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Making Workforce Analytics Stick


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Making Workforce Analytics Stick: Pitfalls, Challenges, and Stick-and-Stay Strategies

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Making Workforce Analytics Stick

  1. 1. Jameson Greiner Director, EPM Business Development & Client Engagement Making Workforce Analytics Stick: Pitfalls, Challenges, and Stick-and-Stay Strategies
  2. 2. • Welcome & Introductions • The Business Case for Workforce Analytics • Workforce Analytics: What It Is & What It Isn’t • Common Roadblocks, Challenges & Pitfalls • Making It Stick • Lessons Learned • Discussion / Q&A Agenda 2
  3. 3. • EPI-USE established in 1984, SAP Practice since 1994 • The EPI-USE Group is privately held and made up of a number of separately branded entities/organizations • Global, World-Class Services and Software Organization to large multi- nationals • Specialists in Human Capital Management Consulting • “Special Expertise Partner” for SAP HR and recently established as a Success Factors Global Partnership • Completed over 600 HCM projects and a team of About EPI-USE Niche HCM Service Provider with SAP as the Core! 3
  4. 4. The Business Case For Workforce Analytics
  5. 5. Are you making decisions about your people with the same rigor, logic and confidence as your decisions about money, customers, products and technology? 0% -5% -1% 11% 4% 4% -6% -4% -2% 0% 2% 4% 6% 8% 10% 12% Using Reporting& Analytics NotUsing Revenue per FTE Profit per FTE Employee Performance The Case for Workforce Analytics THE WORKFORCE MAKES UP 60-80% OF YOUR OPERATING EXPENSES “ “ DR. BOUDREAU, USC CENTER FOR EFFECTIVE ORGANIZATIONS (Aberdeen, “Intelligent Human Capital Management”, 2010) 5
  6. 6. The Workforce Analytics Journey • Reactive Information • Focus on Accuracy • Basic List Reports LOW Impact • Data Manipulation Capabilities • Report Automation • Scorecards and KPI Reporting Growing Sophistication • Proactive Insights • Analytically Drives Actions for Business Success • Data-Driven HR Function HIGH Impact Data Vision Action 6
  7. 7. 0 50 100 Information is Important Receives Sufficient Information Executives Lack the Data Needed to Make Investments in Talent A Minority of CEOs Receive Comprehensive Data on Their Workforce Percentage of CEOs Who Believe Information is Important and Sufficient for Decision-Making, PwC Survey, n=1,258 Source: PwC, 15th Annual Global CEO Survey, 2012 Percentage of CEOs Labor costs Return on investment in human capital Assessments of internal advancement Employees’ views and needs Costs of employee turnover Staff productivity 7
  8. 8. Workforce Analytics: What It Is & What It Isn’t
  9. 9. A Definition of Workforce Analytics Workforce analytics is a methodology for creating insights on how investments in human capital impact business outcomes. This is done by applying statistical methods to integrated HR, talent management, financial, and operational data. 9
  10. 10. 10 Link Corporate Strategy to Measurable Business Impact ACTION IMPACT Grow 20% Expand new markets Cut operating costs Improve service Cut time to market Innovate Do we have the talent to execute on our strategy? Where are future talent gaps? Are we maximizing new hire investments? In which workforce segments does increases in voluntary turnover present greatest risk? Are we retaining our high performers? Which workforce programs have the highest projected financial impact? Do we pay for high performance? Manager tenure Staff turnover Quality of hire Pay distribution Workforce planning Optimize pay distribution Change on-boarding Growth Cost reduction Effective leadership Productivity ASK THE RIGHT QUESTIONS INSIGHTSTRATEGY BASE ANSWERS ON FACTS VS. GUT FEELINGS KNOW THE IMPACT OF YOUR ACTIONS CHALLENGES 1. What business outcomes are we trying to impact? 2. What are the human capital drivers of these outcomes? 3. What is our current state compared to the optimal state? 4. What talent strategies drive these outcomes?
