Measuring Human Capital Impact to Business

1. Measuring Human Capital Impact to Business Sreekanth K Arimanithaya CHRO

2. Does HR add Value to Business?

3. Does HR add value to business? • For decades, human resource managers have believed that their function enhances performance. This contention has been met with scepticism on the part of executives, who wonder whether funds allocated to the human resource function are good investments. • Does human resource management matter for organizational performance? – we take stock of the available evidence. Based on data from over 19,000 organizations, reserchers conclude that human resource management adds significant value to organizations. • In addition, the value added is strongest when human resource systems are emphasized rather than individual practices, when human resource management decisions are tied to strategy. • Indeed, in many industries (such as those with low margins), the decisions and actions of skilled HR managers can represent the difference between making profit and losing money.

4. Does HR add value to business? • For 10 of the 13 practices investigated, there is compelling evidence that each significantly affects performance. Three specific factors that impact the effectiveness of the practices discussed in the previous section: • (1) vertical alignment between HRM and firm strategy; • (2) horizontal alignment among the HRM practices; and • (3) the work context. • Data from over 19,000 organizations makes it clear that HRM adds value. In particular, we believe that managers will see the most gains from HRM by developing a comprehensive and internally cohesive HRM system that is embedded in the organization’s history, culture, and structure. Doing so not only enhances performance, but also leads the firm’s system to be more difficult for competitors to imitate.

5. Relevance….

6. Look at the facts…..

7. Ram Charan If organizations managed money the way they managed people, they would be bankrupt! Source: Talent Masters

8. Providing ROI on HR Programs & Impact of Talent on Business

9. Importance of Measurements “If we can’t express what we know in the form of numbers, we really don’t know much about it. If we don’t know much about it, we can’t control it. If we can’t control it, we are at the mercy of chance” Mike J. Harry Six Sigma Academy

10. Human Capital is increasingly critical Value of typical 500 company Yet we don’t study how to measure HC Imapct !!! Intangible Assets 70% 20% Today 1980

11. Building Blocks Employee Data linkage to Business Metrics (KPIs and Dashboards) Analyzer (Semantic searches & Algorithm) Soseeo Collaborator

12. Decision Enabled Talent Management MANAGE (Ensure right talent is available at the right place and managers have the ability to manage the life cycle) GOVERN (Ability to understand return on investment on Talent management programs and initiatives) SECURE (Ability to ensure employee knowledge is retained and IP of the organization is safeguarded. Also understand risk against execution of strategy with respect to Talent Management) Strategy Operation Plan Organization Capability

13. Linking HR Analytics to Business

14. Linking HR Analytics to Business

15. HR Functional Score Card Revenue per FTE, Employee Satisfaction, Retention of Key Talents, Attrition Analysis, Labor Productivity, Time to Proficiency, HR Operating Cost, HR Transaction Cycle Time, HR/FTE ratio, Separation cost, Recruitment Total Rewards Employee Development HR Consulting/ BP • Quality of Hire • Talent Mix Hiring • Diversity Hiring • New Hire Attrition • Total Cost (to market) • TR cost to revenue • ROI on TR programs • Time to Proficiency • Talent Up-gradation • Cross Skill Ratio • Promotion / Progression Ratio • Employee Satisfaction • Retention/ Attrition • Labor Productivity • Cycle Time • Cost • % Position Filled • Source Mix • New Hire Satisfaction • Hit Ratio • Total Rewards (cost by • components) • Benefit cost to payroll • Budget Variance • Reward / Employee • Year to Year ratio (Merit/ Variable) • Hours trained • (Employee/Course) • Training Cost • Training Satisfaction • PMS completion • Skill Gap ratio • Succession ratio • Employee Touch Points • PIP Action identified Vs Completed. Centre Of Scale Statistics

16. HR Metrics Maturity Journey- Talent Acquisition • Quality of hire • New Hire Talent Retention Effectiveness Improvement(Strategic HR Workforce) • Talent Mix • Diversity Hiring • Cycle time of hiring • New Hire satisfaction • Cost of Hire • Hit Ratio • % position filled • Source Mix Efficiency Improvements (Technology-enabled Service Delivery)

