How data-driven HR can improve… retention and recruiting

1. Don’t Be Left Behind… As HR
Shifts To A Data-Driven, High
Business Impact Approach
© Dr John Sullivan
45
These slides can be found at: www.drjohnsullivan.com
• The most dramatic shift in HR in decades is occurring
right now… and it will soon make your current HR
approach obsolete.
• You can welcome it or fear it, but this shift is inevitable

2. 2
I’m from the Silicon Valley…
They asked me to highlight the most advanced
data-driven talent practices
• Obviously you can’t adopt all of them
• So pick & choose and adapt whatever practices
that you find are best for your organization

3. 3
Let me be clear…
Its time to realize that its
all about the money!
HR is not exempt from the rules guiding
all other business functions…
the best / favored ones are more productive
& innovative, and as a result…
they show they create more revenue!

4. Does great Talent Management really have a
bottom line impact?
IBM
HP
Amazon
Microsoft
Google
Facebook
Apple
Which of these firms have the best Talent Mgmt ?
Which firms are the most innovative & productive?
4

5. Now let’s compare the difference in employee output
value at… “Top” vs. “Very Good” firms in tech
Note: Productive firms have a higher Rev. per Employee #
Average rev per ee $208,000 USD
IBM $238,000 (14% above the average)
HP $363,000 (Nearly 1 ¾ times theaverage)
Amazon $577,000 (Nearly 2 ¾ times the average)
* Indicates it’s rank among the top most valuable firms in the world
Microsoft* #4 $729,000 (Nearly 3 ½ times the average)
Google* #3 $1,230,000 (Nearly 6 times the average)
Facebook* #11 $1,360,000 (Nearly 6 ½ times the average)
Apple* #1
Key learning – Apple could produce the same
revenue as IBM with 9 times fewer workers
(From 4/22/15 data from www.MarketWatch.com )
5
$2,150,000 (Nearly 10 ¼ times the average)
Your job…
is to figure out which
key HR actions cause
these huge employee
output differences
--
Any Questions?

6. ID your HR functions with the highest business impact
6Source: BCG/WFPMA - From Capability to Profitability: Realizing the Value of People Management, 2012
Which HR function normally has the highest impact on profit?
So the 1st ddHR goal is to…

7. Mid and lower impact HR functions
7

8. 8
Conclusion
Provided that you manage the right way…
“Great Talent Management increases
workforce productivity and innovation to
the point where Talent Management has
the highest business impact on revenue of
any business function”
Any questions?
Its all about the money!

9. 9
A definition of
data-driven HR (ddHR)

10. 10
A definition of data-driven HR (ddHR)
A strategic forward looking approach to HR
It replaces the currently common… opinions,
beliefs, intuition, hunches, speculation, trial & error
learning & automatically continuing with past practices.
It instead relies on… data, facts, analysis, charts,
metrics, algorithms, science and predicted trends…
to improve the accuracy, speed and business
impacts of major people management decisions…
that are made by managers and HR professionals.
And finally, it reveals “why” programs work.

11. 11
Replace them with…
I know
The data proves that…
This chart / graph proves it
Our algorithm shows it works
A predictive trendline shows
An A/B test shows B is better
Its cutting revenue by $23mil
It’s a science (hard HR)
ddHR goal #2
Outdated phrases
I think/I believe/ I feel
My opinion is…
My gut tells me
We tried that once…
Historical metrics show
We always do it this way
Turnover is a problem
It’s an art (soft HR)
To learn to use the language of business ($ and #’s)

12. 12
2 quick examples of:
How data-driven HR can
improve… retention and
recruiting

13. Traditional HR would guess / speculate for
retention purposes… when do new hires quit?
Source: entelo.com using 1 million resumes
Waiting period
ddHR can prove what causes these “turnover spikes”
Employees that quit
Years at the firm

14. 14
During what month do most salespeople quit?
I
Source: Entelo 2015
Turnover seems even… until you add December
During what month should
you start retention efforts?

15. 15
Do you see how using data
can change you from “a guesser”…
to a “I can prove it” expert ?

