talent management - processes, principles and practice

TALENT MANAGEMENT - PLANNING, ACQUISITION, RETENTION AND

ANALYTICS MASTERCLASSCHARLES COTTER

29-30 SEPTEMBER 2016EMPIRE HOTEL, SANDTON

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Strategic Talent Management

(Strategic) Talent Planning

Talent Acquisition

Employee Selection principles and practice

Employment negotiations

Talent Retention, Employee Engagement and Succession Planning

Talent Metrics and Analytics

TRAINING PROGRAMME OVERVIEW

Individual activity:

Complete the statement by inserting one (1) word only. As a HR Manager, in order to effectively apply Strategic Talent Management, I need to/to be .…………………………………..

Now find other learners with the same word as you.

Jot these words down on the flip-chart.

Each learner will have the opportunity to elaborate on their chosen word.

INTRODUCTORY ACTIVITY

Strategic Human Resources Management (SHRM)

Ulrich’s view of SHRM and Roles Model

Norton and Kaplan’s Balanced Scorecard

(Strategic) Talent Management

(Strategic) Talent /HR Planning

HRM Value chain

DEFINING THE FUNDAMENTAL CONCEPTS

6 STRATEGIC MANAGEMENT PRINCIPLES (APPLICABLE TO HRM)

(Vertical) Alignment with business strategy, goals and objectives

(Horizontal) integration of HRM value chain functions (bundling)

HRM conducts environmental scanning and is highly attuned, sensitive to and pro-actively responsive of change

HRM is future-focused (ensuring that the organization is future-proof)

HRM adopts a measurement culture e.g. scorecards, dashboards, metrics, risk analysis and audits etc.

Enables the organization to gain a sustainable, strategic competitive advantage

BALANCED SCORECARD

Talent Management is an integrated process which focuses on attracting, developing, deploying and retaining the best people and the other HRM value chain functions.

DEFINING TALENT MANAGEMENT

DEFINING WORKFORCE PLANNING (WFP)

Step 1: HR/Workforce planning

Step 2: Acquiring qualified workers

Step 3: Retaining qualified workers

Step 4: Motivating qualified workers

Step 5: Evaluating qualified workers

Step 6: Training and developing qualified and competent employees

HRM PROCESS/VALUE CHAIN

MODERN: STRATEGIC HRM VALUE CHAIN

Group Discussion:

By referring to step 1: HR Planning and Step 2: Talent Acquisition of the HRM process, evaluate the efficiency and effectiveness of these two steps. Identify areas of improvement (gaps) and recommend how the HR function can enhance performance and value add.

LEARNING ACTIVITY 1

WFP - GETTING IT “RIGHT”

INTEGRATING HR AND BUSINESS PLANNING

Inventory of available organizational core competencies?

Inventory of organizational scarce skills?

Mission critical organizational jobs (to enable strategy achievement)?

Critical employee segments (to promote business continuity/sustainability)?

Competitivity and readiness of organizational talent pipeline?

Identification of organizational talent gaps?

CLEAR VIEW?

CURRENT: HRM-BASED WORKFORCE PLANNING ARCHITECTURE

REQUIRED: BUSINESS-BASED SWP ARCHITECTURE

#1: Aligned with organization’s strategic business plans and priorities.

#2: Future-focused, adopting a strategic, medium to long-term forward-looking approach.

#3: Pro-active, sensitive and responsive to (internal and external) environmental change and trends.

#4: Provides accurate and reliable (clear view) talent planning/management information e.g. available core competencies; scarce skills; critical jobs and employee segments and talent gaps.

#5: Collaborative, well coordinated and partnering effort (HRM has co-opted business partners e.g. line managers to the process).

DIAGNOSIS: 10 BEST PRACTICE GUIDELINES FOR EFFECTIVE SWP

#6: Integrated (bundled) with other HR value chain processes e.g. Recruitment, Succession Planning, Retention and Leadership Development.

#7: Generates meaningful business intelligence which shapes, informs and influences business planning and supports strategic decision-making.

#8: Integrates both scientific (HRM metrics, predictive analytics and strategy maps) with artistic (planning) principles.

#9: Dynamic - regularly and systematically monitored, reviewed, evaluated and adapted (committed to continuous improvement processes).

