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HCMI Intro SOLVEPro Demo Deck Aug 2016e

The document provides an introduction and demo of the Human Capital Management Institute (HCMI). HCMI specializes in workforce analytics and measurement to help organizations quantify their investments in human capital. The demo shows how HCMI uses its software tools and proprietary data to analyze workforce productivity, quantify the financial impact of workforce decisions, and optimize the workforce based on scenarios modeled. HCMI also discusses its products and services including dashboards, benchmarks, and training to help users discover insights into areas like productivity, costs, and ROI from their workforce.

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1 HCMI Introduction and Demo - Aug, 2016
2 About Human Capital Management Institute HCMI Background:  Specialized in HR analysis & measurement  Deep expertise in Workforce Analytics & Planning  Board made up of CFOs and HR heads  Over 40 years of experience What We Do:  Measure the immeasurable in human capital  Transform workforce data into business intelligence  Provide Tools and Training so HR can Partner with Finance Workforce Assessment w Strategic Consulting w Training Best Practices w Workforce Analytics and Planning w Benchmarking The Human Capital Management Institute (HCMI) was founded on the belief that organizations can, and must, find better ways of measuring their investments in human capital. Our vision of the future is one in which human capital measurement and information is as integral to business decision making as financial information is today. We Bring Financial Discipline, Standards and Rigor to the HR Function Have You Found Your Analytics Pot of Gold?
Human Capital Metrics HandbookTraining and Advisory Support • Workforce Analytics Training • Workforce Planning Training • Custom onsite training HCMI Products & Services © Human Capital Management Institute 3 620+ Metrics and Detailed Definitions Data Integration Blueprint Workforce Analytics Assessment Analytic Consulting On-Demand Analytics COE and Roadmap Design Statistical Prediction Correlation Coefficient ( 0-1) Factors Leading to Increased Turnover Job Title or Position Dissatisfaction With Compensation High vs. Low Turnover Manager Commute Distance Driver #3 Driver #2 Driver #1 .50 .33 .27 .02 Low Turnover Impact High Turnover Impact Some Turnover Impact .11 Work Location Number of Jobs in Last 3 Years .70 Hired Through Employee Referral .19 Initial Reports & Analysis Data Gathering First Good Metrics HR Data Warehouse Drill-down,standard reports ScenarioAnalysis External Benchmarking Context fordecisions Data Driven Decision Making! Turnover, Headcount,Hiring HRISsystem data COE Formation Data Errors HR Analytics Mandate HR Standards EstablishedLost HR Credibility HR data/systems Assessed HR Data Cleansed historicaldata scrubbed Bus. Units Reject Analysis Data Errors Historical data still bad 1st Analytics Study Advanced Analytic Studies HR Analysis Validated Integrated HR Databases COE Launches Training Courses Bus. Units Demand more Analytics journey steps Setbacks along the way Journey path and goal CONSULTING SERVICES Integrated Dashboard DASHBOARDSPRO TECHNOLOGY SOLUTIONS Human Capital Financial Statements • Human Capital Impact Statement • Human Capital Asset Statement • Human Capital Flow Statement Workforce Quantifier™ ROI Calculator • ROI of Workforce Decisions • Cost of Turnover, Cost per Hire Workforce Planning • Link Workforce and Financial Metrics • Forecast Skills, Costs, Talent and Productivity Job Framework Mapping • Integrated Taxonomy 15,000+ jobs • Map Critical Job Roles Span of Control Optimizer™ Tool • Benchmark and Optimize Spans • Optimize Management Layers Career Path Quantifier • ROI of Career Path • Build, Buy or Lease Talent Analysis $$$ Financial Impact Metrics Data Blueprint Predictive Modeling TRAINING & SUPPORT
Clients Include… CONFIDENTIAL, DO NOT COPY OR REDISTRIBUTE
Asking the Right Questions © Human Capital Management Institute 5 What If you could answer the following? 1. What is our workforce productivity? Is it improving? How do we rank? 2. Where do our stars come from in Sales? In Operations? In leaders? 3. Is it better to build, buy or rent talent? What is the right workforce cost? 4. What is the ROI of our training investment in the workforce? 5. Which are the strategic critical roles (game winners) vs. operational critical roles (keep us in the game)? 6. Do we know drivers of employee turnover? What about employee engagement and retention drivers? 7. Are leaders effectively managing human capital? Do leaders correlate to employee engagement, retention and performance?
1. Is our workforce headcount the optimal size and shape? What about our workforce Cost? 2. What percent of our workforce is customer-facing or revenue-generating? What is the trend? 3. Is the organization building, buying or renting its’ critical and core talent? 4. What is our workforce productivity? 5. Is workforce productivity increasing, decreasing or static? How are we performing versus peers? 6. What is the marginal return of a dollar invested in the workforce? 7. Is the ROI on Human Capital higher than other investments? 8 Are leaders effectively managing human capital? Do leaders link to engagement, retention, performance? 9 Where does our best talent come from? Which managers are the best talent scouts and coaches? 10.What percent of our workforce is highly engaged? Is it increasing or decreasing? 11.Is there a link between engagement, performance and productivity? 12.What is our leadership and critical role bench strength? 13.Can we forecast our workforce to optimize cost, profit and productivity? 25 Key Human Capital Questions 14. What business areas/positions/leaders have the highest turnover? How do we compare to peers? 15.Are we losing the right people(low performers) or the wrong people(high performers or critical roles/skills)? 16. What is our regrettable turnover rate? Why is talent leaving? Is by design or accident? 17. Is the quality and cultural fit of new hires improving? Can we measure it? 18. Is attracting/recruiting talent impacting growth? What recruiting source yields the best cultural fit? 19. What is the size and cost of our contingent workforce? Is it by accident or by design? 20. What part of our workforce costs are increasing the most? Can we control it better? 21. What is our Total Cost of Workforce as a percent of revenue? Of expenses? How do we compare to peers? 22. Are we investing the right amount in training? Could training improve productivity & profitability? 23. If talent is critical is the training investment adqaute to support the business strategy? 24.Is internal mobility a source of value or not? What percent of the workforce moves internally each year? 25.What percent of open positions are filled internally? What percent of management roles? © Human Capital Management Institute 6
Key Differentiators © Human Capital Management Institute 7 • Human Capital Financial Statements(HCF$™) (adopted by Institutional investors) • SOLVE Metrics online metrics handbook • Workforce productivity benchmark database (7,000 companies) 3 Layers of IP 1. Powerful software (predictive scenario modeling of future workforce) 2. Proprietary data integration “Blueprint” (HR, financial, operational data) 3. Experience, 100’s of successful project insights in SOLVE Have You Found Your Analytics Pot of Gold? $1.0 Million ROI Guarantee!
