HR Metrics: Workforce Intelligence for Your CEO

1. HR Metrics:Workforce Intelligence for Your CEO HRPA Ottawa Breakfast Series April 16, 2015

2. Agenda • Introduction • The ‘datafication’ of HR • Why you should care (because your CEO loves this stuff) • Essential HR Metrics (what everybody does) • HR Analytics (what you can do / upping your game) • The HR Annual Report • ‘Best in Class’ examples • Take Away’s

3. Introduction “After 30 years studying HR departments, I have found that the largest single difference between a great HR department and an average one, is the extensive use of metrics” “CEO’s see business as a battlefield. They expect HR to provide the strategies and talent to give the firm a distinctive competitive advantage” (Dr. John Sullivan, HR Metrics the World Class Way)

4. Introduction - HR Metrics • HR numbers • Quantifiable measures of the effectiveness of HR programs. • Objective, measurable and relevant to the organization. • A vital way to quantify the cost and impact of employee programs and HR processes. • Measure the success (or failure) of HR initiatives.

5. Introduction - HR Analytics • Talent Analytics, Workforce Analytics and Workforce Intelligence. • Combines data mining with business analytics techniques to analyze human resources data. • Metrics with predictive data and insights. • Show how HR contributes to the business. • Opportunity for continuous improvement.

6. Why You Should Care • Most organizations say that employees are their greatest assets, and a large portion of their operating budget. • Few say these assets are easy to measure. • Are your most valuable assets productive? • Can you define ‘productive’? • Are they regularly upgraded through targeted training? • Does the organization know how to acquire more quality assets cost-effectively? • Do the assets stay with the organization long enough to be worth the investment? • The problem is not that there is not enough data – it’s that there is too much. • Organizations do not know how to make this information meaningful.

7. Why You Should Care (2) • HR metrics help HR become fact-based rather than opinion-based. • HR is being required to measure themselves the same way as other business units. • CFOs report on financial measurements. COOs report on operational measurements. CHROs report on people measurements – with a human touch. • Gain credibility with the C-suite (CEO, CFO, COO) by providing numbers and tangibles that can be used to add value to the business and operations. • Metrics allow HR to speak the “language” of CFOand CEO.

8. Us vs. Them

9. What’s NOT on the Mind of Your CEO? HR Transaction volumes Social events Where HR’s desks are located Whether HR has a ‘seat at the table’ HR File Audits Helping the less fortunate Percentage of Performance Appraisals completed Benefit’s sign-ups Is HR using the latest & greatest tools? HR’s organizational structure United Way participation Employee Birthdays Happy employees

10. What IS on the Mind of Your CEO? Winning Do I have the right people? Will I have enough skilled employees to create / develop new product? Competitive advantage What is my risk of losing High Potential Employees What is the cost of my turnover? Are we paying competitively? Will I be able to get enough skilled employees to fill that new factory I’m building? What is the gap between the Human Capital resources I have and those I need? Revenue! Costs! Productivity! Profits! Stock price!

11. The ‘Datafication’ of HR

12. The ‘Datafication’ of HR (2)

13. The ‘Datafication’ of HR (3) What actions will this drive?

14. HR Metrics • Standard HR metrics include: • Population demographics / Workforce Profile • # of staffing requisitions filled • Staffing time-to-fill • Cost per hire • Success rates of recruiting sources • Training expenses / hours / # of employees trained • Turnover rate / costs • Absenteeism rate • Health care costs per employee • # of accidents / days since last accident

15. HR Analytics • Costs – Know the costs of attrition, poor hiring, sub-optimal compensation, retaining poor employees and not training. • “What if we train employees and they leave?” • “ What if we don’t train them and they stay?” • Flight Risk Assessment - Identify high performers at risk of leaving the organization?  • Critical position + Top Performer + Flight Risk = Trouble • Recruiting - Develop a “high performer profile” that enables you to hire the right people the first time. • Revenue: Measure the revenue generated by hiring and retaining top performers compared to the revenue generated by an average performer.

16. HR Analytics (2) • Workforce analytics include: • Human Capital ROI • Training Investment Factor • Workforce Productivity Measures • Turnover • Resignation segmentation • Slice and dice data looking for the root cause of turnover. By: • Manager • Tenure • Generation • Location • Department • Reason for leaving • Performance level (High performers) • Engagement scores

17. HR Analytics (3) • Recruiting Effectiveness • New hire performance, new hire performance by source • Performance • Top talent characteristics • Career progression of top performers • Talent Retention • Flight risk • Resignation drivers, resignation correlations (pay, promotion wait time, training) • Compensation • Pay for performance correlation • Market pay policy position analysis • Flexible workforce costs

18. HR Analytics (4) • Employee Movement • Brain gain vs. brain drain in key operational units • Build vs. Buy correlation analysis • Succession modeling

19. Predictive HR Analytics • Turnover Modeling • Predict future turnover in business units in specific functions or geographies. • Targeted Retention • Map critical positions to HiPo’s to Flight Risk profile to focus retention activities on a critical few people. • Talent Forecasting • Predict which new hires are likely to be high fliers and move them in to fast track programs. • Revenue Projections • From the recruitment / retention of top performers.

20. The Journey to HR Analytics

21. HR Analytics - Stages Business Value Complexity

22. The HR Annual Report • An end-of-year synopsis of the performance and results of the HR Department. • Offers a gauge or snapshot of performance data used to support organizational and departmental decision-making. • Summarizes and reminds all stakeholders of the concrete results HR provides. • Best in class examples: • HR department at Memorial University in Newfoundland. http://www.mun.ca/humanres/HR_Annual_Report.pdf • Ryerson University and can be found at:http://ryerson.ca/content/dam/hr/about/annual_reports/2012-HR-Annual-Report.pdf

23. ‘Best in Class’ examples • Starbucks and Best Buy • Can precisely identify the value of a 0.1% increase in employee engagement among employees at a particular store. • AT&T • Quantitatively established that a demonstrated ability to take initiative is a far better predictor of high performance than high grades from a prestigious school. • Sprint and Oracle • Have identified the factors that best foretell which new employees will leave after a relatively short time. • Can predict which top performers were more likely to leave the organization and why. • Google • An average employee generates $1.3 million revenue. • A ‘game changer’ software developer produces 300x that in revenue.

24. HR Analytics for Public / Non-Profit Sectors

25. Take Away’s • Do you have an HR strategy? • Do you have an HR business plan? • What metrics / analytics do you currently use? • What could you use? How? • Develop an HR annual report / dashboard. • Target results and business impacts. • Move to fact-based, data driven decisions. • Find out what your CEO / CFO wants.

26. Take Away’s (2) • Focus on top performers. • Don’t wait for the business to ask for your data, be proactive and start now. For example: • “Why are sales down at XYZ location?” By digging into sales, customer, and employee data, you may be amazed at what you find. • Quantify the revenue generation differential between top and average performers. • Identify and target the jobs and employees that generate the most revenue / profit and organizational impact. • Identify direct links between strategic impact areas (see slide 24) and HR programs using HR analytics.

27. Thank You! QUESTIONS?