16. 16
More reasons why HR must shift
to a new data-driven model

17. 17
Almost everyone agrees that HR must become
more strategic… and a ddHR approach can do that
When CEO’s and board-level executives rank
business functions… which one is listed as the most
strategic?
Sales
Where was HR ranked on the list?
“the least strategic function” Source: DDI
17

18. 18
Almost everyone agrees that HR must increase its
business impacts and a data approach can do that
Of the 18 business factors that contributed the most
to business outcomes…
#1 - with the highest impact was… reducing
operational cost structures
“Talent was dead last” (#18)
(source: KPMG / HfS research) 18

19. 19
Almost everyone agrees that HR doesn’t use many
analytics – so there is room for improvement
Where does HR rank in analytics usage compared
to other bus functions?
% of advanced users % of non-user
1.Finance 58% 7%
2.Executive team 51% 11%
3.Operations 48% 9%
4.R&D 44% 23%
5.Marketing 41% 16%
6.Sales 34% 20%
7.HR (last) 27% 23%
Source: AMA/i4cp 2013

20. 20
CEO’s do not have faith in our metrics
Only 12% of CEO’s are confident on the quality
of Human Capital metrics
20
AICPA survey 2012

21. Stop arguing against dramatic change
It’s time to drop the black phone approach to HR
Std. excuse -“our current model has served for years
and it seems like it works fine just the way it is”
Answer… the old ways must be abandoned because
• Every bus. function & many sports shifted long ago
• Executives now expect more from HR
• Technology/big data have much greater capabilities
• Not using data is hurting your shareholders
21

22. 22
Let’s look at a quick case study
A snapshot of
how Google does ddHR

23. 23
Learn from Google
Laszlo Bock VP at Google

24. 24
ddHR goal # 3
Use data for all key people decisions
“All people decisions are based on data & analytics”
“We apply the same level of rigor, analysis and
experimentation on people as we do the tech side”
Even their famous employee benefits are “broken
down into crunchable, poll-able or graphicable
data”

25. 25
Years of assuming that…
“what we have always done” was right…
can be proven to be “completely wrong” with data
Why we must shift

26. Google data… revealed that they were wrong
about what predicts new hire success
“GPA’s
“Test scores
“Brainteasers
Interviews – “many managers, recruiters, and HR
staffers think they have a special ability to sniff
out talent”
“it’s a complete random mess”… “we found a
zero relationship” (between interview scores and on-the-job performance)
No value is added “after 4 interviews”
College –“the proportion of people at Google
without any college education…has increased over time”
What predicts? –
26
are worthless as a criteria for hiring”
are worthless”
are a complete waste of time”
Laszlo Bock, Senior VP of people operations at Google The New York Times
“They’re wrong”
“capability & learning ability”

27. 27
ddHR goal # 4
Data-driven experimentation
Google has an R&D team that experiments
People & Innovation Lab (PiLab) - it runs dozens
of experiments on employees in an effort to
answer questions about the best way to manage
a large firm (on-boarding, diversity, pay,
retirement savings & employee weight)

28. 28
An example of a data-driven experiment
1 email results in a 25% improvement in productivity
Each new hire’s manager is sent a JIT on-boarding
email… reminding them to do these 5 things
Have a discussion on their role and responsibilities
Match your new hire with a peer buddy
Help your new hire build a social network
Schedule onboarding check-ins once a month (6 mths)
Encourage an open dialogue
Result – time to minimum productive is 25% faster
Source: Laszlo Bock, SVP Google

29. 29
ddHR goal # 5
Identify the highest impact actions/ solutions
Project Oxygen showed actions make good managers
1. Be a good coach – have regular one on ones, and
provide constructive feedback
2. Empower your team and don’t micromanage –
give employees freedom and provide them with
stretch assignments
3. Express interest in team members success and
personal well-being – get to know employees as
people, with outside lives
4. Don’t be a sissy: be productive and results-
oriented – help the team prioritize work and
remove roadblocks

30. 30
Let’s finish up with…
more examples that cover the
remaining ddHR goals

31. 31
ddHR goal # 6
It’s critical to convert HR’s results into their $ value
 Last year, a revised data-driven recruiting
program for salespeople was implemented
 Because of the improved hiring process, newly
hired salespeople now sell nearly 15% more
(+ $5,100 a month or $61,000 per year)
 With over 100 sales hires per year, the CFO
calculated that the revenue impact exceeded
$6.1 million
 That amount is nearly 4X the total corporate
recruiting budget and 15% of corporate revenue

32. What happened here?
Hockey stick approach
32
Turnover %
TimeOctober 2014
Steady turnover of 9 %
Personalized retention plans were implemented
4 % turnover
ddHR goal # 7
Use charts to prove that things work