SHOW ME THE MONEY! © Human Capital Management Institute 8 • 15% productivity gain and lower costs ($55.0 Billion Package Delivery Co. ) • Predicting sales stars pre hire {$1.0 Billion Bank} • ROI of sales training {$2.0 Billion Retail Co.} • Location optimization for talent growth {US Regional Bank} • Employee engagement to revenue impact {$1.0 Billion public Airline} • 40% voluntary turnover reduction {public, financial services co.} • ROI of internal vs. external hires {public bank} $1.1 Billion Annual $264 Million Annual $1.1 million per sales person $250 Million Annual $250k per Salesperson $200 Million 10 years $96 Million Annual $5 per flight premium $12 Million Annual $6 Million Annual
Evolution of a New Ecosystem © Human Capital Management Institute 2010 9 What if someone owned “financial statements” in financial reporting? Would this help public companies? Would this help software technology firms? Would this help accounting firms? Would this help HR ! YES ! Human Capital Disclosure Statement™ Dashboards Human Capital ROI Dashboards Human Capital Financial Statements HCFS ™ Pro Automated Analytics Ecosystem
© Human Capital Management Institute 10 Evidence-based Human Capital Management > QUANTIFY > ANALYZE > OPTIMIZE Quantify not just financial info but also the impact of human capital to business outcomes. Analyze past operations, historical change rate and forecasted performance and benchmark them against the industry average. Optimize workforce strategy by selecting the interventions that yield the highest ROI impact, Linking Human Capital to Financial Performance From Theory to Practice SOLVE combines Human Capital data with Finance and Operations to quantify hard-to-measure areas, analyze them and ultimately optimize the workforce. OPERATIONS FINANCE WORKFORCE
© Human Capital Management Institute 11 SOLVE in Action: Workforce Productivity > QUANTIFY > ANALYZE > OPTIMIZE • Model and Forecast Productivity • Analyze Productivity, Total Cost of Workforce and Profit change rate • Analyze Workforce Cost relative to Revenue and Total Expenses • Benchmarks: Peer Comparison Use analysis tools to answer the following questions: • What is your workforce productivity? Is it higher than peers? • What is the marginal return of one dollar invested in workforce? • Is the ROI on Human Capital higher than other investments? • Is workforce productivity increasing, decreasing or static? Analysis Examples: • Total Cost of Workforce • Return on Human Capital Investment • Human Capital Investment ROI ratio
© Human Capital Management Institute 12 How SOLVE Helps Users Discover Insights > Validate, Configure and Standardize Data > Identify Trends & Conduct Initial Analysis > Build Workforce Scenarios & Conduct Advanced Modeling > Optimize Workforce Interventions with Quantified Impacts, Cost Savings & Project ROI
$- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2015 2016 2017 2018 2019 2020 Millions TCOW* Calculated vs Strategic Plan Calculated Strategic Plan 22.0% 10.0% 0% 5% 10% 15% 20% 25% 2016 2017 2018 2019 2020 TCOW* % Change Calculated Strategic Plan Variables Status Quo Controlled Growth Workforce Headcount 12% Average Employee Salary 8% Bonus & Incentive Pay (Average) 5% Total HR Costs 11% $X,XXX,XXX below calculated data $627M GAP v Calculated Data © Human Capital Management Institute 13 Example: Forecast Total Cost of Workforce Status quo GAP=Labor Cost growth 22% v 10% Planned * TCOW= Total Cost of Workforce, aka Total Labor Cost
$- $200 $400 $600 $800 $1,000 $1,200 $1,400 2015 2016 2017 2018 2019 2020 Millions TCOW Calculated vs Strategic Plan Calculated Strategic Plan 10.0% 10.5% 0% 2% 4% 6% 8% 10% 12% 2016 2017 2018 2019 2020 TCOW % Change Strategic Plan Calculated Variables Status Quo Controlled Growth Workforce Headcount 12% 5% Average Employee Salary 8% 4% Bonus & Incentive Pay (Average) 5% 2% Total HR Costs 11% 5% GAP closed Strategic Plan Bottoms up fit © Human Capital Management Institute 14 Example: Forecast Total Cost of Workforce Controlled Growth =Labor Cost growing at Plan 10% Rate Changes
SOLVE Demo © Human Capital Management Institute
Workforce Productivity © Human Capital Management Institute 16
© Human Capital Management Institute 17 SOLVE – Productivity Dashboard Example Index Metric Score One score that summarizes how your organization is doing along with its quantified impacts. Index Metric in Graph Analyze the change rate of your index metric and the industry average and plan with SOLVE’s built-in predictive tools. Scenario Manager Detailed scores and benchmarks of the components that made up the index metric. Critical Insights & Predictions Control workforce dynamics that impact the business down to the job-level details.
Benefits of Using SOLVE Pro – Functional/Financial 1. Dedicated HCMI analyst for analytics and planning (1 FTE) 2. External benchmarks for Productivity, Recruiting, Learning, Turnover + more 3. Unlimited “What-If” Scenario Modeling capability for “Forecast” metrics 4. Easily Quantify $1.0M+ future “ROI” impacts (i.e. business case) 5. Link HR and Workforce metrics and data to financial results 6. Low Total Cost of ownership with SaaS (1/2 or lower vs. on-premise solutions) 7. Online version of HCMI’s Human Capital Metrics Handbook; 8. Powerful drill down across multiple dimensions for root cause analysis/ reporting 9. Automated preparation of Human Capital Financial Statements 10. On-demand workforce planning for rapid completion of workforce planning 11. Guaranteed pricing at contract rates © Human Capital Management Institute 18
The Human Capital Disclosure Statement
© Human Capital Management Institute 20 HCMI Background Jeff Higgins, Founder & CEO Human Capital Management Institute Jeff is a driving force in Workforce analytics at leading companies who transform workforce data into a source of value creation via planning and predictive modeling. With his unique combination of experience as both a senior HR executive and former CFO, Jeff helps organizations around the world rapidly advance their analytics & workforce planning journey. He is a regular speaker at HR events, a member of the Human Capital Institute National Advisory Council on Talent Leadership and a founding member of the PwC Saratoga Institute advisory council on metrics. • HCMI has been focused on workforce productivity since 2009. In 2010 a client asked if human capital data could be presented in reports like financial statements. Thus began a journey to Human Capital Financial Statements (HCFS™). • After 5 years, working with over 100 organizations, and creating the world’s largest workforce productivity database, we have distilled the complexity of human capital reporting into a single document called a “Human Capital Disclosure Statement.”
