (Colleagues)Number of new starters (Joiners)Number of leavers (Leavers)Number of transfers inNumber of transfers outTotal number of sickness days (Sickness Days)
People P&L - Benefit Business Cycle
Produce and
distribute reports
Review and
Analyse
Take action
Automated Report Production:
Distribution of reports to the line can be automated, but quality of data must be protected in order to protect credibility
HR & Line managers review P&L values. HR provide analysis to seek reasons for P&L issues highlighted. Improvement actions determined. Affects of previous improvement actions reviewed
Implement Actions:
Until this happens there are no major business benefitsHR in control of accounting for people as an asset, driving benefits from managing colleagues, & contributing to profit margin/bottom line
Financial Benefits
Immediate Automation of P&L (£50k+ savings)
Targeted first year benefits Reduce absenteeism by 1 day per person Reduce voluntary turnover by 2%
Generated > £1m in savings in first year
Operational Benefits
P&L Reports available at all Organisational levels within the business
Speed of delivery One consistent version of the truth. Improved the dynamics between HR and the Line. System enables better review and improvement of HR
business processes. Increased ability to measure management performance. Improves organisational effectiveness & efficiency. Empowers local HR administrators to record accurate data.
Link to Performance / Pay
Key HR metrics linked to individual line managers’ key objectives for the year through appraisal process.
HR metrics reviewed annually by HR board with a view to eventually being in the upper quartile compared to other UK based businesses.
People P&L bonus targets for Senior Management Group (SMG) introduced
If members of the SMG did not carry out Appraisals for their reports and 360 degree feedback from their manager no annual pay review was awarded
Plans to attach bonus to all line managers performance were shelved after Aviva takeover
Other Perceived Benefits
Elevation of status of HR in the business. Adding value Providing Insight Making the business more effective
Closer links between HR & Operational units established to support Line management
Greater Education and support for the business
Greater Management accountability
Regular Director reviews
P&L actuals regularly reported throughout the organisation
Greater confidence in the data
Essential Requirements for success
High level stake holder buy in Active engagement by HR community Must be Strategy led All levels of management need to buy in Clean Data Simple, effective B.I. tool Suitably qualified and trained dedicated HR
staff to analyse / interrogate the reports
HR Director - PLC Board
“HuRBi helps us deliver a comprehensive understanding of HR performance
through the use of metrics and benchmarking.”
Debbie Hewitt, now MD, RAC
Lessons Learnt
Minimise the customisation of your solution
Ensure data is cleansed initially
Ensure effective and efficient processes are in place to keep data clean
We had the Right tool, but the wrong people Need for a Core strategic Analytics Team