making workforce analytics stick
TRANSCRIPT
Jameson GreinerDirector, EPM Business Development & Client Engagement
Making Workforce Analytics Stick: Pitfalls, Challenges, and Stick-and-Stay Strategies
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• Welcome & Introductions
• The Business Case for Workforce Analytics
• Workforce Analytics: What It Is & What It Isn’t
• Common Roadblocks, Challenges & Pitfalls
• Making It Stick
• Lessons Learned
• Discussion / Q&A
Agenda
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• EPI-USE established in 1984, SAP Practice since 1994
• The EPI-USE Group is privately held and made up of a number of separately branded entities/organizations
• Global, World-Class Services and Software Organization to large multi-nationals
• Specialists in Human Capital Management Consulting
• “Special Expertise Partner” for SAP HR and recently established as a Success Factors Global Partnership
• Completed over 600 HCM projects and a team of over 1000 consultants world-wide
About EPI-USE
Niche HCM Service Provider with SAP as the Core!
The Business Case For Workforce Analytics
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Are you making decisions about your people with the samerigor, logic and confidence as your decisions about money,
customers, products and technology?
0%
-5%
-1%
11%
4%
4%
-6% -4% -2% 0% 2% 4% 6% 8% 10% 12%
Using Reporting &AnalyticsNot Using
Revenue per FTE
Profit per FTE
Employee Performance
The Case for Workforce Analytics
THE WORKFORCE MAKES UP 60-80%OF YOUR OPERATING EXPENSES
“
“
DR. BOUDREAU, USC CENTER FOR EFFECTIVE ORGANIZATIONS
(Aberdeen, “Intelligent Human Capital Management”, 2010)
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The Workforce Analytics Journey
• Reactive Information
• Focus on Accuracy
• Basic List Reports
LOW Impact
• Data Manipulation Capabilities
• Report Automation
• Scorecards and KPI Reporting
Growing Sophistication
• Proactive Insights
• Analytically Drives Actions for Business Success
• Data-Driven HR Function
HIGH Impact
Data Vision Action
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0 50 100
Information is Important
Receives Sufficient Information
Executives Lack the Data Needed to Make Investments in Talent
A Minority of CEOs Receive Comprehensive Data on Their WorkforcePercentage of CEOs Who Believe Information is Important and Sufficient for Decision-Making, PwC Survey, n=1,258
Source: PwC, 15th Annual Global CEO Survey, 2012
Percentage of CEOs
Labor costs
Return on investment in human capital
Assessments of internal advancement
Employees’ views and needs
Costs of employee turnover
Staff productivity
Workforce Analytics: What It Is & What It Isn’t
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A Definition of Workforce Analytics
Workforce analytics is a methodology for creating insights on how investments in
human capital impact business outcomes.
This is done by applying statistical methods to integrated HR, talent management,
financial, and operational data.
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Link Corporate Strategy to Measurable Business Impact
ACTION IMPACTGrow 20%Expand new marketsCut operating costsImprove serviceCut time to marketInnovate
Do we have the talent to execute on our strategy?Where are future talent gaps?Are we maximizing new hire investments?In which workforce segments does increases in voluntary turnover present greatest risk?Are we retaining our high performers?Which workforce programs have the highest projected financial impact? Do we pay for high performance?
Manager tenureStaff turnoverQuality of hirePay distribution
Workforce planningOptimizepay distributionChangeon-boarding
GrowthCost reductionEffective leadershipProductivity
ASK THE RIGHT QUESTIONS
INSIGHTSTRATEGY
BASEANSWERS ONFACTS VS. GUT FEELINGS
KNOW THEIMPACT OF YOUR ACTIONS
CHALLENGES
1. What business outcomes are we trying to impact?
2. What are the human capital drivers of these outcomes?
3. What is our current state compared to the
optimal state?
4. What talent strategies drive
these outcomes?
A Simple Definition of the Terrain
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Valu
e /Im
pact
Reactive Proactive
Strategic Reporting: WHAT is
happening with our workforce today?
Workforce Analytics: WHY are those trends occurring?
Workforce Planning: HOW should we respond today to build the
workforce needed for the future?
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Which phase of the Workforce Analytics Maturity Model best describes your organization?
1. Workforce Reporting
2. Workforce Analytics
3. Workforce Planning
Discussion Question #1: Show of hands…
Roadblocks, Challenges, & Pitfalls
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Do We Have A Workforce Analytics Strategy?
“There's no reason to become alarmed, and we hope you'll enjoy the rest of your flight. By the way, is there
anyone on board who knows how to fly a plane?”
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Common Year 1 Roadblocks
Selecting KPIs aligned with strategy
Standard metrics
definitions
Data quality and credibility
Center of excellence
Generating actionable
insight
Without standard definitions for metrics, there is misunderstanding and inconsistency.
Both external (industry) and internally.
Without reduces or invalidates the value of the results.
Data discussions are more focused on source of inputs, formulas, and calculations rather than results.