Why Should we Bother with Workforce Productivity © Human Capital Management Institute 21 • Institutional Investors are demanding it • Being utilized by a growing number of forward looking S&P 500 organizations • Dow Jones Sustainability Index adopted Human Capital ROI Ratio in 2014 (over 900 companies submitted for 2014) Dow Jones Sustainability Index (DJSI)
22 Introduction to Productivity © Human Capital Management Institute
…and Human Capital ROI ratio is downright awful. +21.8% (19.0%) REVENUE Great Revenue per FTE growth! Do you know your workforce productivity? But Return on Human Capital Investment is bad… (29.2%) 1 2 Example: Investment Banking Sector, 1996-2012 The Workforce Productivity Paradox 3
Metrics Profit per FTE Revenue per FTE Human Capital ROI Ratio Return on Human Capital Investment Total Cost of Workforce Percent of Operating Expense Total Cost of Workforce Percent of Revenue Human Capital Metrics Drive Stock Price © Human Capital Management Institute 24 The top 25% of companies improved HC metrics by 51%, driving 4.0% average annual stock price gains (CAGR) and 66.0% overall
-7.0% 0.4% 9.8% -2.7% 5.7% 25.4% 10.9% 12.9% 26.2% 14.8% 19.9% 28.0% -10% -5% 0% 5% 10% 15% 20% 25% 30% Low-Performers Mid-Performers Top Performers Human Capital ROI Ratio Return on Human Capital Investment Stock Price Market Value (Capitalization) Human Capital Metrics and Market Performance © Human Capital Management Institute 25 Top quartile companies improved workforce productivity 9.8% & 25.4% annually, seeing 26.2% annual stock price gains, double the market average improvement Top QuartileBottom Quartile 25th to 75th Percentile Human Capital and Market Capitalization, Financial Services, October, 2015 Financial Services Industry Change Rates (CAGR) 2012-2014
26 What is in the Human Capital Disclosure Statement © Human Capital Management Institute 1. Human Capital Impact 1. Income Statement 2. Cash Flow Statement 3. Balance Sheet Traditional Financial Statements Human Capital Disclosure Statement 3. Human Capital Cost 2. Human Capital Flow Examples: • Total Cost of Workforce (TCOW) • Productivity Impact • Human Capital ROI Ratio Examples: Inflows, Outflows, number of Contingent Staff, Transfers and Promotions Examples: Employee Salary Cost, Contingent Workforce Cost, Recruiting Cost Data #3 #2 #1 26 #4 4. Management Discussion Examples: Overall workforce growth, critical and non-critical job roles, etc. Key Step: Align Human Capital to Finance
27 Human Capital Disclosure Statement © Human Capital Management Institute A B C A. Human Capital Impact • Integrates Financial and People Metrics • Shows Return on People & workforce productivity B. Human Capital Flow • Employee + contingent workforce (hires, terms, internal hires) C. Human Capital Cost • Breakdown Total cost of workforce (TCOW) • Breakdown of HR & training investments D. Management Discussion • Explanation of significant workforce changes and talent strategy Stories of changes in talent performance metrics and strategic direction D
Prior Year Current Year % Chg Revenue Net Operating Revenue 1,400,000,000$ 1,540,000,000$ 10.0% Total Headcount (FTE) 15,000 16,400 9.3% Revenue per FTE 93,333$ 93,902$ 0.6% Costs Total Operating Expenses* 1,170,000,000$ 1,285,000,000$ 9.8% Total Cost of Workforce (TCOW) 779,950,000$ 861,000,000$ 10.4% TCOW per FTE 51,997$ 52,500$ 1.0% TCOW % of Revenue 55.7% 55.9% 0.4% Profit Net Operating Profit 143,750,000$ 159,375,000$ 10.9% Profit per FTE 9,583$ 9,718$ 1.4% Workforce Productivity Hunan Capital ROI Ratio 1.29 1.30 0.1% Return on Human Capital Investment 18.4% 18.5% 0.4% Human Capital ROI per FTE 15,333$ 15,549$ % 1.4% Total Cost of Workforce (TCOW) increasing more than Revenue TCOW was up year-over-year 10.4% above the 10.0% Revenue increase, negatively affecting workforce productivity. Workforce Productivity Both workforce productivity metrics improved, however the rate of growth is minimal and well below the 3% productivity gains of competitors. Profit per FTE Operating Profit increased 10.9%, and profit per FTE 1.4%, partly offsetting the negative impact of higher TCOW. Further profit gains vs. peers seem unsustainable without further productivity gains. Revenue per FTE is up Revenue increased 10.0% while headcount increased 9.3%, resulting in a revenue per FTE increase of .6% 25© Human Capital Management Institute A. Human Capital Impact
29 B. Human Capital Flow © Human Capital Management Institute Increases in Support Staff What is driving increased support staff? Is this why TCOW is increasing faster than revenue? Contingent Workforce Is contingent workforce a feeder group for critical roles? A low cost workforce strategy or a gap filler? How does contingent workforce fit in the strategic company direction? Management Internal Hire Rate 75 Internal Staff were promoted into mgmt however 115 were hired externally or only 39% of internal staff was considered ready for management Critical Job Roles - Sales While 860 sales people were hired, (450) departed. Why? Are they high or low performers, new hires or veterans? Co. Growth and success is heavily reliant on this group. Buy Build Rent
30 C. Human Capital Cost © Human Capital Management Institute Absence Lost Days and Cost These costs are increasing rapidly, was this due to one time events or longer term trends? Benefit Costs The largest rapidly rising cost is benefit costs for employees. What is the plan to better manage these costs? How does the organization compare to peers in this area? Are Training & Development costs aligned with the company growth strategy? Is the organization “Building, Buying or Renting” its best current and future talent? Total Cost of Workforce is increasing as a higher rate than revenue, a long term predictor of declining workforce productivity. How will the company better manage these costs as they execute on their growth plans?
Research on Human Capital Reporting
32 What To Include in Human Capital Reporting © Human Capital Management Institute Source: http://ww2.cfo.com/people/2012/04/proposed-standard-calls-for-human-capital-disclosure/ by David McCann HR Reporting Standards Recommended by American National Standards Institute (ANSI)