33. 33
Conclusion – best practice sharing increases revenue by $250,000
a year, at a cost of $50,000, with an ROI of 4 to 1
Monthly sales
Best
practice
sharing
in sales
started
Sales up
+ 22.4% after 1 yr.
of B. Practice sharing
1st Quarter
$1.5 mil
$1.4 mil
$1.3 mil
$1.2 mil
$1.0 mil
.02% change in sales in control group
2nd Quarter 3rd Quarter 4th Quarter
Control group
ddHR goal # 8
Use split samples to show programs work

34. 34
ddHR goal # 9
Calculate the added value of top performers
Prioritize your top performers
 The top 1% of your workforce produces what %
of your total output ?
 The top 5% produce
 Bottom 5%...
A top performer produces how much more than
the average employee in the same job?
- 10 times the average
- 25 times more than average employee
- 300 times more than the average
- 1000 times more than the average
GE, Netflix & Yahoo
5%
Apple
Google
Microsoft
26% (5X) - U of Indiana study
cost up to 2 ¼ X salary/ 1 day week

35. 35
ddHR goal # 10
Find out if you should give them a 2nd chance
Performance management Q – what is the cost / time
required to turn level 3 performers into level 1 performers?
1.The firm searched their records and they found that
2 years ago… 1,019 of their employees were
rated #3, “needs improvement”
2.They calculated that they spent an average of
$26,180 over those 2 years on improving their
performance (training, coaching, counseling and
manager time)
3. Now 2 years later they checked… the number
that had improved to #1’s
4.That number was 0

36. 36
ddHR goal # 11
Integrated data allows you to “connect the dots”
Don’t miss the costs of unintended consequences
Pocket #1 – Froze safety training (Saved $50,000)
But look at “other pocket” costs after one year…
Pocket #2 – Accident rates doubled (+$400,000)
Pocket #3 – Insurance rates up 23% (+$187,000)
Pocket #4 – Turnover of safety ee’s +15% (+ $89,000)
Other pocket costs = - $676,000 >

37. 37
ddHR goal # 12
ddHR reveals the cost of slow
Last year they had only 110 vacancy days in loan
officer positions at this Midwestern bank
But then the COO cut the recruiting staff by 20%
With fewer recruiters, it slowed hiring, so this
year we had 100 more position vacancy days (210)
 The CFO calculated that $5000 each day is the lost
revenue when a loan officer position is vacant
$5k times the 100 additional excess vacancy days
equals a $500,000 loss per year
The savings from the 20% recruiter cut was only
$200,000 (a $300,000 net loss)
OMG!

38. 38
ddHR goal # 13
Use data to influence (vs relationships)
Relationships are slow to build and are quickly
lost when one party leaves… so instead use data to
influence managers
“The best thing about using data to influence
managers… is that it’s hard for them to contest
it”
“For most… just knowing that information…
causes them to change their conduct”
Source: Laszlo Bock

39. 39Source: Workday Insights Retention Analytics
An example - influence managers with data
by distributing ranked reports (retention flight risk)

40. 40
This is what data-driven retention looks like (Workday)
Source: Workday Insights Retention Analytics
Software makes decision-making easy

41. ddHR goal # 14
Improve decision-making speed (GSK)
Open-office design improves decision-making speed
by 45% and cuts the cost of delays / “doing nothing”
41Source: Forbes 2012

42. ddHR goal # 15
Predictive metrics alert you in time to act
42
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2014 2015 2016 2017
Yearly cost
of turn will
reach
$10 mil
Yearly cost
of turn will
reach
$20 mil
Yearly cost
will
reach
$30 mil
Yearly cost
will
reach
$39 mil
in 2017
Employee turnover projection alert
(% of all employees likely to quit)
The average turnover cost in our industry is $4 mil per year
Our firm’s average yearly profit is only $15 mil per year

43. 43
Benchmark Google (read Work Rules)
Put together an HR analytics team
Hire HR pro’s with data/analytics skills
Work with exec’s to prioritize HR areas
Shift from historical to real-time and
predictive metrics to alert
Start with retention –predict who will quit
Next rec. – ID factors that predict success
Run a small split sample/ control group
Use stats to ID what correlates with perf.
Initial action steps to consider under ddHR

44. 44
My business impact elevator speech
Hi
I’m a productivity consultant… and I’m here to
increase employee productivity and innovation to the
point where it measurably increases corporate
revenues by $46 million within 12 months, with a
89% success rate and a cost of under $400k.
Do you care what my approach is called? 

45. Do we have time for questions?
45
Did I make you think?
These slides can be found at www.drjohnsullivan.com