#10: Yields a positive ROI, with tangible/demonstrable outcomes and impact i.e. creates sustainable HCM competitive advantages

DIAGNOSIS: 10 BEST PRACTICE GUIDELINES FOR EFFECTIVE SWP

Individual Activity: Diagnose your current Workforce Planning practices

against the ten (10) best practice criteria.

Group Discussion: Identify gaps and recommend improvement

strategies.

LEARNING ACTIVITY 2

LEVELS OF SWP MATURITY

Although 92% of companies have some level of workforce planning, only 21% take a strategic, long-term approach to addressing the talent demand, talent supply and the actions necessary to close the gap between the two.

Only 11% of organizations have currently reached Level 3 of Maturity. Only 10% have reached Level 4.

Although best-practice companies align workforce planning as an integral part of their business and financial planning, 67% of companies at every level still conduct workforce planning on an “as-needed” basis.

Only 25% of workforce plans are effective at helping business leaders forecast revenue and operating budgets.

Only 27% of workforce planning processes are conducted by recruiting and staffing departments . The majority of workforce planning processes are owned by individual business leaders – so they are disjointed from recruiting and even HRM.

RESEARCH-BASED (BERSIN) REALITY CHECK

S CANNING

P ROFILING

A NALYZING

D EVELOPING

I MPLEMENTING

C ONTROLLING

SWP: S-P-A-D-I-C PROCESS/CYCLE

S-P-A-D-I-C

THE NATURE OF THE BUSINESS ENVIRONMENT – V-U-C-A

Reviewing current HRM and organizational strategies (Strategic Direction and Intent)

Conducting an environmental scan

Identifying workforce trends and challenges

Benchmarking

Preferred Scanning tools – SWOT and PESTEL Analyses

STEP 1: SCANNING – STRATEGIC ANALYSIS

Forecasting HR Demand (Futuring)

Segmentation

Measuring Current Supply

STEP 2: PROFILING

"Futuring is the field of using a systematic process for thinking about, picturing possible outcomes, and planning for the future. Futurists are people who actively view the present world as a window on possible future outcomes. They watch trends and try to envision what might happen.“ (Kirkwood, 2011)

Futuring is a broader concept than the forecasting traditionally done in Workforce Planning and enables organizations to look at the future in four different ways (Cillie-Schmidt, 2013):

The possible future - what could happen? The plausible future - what could realistically happen? The probable future - what is likely to happen? The preferred future - what we want to happen?

FUTURING

Forecasting should consider the past and the present requirements as well as future organizational direction/s

Number of employees

Type of employees

Skills requirements of these employees

Consider and assess the challenges and constraints

Preferred Scanning tools –”What If” and Scenario Planning

FORECASTING HR DEMAND

Assess the current HR capacity of the organization by means of the Skill inventories/audits method

The knowledge, skills and abilities of your current staff need to be identified

Employee experience, education and special skills Certificates or additional training should also be included

A forecast of the supply of employees projected to join the organization from outside sources

HRM indicators, metrics and indices e.g. turnover rates

MEASURING CURRENT SUPPLY

STEP 3: ANALYZING – RECONCILING/GAP ANALYSIS

STEP 4: DEVELOPING – STRATEGIC HRM ACTION PLANS

Develop and initiate a Resourcing Strategy

Matching strategy (intervention) with scenario (surplus or deficit)

Action plan-based implementation methodology

STEP 5: IMPLEMENTING - INTERVENTIONS

There are five HR strategies for meeting your organization's needs in the future:

Restructuring strategies

Training and development strategies

Recruitment strategies

Outsourcing strategies

Collaboration strategies

HR ACTION PLANS

HRM ACTION PLAN (INTERVENTION) TEMPLATE

Tracking implementation progress – monitoring, measuring, evaluating and reporting

STEP 6: CONTROLLING

Group Discussion:

Apply steps 1-6 of the HR Planning process in the context of your organization.