© Human Capital Management Institute 33 Human Capital Disclosure Requirements MatrixI = Included in Management's Human Capital Discussion InternationalIntegrated ReportingCouncil OMERSOntario MunicipalEmployees RetirementSystem SustainableAccounting StandardsBoard,SASB IRRCInstitute-HBS, MaterialityofHuman CapitaltoFin.Perf. GRI–GlobalReporting Initiative AccountingforPeople TaskForce2003 SmarterAnnualReport 2015,Creelman,Bassi DowJonesSustainability Index2014-2015 ANSI-SHRMInvestor GuidelinesforReporting HC2012 CIPDValuingYour Talent2014-2015 NAPF–National AssociationofPension Funds ISO:NWIPN-141,HC ReportingforInt.&Ext. stakeholders TOTAL HCDisclosure Statement Workforce Composition Workforce Headcount           10  Workforce Cost          9  Workforce Productivity          9  Return on Workforce or People          9  Workforce Composition-Breakdown          9  - Contingent Labor Cost       6  - Contingent Labor Force Size       6  - Benefits (i.e. full-time v part-time)       6  - Geographic-Global Workforce Distribution      5  - Revenue per Employee or FTE     4  - Demographics, Diversity (i.e. Age, Gender)    3 I - EBITDA per employee or FTE    3  - Full-time v part-time    3  - Job Level    3  - Talent Efficiency/Effectiveness   2  - Proportion Professional qualified employees   2  - Work Hours  1  Workforce Skills and Capabilities - Total Training Investment          9  - Leadership Depth/Career devpmt/Succession         8  - Talent Management       6  - Competencies and Skills       6  - Internal Hire Rate       6  - Average training hours per employee    3  - Leadership Quality/ Effectiveness    3  - Training Types (formal/informal, technical, apprentice)   2 I - Training by Job Group   2 I - Number of Courses Taken  1 I - Number of PhD's (or total # of Patents)  1 I Overarching HC Disclosure Objectives Human Capital Performance, Productivity            11  Comparable across entities/industries            11  Category, Element, Metric or Dimension Human Capital Disclosure Requirements Matrix I = included in Management’s Human Capital Discussion
© Human Capital Management Institute 34 Human Capital Disclosure Requirements Matrix - continued I = included in Management’s Human Capital Discussion
Case Studies
36© Human Capital Management Institute Case Study: BroadTek Communications Revenue Prior Year Current Year Variance % Chg Net Operating Revenue $4,114,540,000 $4,444,560,000 $330,020,000 8.0% Total Workforce Headcount (FTE) 4,645 4,750 105 2.3% Revenue per FTE $885,800 $935,697 $49,897 5.6% Costs Total Expenses $2,788,752,921 $2,809,406,376 $20,653,455 0.7% Total Operating Expense $2,262,997,000 $2,377,839,600 $114,842,600 5.1% Total Cost of Workforce (TCOW) $447,661,952 $467,567,712 $19,905,760 4.4% TCOW Percent of Revenue 10.9% 10.5% -0.4% -3.3% TCOW Percent of Expenses 16.1% 16.6% 0.6% 3.7% TCOW Percent of Operating Expenses 19.8% 19.7% -0.1% -0.6% Profit EBITDA(1) $1,316,652,800 $1,511,150,400 $194,497,600 14.8% Net Operating Profit $573,155,422 $680,017,680 $106,862,258 18.6% Profit per FTE $123,392 $143,162 $19,770 16.0% Productivity and ROI of Human Capital Total Market Capitalization (2) $6,304,709,642 $6,800,176,800 $495,467,158 7.9% Average Market Capitalization Value per FTE $1,357,311 $1,431,616 $74,305 5.5% Human Capital ROI Ratio 3.96 4.50 0.54 13.5% Return on Human Capital Investment 128.0% 145.4% 17.4% 13.6% TOTAL WORKFORCE PRODUCTIVITY IMPACT: $355,630,545 $700,578,523 $344,947,978 97.0% 1 1 2 2 2 3 3 Key Findings: TCOW growing slower than Revenue and Profit per FTE Positive HC ROI Ratio and Return on HC Investment Case Study: BroadTek Communications
Case Study: BroadTek Communications 37 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ClearTel RayFi BroadTek Revenue per FTE Profit per FTE Total Cost of Workforce per FTE Productivity Gain(Loss) per FTE Note: All Dollars in Thousands KPI = Key Performance Indicator FTE = Full Time Equivalents 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% ClearTel RayFi BroadTek Revenue per FTE Profit per FTE Total Cost of Workforce per FTE -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% Human Capital ROI Ratio Return on Human Capital Investment ClearTel RayFi BroadTek Current Financial KPIs Prior-Current Year KPI Variance Prior-Current Year Productivity Variance 1 Poor Performance Relative to Competitors Average Performance Relative to Competitors Strong Performance Relative to Competitors 2 3 3 © Human Capital Management Institute
Case Study: BroadTek Communications © Human Capital Management Institute 38 The Human Capital Asset Statement Human Capital Headcount Deployed Prior Period Percent of Total Current Period Percent of Total Variance Employees 4,395 94.6% 4,535 95.5% 3.2% - Management & Senior Leadership 610 13.1% 615 12.9% 0.8% - Professional Staff 1,310 28.2% 1,405 29.6% 7.3% - Sales Staff 730 15.7% 805 16.9% 10.3% - Specialists and Technicians 515 11.1% 530 11.2% 2.9% - Skilled Trade Staff 115 2.5% 105 2.2% -8.7% - Operations Staff 210 4.5% 210 4.4% 0.0% - Service Staff 550 11.8% 560 11.8% 1.8% - Administrative Support Staff 250 5.4% 220 4.6% -12.0% - Laborers and Helpers 105 2.3% 85 1.8% -19.0% Contingent Staff 250 5.4% 215 4.5% -14.0% Total Workforce 4,645 100.0% 4,750 100.0% 2.3% Step #1: Measure Changes in Workforce Headcount • Total Employees • Sales Staff and Service Staff = Core Workforce • Administrative + Laborers and Helpers = Non-Core Workforce Step #2: Quantify Differential Value of High vs. Low Value Add Roles • Core Job Roles add Greater Value • Critical Job Roles add Greater Value
39 Case Study: BroadTek Communications © Human Capital Management Institute Optimizing The Workforce by Measuring Job Roles
Talent Management Impact Findings 40 $ ROI from Change in Average Days to Start Scofield reduced Average Days to Start by (-5) for critical revenue generating roles, with savings of $1.5 million due to 1,250 productive days saved at $1,200 in lost productivity per day. Internal vs. External Cost per Hire Differential Scofield saves $4,500 in recruiting costs on positions filled internally. NOTE: professional or manager positions filled may have larger savings while low level positions may lower or $0. (see Asset Statement for details) Internal vs. External Hire Compensation Cost Impact Scofield saves $1,000 in total compensation, a part of Total Cost of Workforce (TCOW), on average, for every role filled internally. NOTE: Professional or mgmt positions filled may have larger savings while low level positions may have $0 or negative savings (see Asset Statement for details) Span of Control Impact Scofield increased overall management span of control from 12 to 12.6, saving the need to hire over 100 new managers, a Total Cost of Workforce productivity savings of $10.06 million.
41 HCMI Analytics and Planning Vision © Human Capital Management Institute • Allow organizations to measure workforce value creation • Link metrics to business results & drive company business strategies • Create a bridge between the Workforce and Traditional Financial Measures

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HCMI Intro SOLVEPro Demo Deck Aug 2016e

  • 1.
    1 HCMI Introduction andDemo - Aug, 2016
  • 2.
    2 About Human CapitalManagement Institute HCMI Background:  Specialized in HR analysis & measurement  Deep expertise in Workforce Analytics & Planning  Board made up of CFOs and HR heads  Over 40 years of experience What We Do:  Measure the immeasurable in human capital  Transform workforce data into business intelligence  Provide Tools and Training so HR can Partner with Finance Workforce Assessment w Strategic Consulting w Training Best Practices w Workforce Analytics and Planning w Benchmarking The Human Capital Management Institute (HCMI) was founded on the belief that organizations can, and must, find better ways of measuring their investments in human capital. Our vision of the future is one in which human capital measurement and information is as integral to business decision making as financial information is today. We Bring Financial Discipline, Standards and Rigor to the HR Function Have You Found Your Analytics Pot of Gold?
  • 3.
