Peter Howes, VP Success Factors - The Need for Workforce Analytics and Planning to Enable Business Execution in the Financial Sector

The Need for WorkforceAnalytics and Planning toEnable Business Executionin the Financial Sector.International SAP Conference for Banking 2012London, 19th June 2012Peter Howes, Vice President SuccessFactorsSuccessFactors Proprietary and Confidential © SuccessFactors Proprietary andAll rights reserved. SuccessFactors, Inc. All rights reserved. 2011 SuccessFactors, Inc. Confidential © 2011 1

Why We Should Create ABusiness Execution Culture Cost Savings Strategic Productivity Business Alignment Results 15.2% 5.4% 1% Decrease in 5.5% High-end Revenue turnover increase in increase in added back time spent on productivity to profit 13.7% strategic Increase in priorities 4.9% internal Increase in job fill rate high performers 1 – 8+ weeks (13.8)% Faster communication 14% Source: 2009 Top 3 Strategy Decrease in 17% Increase in Consulting firm survey of CxO’s at more than 500 Successfactors low of strategy Increase in people Customers getting the right project performers training completion SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 2

Personal Reflections on WorkforcePlanning Over Three Decades• WFP is a risk mitigation • WFP best managed as a process CoE• Time Frame • Develop a team with the• Scenarios right skills• Frameworks • Technology is critical• Forecasting numbers and (build or buy) competencies • Planning must lead to• “Mind the Gap” action• Strategic versus Tactical • Only done for critical job staffing roles SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 3

What Workforce Planning is Not  A commitment to future decisions  Something that is done once and forgotten about – “a box to tick”  A report to go on a shelf  Something done just by HR  The way to fill vacancies today – staffing or budgeting  Analysis of every role and workforce issue across the organisation  A perfect prediction of future workforce needs (especially numbers) 1 year 3 years 5+ yearsTimeStaffing/Budgeting Workforce Planning SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 4

Workforce Planning is a Critical Toolin Overall Talent Management• Career Management - Sleeper in Workforce Planning − 50-60% of employees will never be promoted − 80-85% of employees will have a maximum of two promotions in the rest of their career• Less than 5% of the workforce (deep specialists) should be in the same job for more than 5 years• Career = Positions + Projects + Placements• New career paths build future competencies• Emerging goal for many companies: career paths with four transfers for every promotion − Career Path Ratio = 0.25 SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 5

Findings1. Implementing workforce planning leads to the improvement of a number of human capital and financial metrics.2. Despite (or perhaps because of) difficult economic conditions, investments in workforce planning are expected to increase in the next 12 months.3. Leading organisations are far more likely to adjust their workforce plans in response to changing economic conditions.4. Leading organisations are far more strategic in their approach to recruitment, retention, and other key talent management initiatives. SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 7

Findings5. Leading organisations primarily invest in workforce planning as a tool to support specific business strategies – not as a tool to address workforce-related issues.6. Leading organisations are much more likely than their peers to incorporate multiple future scenarios into their workforce planning efforts.7. Leading organisations are far more likely to implement specific talent management initiatives as a result of their workforce planning efforts. SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 8

Findings8. Leading organisations are far more likely to use advanced technologies in support of their workforce planning efforts.9. Leading organisations prioritise a different, more business relevant, set of competencies needed for those involved in workforce planning.10. Leading organisations continually push to improve the business relevance of workforce planning – even to the point of managing the process outside of HR. SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 9

Do we reward Managers who arenet exporters of talent?Top 10% of Managers who:• Transferred or promoted individuals • Transferred or promoted individuals IN OUT by Performance Rating by Performance Rating Performance Number of Performance Number of Rating People Rating People 1-3 25 1-3 16 4 116 4 64 5 36 5 21 • Average salary increase of top exporters of talent (6%) • Average salary increase of top importers of talent (9%) SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 12

Conclusions• We do not adequately reward managers who export their top talent to the rest of the organisation.• We over reward managers who are net importers of talent from the rest of the organisation. SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 13

Average Revenue per Sales Rep Average Revenue per Sales Rep $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 $400,000 $200,000 $0 0 1 2 3 4 5 Average Performance Rating Break even is in the third year of employment SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 14

For our Sales Reps how does voluntarylabour turnover vary by performance ratingand position tenure?• Total voluntary labour turnover (8%)• Total voluntary labour turnover Sales Reps (14%) Voluntary Turnover By Performance Rating Performance Rating Voluntary Turnover Not Rated 16% 1 38% 2 19% 3 12% 4 16% 5 18% Average 14% SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 15