LEARNING ACTIVITY 3

RECRUITMENT PROCESS Defining the role (Job Analysis)

Job Specification Job Description

Attracting applications

Recruitment methods (internal and external) Employee value proposition (EVP)

Managing the application and selection process

Making the appointment

JOB ANALYSIS

Objective: Magnetically attracting the “Cream of the Crop”

Objective: Facilitating an optimal Person-Environment (P-E) fit

Strategy: Developing, articulating and advocating of a compelling Employee Value Proposition (EVP)

Strategy: Employer Branding – (re) positioning as an “Employer of Choice”

STRATEGIC TALENT ATTRACTING AND RETENTION

A resourcing strategy is concerned with shaping what an organization has to offer to people to join and stay in the organization. (Armstrong, 2011)

EVP is a statement of what an organization will provide for people that they will value - why the total work experience at their organization is superior to that at other organizations.

The EVP is an employee-centered approach that is aligned to existing, integrated workforce planning strategies because it has been informed by existing employees and the external target audience.

Key Selling Points (KSP): Host of financial and non-financial benefits

Non-financial benefits:

The attractiveness of the organization Responsibility – corporate conduct, ethics and CSR/CSI Respect – diversity and inclusiveness Work-life balance Opportunities for personal and professional growth

EMPLOYEE VALUE PROPOSITION (EVP)

COMPONENTS OF VIABLE EVP

EVP PROCESS

Unique Selling Points (USP) - Employer brand that is unique and special

Creation of a Brand image of the organization for prospective employees

Influenced by the reputation of the organization

Creating an Employer Branding strategy

EMPLOYER BRANDING

MANAGING THE APPLICATION AND SELECTION PROCESS

The Curriculum Vitae (CV) or

The application form

Dealing with applications

The ‘candidate experience’

Group Discussion:

Develop an EVP for a defined organization. Critically evaluate the various talent

acquisition strategies, in particular, social media recruitment, and indicate the most viable and feasible strategies.

LEARNING ACTIVITY 4

SELECTION PROCESS

Short-listing

Assessing applicants to decide who should be offered a job

Making the employment appointment (offer)

References Medical examinations Psychometric testing Performance tests

Employment offer

SELECTION PROCESS AND METHODS

DEFINING COMPETENCY-BASED INTERVIEWS

Competency-based interviews (also called structured interviews) are interviews where each question is designed to test one or more specific skills.

The answer is then matched against pre-decided criteria and marked accordingly.

For example, the interviewers may want to test the candidate's ability to deal with stress by asking first how the candidate generally handles stress and then asking the candidate to provide an example of a situation where he worked under pressure.

DIFFERENTIATING BETWEEN COMPETENCY-BASED INTERVIEWS AND NORMAL INTERVIEWS

Normal interviews are essentially a conversation where the interviewers ask a few questions that are relevant to what they are looking for but without any specific aim in mind other than getting an overall impression of you as an individual.

Questions are fairly random and can sometimes be quite open.

Competency-based interviews are more systematic, with each question targeting a specific skill or competency.

Candidates are asked questions relating to their behaviour in specific circumstances, which they then need to back up with concrete examples.

The interviewers will then dig further into the examples by asking for specific explanations about the candidate's behaviour or skills.

CBI PROCESS FLOW

SKILLS AND COMPETENCIES FOR CBI

Adaptability Compliance Communication Conflict management Creativity and

Innovation Decisiveness

Delegation External awareness Flexibility Independence Influencing Integrity

Leadership Leveraging diversity Organisational awareness Resilience and tenacity Risk taking Sensitivity to others Team work

HOW COMPETENCY-BASED INTERVIEW QUESTIONS ARE

MARKEDPositive indicators Negative indicators

Demonstrates a positive approach towards the problem.

Considers the wider need of the situation Recognises his own limitations Is able to compromise Is willing to seek help when necessary Uses effective strategies to deal with

pressure/stress

Perceives challenges as problems Attempts unsuccessfully to deal with the

situation alone Used inappropriate strategies to deal with

pressure/stress

HOW COMPETENCY-BASED INTERVIEW QUESTIONS ARE

MARKED

S-T-A-R CBI QUESTIONING PROCESS

CBI CHECKLIST Prepare for the interview

Follow a logical sequence

Create a proper environment

Relax the candidate

Let the candidate do the talking

Perfect your questioning

CBI CHECKLIST Become a better listener

Keep your reactions to yourself

Stay in control

Take notes

Sell but don’t oversell the position

Conclude on a proper note

PRIMARY EMPLOYMENT NEGOTIATION OBJECTIVE

PHASES OF EMPLOYMENT NEGOTIATION

PHASE 1: PREPARATION Preparatory points to consider

Key to preparation – setting ground rules and other guidelines etc.

