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Using Analytics To Make Smart HR Decisions

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View recording with slides: http://bit.ly/1TG16LN

Knowing what analytics to use on a day to day basis can be difficult. This webinar shares why analytics are important in becoming strategic in HR.

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Using Analytics To Make Smart HR Decisions

  1. Rusty Lindquist VP Strategic HR Insights BambooHR Mykkah Herner Head of Professional Services PayScale
  2. —Ion Hewitt Of the 6 emerging capabilities of todays HR leaders, the first is “data- and analytics-based decision making.
  3. Evolution of HR Business Value H L Strategic Micro Small Mid Large Operational HR viewed as a cost center Transactional HR High-Impact HR HR as a strategic investment
  4. People Analytics Companies that build capabilities in people analytics outperform their peers in quality of hire, retention, and leadership capabilities, and are generally higher ranked in their employment brand. -Bersin, by Deloitte Human Capital Trends, 2015
  5. Competency Gap Three in four surveyed companies (75 percent) believe that using people analytics is “important,” but just 8 percent believe their organization is “strong” in this area. -Bersin, by Deloitte Human Capital Trends, 2015
  6. Competency Gap Too few organizations are actively implementing people analytics capabilities to address complex business and talent needs. Among all the challenges we studied this year, people analytics presented the second-biggest overall capability gap for organizations. -Bersin, by Deloitte Human Capital Trends, 2015
  7. of HR professionals scorethemselves low in their ability toanalyze. 80% -Bersin
  8. It’s time to blow up HR and build something new Rethinking HR Why we love to hate HR What will it take to fix HR It’s time to split HR HR faces a crisis of credibility in the boardroom HR is our “favorite corporate punching bag” Value Perception Crisis
  9. It’s more than just Competency • Outdated Technologies (like spreadsheets) • Need for data consolidation (like HRIS) • Need to look externally • Waiting too long to start measuring • Don’t know what to measure and how
  10. How do we fix it?
  11. Increase exposure to the data you do use
  12. Identify the data you need
  13. Data is not the point
  14. Suck Threshold Features Suck Threshold Not all growth is good growth Expected Result Actual Result PerceptionofValue Not doing enough Doing too much
  15. Suck Threshold What Matters Most Not doing enough Doing too much What To Say No To Sweet Spot Features Not all growth is good growth PerceptionofValue Suck Threshold
  16. Signal to noise ratio
  17. Align With Strategy
  18. Focus on Outcomes
  19. Examples: Comp Analytics
  20. What are comp analytics and why do they matter? o Measure performance of your comp program. o Identify pay issues that create unnecessary cost. o Identify pay issues that create risk of litigation. o Condense large amounts of information into small understandable nuggets. o Substantiate your hunches. o Get your CFO on your side.
  21. Range MidpointMinimum Maximum $20,000 $32,000 $26,000 Range Midpoint:Range Minimum: Range Maximum: Lower limit of a pay range/band. The proficiency point aligns to market. The upper limit of a pay range/band. Basic Comp Measures Pay Ranges
  22. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan o Range Width [=(max-min)/min] o How much flexibility do we give our managers in setting pay? o Midpoint Differential [=(midpoint grade2-midpoint grade1)/midpoint grade1)] o Do we have a more or less hierarchical org structure? Positions with multiple levels? Understanding Range Math
  23. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan o Range Penetration [=(EE Pay-min)/(max-min)] o How well are employees moving through their ranges – do the ones at the top deserve it? o Green-Circled Employees [Below bottom of range] o We may be untruthful and/or paying un”fair”ly. o Red-Circled Employees [Above top of range] o These are employees we decide to pay more, even though the data doesn’t support it. Using Ranges
  24. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan o Compa-Ratio [=EE Pay/Mid] o Are we on track with our pay philosophy? o Market Ratio [=EE Pay/Market] o How are we doing vs our competitors? o Midpoint to Market Delta [=(Mid-Market)/Market] o Are our ranges current to market? Measuring Plan Performance
  25. Communicating With Execs About Compensation
  26. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan How are we doing? What’s the real concern o Comp is something nebulous that I can’t control or understand o I’m afraid we’re far far away from the market What’s the response o Educate and update execs regularly on the comp info they need to know Proof o Market-Ratio – report for the org and by dept* o Compa-Ratio – report for the org and by dept. Provide individual info to managers, as appropriate
  27. 29 Cost to bring Green Outliers to range minimum: $115,041 or 2.02% Amount paid to Red outliers above range maximum: $115,041 or 2.02% Sample CompaRatio Report How are we doing?
  28. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan Are we keeping up with the market? What’s the real concern? o We’re losing a lot of people to our competitors. o Someone annoying has been coming into my office every week for the past quarter asking for an increase. o Are we overpaying? What’s the response? o Share real-time data on your organization’s position relative to the market. Proof o Market-Ratio – report for the org and by dept.* o Compa-Ratio – report for the org and by dept. Provide individual info to managers, as appropriate.
  29. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan Sample Market RatioReport Are we keeping up with the market?
  30. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan What about our critical positions? What’s the real concern? o We have 12 names in a drawer and we’re willing to pay those people anything – don’t tie my hands. o We’ve had 3 of our best 8 people leave a critical job in the past few months. What’s going on? What’s the response? o Share current market trends on critical jobs so you can be more responsive to market shifts in an uncertain time. Proof o Market Reports – Hot jobs analysis.