  11. 11. A Simple Definition of the Terrain 11 Value/Impact Reactive Proactive Strategic Reporting: WHAT is happening with our workforce today? Workforce Analytics: WHY are those trends occurring? Workforce Planning: HOW should we respond today to build the workforce needed for the future?
  12. 12. Which phase of the Workforce Analytics Maturity Model best describes your organization? 1. Workforce Reporting 2. Workforce Analytics 3. Workforce Planning Discussion Question #1: Show of hands… 12
  13. 13. Roadblocks, Challenges, & Pitfalls
  14. 14. Do We Have A Workforce Analytics Strategy? 14 “There's no reason to become alarmed, and we hope you'll enjoy the rest of your flight. By the way, is there anyone on board who knows how to fly a plane?”
  15. 15. Common Year 1 Roadblocks Selecting KPIs aligned with strategy Standard metrics definitions Data quality and credibility Center of excellence Generating actionable insight Without standard definitions for metrics, there is misunderstanding and inconsistency. Both external (industry) and internally. Without reduces or invalidates the value of the results. Data discussions are more focused on source of inputs, formulas, and calculations rather than results. Differences between systems (e.g., Finance headcount vs. HRIS). Provides the foundation for consistent reporting and analytics. Delivers insights of strategic impact to the business. Just measuring and reporting data is not enough. Data needs to be communicated effectively to generate action. Provide solutions not problems. Must be aligned with HR or corporate strategy. If not, KPI’s unlikely to be valued by the business. 15
  16. 16. Turnover of key leader or analytics team member Lack of dedicated resources HR lacks analytics skills & culture Difficulty measuring business impact Workforce data not reaching executives Common Year 3 Challenges 16
  17. 17. What is the biggest challenge your organization has encountered in your workforce reporting, workforce analytics, or workforce planning efforts? Discussion Question #2 17
  18. 18. Making It Stick
  19. 19. Best Practices for Making It Stick Alignment with Business Strategy Executive Level Reporting Dollarize Reporting Strategy Communication Plan Quick Wins Pilot Program 19
  20. 20. Strategic Alignment: Prioritize Workforce and Business Issues For Analysis A Top-Down Approach A Bottom-Up Approach • Branding and advertising • Improve customer satisfaction • Improve employee satisfaction • Improve service delivery • Access new markets • Voluntary Termination Rate • Employee Retention Index • Managerial Quality Index • Training Hours/FTE Corporate Strategy Business Drivers Human Capital Metrics Functional Strategy Increase Market Share Customer Retention Customer Acquisition Requests for Data Analysis Request: Investigate company age profile Reason: Anticipated spike in retirements by 2015 Business Case: Increased costs Loss of knowledge Staffing shortages Summary: High Priority Request: Generate headcount reports for 5 largest business units Reason: Concern over discrepancies between HR and Finance headcounts Business Case:? Summary: Low Priority 20
  21. 21. The “Right” Set Of Metrics for Executive Reporting Group #1: Core Workforce Facts: – Headcount/FTE – Terminations – Diversity, by Gender and Ethnic Background – Workforce Age Profile Group #2: Financial Workforce Metrics: – Operating Revenue per FTE – Operating Profit per FTE – Return on Human Capital Investment Ratio – Cost of Turnover Group #3: Productivity and Performance: – Workforce Productivity (Measured in outputs relevant to the specific firm) – Workforce Availability/Absenteeism – Executive Compensation/Pay Comparison Group #4: Talent Development and Succession: – Leadership Quality (Current and Bench) – Staffing Rate – High Performers – Staffing Rate – High Potentials Group #5: Human Capital Risk: – Succession Risk (Absence of Ready-Now Successors) – Staffing Shortages in Critical Roles – Current vs. Future Competency Gaps – Churn (hires vs. terminations) Rates – Knowledge & Transition Risk (of an aging workforce) 21
  22. 22. • Cost of Turnover = Average Salary x # of Exiting Employees • Multipliers (e.g., High Performer Multiplier = 1.5 x regular employees) • Building The Case (e.g., Headcount Spend as a % of Revenue) • Calculators: COT, COH, ROI • Back Of The Envelope Calculations (e.g., Average Salary of Employee in X Job Role x # of Hours Spent On X Project) • Training ROI = Productivity Gains – Productivity Losses Money Talks: Quantify and Dollarize 22