Identifying your Hot Buttons Doing Research

Identifying Your Walk Away Position (WAP)

Identifying Your Best Alternative to a Negotiated Agreement (BATNA)

Working within the Zone of Possible Agreement (ZOPA)

PREPARATORY POINTS TO CONSIDER

Goals

Trades

Alternatives

Relationships

Expected outcomes

Consequences

Power

Possible solutions

DOING YOUR RESEARCH

When doing research and preparing for employment negotiations, there are 3 important considerations:

Collecting facts

Knowing priorities

Knowing principles

WORKING WITHIN THE ZONE OF POSSIBLE AGREEMENT (ZOPA)

STEP 2: EXCHANGING INFORMATION – KEY ACTIONS This is not a step that many negotiators consider

consciously, except perhaps in legal situations (where it is referred to as disclosure), but it makes sense, even in negotiations at home, and, certainly, in the workplace.

Exchanging information is really an extension of preparation, and allows both parties the opportunity to consider all of the available information before a bargaining meeting takes place.

The strength of these answers could put you in a much

stronger bargaining position when you present your ideas to the boss.

STEP 3: BARGAINING Responding to Challenges

Creating win-win solutions

PARENT-ADULT-CHILD (PAC) MODEL

STEP 4: COMMITMENT AND CLOSING

Once the parties have completed bargaining, made all the adjustments, and agreed upon the least uncomfortable result, the negotiation is ready for commitment and closure.

Developing a Sustainable Agreement

What is a Sustainable Agreement?

Getting everyone’s Perspective

Reviewing the Information

Outlining the Options

Gaining Consensus

DEFINING A SUSTAINABLE AGREEMENT

A sustainable agreement can be said to reflect the reality of the business i.e. the reality of business and economic cycles, industries, and real issues that people face.

It must also reflect the multiple aspects of the stakeholders who both provide input, and are affected by the results.

In developing a sustainable agreement, the partners must ensure that:

#1: The organizations that they negotiate on behalf of are interested in having an agreement

#2: The negotiating organizations will enforce and take part in the terms of that agreement.

If the agreement cannot stand on its own, and the parties who sign it refuse to use it, then the paper it is printed on is useless.

An agreement also cannot focus on one aspect of the business when the business impacts other industries, cultures, or linguistic groups.

REACHING CONSENSUS

REACHING CONSENSUS Before an agreement is signed, it is important to have consensus for agreement

among the parties.

Consensus can be difficult during tough negotiations; generally, the more stakeholders taking part in the process, the more difficult it is to reach consensus.

Persuasion, that ability to have people recognize the value in what we are saying, is an exceptionally valuable communication skill for a negotiator.

One way to secure commitment is to ask the other party to summarize their understanding of the agreement, and to get it in writing. To clarify, it can help to ask them three questions:

Please explain what we have agreed to.

Do you agree with what we have agreed to?

Are you committed to carry out the agreement? If not, what factors need to be clarified?

Group Discussion:

Critically evaluate the various selection methods and indicate the most viable and feasible.

Critically evaluate the merits of CBI. Describe the

process of conducting a CBI. Describe the best practice employment

negotiation principles and processes.

Describe the best practice on-boarding principles and processes.

LEARNING ACTIVITY 5

THE LINK BETWEEN TALENT ATTRACTION AND EMPLOYEE ENGAGEMENT

HUMAN CAPITAL

FINANCIAL CAPITAL

SOCIAL CAPITAL

INTELLECTUAL CAPITAL

EMOTIONAL CAPITAL

CULTURAL CAPITAL

THE IMPORTANCE OF CAPITAL – AS A RETENTION STRATEGY

THE STRATEGIC IMPERATIVE OF EMPLOYEE ENGAGEMENT

Are employees COMMITTED to the organization?