    Human Capital MetricsHandbookTraining and Advisory Support • Workforce Analytics Training • Workforce Planning Training • Custom onsite training HCMI Products & Services © Human Capital Management Institute 3 620+ Metrics and Detailed Definitions Data Integration Blueprint Workforce Analytics Assessment Analytic Consulting On-Demand Analytics COE and Roadmap Design Statistical Prediction Correlation Coefficient ( 0-1) Factors Leading to Increased Turnover Job Title or Position Dissatisfaction With Compensation High vs. Low Turnover Manager Commute Distance Driver #3 Driver #2 Driver #1 .50 .33 .27 .02 Low Turnover Impact High Turnover Impact Some Turnover Impact .11 Work Location Number of Jobs in Last 3 Years .70 Hired Through Employee Referral .19 Initial Reports & Analysis Data Gathering First Good Metrics HR Data Warehouse Drill-down,standard reports ScenarioAnalysis External Benchmarking Context fordecisions Data Driven Decision Making! Turnover, Headcount,Hiring HRISsystem data COE Formation Data Errors HR Analytics Mandate HR Standards EstablishedLost HR Credibility HR data/systems Assessed HR Data Cleansed historicaldata scrubbed Bus. Units Reject Analysis Data Errors Historical data still bad 1st Analytics Study Advanced Analytic Studies HR Analysis Validated Integrated HR Databases COE Launches Training Courses Bus. Units Demand more Analytics journey steps Setbacks along the way Journey path and goal CONSULTING SERVICES Integrated Dashboard DASHBOARDSPRO TECHNOLOGY SOLUTIONS Human Capital Financial Statements • Human Capital Impact Statement • Human Capital Asset Statement • Human Capital Flow Statement Workforce Quantifier™ ROI Calculator • ROI of Workforce Decisions • Cost of Turnover, Cost per Hire Workforce Planning • Link Workforce and Financial Metrics • Forecast Skills, Costs, Talent and Productivity Job Framework Mapping • Integrated Taxonomy 15,000+ jobs • Map Critical Job Roles Span of Control Optimizer™ Tool • Benchmark and Optimize Spans • Optimize Management Layers Career Path Quantifier • ROI of Career Path • Build, Buy or Lease Talent Analysis $$$ Financial Impact Metrics Data Blueprint Predictive Modeling TRAINING & SUPPORT
  • 4.
    Clients Include… CONFIDENTIAL, DONOT COPY OR REDISTRIBUTE
  • 5.
    Asking the RightQuestions © Human Capital Management Institute 5 What If you could answer the following? 1. What is our workforce productivity? Is it improving? How do we rank? 2. Where do our stars come from in Sales? In Operations? In leaders? 3. Is it better to build, buy or rent talent? What is the right workforce cost? 4. What is the ROI of our training investment in the workforce? 5. Which are the strategic critical roles (game winners) vs. operational critical roles (keep us in the game)? 6. Do we know drivers of employee turnover? What about employee engagement and retention drivers? 7. Are leaders effectively managing human capital? Do leaders correlate to employee engagement, retention and performance?
  • 6.
    1. Is ourworkforce headcount the optimal size and shape? What about our workforce Cost? 2. What percent of our workforce is customer-facing or revenue-generating? What is the trend? 3. Is the organization building, buying or renting its’ critical and core talent? 4. What is our workforce productivity? 5. Is workforce productivity increasing, decreasing or static? How are we performing versus peers? 6. What is the marginal return of a dollar invested in the workforce? 7. Is the ROI on Human Capital higher than other investments? 8 Are leaders effectively managing human capital? Do leaders link to engagement, retention, performance? 9 Where does our best talent come from? Which managers are the best talent scouts and coaches? 10.What percent of our workforce is highly engaged? Is it increasing or decreasing? 11.Is there a link between engagement, performance and productivity? 12.What is our leadership and critical role bench strength? 13.Can we forecast our workforce to optimize cost, profit and productivity? 25 Key Human Capital Questions 14. What business areas/positions/leaders have the highest turnover? How do we compare to peers? 15.Are we losing the right people(low performers) or the wrong people(high performers or critical roles/skills)? 16. What is our regrettable turnover rate? Why is talent leaving? Is by design or accident? 17. Is the quality and cultural fit of new hires improving? Can we measure it? 18. Is attracting/recruiting talent impacting growth? What recruiting source yields the best cultural fit? 19. What is the size and cost of our contingent workforce? Is it by accident or by design? 20. What part of our workforce costs are increasing the most? Can we control it better? 21. What is our Total Cost of Workforce as a percent of revenue? Of expenses? How do we compare to peers? 22. Are we investing the right amount in training? Could training improve productivity & profitability? 23. If talent is critical is the training investment adqaute to support the business strategy? 24.Is internal mobility a source of value or not? What percent of the workforce moves internally each year? 25.What percent of open positions are filled internally? What percent of management roles? © Human Capital Management Institute 6
  • 7.
    Key Differentiators © HumanCapital Management Institute 7 • Human Capital Financial Statements(HCF$™) (adopted by Institutional investors) • SOLVE Metrics online metrics handbook • Workforce productivity benchmark database (7,000 companies) 3 Layers of IP 1. Powerful software (predictive scenario modeling of future workforce) 2. Proprietary data integration “Blueprint” (HR, financial, operational data) 3. Experience, 100’s of successful project insights in SOLVE Have You Found Your Analytics Pot of Gold? $1.0 Million ROI Guarantee!
  • 8.
    SHOW ME THEMONEY! © Human Capital Management Institute 8 • 15% productivity gain and lower costs ($55.0 Billion Package Delivery Co. ) • Predicting sales stars pre hire {$1.0 Billion Bank} • ROI of sales training {$2.0 Billion Retail Co.} • Location optimization for talent growth {US Regional Bank} • Employee engagement to revenue impact {$1.0 Billion public Airline} • 40% voluntary turnover reduction {public, financial services co.} • ROI of internal vs. external hires {public bank} $1.1 Billion Annual $264 Million Annual $1.1 million per sales person $250 Million Annual $250k per Salesperson $200 Million 10 years $96 Million Annual $5 per flight premium $12 Million Annual $6 Million Annual
  • 9.
    Evolution of aNew Ecosystem © Human Capital Management Institute 2010 9 What if someone owned “financial statements” in financial reporting? Would this help public companies? Would this help software technology firms? Would this help accounting firms? Would this help HR ! YES ! Human Capital Disclosure Statement™ Dashboards Human Capital ROI Dashboards Human Capital Financial Statements HCFS ™ Pro Automated Analytics Ecosystem
  • 10.
    © Human CapitalManagement Institute 10 Evidence-based Human Capital Management > QUANTIFY > ANALYZE > OPTIMIZE Quantify not just financial info but also the impact of human capital to business outcomes. Analyze past operations, historical change rate and forecasted performance and benchmark them against the industry average. Optimize workforce strategy by selecting the interventions that yield the highest ROI impact, Linking Human Capital to Financial Performance From Theory to Practice SOLVE combines Human Capital data with Finance and Operations to quantify hard-to-measure areas, analyze them and ultimately optimize the workforce. OPERATIONS FINANCE WORKFORCE
  • 11.
    © Human CapitalManagement Institute 11 SOLVE in Action: Workforce Productivity > QUANTIFY > ANALYZE > OPTIMIZE • Model and Forecast Productivity • Analyze Productivity, Total Cost of Workforce and Profit change rate • Analyze Workforce Cost relative to Revenue and Total Expenses • Benchmarks: Peer Comparison Use analysis tools to answer the following questions: • What is your workforce productivity? Is it higher than peers? • What is the marginal return of one dollar invested in workforce? • Is the ROI on Human Capital higher than other investments? • Is workforce productivity increasing, decreasing or static? Analysis Examples: • Total Cost of Workforce • Return on Human Capital Investment • Human Capital Investment ROI ratio
  • 12.