Differences between systems (e.g., Finance headcount vs. HRIS).
Provides the foundation for consistent reporting and analytics.
Delivers insights of strategic impact to the business.
Just measuring and reporting data is not enough.
Data needs to be communicated effectively to generate action.
Provide solutions not problems.
Must be aligned with HR or corporate strategy.
If not, KPI’s unlikely to be valued by the business.
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Turnover of key leader or analytics team member
Lack of dedicated resources
HR lacks analytics skills & culture
Difficulty measuring business impact
Workforce data not reaching executives
Common Year 3 Challenges
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What is the biggest challenge your organization has encountered in your workforce reporting, workforce
analytics, or workforce planning efforts?
Discussion Question #2
Making It Stick
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Best Practices for Making It Stick
Alignment with
Business Strategy
Executive Level Reporting
Dollarize
Reporting Strategy
Communication Plan
Quick Wins
Pilot Program
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Strategic Alignment: Prioritize Workforce and Business Issues For Analysis
A Top-Down Approach A Bottom-Up Approach
• Branding and advertising• Improve customer satisfaction• Improve employee satisfaction• Improve service delivery• Access new markets
• Voluntary Termination Rate• Employee Retention Index• Managerial Quality Index• Training Hours/FTE
Corporate Strategy
Business Drivers
Human CapitalMetrics
Functional Strategy
Increase Market Share
Customer Retention
Customer Acquisition
Requests for Data AnalysisRequest: Investigate company age profileReason: Anticipated spike in retirements by 2015Business Case: Increased costs
Loss of knowledge Staffing shortages
Summary: High Priority
Request: Generate headcount reports for 5 largest business units
Reason: Concern over discrepancies between HR and Finance headcountsBusiness Case:?
Summary: Low Priority
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The “Right” Set Of Metrics for Executive Reporting
Group #1: Core Workforce Facts:
– Headcount/FTE– Terminations– Diversity, by Gender and Ethnic Background– Workforce Age Profile
Group #2: Financial Workforce Metrics:
– Operating Revenue per FTE – Operating Profit per FTE– Return on Human Capital Investment Ratio– Cost of Turnover
Group #3: Productivity and Performance:– Workforce Productivity (Measured in outputs relevant to the specific firm)– Workforce Availability/Absenteeism– Executive Compensation/Pay Comparison
Group #4: Talent Development and Succession:
– Leadership Quality (Current and Bench)– Staffing Rate – High Performers– Staffing Rate – High Potentials
Group #5: Human Capital Risk:
– Succession Risk (Absence of Ready-Now Successors)– Staffing Shortages in Critical Roles– Current vs. Future Competency Gaps– Churn (hires vs. terminations) Rates– Knowledge & Transition Risk (of an aging workforce)
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• Cost of Turnover = Average Salary x # of Exiting Employees
• Multipliers (e.g., High Performer Multiplier = 1.5 x regular employees)
• Building The Case (e.g., Headcount Spend as a % of Revenue)
• Calculators: COT, COH, ROI
• Back Of The Envelope Calculations (e.g., Average Salary of Employee in X Job Role x # of Hours Spent On X Project)
• Training ROI = Productivity Gains – Productivity Losses
Money Talks: Quantify and Dollarize
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Reporting Strategy
Annual Strategy Kick-Off• Analyze key outcomes from prior year• Communicate strategic initiatives and plans for current year• Suggest metrics and data analysis used to measure success of each initiative• Present updated workforce plans
Monthly HR Strategy Review
• Present results and analysis of workforce KPIs
• Identify emerging issues to investigate
Quarterly Senior MGMT Meeting
• Review human capital scorecard• Suggest themes and metrics for Board meeting and external communication• Provide overview of external labor market trends impacting current workforce
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Build a Communication and Feedback Plan
Format for Delivery(Presentations, email or portal)
Timing(Quarterly, monthly or
ad-hoc)
Audience
(HR, business lines or executives)
Message (Content, rationale or
preferred action)
Communication Planning
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Analysis of your organization’s Strengths, Weaknesses, Opportunities, and Threats will help identify quick wins and prioritize resources towards problem areas.
Identify Quick Wins
• Leadership support• End-user receptivity to dataStrengths
• HRBPs lack analytical skills• Poor quality dataWeaknesses
• No workforce plan exists• High-cost of call center t/oOpportunities
• Cannot demonstrate ROI• Data analysts leave Threats
Include in Mission Statement
Top Priorities: Training & Data Quality Review
Complete Phase One Review by
End of 2013
Include ROI in all Analyses; Build
Pipeline
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2013 Research Agenda
• In the last four years, has workforce productivity increased, decreased or remained the same?
• How will increased retention affect our cost of turnover and cost of hiring over time?
• What is the depth and quality of the successor pool for key positions?
• What recruiting sources provide the highest performing employees?