Are employees proud to work for the organization – company/brand ambassadors? CITIZEN

Do employees put forth extra/discretionary effort to help the organization and their colleagues achieve business objectives? COMRADE

Are employees enthusiastic and passionate about their work/jobs? CREATOR

Are employees CONNECTED (intellectually and emotionally) to their work/jobs – offer value add?

DIAGNOSIS: THE 5 C’S OF EMPLOYEE ENGAGEMENT

Gallup’s Q12 survey:

#1 Role clarity and expectations

#2 Resources – materials and equipment

#3 Role optimization and opportunities

#4 Receipt of recognition and praise

#5 Managerial care and interest

#6 Encouragement of personal and professional development

DIAGNOSIS OF EMPLOYEE ENGAGEMENT

Gallup’s Q12 survey:

#7 Opinions and inputs are valued

#8 Job/task significance

#9 Fellow employee commitment to performance excellence/quality

#10 Collegial and harmonious working relationships

#11 Managerial interest in career progression and development

#12 Ample opportunities to learn and grow

DIAGNOSIS OF EMPLOYEE ENGAGEMENT

How can I grow?

Do I belong?

What do I give?

What do I get?

FOUR STAGES OF EMPLOYEE ENGAGEMENT

ENGAGEMENT’S EFFECT ON 9 KEY PERFORMANCE

INDICATORS

According to Gallup (2013) research, the best organizations deeply integrate employee engagement into the following four (4) areas:

Strategy and Leadership Philosophy

Accountability and Performance

Communication and Knowledge Management

Development and on-going Learning Opportunities

BEST PRACTICE EMPLOYEE ENGAGEMENT

According to Gallup (2013), strategies to improve employee engagement are:

Use the right employee engagement survey

Focus on engagement at the enterprise and local levels

Select the right managers

Coach managers and hold them accountable for their employees’ engagement

Define engagement goals in realistic, everyday terms

Find ways to connect with each employee

STRATEGIES TO DEVELOP EMPLOYEE ENGAGEMENT

According to Gallup (2013), three (3) strategies to accelerate employee engagement are:

Select the Right People and Managers

Develop employees’ strengths

Enhance employees’ well-being

STRATEGIES TO ACCELERATE EMPLOYEE ENGAGEMENT

Through selecting the right managers and employees for any role, companies can strategically boost engagement.

Great managers have great talent for supporting, positioning, empowering, and engaging their staff.

A few key employees stand out for their ability to foster workplace engagement. They energize and influence others with their commitment to achieving organizational and team objectives.

Gallup developed the Engagement Creation Index (ECI) — an innovative tool designed to identify and measure the talent for engaging others — to help organizations transform their engagement dynamic by adjusting their hiring practices. ECI captures a candidate’s ability to act as a catalyst to build engaged work teams.

SELECT THE RIGHT PEOPLE AND RIGHT MANAGERS

It is imperative for leaders to devise selection strategies with the goal of accelerating employee engagement. This starts with hiring and promoting managers based on objective selection criteria to ensure that companies hire/promote managers with the talent to lead and engage their workgroups.

With each new hire or promotion, employers have the opportunity to maximize employee engagement in the workplace.

People want to feel supported, have a sense of belonging, and understand the contribution they can make toward organizational goals. Making sure that they get these things from their interactions with managers and team members is key to driving their engagement.

SELECT THE RIGHT PEOPLE AND RIGHT MANAGERS

According to HR Future Magazine, "39% of employees are concerned about losing knowledge as their older colleagues retire, implying that succession planning should be top of the HRM agenda."

SUCCESSION PLANNING STATISTIC

Succession planning is the identification and development of potential successors for key positions in an organization, through a systematic evaluation process and possible training or mentoring.

Succession planning and management involves an integrated, systematic approach to identify, develop and retain talent for key positions and areas in line with current and projected business objectives.

Succession Planning is "a means of identifying critical management positions, starting at the levels of project manager and supervisor and extending up to the highest position in the organization.”

DEFINING SUCCESSION PLANNING

“EFFECTIVE SUCCESSION MANAGEMENT IS MUCH MORE THAN SIMPLY HAVING A SLATE OF

CANDIDATES TO REPLACE THE CEO. IT REQUIRES ENSURING THAT THE ORGANIZATION HAS THE DEPTH AND BREADTH OF TALENT NEEDED TO

FULFILL ITS MOST CRITICAL OBJECTIVES.”