    © Human CapitalManagement Institute 12 How SOLVE Helps Users Discover Insights > Validate, Configure and Standardize Data > Identify Trends & Conduct Initial Analysis > Build Workforce Scenarios & Conduct Advanced Modeling > Optimize Workforce Interventions with Quantified Impacts, Cost Savings & Project ROI
  • 13.
    $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 $2,000 2015 2016 20172018 2019 2020 Millions TCOW* Calculated vs Strategic Plan Calculated Strategic Plan 22.0% 10.0% 0% 5% 10% 15% 20% 25% 2016 2017 2018 2019 2020 TCOW* % Change Calculated Strategic Plan Variables Status Quo Controlled Growth Workforce Headcount 12% Average Employee Salary 8% Bonus & Incentive Pay (Average) 5% Total HR Costs 11% $X,XXX,XXX below calculated data $627M GAP v Calculated Data © Human Capital Management Institute 13 Example: Forecast Total Cost of Workforce Status quo GAP=Labor Cost growth 22% v 10% Planned * TCOW= Total Cost of Workforce, aka Total Labor Cost
  • 14.
    $- $200 $400 $600 $800 $1,000 $1,200 $1,400 2015 2016 20172018 2019 2020 Millions TCOW Calculated vs Strategic Plan Calculated Strategic Plan 10.0% 10.5% 0% 2% 4% 6% 8% 10% 12% 2016 2017 2018 2019 2020 TCOW % Change Strategic Plan Calculated Variables Status Quo Controlled Growth Workforce Headcount 12% 5% Average Employee Salary 8% 4% Bonus & Incentive Pay (Average) 5% 2% Total HR Costs 11% 5% GAP closed Strategic Plan Bottoms up fit © Human Capital Management Institute 14 Example: Forecast Total Cost of Workforce Controlled Growth =Labor Cost growing at Plan 10% Rate Changes
  • 15.
    SOLVE Demo © HumanCapital Management Institute
  • 16.
    Workforce Productivity © HumanCapital Management Institute 16
  • 17.
    © Human CapitalManagement Institute 17 SOLVE – Productivity Dashboard Example Index Metric Score One score that summarizes how your organization is doing along with its quantified impacts. Index Metric in Graph Analyze the change rate of your index metric and the industry average and plan with SOLVE’s built-in predictive tools. Scenario Manager Detailed scores and benchmarks of the components that made up the index metric. Critical Insights & Predictions Control workforce dynamics that impact the business down to the job-level details.
  • 18.
    Benefits of UsingSOLVE Pro – Functional/Financial 1. Dedicated HCMI analyst for analytics and planning (1 FTE) 2. External benchmarks for Productivity, Recruiting, Learning, Turnover + more 3. Unlimited “What-If” Scenario Modeling capability for “Forecast” metrics 4. Easily Quantify $1.0M+ future “ROI” impacts (i.e. business case) 5. Link HR and Workforce metrics and data to financial results 6. Low Total Cost of ownership with SaaS (1/2 or lower vs. on-premise solutions) 7. Online version of HCMI’s Human Capital Metrics Handbook; 8. Powerful drill down across multiple dimensions for root cause analysis/ reporting 9. Automated preparation of Human Capital Financial Statements 10. On-demand workforce planning for rapid completion of workforce planning 11. Guaranteed pricing at contract rates © Human Capital Management Institute 18
  • 19.
    The Human CapitalDisclosure Statement
  • 20.
    © Human CapitalManagement Institute 20 HCMI Background Jeff Higgins, Founder & CEO Human Capital Management Institute Jeff is a driving force in Workforce analytics at leading companies who transform workforce data into a source of value creation via planning and predictive modeling. With his unique combination of experience as both a senior HR executive and former CFO, Jeff helps organizations around the world rapidly advance their analytics & workforce planning journey. He is a regular speaker at HR events, a member of the Human Capital Institute National Advisory Council on Talent Leadership and a founding member of the PwC Saratoga Institute advisory council on metrics. • HCMI has been focused on workforce productivity since 2009. In 2010 a client asked if human capital data could be presented in reports like financial statements. Thus began a journey to Human Capital Financial Statements (HCFS™). • After 5 years, working with over 100 organizations, and creating the world’s largest workforce productivity database, we have distilled the complexity of human capital reporting into a single document called a “Human Capital Disclosure Statement.”
  • 21.
    Why Should weBother with Workforce Productivity © Human Capital Management Institute 21 • Institutional Investors are demanding it • Being utilized by a growing number of forward looking S&P 500 organizations • Dow Jones Sustainability Index adopted Human Capital ROI Ratio in 2014 (over 900 companies submitted for 2014) Dow Jones Sustainability Index (DJSI)
  • 22.
    22 Introduction to Productivity ©Human Capital Management Institute
  • 23.
    …and Human Capital ROIratio is downright awful. +21.8% (19.0%) REVENUE Great Revenue per FTE growth! Do you know your workforce productivity? But Return on Human Capital Investment is bad… (29.2%) 1 2 Example: Investment Banking Sector, 1996-2012 The Workforce Productivity Paradox 3
  • 24.
    Metrics Profit per FTE Revenueper FTE Human Capital ROI Ratio Return on Human Capital Investment Total Cost of Workforce Percent of Operating Expense Total Cost of Workforce Percent of Revenue Human Capital Metrics Drive Stock Price © Human Capital Management Institute 24 The top 25% of companies improved HC metrics by 51%, driving 4.0% average annual stock price gains (CAGR) and 66.0% overall
  • 25.
    -7.0% 0.4% 9.8% -2.7% 5.7% 25.4% 10.9% 12.9% 26.2% 14.8% 19.9% 28.0% -10% -5% 0% 5% 10% 15% 20% 25% 30% Low-Performers Mid-Performers TopPerformers Human Capital ROI Ratio Return on Human Capital Investment Stock Price Market Value (Capitalization) Human Capital Metrics and Market Performance © Human Capital Management Institute 25 Top quartile companies improved workforce productivity 9.8% & 25.4% annually, seeing 26.2% annual stock price gains, double the market average improvement Top QuartileBottom Quartile 25th to 75th Percentile Human Capital and Market Capitalization, Financial Services, October, 2015 Financial Services Industry Change Rates (CAGR) 2012-2014
  • 26.
    26 What is inthe Human Capital Disclosure Statement © Human Capital Management Institute 1. Human Capital Impact 1. Income Statement 2. Cash Flow Statement 3. Balance Sheet Traditional Financial Statements Human Capital Disclosure Statement 3. Human Capital Cost 2. Human Capital Flow Examples: • Total Cost of Workforce (TCOW) • Productivity Impact • Human Capital ROI Ratio Examples: Inflows, Outflows, number of Contingent Staff, Transfers and Promotions Examples: Employee Salary Cost, Contingent Workforce Cost, Recruiting Cost Data #3 #2 #1 26 #4 4. Management Discussion Examples: Overall workforce growth, critical and non-critical job roles, etc. Key Step: Align Human Capital to Finance
  • 27.