  23. 23. Reporting Strategy Annual Strategy Kick-Off • Analyze key outcomes from prior year • Communicate strategic initiatives and plans for current year • Suggest metrics and data analysis used to measure success of each initiative • Present updated workforce plans Monthly HR Strategy Review • Present results and analysis of workforce KPIs • Identify emerging issues to investigate Quarterly Senior MGMT Meeting • Review human capital scorecard • Suggest themes and metrics for Board meeting and external communication • Provide overview of external labor market trends impacting current workforce 23
  24. 24. Build a Communication and Feedback Plan Format for Delivery (Presentations, email or portal) Timing (Quarterly, monthly or ad-hoc) Audience (HR, business lines or executives) Message (Content, rationale or preferred action) Communication Planning 24
  25. 25. Analysis of your organization’s Strengths, Weaknesses, Opportunities, and Threats will help identify quick wins and prioritize resources towards problem areas. Identify Quick Wins • Leadership support • End-user receptivity to dataStrengths • HRBPs lack analytical skills • Poor quality dataWeaknesses • No workforce plan exists • High-cost of call center t/oOpportunities • Cannot demonstrate ROI • Data analysts leaveThreats Include in Mission Statement Top Priorities: Training & Data Quality Review Complete Phase One Review by End of 2013 Include ROI in all Analyses; Build Pipeline 25
  26. 26. 2013 Research Agenda • In the last four years, has workforce productivity increased, decreased or remained the same? • How will increased retention affect our cost of turnover and cost of hiring over time? • What is the depth and quality of the successor pool for key positions? • What recruiting sources provide the highest performing employees? • Other strategically aligned questions for analytic investigation Pilot Program Step 1: Identify business leader or champion to partner with Step 2: Initial debrief session to identify top 1-3 business challenges Step 3: Analytic investigation Step 4: Executive Briefing with key findings and recommended action Step 5: Action plan and ongoing monitoring Step 6: Communicate success Get Creative 26
  27. 27. Lessons Learned
  28. 28. A Different Approach: 100 Critical Human Capital Questions Workforce Demographics and Diversity What is our ratio of customer-facing or revenue-generating staff to back-office staff? In the last five years has it increased, decreased or remained the same? Workforce Productivity Is the ROI on Human Capital higher than the ROI on working capital, invested capital or plant and equipment? Workforce Health and Safety What is the dollar cost impact of short- and long-term disability absences and claims? Workforce Relations and Satisfaction What percentage of our employees are fully engaged and are “doing their best work” at all times? How does this vary across functions and lines of business? Workforce Turnover and Mobility What percentage of our workforce moves internally each year between lines of business or functional areas? Workforce Planning What is the magnitude of competency “gaps’ between needed and actual capabilities? Staffing and Recruiting Do our new hires continually increase the overall quality and productivity of our workforce? Workforce Compensation and Benefits Based on our workforce demographic, could we be offering a benefits packages that is both more attractive and less expensive than the current offerings? Workforce Training and Development How have leadership development programs impacted productivity, profitability or employee satisfaction? HR Function What is the ROI of our daily HR activities? 28