• Other strategically aligned questions for analytic investigation
Pilot Program
Step 1: Identify business leader or champion to partner with
Step 2: Initial debrief session to identify top 1-3 business challenges
Step 3: Analytic investigation
Step 4: Executive Briefing with key findings and recommended action
Step 5: Action plan and ongoing monitoring
Step 6: Communicate success
Get Creative
Lessons Learned
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A Different Approach:100 Critical Human Capital Questions
Workforce Demographics and DiversityWhat is our ratio of customer-facing or revenue-generating staff to back-office staff? In the last five years has it increased, decreased or remained the same?
Workforce ProductivityIs the ROI on Human Capital higher than the ROI on working capital, invested capital or plant and equipment?
Workforce Health and SafetyWhat is the dollar cost impact of short- and long-term disability absences and claims?
Workforce Relations and SatisfactionWhat percentage of our employees are fully engaged and are “doing their best work” at all times? How does this vary across functions and lines of business?
Workforce Turnover and MobilityWhat percentage of our workforce moves internally each year between lines of business or functional areas?
Workforce PlanningWhat is the magnitude of competency “gaps’ between needed and actual capabilities?
Staffing and RecruitingDo our new hires continually increase the overall quality and productivity of our workforce?
Workforce Compensation and BenefitsBased on our workforce demographic, could we be offering a benefits packages that is both more attractive and less expensive than the current offerings?
Workforce Training and DevelopmentHow have leadership development programs impacted productivity, profitability or employee satisfaction?
HR FunctionWhat is the ROI of our daily HR activities?
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Answer Questions Important to the Business
Human Capital Question Essential for Measuring…
Example Related Metrics
What is our revenue and profit per employee?
…the financial impact of workforce performance
Operating Profit per FTE or Return on Human Investment Ratio
What percentage of our employees are fully engaged and are “doing their best work” at all times?
…employees’ emotional commitment to the firm
Employee Engagement Index or Voluntary Turnover Rate
What percentage of our workforce will retire in the next year or next five years?
…the risk of staffing shortages Staff Rate: Approaching Retirement Eligibility
What percentage of our workforce moves internally each year between lines of business or functional areas?
…career-path effectiveness Career Path Ratio or Internal Mobility Rate
What is our voluntary turnover rate among top performers and what is the cost to the business?
…the bottom-line impact of losing “stars” Cost of Turnover or Quality of Hire
Which recruiting sources provide the highest performing employees? …the ROI of talent acquisition Staff Rate: High Performers by
Recruitment SourceWhat is the percent increase in employee performance as a result of every one percent increase in pay?
…the link between compensation and performance
Performance Based Pay Differentials or Unscheduled Absence Rate
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Example of a KPI Framework
Maximise Return on Assets
Business DriversWorkforce
Implications
Improved Quality of Service
Market Expansion
Become a Preferred Employer
Workforce Availability
X% Unscheduled Absence Rate
Retention Rate of High Performers
Workforce Productivity
Workforce Capability
Customer Focused
Return on Human Investment Ratio
Engaged Employees
People Management Initiatives
Management Performance
Performance Management
Employee Relations
Flexible Working Options
Employee Satisfaction Survey results
Managerial Performance Rating Distribution
% uptake of Flexible Options
KPIs
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Exercise
Become a Preferred Employer
Business DriversWorkforce
Implications
Market Expansion
Workforce Capability
Engaged Employees
People Management Initiatives KPIs
Customer Focused
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Critical Decision Points for Metric SuccessD
ata-
Driv
en M
omen
tum
Time
Data producers and consumers
are identified and “trained”
Data utilization begins
Supporting HR staff job roles are redefined
to incorporate data usage
HR leaders use data as part of decision-
making processes
Stakeholders & champions are unsure of the
program’s purpose Data producers are bogged down by low-value data
miningQuick wins are not capitalized upon
Skeptics point to the lack of ROI
metrics
Data producers are supported with training
and development opportunities
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• Strategic Alignment: What are the Metrics that best answer the questions that drive the business?
• 3M’s: Measure, Monitor, Manage
• 3R’s: Re-evaluate, Rebrand, Relaunch
• Executive Level Reporting
Key Takeaways
Does Your Workforce Analytics Program Incorporate The Following?
Facilitated Discussion
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Questions
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1. Can you describe how your organization currently conducts workforce reporting & analytics? For example, what workforce reporting & analytics activities does your HR team perform? What metrics are currently tracked?
2. Who conducts these activities? A Center of Excellence? HRIS staff? HR Business Partners?
3. To what extent are these activities meeting your needs for the utilization of data and metrics?
4. What are 2-3 decisions you need to make to improve your workforce reporting/analytics activities?
5. For what talent management topic is there the biggest opportunities for WFA? Turnover? Learning? Career-Pathing
6. Are you doing Benchmarking? Internal vs. external?
Key Consideration Questions: WFA & Reporting
© 2013 EPI-USE America, Inc. All Rights Reserved.
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Jameson GreinerDirector, EPM Business Development & Client EngagementMobile: 678.978.4147Email: [email protected]
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