Voluntary Labour Turnover Voluntary Turnover of Sales Reps by Performance Rating by Position Tenure Position TenurePerformance <1 Yr 1-2 Yrs 3-5 Yrs 5+ Yrs TotalRatingNot Rated 22% - - - 16%1 - 32% 55% 25% 38%2 - 26% 24% 16% 19%3 - 17% 12% 68% 12%4 - 14% 36% 20% 18%5 - 12% 42% - 20%Total 16% 16% 18% 9% 14% SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 16

Quantifying the ROI of Training $601 $600 Sales reps with more training $500 dramatically outperform reps $482 $530 with less – at all levels ofAverage Annual Sales Volume $403 $400 $407 $351 (Thousands) $318 $300 $307 $263 $259 $249 $201 $200 $179 $197 $170 $142 $153 $250 $100 $203 $222 $121 $148 $110 $58 $0 < 3 Months 3 - 6 Months 6 - 12 Months 12 - 24 Months 24 - 36 Months 36+ Months Employee Tenure Annual Difference Between All and No Courses No Courses Some Courses All Courses Modules Modules Modules Modules SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 17

Example: Employee–Customer Profit Chain A Compelling Place A Compelling Place to Work A Compelling Place to Shop to Invest Customer Service Recommendations AttitudeAbout the Job Helpfulness Return on Assets Employee Customer Operating Margin Behavior Impression Revenue Growth Attitude Merchandise About the Company Value Employee Customer Retention Retention 0.5% Increase 5 Unit Increase in 1.3 Unit Increase in Customer in Revenue Employee Attitude Drives Impression Drives Growth Source: The Employee-Customer-Profit Chain at Sears in ‘Harvard Business Review’, Jan-Feb 1998 SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 18

Example: Engagement DrivesPerformance Through Two Paths …drives effort …resulting in …which driveEngagement… and intent to improved performance branch performance. stay… and retention… Discretionary Performance EffortEmployee BranchEngagement Profitability Intent to Stay Retention SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 19

Example: Model Tested: ABC Retail BankEngagement data …Customer survey scores and …predict Branch financialIntegrated with… Human capital metrics to… performance Discretionary Performance (Customer Effort Satisfaction 2010) Branch Employee Profitability Engagement (2010 Profit (Gallup 2009) per FTE) Retention (2010 Branch Intent to Stay Voluntary Termination Rates) SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 20

Example: Linking Engagement/HumanCapital To Financial Performance Profit per FTE Low Employee Engagement High SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 21

Example: Prioritizing HR Initiatives At ABC Retail BankInteraction of Manager Tenure and Employee Engagement on Customer Satisfaction Low Manager Tenure High Manager Tenure 1. Employee engagement is a strong driver of customer satisfaction through greater discretionary High effort. 2. Engagement is critical for customer satisfaction, but matters most in stores with low B manager tenure. Customer Satisfaction 3. Experienced managers provided clear expectations and guidelines for employees reducing importance of discretionary effort. 4. HR efforts now focused on retention of managers C A and identifying and transferring best practices. 5. HR interventions should be focused on stores with low managerial tenure and low employee engagement. These interventions should aim to raise engagement and increase the skills of the managers with less experience as you cant readily increase their tenure. Low Low Employee High Employee Engagement Engagement SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 22

Example: Result ABC Retail BankEmployee-Customer-Value chain:• Identify areas of focus to improve store performance• Help prioritise people investment decisionsQuantify Impact of Engagement:• A 10% increase in engagement drives• 2 unit increase in customer satisfaction drives• 7.5% increase in Profit per FTEThis equates to a total increase in profit across the sampledbranches of approximately, $45,000,000. Across totalcompany the increase in profit would be $86,000,000. SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved. 23

SAP International Banking ConferenceThank YouPeter Howes, Vice President SuccessFactors+44 (0)79 7469 6218phowes@successfactors.comSuccessFactors Proprietary and Confidential © SuccessFactors Proprietary andAll rights reserved. SuccessFactors, Inc. All rights reserved. 2011 SuccessFactors, Inc. Confidential © 2011 24

Peter Howes, VP Success Factors - The Need for Workforce Analytics and Planning to Enable Business Execution in the Financial Sector

by SAPforBanking on Jul 06, 2012

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Peter Howes, VP Success Factors - The Need for Workforce Analytics and Planning to Enable Business Execution in the Financial Sector Presentation Transcript