This document discusses using human resources (HR) metrics and data to tell compelling stories that support business decision making. It provides examples of research showing links between effective HR strategies and improved financial performance. The challenges of collecting too much data without interpreting it are discussed. Elements of an effective data-driven story are outlined, including setting the scene, logical plot development, and conclusions. The document concludes with a case example of using metrics to analyze and address high early tenure turnover, showing potential cost savings from reducing first year termination rates.

1. T ELLING S TORIES WITH HR M ETRICS Turning Data into Information CLC M ETRICS

2. Roadmap for the Presentation Introduction to Data-Driven Stories Elements of a High Value Story The Challenge at Hand Case Example: Early Tenure Turnover

3. Worthy of Any CFO’s Consideration Organizations That Effectively Leverage Their Workforces Reap Financial Return Sample Research Source: Becker, Huselid Pickus and Spratt, Human Resources Management Journal, Vol. 31(1), Spring 1997; Bilmes (2002), The People Factor; PwC Global Human Capital Survey, 2002. Findings Study Companies with a documented HR strategy have 35 percent higher revenues per employee , 12 percent lower absenteeism and more efficient performance management and reward systems. Three-quarters of those firms with a documented HR strategy also feel that their performance management systems are “very effective.” Companies with lower absenteeism have higher profits per employee. PwC Global Human Capital Survey Companies that scored highest against the “people scorecard” - earned higher total shareholder returns than lower scoring companies; top scoring companies had an average return of 27 percent whereas those at the bottom earned just 8 percent. The People Factor A 35% improvement in Human Capital Architecture “sophistication” is linked to a 10% to 20% gain in market capitalization per employee . Human Resources Management Journal

5. Updated Mandate: Provide Information, Not Data Timeline of Major HR Information Management Challenges 1970–2005 The Current Challenge in HR Information Management Is to Transform Data Captured in Systems into Information That Supports Decision Making Provide Workforce Information to the Business Collect Workforce Data in Systems Build an Enterprise-Wide System Protect Data From Y2k Concerns Extract Data from Systems

6. Human Capital Management Systems Market Total Revenue 2001-2007 (E) Investments Largely Fall Short of Expectations Despite Significant Spend on Human Capital Management Systems— ~$5 Billion per Year… Source: Barron, Monica and Fenella Scott, “The Human Capital Management Applications Report, 2002-2007.” AMR Research Report, 2003.

7. Distribution of HR Executive Reponses … HR Executives Lack Confidence That the Systems Produce the Metrics Required to Support the Business Investments Largely Fall Short of Expectations Source: Corporate Leadership Council 2002 Metrics Survey. The HR function’s measurement system is clearly linked to corporate strategy. Overall, how would you rate the effectiveness of your current HR measurement/metrics system? n = 271 organizations. n = 271 organizations.

8. Roadmap for the Presentation Introduction to Data-Driven Stories Elements of a High Value Story The Challenge at Hand Case Example: Early Tenure Turnover

9. Oversupplying Human Capital Data Decreases its Value, as Decision-Makers Lack Time to Conceptualize and Organize the Information A Key Measurement Risk: The Data Quagmire Supply and Demand Curve Illustrative “ If the supply of information is exploding, the value of the information is plummeting… What is the scarce resource? The scarce resource is the ability to conceptualize and organize the information in some creative way to create large amounts of value. That's our challenge-to recombine information in novel ways.” Dr. J. Doyne Foyner McKinsey Professor Santa Fe Institute The Information Glut Value Supply Demand Quantity

10. The Quagmire Illustrated: IBM While Armed with Data, IBM Experienced Poor Performance in the Early ’90s. As Part of the Turnaround Effort, CEO Lou Gerstner Required Concise Presentations Source: Austin, Robert D. and Richard L. Nolan, “IBM Corporation Turnaround,” Harvard Business School, 2000. IBM Senior Executive Meetings Circa 1992 Revenue = $64.5 Billion Net Income = ($5 Billion) IBM Senior Executive Meetings Circa 1994 Revenue = $64 Billion Net Income = $3 Billion

11. Avoiding the Quagmire: Employing Storytelling Documentary Filmmakers Practice an Art That Requires Filtering Available Information to That Which Is Relevant for Building a Compelling, Interesting Story Crafting a Documentary Film History of Ray Charles Born: Ray Charles Robinson Date: September 23, 1930 Location: Albany, Georgia Storytelling

12. Filtering Human Capital Data Through Stories Employing a Storytelling Filter when Presenting Human Capital Data Aids in Building a Compelling Case for Organization Decision-Making and Action Crafting a Data-Driven Story Storytelling Human Capital Metrics Q4 2004

13. Building Upon Current Paradigms Incorporating Data-Driven Stories into Current Decision-Making Processes Improves the Effectiveness of the Process and Credibility of Recommendations Experience-Driven Story Illustrative Data-Driven Story Illustrative Alice is a high flyer. Frank was a regrettable loss. Sabrina is a rising star. Looking at the data… Promotion Rate Cost per Hire Offer Acceptance

14. Roadmap for the Presentation Introduction to Data-Driven Stories Elements of a High Value Story The Challenge at Hand Case Example: Early Tenure Turnover

22. Roadmap for the Presentation Introduction to Data-Driven Stories Elements of a High Value Story The Challenge at Hand Case Example: Early Tenure Turnover

23. Significant Low Tenure Turnover Present Within Tamarack* New Hire Retention 2001–2003 Projected New Hire Retention Next 10 Years 100% x% 2x% 3x% 4x% 100% x% 2x% 3x% 4x% * Pseudonym.

24. Reducing First Year Turnover Can Result in Significant Cost Savings Annual Hires Required to Maintain a Steady Headcount Five-Year Cumulative Cost Savings 6x 5x 4x $40x $20x $0x $x $2x $19x $36x Scenario 1: ↓ First Year Turnover by 5% Scenario 2: ↓ First Year Turnover by 10%

25. “ No Shows” Are a Significant Driver of First Year Turnover Percentage of Terminations By Separation Reason (2003) 2x% x% 0%

26. Most “No Shows” Occur in the First Three Months of Employment Percentage of First Year Terminations Occurring in the First Three Months By Separation Reason (2003) 100% 0%