    27 Human Capital DisclosureStatement © Human Capital Management Institute A B C A. Human Capital Impact • Integrates Financial and People Metrics • Shows Return on People & workforce productivity B. Human Capital Flow • Employee + contingent workforce (hires, terms, internal hires) C. Human Capital Cost • Breakdown Total cost of workforce (TCOW) • Breakdown of HR & training investments D. Management Discussion • Explanation of significant workforce changes and talent strategy Stories of changes in talent performance metrics and strategic direction D
  • 28.
    Prior Year CurrentYear % Chg Revenue Net Operating Revenue 1,400,000,000$ 1,540,000,000$ 10.0% Total Headcount (FTE) 15,000 16,400 9.3% Revenue per FTE 93,333$ 93,902$ 0.6% Costs Total Operating Expenses* 1,170,000,000$ 1,285,000,000$ 9.8% Total Cost of Workforce (TCOW) 779,950,000$ 861,000,000$ 10.4% TCOW per FTE 51,997$ 52,500$ 1.0% TCOW % of Revenue 55.7% 55.9% 0.4% Profit Net Operating Profit 143,750,000$ 159,375,000$ 10.9% Profit per FTE 9,583$ 9,718$ 1.4% Workforce Productivity Hunan Capital ROI Ratio 1.29 1.30 0.1% Return on Human Capital Investment 18.4% 18.5% 0.4% Human Capital ROI per FTE 15,333$ 15,549$ % 1.4% Total Cost of Workforce (TCOW) increasing more than Revenue TCOW was up year-over-year 10.4% above the 10.0% Revenue increase, negatively affecting workforce productivity. Workforce Productivity Both workforce productivity metrics improved, however the rate of growth is minimal and well below the 3% productivity gains of competitors. Profit per FTE Operating Profit increased 10.9%, and profit per FTE 1.4%, partly offsetting the negative impact of higher TCOW. Further profit gains vs. peers seem unsustainable without further productivity gains. Revenue per FTE is up Revenue increased 10.0% while headcount increased 9.3%, resulting in a revenue per FTE increase of .6% 25© Human Capital Management Institute A. Human Capital Impact
  • 29.
    29 B. Human CapitalFlow © Human Capital Management Institute Increases in Support Staff What is driving increased support staff? Is this why TCOW is increasing faster than revenue? Contingent Workforce Is contingent workforce a feeder group for critical roles? A low cost workforce strategy or a gap filler? How does contingent workforce fit in the strategic company direction? Management Internal Hire Rate 75 Internal Staff were promoted into mgmt however 115 were hired externally or only 39% of internal staff was considered ready for management Critical Job Roles - Sales While 860 sales people were hired, (450) departed. Why? Are they high or low performers, new hires or veterans? Co. Growth and success is heavily reliant on this group. Buy Build Rent
  • 30.
    30 C. Human CapitalCost © Human Capital Management Institute Absence Lost Days and Cost These costs are increasing rapidly, was this due to one time events or longer term trends? Benefit Costs The largest rapidly rising cost is benefit costs for employees. What is the plan to better manage these costs? How does the organization compare to peers in this area? Are Training & Development costs aligned with the company growth strategy? Is the organization “Building, Buying or Renting” its best current and future talent? Total Cost of Workforce is increasing as a higher rate than revenue, a long term predictor of declining workforce productivity. How will the company better manage these costs as they execute on their growth plans?
  • 31.
    Research on HumanCapital Reporting
  • 32.
    32 What To Includein Human Capital Reporting © Human Capital Management Institute Source: http://ww2.cfo.com/people/2012/04/proposed-standard-calls-for-human-capital-disclosure/ by David McCann HR Reporting Standards Recommended by American National Standards Institute (ANSI)
  • 33.
    © Human CapitalManagement Institute 33 Human Capital Disclosure Requirements MatrixI = Included in Management's Human Capital Discussion InternationalIntegrated ReportingCouncil OMERSOntario MunicipalEmployees RetirementSystem SustainableAccounting StandardsBoard,SASB IRRCInstitute-HBS, MaterialityofHuman CapitaltoFin.Perf. GRI–GlobalReporting Initiative AccountingforPeople TaskForce2003 SmarterAnnualReport 2015,Creelman,Bassi DowJonesSustainability Index2014-2015 ANSI-SHRMInvestor GuidelinesforReporting HC2012 CIPDValuingYour Talent2014-2015 NAPF–National AssociationofPension Funds ISO:NWIPN-141,HC ReportingforInt.&Ext. stakeholders TOTAL HCDisclosure Statement Workforce Composition Workforce Headcount           10  Workforce Cost          9  Workforce Productivity          9  Return on Workforce or People          9  Workforce Composition-Breakdown          9  - Contingent Labor Cost       6  - Contingent Labor Force Size       6  - Benefits (i.e. full-time v part-time)       6  - Geographic-Global Workforce Distribution      5  - Revenue per Employee or FTE     4  - Demographics, Diversity (i.e. Age, Gender)    3 I - EBITDA per employee or FTE    3  - Full-time v part-time    3  - Job Level    3  - Talent Efficiency/Effectiveness   2  - Proportion Professional qualified employees   2  - Work Hours  1  Workforce Skills and Capabilities - Total Training Investment          9  - Leadership Depth/Career devpmt/Succession         8  - Talent Management       6  - Competencies and Skills       6  - Internal Hire Rate       6  - Average training hours per employee    3  - Leadership Quality/ Effectiveness    3  - Training Types (formal/informal, technical, apprentice)   2 I - Training by Job Group   2 I - Number of Courses Taken  1 I - Number of PhD's (or total # of Patents)  1 I Overarching HC Disclosure Objectives Human Capital Performance, Productivity            11  Comparable across entities/industries            11  Category, Element, Metric or Dimension Human Capital Disclosure Requirements Matrix I = included in Management’s Human Capital Discussion
  • 34.
    © Human CapitalManagement Institute 34 Human Capital Disclosure Requirements Matrix - continued I = included in Management’s Human Capital Discussion
  • 35.
  • 36.
    36© Human CapitalManagement Institute Case Study: BroadTek Communications Revenue Prior Year Current Year Variance % Chg Net Operating Revenue $4,114,540,000 $4,444,560,000 $330,020,000 8.0% Total Workforce Headcount (FTE) 4,645 4,750 105 2.3% Revenue per FTE $885,800 $935,697 $49,897 5.6% Costs Total Expenses $2,788,752,921 $2,809,406,376 $20,653,455 0.7% Total Operating Expense $2,262,997,000 $2,377,839,600 $114,842,600 5.1% Total Cost of Workforce (TCOW) $447,661,952 $467,567,712 $19,905,760 4.4% TCOW Percent of Revenue 10.9% 10.5% -0.4% -3.3% TCOW Percent of Expenses 16.1% 16.6% 0.6% 3.7% TCOW Percent of Operating Expenses 19.8% 19.7% -0.1% -0.6% Profit EBITDA(1) $1,316,652,800 $1,511,150,400 $194,497,600 14.8% Net Operating Profit $573,155,422 $680,017,680 $106,862,258 18.6% Profit per FTE $123,392 $143,162 $19,770 16.0% Productivity and ROI of Human Capital Total Market Capitalization (2) $6,304,709,642 $6,800,176,800 $495,467,158 7.9% Average Market Capitalization Value per FTE $1,357,311 $1,431,616 $74,305 5.5% Human Capital ROI Ratio 3.96 4.50 0.54 13.5% Return on Human Capital Investment 128.0% 145.4% 17.4% 13.6% TOTAL WORKFORCE PRODUCTIVITY IMPACT: $355,630,545 $700,578,523 $344,947,978 97.0% 1 1 2 2 2 3 3 Key Findings: TCOW growing slower than Revenue and Profit per FTE Positive HC ROI Ratio and Return on HC Investment Case Study: BroadTek Communications
  • 37.