  29. 29. Answer Questions Important to the Business Human Capital Question Essential for Measuring… Example Related Metrics What is our revenue and profit per employee? …the financial impact of workforce performance Operating Profit per FTE or Return on Human Investment Ratio What percentage of our employees are fully engaged and are “doing their best work” at all times? …employees’ emotional commitment to the firm Employee Engagement Index or Voluntary Turnover Rate What percentage of our workforce will retire in the next year or next five years? …the risk of staffing shortages Staff Rate: Approaching Retirement Eligibility What percentage of our workforce moves internally each year between lines of business or functional areas? …career-path effectiveness Career Path Ratio or Internal Mobility Rate What is our voluntary turnover rate among top performers and what is the cost to the business? …the bottom-line impact of losing “stars” Cost of Turnover or Quality of Hire Which recruiting sources provide the highest performing employees? …the ROI of talent acquisition Staff Rate: High Performers by Recruitment Source What is the percent increase in employee performance as a result of every one percent increase in pay? …the link between compensation and performance Performance Based Pay Differentials or Unscheduled Absence Rate 29
  30. 30. Example of a KPI Framework Maximise Return on Assets Business Drivers Workforce Implications Improved Quality of Service Market Expansion Become a Preferred Employer Workforce Availability X% Unscheduled Absence Rate Retention Rate of High Performers Workforce Productivity Workforce Capability Customer Focused Return on Human Investment Ratio Engaged Employees People Management Initiatives Management Performance Performance Management Employee Relations Flexible Working Options Employee Satisfaction Survey results Managerial Performance Rating Distribution % uptake of Flexible Options KPIs 30
  31. 31. Exercise Become a Preferred Employer Business Drivers Workforce Implications Market Expansion Workforce Capability Engaged Employees People Management Initiatives KPIs 31 Customer Focused
  32. 32. Critical Decision Points for Metric Success Data-DrivenMomentum Time Data producers and consumers are identified and “trained” Data utilization begins Supporting HR staff job roles are redefined to incorporate data usage HR leaders use data as part of decision- making processes Stakeholders & champions are unsure of the program’s purpose Data producers are bogged down by low-value data mining Quick wins are not capitalized upon Skeptics point to the lack of ROI metrics Data producers are supported with training and development opportunities 32
  33. 33. • Strategic Alignment: What are the Metrics that best answer the questions that drive the business? • 3M’s: Measure, Monitor, Manage • 3R’s: Re-evaluate, Rebrand, Relaunch • Executive Level Reporting Key Takeaways 33 Does Your Workforce Analytics Program Incorporate The Following?
  34. 34. Facilitated Discussion 34
  35. 35. Questions 35
  36. 36. 1. Can you describe how your organization currently conducts workforce reporting & analytics? For example, what workforce reporting & analytics activities does your HR team perform? What metrics are currently tracked? 2. Who conducts these activities? A Center of Excellence? HRIS staff? HR Business Partners? 3. To what extent are these activities meeting your needs for the utilization of data and metrics? 4. What are 2-3 decisions you need to make to improve your workforce reporting/analytics activities? 5. For what talent management topic is there the biggest opportunities for WFA? Turnover? Learning? Career-Pathing 6. Are you doing Benchmarking? Internal vs. external? Key Consideration Questions: WFA & Reporting © 2013 EPI-USE America, Inc. All Rights Reserved. 36
  37. 37. Jameson Greiner Director, EPM Business Development & Client Engagement Mobile: 678.978.4147 Email: The information in this document is confidential and may not be disclosed outside of <Client name>. The document and its contents may not be duplicated, used, or disclosed in whole or in part. Provided that a written contract exists between EPI-USE America, Inc. and <Client name>, <Client name> will have the right to duplicate, use, or disclose the information to the extent provided by the contract. EPI-USE America, Inc. retains ownership of this document, unless explicitly stated otherwise in this document or in a written contract. EPI-USE, the EPI-USE logo, [type every EPI-USE product mentioned in the document] is/are trademarks or registered trademarks of EPI-USE Systems. Type each and every instance of other products and services from other partners mentioned in this document in the appropriate trademark statement format of the partner. Refer to the partner’s trademark usage guidelines. All other trademarks mentioned are the property of their respective owners. Data contained in this document serves information purposes only, unless explicitly mentioned otherwise. National product specifications may vary 37