“EFFECTIVE SUCCESSION PLANNING CANNOT SUCCEED WITHOUT COMMITMENT FROM

LEADERS AT ALL LEVELS, STARTING AT THE TOP.”

CRITICAL SUCCESS FACTORS FOR SUCCESSION PLANNING

PLAN, DO AND REVIEW MODEL

ROTHWELL MODEL

U.S. OFFICE OF PERSONNEL MANAGEMENT MODEL

INTEGRATED MODEL

SIBSON CONSULTING MODEL

THE SUCCESSION PLANNING PROCESS – VARIOUS MODELS

ROTHWELL MODEL

U.S. OFFICE OF PERSONNEL MANAGEMENT MODEL -

ILLUSTRATION

STEP 1: IDENTIFY CURRENT CRITICAL/KEY POSITIONS AND ANALYZE FUTURE REQUIREMENTS AND COMPETENCIES (BUSINESS STRATEGY)

STEP 2: IDENTIFICATION AND ASSESSMENT OF SUCCESSORS – POTENTIAL AND PERFORMANCE (9-BOX MATRIX)

STEP 3: IDENTIFY TALENT GAPS

STEP 4: DEVELOP SUCCESSION PLAN AND STRATEGIES

STEP 5: IMPLEMENT SUCCESSION PLAN AND DEVELOPMENTAL STRATEGIES

STEP 6: MONITOR AND TRACK PROGRESS

STEP 7: REVIEW AND EVALUATE THE IMPACT/EFFECTIVENESS OF SUCCESSION PLAN

GENERIC SUCCESSION PLANNING PROCESS

STEP 2: IDENTIFICATION AND ASSESSMENT OF SUCCESSORS

Group Discussion:

Evaluate the current degree of your organization’s employee retention by gauging against the 10 retention criteria and the Irresistible Organization.

Develop best practice employee engagement strategies.

Critically evaluate a defined organization’s succession planning strategies.

LEARNING ACTIVITY 6

• What type of HRM Metrics does your organization currently utilize?

• Describe the organizational impact, level of maturity and credibility of these HRM Metrics

• What does your organizational HRM Metrics architecture look like?

• What is the current degree of HRM practitioner competency of HRM metrics/analytics?

• Review the benefits of HR Metrics. Is there a business case for applying HR Metrics?

HRM ANALYTICS TASK TEAM – 2016?

Metrics are simply measurements. Metrics track activity, but don’t necessarily show a causal relationship.

HRM Metrics - Measurements used to determine the value and effectiveness of HR strategies.

Differentiation between People and HR Measures

Human capital analytics examine the effect of HRM metrics on organizational performance. In more general terms, analytics look for patterns of similarity between metrics. By using analytics over time, HRM can become predictive.

Measures - #1 HRM measure?

DEFINING THE FUNDAMENTAL CONCEPTS

STRATEGIC PERSPECTIVE – HRM METRICS/ANALYTICS

• Strategic HRM and correlation to metrics/analytics

• The Balanced Business Scorecard

• Strategy Mapping

• HRM Scorecard:

Key people measures from the organization’s scorecard The second class of measures should be the HR measures

• Linking business strategy to personal objectives

HRM ANALYTICS MATURITY MODEL (BERSIN BY DELOITTE)

TRANSFORMING HRM TO A DATA SCIENCE-DRIVEN FUNCTION

HRM ANALYTICS PROCESS

HR METRICS PROCESS – BASIC MODEL

HRM METRICS AND ANALYTICS PROCESS

5-STEP HRM ANALYTICS PROCESS

Step 1: Identify where HRM can make a strategic impact in the organization

Step 2: Develop appropriate metrics around these areas

Step 3: Obtain data relating to relevant metrics

Step 4: Draw out insight from the data

Step 5: Project and take action to communicate metrics and related insights information to provide a robust basis for strategic change and improvement

THE 5 E’s OF HRM ANALYTICS

Exploration

Examination

Extraction

Evaluation

Extrapolation

STEP 1: IDENTIFYING WHERE HRM CAN MAKE A STRATEGIC IMPACT (EXPLORATION)

This process step focuses on determining the areas where HRM can make a strategic impact within the organizational context.

