Value Added Metrics in HR

Emre Kavukcuoglu International HR Conference

10-11 May, 2013 - Tbilisi

Source of Competitive Advantage is Changing

Emre Kavukcuoğlu

...... for us this lawsuit has always been about something

much more important than patents or money. It’s about

values. We value originality and innovation and pour our

lives into making the best products on earth. And we do

this to delight our customers, not for competitors to

flagrantly copy.

... i am very proud of the work that each of you do.

Today, values have won and I hope the whole world

listens.

Source: http://www.businessinsider.com/tim-cooks-memo-to-apple-employees-after-winning-samsung-case-2012-8

Here's The Memo Tim Cook Sent To Apple Employees After The Company's Big Win In Court

Source of Competitive Advantage is Changing

Emre Kavukcuoğlu

17

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83

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1975 1985 1995 2005 2010

Tangible Assets Intangible Assets

Source: Ocean Tomo, Components of Market Value of S&P 500

Source of Competitive Advantage is Changing

Emre Kavukcuoğlu

talent

knowledge

values

culture

leadership

engagement innovation

high potential

From Strategy to Value Creation

Emre Kavukcuoğlu

STRATEGY (Business Strategy / HR Strategy)

VALUE

Data Information Insight Action Business

Performance

Efficient use of Metrics

Value Matrix for HR Metrics

Emre Kavukcuoğlu

Business Impact

Imp

ort

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to

C-S

uit

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High

Low High

Delist immediately «messtric»

Opportunity Area

Nice to have Value Added

HR Can Drive Business Results

Emre Kavukcuoğlu

Topic in which most capable and least capable companies were compared

The impact that the most capable companies achieve over the least capable companies in...

...revenue growth ...profit margin

Delivering on recruiting 3.5x 2.0x

Onboarding of new hires and retention 2.5x 1.9x

Managing talent 2.2x 2.1x

Improving employer branding 2.4x 1.8x

Performance management and rewards 2.1x 2.0x

Developing leadership 2.1x 1.8x

Source: BCG, From Capability to Profitability, 2012 Survey of 4.288 HR/Non HR

Why Analytics is Not Used

Emre Kavukcuoğlu

Source: Analytics, The New Path to Value, IBM-MIT Report, 2010

What are the primary obstacles to adoption and use of

information and analytics in your

Organization?

Information Gap is huge

Emre Kavukcuoğlu

Source: PWC 15th Annual Global CEO Survey, 2012 N= 1.258, 60 countries

Information gap is huge

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Source: Taleo , Talent Intelligence, Key to Success - 2010 N= 350+ HR/Non HR

Starting from the beginning

Emre Kavukcuoğlu

Review your current metrics

Identify the ones that are aligned with your business

– Meaningful

– Easy to access

– Actionable

Get input from management– senior management, line management

– What are their priorities ?

– What are the metrics that will guide their decision ?

– Which metrics would they follow, if they had the opportunity to?

– How can HR help?

Starting from the beginning

Emre Kavukcuoğlu

Decide which metrics to use

– Absolute value, %, (benchmark vs. targets)

– Measurement period (annual, quarter,monthly...)

– External benchmark (industry, peer groups...)

Collaborate with IT and Finance

Consultancy

Emre Kavukcuoğlu

78% 76%

51% 46% 46% 45% 44% 43% 41% 40%

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100% no. of participants: 160

76% : 200+ headcount

44% : 1.000+ headcount

Source: www.hragenda.net

What companies are Measuring-Global Survey of hragenda.net

Emre Kavukcuoğlu

Source: www.hragenda.net

38% 36% 35%

32% 31%

26% 24% 23%

21% 21% 20% 19% 18%

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What companies are Measuring-Global Survey of hragenda.net

• Bench Strength / Succession Planning - Organization’s sustainability - Minimization of knowledge loss - Senior positions - Key positions

Management headcount ready for promotion / Management Headcount Number of succession planning candidates / Number of key roles Number of succession planning candidates promoted / Number of succession planning candidates

Value Added Metrics

Emre Kavukcuoğlu

Value Added Metrics

Time to fill : Total days to fill / Total hires First year of service voluntary separation / Total separations Performance of new hires Value vs. Cost based on recruitment sources (LinkedIn, newspaper, career site, consultancy...)

• Quality of hire - Time - Performance - Productivity - Resource based evaluation ( quality vs. sources used)

Emre Kavukcuoğlu

HCROI =[Revenue – (Total Cost* – (Compensation + Benefits Costs))] / (Compensation + Benefits Costs)

( Compensation + Benefits Costs) / Revenue

Value Added Metrics

• Compensation and Benefits - Link with financials - Compensation costs - Workforce planning

* Total cost = Revenue – Operating Profit

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Total voluntary separations / Headcount Total voluntary separations from key positions Hi-Potential voluntary separation ratio Hi-Performer voluntary separation ratio Detailed analysis of exit interview Potential turnover risk of key employees Turnover costs

Value Added Metrics

• Retention / Turnover – multidimensional analysis - Resignation rates - Functional - Based on workforce groups - Management action

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Engagement Index Actions taken based on Engagement Survey indications

• Employee engagement - Action plans

Value Added Metrics

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Realization of individual goal

% of individual goals aligned with business plans

Competency gap analysis: expected vs. actual

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Value Added Metrics

• Goal alignment / Competency Gap Analysis - Performance management - Aligned individual goals with business direction - Development goals follow-up - Competency / skills analysis

Employees eligible for retirement within next 5 yrs / Headcount

Emre Kavukcuoğlu

Value Added Metrics

• Retirement in 5 yrs. - Loss of expertise, knowledge - Organization’s sustainability - Key positions/senior management - Workforce planning - Development planning

Assessing Your Metrics

Emre Kavukcuoğlu

Are they aligned with business/HR strategy ?

Do they have financial measures?

Are they causing an action or a change in behavior?

Are these only measuring the past or giving any indication

about the future?

Are these designed together with senior management or

functional leaders in the Organization?

Assessing your Metrics

Emre Kavukcuoğlu

Are you following more than 8 metrics?

Are you only tracking operational metrics?

Are you benchmarking your results with market?

Are these included in the annual reports of the Company?

Sources for HR Measurement

Emre Kavukcuoğlu

You can also visit my website http://www.hragenda.net

Value Added Metrics in HR

Thank You.......

Emre Kavukcuoglu International HR Conference

10-11 May, 2013 - Tbilisi