  31. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan What about our critical positions? HotJobsAnalysis
  32. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan How are our top performers doing? What’s the real concern? o We just lost a really critical, high-performing, employee to our competitor. What’s the response? o Share info about where your top performers fall in range. Proof o Flight Risk Report. o Underpaid over-achievers.
  33. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan How are our top performers doing? Flight Risk Report How are our top performers doing? FlightRisk Report
  34. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan What’s the real concern? o Where are we open to law suits? o We have a report due on our compliance with EEO. What’s the response? o Share info on disparate pay/potential risk areas. o Provide assurance that there are no risk issues. Proof o Disparate pay report, divided by EEO classes. What are our potential risks?
  35. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan Are there any potential risks? Disparate Pay and Reports by EEO Gender-based Report What are our potential risks? Disparate Pay andReports by EEO Disparate Pay
  36. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan What’s the real concern? o We’ve had a lot of folks who have been here a while leave! Is that ok? o We’ve had some critical positions turnover, is that ok? What’s the response? o Get to the reasons behind the turnover. Not all turnover is bad. o Share the physical costs of turnover. Proof o Turnover calculation. Any Turnover Issues?
  37. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan Any turnover issues? Calculating the Cost of Turnover Additional Resource: http://www.isquare.com/turnover.cfm Any Turnover Issues? Calculating the costofturnover Monetary o Costs due to leaving o Recruitment o Training o Low Productivity Costs o New Hire o Lost sales / opportunity costs Morale o Bad turnover vs good turnover Typical Projections o Line Staff = 150% of annual salary o Managerial staff = 200-250% of annual salary
  38. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan Examples of Recruitment Measures 40 Examples of Recruitment Measures • Average Time to Hire X days • How often do employees negotiate their offer? X% of offers negotiated • Number of non-accepted offers due to compensation • Win Rate vs. Competitors # of head-to-head wins vs. competitors The idea is that recruitment should improve in relation to the comp program’s success
  39. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan • Flight Risk - # flight risk EE • 90 Day Turnover Rate = • Good Turnover vs. Bad Turnover The idea is that retention should improve in relation to the comp program’s success Examples of Retention Measures # Separations in the Quarter Avg # EE in the Quarter X 100 Low performer Avg Performer High Performer Voluntary X% Y% Z% Involuntary P% D% Q% 41 Examples of Retention Measures
  40. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan www.payscale.com the rate at which people leave a place, company, etc., and are replaced by others
  41. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan Examples of Budgetary Impact Measures 43 • Compensation as a % of Revenue or Total Compensation as a % of Revenue The idea is that comp $ don’t have to increase to spend comp better • Gut check on over/under payment vs. Actual (Range & Market) relative to performance The intent is to show that gut checks aren’t always accurate – value in doing comp studies Examples of Budgetary Measures
  42. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan Examples of Engagement Measures • Engagement Survey Scores • Absenteeism – Average # of unplanned absences by employee • Exit Interview Responses re: compensation 44 Examples of Engagement Measures
  43. eNPS (Employee Net Promoter Score) “On a scale of 1 to 10, how likely are you to recommend this company as a place to work?” 10 9 8 7 6 5 4 3 2 1 0 Promoters Passives Detractors eNPS = Promoters (%) – Detractors (%)
  44. General Guidelines • Start small (the journey of a thousand miles) • Pick something meaningful and get started • Align your efforts with your business strategy • Build (or hire) competency in your team • Partner with IT • Focus on ROI • Leverage technology
  45. Companies that excel in talent and HR analytics can be positioned to out- compete and outperform their peers in the coming years. —Bersin
  46. Who are our key partners? Who are our key suppliers? Which key resources are we acquiring from partners? Which key activities do partners perform? What key activities do our value propositions require? Our distribution channels? Customer relationships? Revenue Streams? What value do we deliver to the customer? Which one of our customer’s problems are we helping to solve? What bundles of products and services are we offering to each Customer Segment? Which customer needs are we satisfying? What type of relationship does each of our Customer Segments expect us to establish /maintain with them? Which ones have we established? How are they integrated with the rest of our business model? For whom are we creating value? Who are our most important customers? Through which Channels do our Customer Segments want to be reached? How are we reaching them now? How are our Channels integrated, and which ones work best, or are most cost- efficient? How are we integrating them with customer routines? What Key Resources do our Value Propositions require? Our Distribution Channels? Customer Relationships? Revenue Streams? What are the most important costs inherent in our business model? Which Key Resources are most expensive? Which Key Activities are most expensive? For what value are our customers really willing to pay? For what do they currently pay? How are they currently paying? (How would they prefer to pay?) How do we report on this “revenue” to the rest of the organization?
  47. Follow BambooHR and PayScale on social media: bamboohr.com/blog | payscale.com/compensation-today Thank you!
  48. Questions? BambooHR Receive a free job posting on our ATS and full HRIS for one week. We will contact everyone within the next few days to set this up. Download our free eBook: Communicating Compensation: Your guide to tackling tough conversations about pay PayScale

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