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Using Analytics To Make Smart HR Decisions
Rusty Lindquist
VP Strategic HR Insights
BambooHR
Mykkah Herner
Head of Professional Services
PayScale
—Ion Hewitt
Of the 6 emerging capabilities of
todays HR leaders, the first is
“data- and analytics-based
decision making.
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
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
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
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
Using Analytics To Make Smart HR Decisions
of HR professionals scorethemselves low in
their ability toanalyze.
80%
-Bersin
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
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• Outdated Technologies (like spreadsheets)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
How do we fix it?
Increase exposure to the
data you do use
Identify the data you need
Data is not the point
Suck Threshold
Features
Suck
Threshold
Not all growth is good growth
Expected Result
Actual Result
PerceptionofValue
Not doing enough Doing too much
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
Signal to noise ratio
Align With Strategy
Focus on Outcomes
Examples:
Comp Analytics
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.
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
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
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
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
Communicating
With Execs
About Compensation
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
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?
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.
bamboohr.com payscale.com
5 Steps to a Smart Compensation Plan
Sample Market RatioReport
Are we keeping up with the market?
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.
bamboohr.com payscale.com
5 Steps to a Smart Compensation Plan
What about our critical positions?
HotJobsAnalysis
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.
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
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?
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
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?
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
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
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
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
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
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
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 (%)
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
Companies that excel in talent and HR
analytics can be positioned to out-
compete and outperform their peers in
the coming years.
—Bersin
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?
Follow BambooHR and PayScale on social media:
bamboohr.com/blog | payscale.com/compensation-today
Thank you!
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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Using Analytics To Make Smart HR Decisions

  • 2. Rusty Lindquist VP Strategic HR Insights BambooHR Mykkah Herner Head of Professional Services PayScale
  • 3. —Ion Hewitt Of the 6 emerging capabilities of todays HR leaders, the first is “data- and analytics-based decision making.
  • 4. 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
  • 5. 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
  • 6. 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
  • 7. 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
  • 9. of HR professionals scorethemselves low in their ability toanalyze. 80% -Bersin
  • 10. 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
  • 11. 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
  • 12. How do we fix it?
  • 13. Increase exposure to the data you do use
  • 14. Identify the data you need
  • 15. Data is not the point
  • 16. Suck Threshold Features Suck Threshold Not all growth is good growth Expected Result Actual Result PerceptionofValue Not doing enough Doing too much
  • 17. 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
  • 22. 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.
  • 23. 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
  • 24. 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
  • 25. 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
  • 26. 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
  • 28. 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
  • 29. 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?
  • 30. 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.
  • 31. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan Sample Market RatioReport Are we keeping up with the market?
  • 32. 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.
  • 33. bamboohr.com payscale.com 5 Steps to a Smart Compensation Plan What about our critical positions? HotJobsAnalysis
  • 34. 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.
  • 35. 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
  • 36. 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?
  • 37. 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
  • 38. 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?
  • 39. 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
  • 40. 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
  • 41. 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
  • 42. 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
  • 43. 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
  • 44. 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
  • 45. 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 (%)
  • 46. 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
  • 47. Companies that excel in talent and HR analytics can be positioned to out- compete and outperform their peers in the coming years. —Bersin
  • 48. 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?
  • 49. Follow BambooHR and PayScale on social media: bamboohr.com/blog | payscale.com/compensation-today Thank you!
  • 50. 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

Editor's Notes

  1. BambooHR
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  19. Payscale
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  28. Payscale Targeting the 50th percentile
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  41. Bamboo
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