17. HR Metrics Maturity Journey- Managing Performance • Demography and rating objective analysis • Gauge R & R of PMS • R & R analysis Effectiveness Improvement(Strategic HR Workforce) • Content analysis and rating correlation • Potential Analysis • Vitality distribution variation • PMS rating quality Audit • Employee Satisfaction on PMS Process • % of Appraisal completion Efficiency Improvements (Technology-enabled Service Delivery)

18. HR Metrics Maturity Journey- Managing Performance • Demography and rating objective analysis • Gauge R & R of PMS • R & R analysis Effectiveness Improvement(Strategic HR Workforce) • Content analysis and rating correlation • Potential Analysis • Vitality distribution variation • PMS rating quality Audit • Employee Satisfaction on PMS Process • % of Appraisal completion Efficiency Improvements (Technology-enabled Service Delivery)

19. HR Metrics Maturity Journey- Talent Development • Transfer of learning • Time/ cost to proficiency Effectiveness Improvement(Strategic HR Workforce) • ROI on Training • ROI on CM/ SM programs • IDP ratio • IDP execution Vs Completion • Training satisfaction • Ratio • Skill Inventory • PMS rating • Promotion ratio • Succession plans • Training Programs • Hrs. Trained Efficiency Improvements (Technology-enabled Service Delivery)

20. HR Metrics Maturity Journey- Talent Retention • Churn Management ratio • Impact analysis Effectiveness Improvement(Strategic HR Workforce) • Cost of TO • ROI on RP • AA by Demography • Attrition Analysis • AA by Mgr. • Attrition rate • AR by category Efficiency Improvements (Technology-enabled Service Delivery)

21. Govern: This Human Capital Analytics provide insight to HR and business leaders understanding on return on investment on Talent management programs and initiatives

22. Governing Human Capital thro’ Talent Analytics Human-Capital Facts What are the key indicators of my organization’s overall health? JetBlue analysts developed a metric—the “crewmember net promoter score”—that monitors employee engagement and predicts financial performance. Analytical HR Which units, departments, or individuals need attention? Managers at Lockheed Martin use an automated system to collect timely performance-review data and identify areas needing improvement. Human-Capital Investment Analysis Which actions have the greatest impact on my business? By keeping track of the satisfaction levels of delivery associates, Sysco improved their retention rate from 65% to 85%, saving nearly $50 million in hiring and training costs. Workforce Forecasts How do I know when to staff up or cut back? Dow Chemical has a custom modelling tool that predicts future head count for each business unit and can adjust its predictions for industry trends, political or legal developments, and various “what if” scenarios. Talent Supply Chain How should my workforce needs adapt to changes in the business environment? Retail companies can use analytics to predict incoming call-center volume and release hourly employees early if it’s expected to drop. Talent Value Model Why do employees choose to stay with— or leave—my company? Google suspected that many of its low performing employees were either misplaced in the organization or poorly managed. Employee performance data bore that out.

23. Secure: This Human Capital Analytics provide insight and ability for business leaders to ensure employee knowledge is retained and IP of the organization is safeguarded. Also understand risk against execution of strategy with respect to Talent Management

24. Secure (Ability to ensure employee knowledge is retained and intellectual property of the organization is safeguarded in the organization. Also understand risk against execution of strategy with respect to Talent Dimensions of “Secure”

25. Secure (Ability to ensure employee knowledge is retained and intellectual property of the organization is safeguarded in the organization. Also understand risk against execution of strategy with respect to Talent Securing Firm’s Most Important Asset- Talent.

26. Knowing what to measure! “Not everything that can be counted counts and not everything that counts can be counted”

27. Thank You

28. What? Of Talent Acquisition

29. What? Of Talent Acquisition

30. So What

31. So What

32. Now What of Talent Acquisition

33. Business Intelligence: Pulling this all together:What , So What and Now What

34. Business Intelligence: Pulling this all together:What , So What and Now What

35. Putting this all togetherNumber of Positions Filled Data from ERP/ XL Logic Entered in Simply Ask • Business Impact • Lost Business Value • Key Actions to be taken