It enables HRM management team to identify priority areas for measurement which are aligned with organizational goals and strategies.

Identify capability opportunities or problem areas from a business partner perspective.

Sources for information collection, retrieval and analysis.

SOURCES FOR INFORMATION COLLECTION, RETRIEVAL AND ANALYSIS Employee and management surveys and

interviews (for employee contentment, communications, rewards system)

Performance appraisals (to measure productivity, attendance)

HR records (to track communications, turnover, recruiting efficiency, retention, promotions, and succession planning)

Employee files (to research productivity, attendance, training)

STEP 1: EXPLORATION A critical first step is to ensure that HRM is measuring the right

things.

The design and development of relevant HR metrics requires reflection and discussion in order to determine what it takes for the organization to succeed and to understand how HR can add value.

Identify organizational burning issues

Three issues underpin effective measurement (CIPD, 2011):

Aligning measurement with goals

Take a business partner perspective

Adding value by focusing on building capability

STEP 2: SELECTING APPROPRIATE METRICS FROM WHICH ORGANIZATIONAL INSIGHTS CAN BE DRAWN (EXAMINATION) HRM Measures:

Efficiency (10%) Effectiveness (20%) Impact (70%)

Categories of HRM Metrics:

First Tier (most valued) Second Tier (lesser valued)

Commonly used HRM Metrics

Refer to Annexure A: Comprehensive HRM Metrics (pages 76-114) and Annexure B: HRM Effectiveness Metrics (pages 115-123)

STEP 2: EXAMINATION - HRM MEASURES

BROAD CATEGORIES OF HRM METRICS

Workforce Demographics

HR Efficiency

Remuneration

Skills Development, Training & Education

Productivity

Provisioning and Recruitment

Risk Analysis

Staff Retention

FREQUENTLY USED HRM METRICS (PWC)

10TYPICAL STATISTICS OBTAINED IN COMPILING

HRM METRICS

Revenue factor, which is company total revenue divided by the amount of full time employees

Human capital value added (revenue minus operating expense and cost of compensation/benefit divided by the total amount of full time employees)

Human capital return on investment: Revenue minus operating expenses and cost of compensation benefit divided by cost of compensation/benefit

Total compensation revenue ratio which is cost of compensation/benefit divided by revenue

Labour cost revenue ratio, which is cost of compensation/benefit plus other employee costs (bonuses, mileage paid, incentives) divided by revenue

10TYPICAL STATISTICS OBTAINED IN COMPILING HR

METRICS

Training investment factor equals the total cost of training divided by total amount of training attendees

Cost per hire, which includes advertising, agency fees, relocation, and others divided by operating expenses

Health care costs per employee (total health care cost divided by total amount of employees)

Turnover costs, which is equal to hiring costs plus training costs plus other costs (turnover rate during first year of employment is key)

Voluntary separation rate is the total number of people who quit or retired divided by the total amount of employees

Present x Productive Productivity

Q: Are your employees contributing to the success of the organisation. Are you connecting human capital & business measures.

? Productivity measures on an annual and a quarterly basis? Compare to national averages

Specific metrics - Return on Human Capital

Investment Revenue per Full-Time Equivalent

(FTE) Profit per FTE

Critical HR Measures - for True Business Impact


Time to fill vacancy x Quality of hire Recruitment Effectiveness

Q: Are you recruiting new talent of a high calibre. Are they staying. Are they performing.

? Business-impact shortfalls in capacity? Consistently increasing organization’s performance through improved talent

Specific metrics - Vacancy Rate First Year Turnover Rate New Hire Performance Time to Fill


Rate of Turnover x Retention of critical top talent

Critical Talent Retention

Q: Is your top talent / your vitally important workers / your competitive advantage – resigning, or at risk of resigning, at a greater rate than your less crucial employees.

? Overall tenure trends? Career development

Specific metrics - Resignation Rate Resignation Rate of Top Performers Promotion Rate and Promotion Wait

Time Engagement Index Market Compensation Ratio

5 STEPS TO FIND THE RIGHT MEASURES

Group Discussion:

Apply step 1 (Exploration) and step 2 (Examination) of the HRM Analytics process to a defined organization.

With step 2, refer to Annexures A and B, for guidelines.

LEARNING ACTIVITY 7

STEP 3: OBTAIN DATA RELATING TO RELEVANT METRICS (EXTRACTION)

The top performing companies were using a variety of drilled-down metrics, having the people to analyze them, and communicating them effectively.

This process step focuses on how HRM can most effectively communicate the insights drawn from metrics to inform action and hence enable HRM to deliver maximum strategic impact.

Effective decision-making, based on robust measures and metrics, therefore, requires HR professionals to think carefully about the relationships that need to be established to enable appropriate information-sharing of these insights.

STEP 3: EXTRACTION – PROCESS STEPS

#1: There is the initial “harvesting” or gathering of unstructured data from the web.

#2: The normalization stage—preparing harvested data for analysis. Normally, a relational database such as MySQL is used, but NoSQL can also be used.

#3: The data is given additional structure with metadata, or tagging. Analytics can then be presented through a dashboard.

The process of collecting and updating the data from the myriad of internet sources has to be automated. Advanced Programming Interfaces (APIs) can enable different digital platforms to share dynamic data and feed it into other applications, such as a company’s own database.

STEP 3: EXTRACTION – CHALLENGES CONFRONTED

Struggling to use unstructured data

Difficulty tying talent acquisition data to business results

Problems with storing, retrieving and integrating data

There is rarely a systematic approach to integrating disparate systems. Legacy data systems often don’t talk to each other. There are missing links between ATS and HRIS systems.

The data exchange is often clumsy at best, requiring rekeying of data and man ual interventions.

The successful transfer of data from multiple sources, such as an ATS, a recruiting site or a social network with an HRIS System is the most problem atic part.

Failure to get the most of ATS

Source: The State of Workforce Analytics and Planning 2014 Survey Report

STEP 4: DRAWING OUT INSIGHTS FROM DATA (EVALUATION)

The HRM function and measurement capability

HR professionals have long been data collectors, amassing and keeping track of employees’ personal information, salary rates and the annual number of retirements. But to grasp the potential of HR analytics, HR managers need to become data interpreters.

Top performing companies invest in personnel who have analytic and process-oriented capabilities, those people who can install the necessary methodological disciplines necessary to use the information effectively.

Identify root causes and cause-effect linkages and -relationships

Action planning – interventions and solutions

DMAIC RCA PROCESS (ILLUSTRATION)

CAUSE EFFECT/FISHBONE DIAGRAM

5-WHY ANALYSIS

STEP 5: PROJECT AND TAKE ACTION TO COMMUNICATE METRICS AND RELATED INSIGHTS INFORMATION TO

PROVIDE A ROBUST BASIS FOR STRATEGIC CHANGE AND IMPROVEMENT (EXTRAPOLATION)

Projection of data – forecasting (PREDICTIVE ANALYTICS)

To communicate HRM Analytics, tell a story (NARRATIVE)

“Data is abundant, but if you don’t give it context, it’s just a bunch of numbers.”

Internal benchmarks (to com pare their business units to others in the organization)

Support comes after results are delivered, not before. “It really comes back to how credible you are. You get buy-in when you show up repeatedly with accurate numbers and you can relate the story to how the company’s performing.”

STEP 5: EXTRAPOLATION - REPORTING

HR analytics reporting

How the information is communicated to the organization, particularly the C-suite, is critically important.

Companies simply produce spreadsheets that offer no easy and timely way to present what is happening in the business.

Like any good research report, it is vital to present meaningful information and identify actionable insight that can be used to make positive change.

Tactically, the best practice organizations, distribute multiple reports to multiple levels. Tailored reporting to address the specific needs, and ideally focuses on very specific busi ness impacts.

If the metrics being shown convey business impact, quarterly reporting of 5-10 of the most critical, agreed-to KPIs is warranted.

Group Discussion:

Apply steps 3-5 of the HRM Analytics process to a defined organization.

LEARNING ACTIVITY 8

CONCLUSION

Key points

Summary

Questions

CONTACT DETAILSCharles Cotter

(+27) 84 562 9446

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