    Case Study: BroadTekCommunications 37 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 ClearTel RayFi BroadTek Revenue per FTE Profit per FTE Total Cost of Workforce per FTE Productivity Gain(Loss) per FTE Note: All Dollars in Thousands KPI = Key Performance Indicator FTE = Full Time Equivalents 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% ClearTel RayFi BroadTek Revenue per FTE Profit per FTE Total Cost of Workforce per FTE -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% Human Capital ROI Ratio Return on Human Capital Investment ClearTel RayFi BroadTek Current Financial KPIs Prior-Current Year KPI Variance Prior-Current Year Productivity Variance 1 Poor Performance Relative to Competitors Average Performance Relative to Competitors Strong Performance Relative to Competitors 2 3 3 © Human Capital Management Institute
  • 38.
    Case Study: BroadTekCommunications © Human Capital Management Institute 38 The Human Capital Asset Statement Human Capital Headcount Deployed Prior Period Percent of Total Current Period Percent of Total Variance Employees 4,395 94.6% 4,535 95.5% 3.2% - Management & Senior Leadership 610 13.1% 615 12.9% 0.8% - Professional Staff 1,310 28.2% 1,405 29.6% 7.3% - Sales Staff 730 15.7% 805 16.9% 10.3% - Specialists and Technicians 515 11.1% 530 11.2% 2.9% - Skilled Trade Staff 115 2.5% 105 2.2% -8.7% - Operations Staff 210 4.5% 210 4.4% 0.0% - Service Staff 550 11.8% 560 11.8% 1.8% - Administrative Support Staff 250 5.4% 220 4.6% -12.0% - Laborers and Helpers 105 2.3% 85 1.8% -19.0% Contingent Staff 250 5.4% 215 4.5% -14.0% Total Workforce 4,645 100.0% 4,750 100.0% 2.3% Step #1: Measure Changes in Workforce Headcount • Total Employees • Sales Staff and Service Staff = Core Workforce • Administrative + Laborers and Helpers = Non-Core Workforce Step #2: Quantify Differential Value of High vs. Low Value Add Roles • Core Job Roles add Greater Value • Critical Job Roles add Greater Value
  • 39.
    39 Case Study: BroadTekCommunications © Human Capital Management Institute Optimizing The Workforce by Measuring Job Roles
  • 40.
    Talent Management ImpactFindings 40 $ ROI from Change in Average Days to Start Scofield reduced Average Days to Start by (-5) for critical revenue generating roles, with savings of $1.5 million due to 1,250 productive days saved at $1,200 in lost productivity per day. Internal vs. External Cost per Hire Differential Scofield saves $4,500 in recruiting costs on positions filled internally. NOTE: professional or manager positions filled may have larger savings while low level positions may lower or $0. (see Asset Statement for details) Internal vs. External Hire Compensation Cost Impact Scofield saves $1,000 in total compensation, a part of Total Cost of Workforce (TCOW), on average, for every role filled internally. NOTE: Professional or mgmt positions filled may have larger savings while low level positions may have $0 or negative savings (see Asset Statement for details) Span of Control Impact Scofield increased overall management span of control from 12 to 12.6, saving the need to hire over 100 new managers, a Total Cost of Workforce productivity savings of $10.06 million.
  • 41.
    41 HCMI Analytics andPlanning Vision © Human Capital Management Institute • Allow organizations to measure workforce value creation • Link metrics to business results & drive company business strategies • Create a bridge between the Workforce and Traditional Financial Measures

Editor's Notes

  • #2 Theme HCFS: the journey to workforce productivity Elements to include/ embed into the slides They value it more if they work to derive the idea Ikea effect More for less Add Productivity metrics linkage to stock price
  • #3 Pro
  • #7 -This is a list of key questions companies should be aiming to answer. -helps to build a story around your analytics- brings numbers alive (no longer just numbers but people) -Can help to identify low hanging fruit. -If you don’t have the data to answer them, start laying the groundwork to get it -Today will be focusing on a few of these key questions. ( I encourage to download this from our website)
  • #10 Human Capital Disclosure Statement Human Capital ROI Dashboards Human Capital Financial Statements Automated Reporting, Benchmarks, Analytics
  • #11 SOLVE differentiator
  • #12 Data Processor Connecting Data from multiple sources Trending them Build Scenario Assess Scenarios with Impacts & ROI Select & Thrive Evidence based talent managmeent
  • #13 How does SOLVE handle this
  • #18 Data Processor Connecting Data from multiple sources Trending them Build Scenario Assess Scenarios with Impacts & ROI Select & Thrive Evidence based talent managmeent
  • #20 Add Productivity metrics linkage to stock price
  • #22 Featured on CFO.com Being used by X Y Z Human Capital ROI -> Dow Jones Sustainability Index
  • #24 Stage by stage by stage Unfolding the story slowly Dramatize but not too dramatic Points: The most recognized business-related productivity metric shows a great long-term trend in a pretty profitable industry However, two key human capital productivity metrics reveal a divergence of results. This shows that human capital investments have been inefficient over that time, actually driving down the profitability of businesses that are otherwise growing. For a company like [prospect firm name], that equates to [x] billion dollars over a five year period!
  • #25 Not only does this show up in the financial statements, if affects market value, which directly affects shareholders and the company’s ability to invest in growth, innovation for competitive advantage, etc. Check this out: in our study, the top 25% of companies improved Human Capital metrics by 51%, seeing 4.0% average annual stock price gains and 66.0% overall overall during that time, vs. an average decline. Measuring, and managing from advanced human capital metrics creates a huge competitive advantage! Profit per FTE Revenue per FTE Human Capital ROI Ratio (HC ROI Ratio) Return on Human Capital Investment (Return on HCI) Total Cost of Workforce Percent of Operating Expenses (TCOW % of Operating Expenses) Total Cost of Workforce Percent of Revenue (TCOW % of Revenue
  • #31 Advanced metrics year by year are interesting in and of themselves, but require context to truly provide real insights Trends and Forecasting productivity changes into the future- indicate whether you’re going in the right direction or going down a dangerous path Benchmarking creates contest both for where you are and where you are going- how will you compare in 5 years at the current rates? Digging deeper Segment by workforce category (See “Optimizing Workforce Analytics through Workforce Segmentation” Less time on this and next One example: organization which was behind competitors, but rapidly growing and projected to catch up to competitors
  • #32 Add Productivity metrics linkage to stock price
  • #36 Cheryl
  • #37 Advanced metrics year by year are interesting in and of themselves, but require context to truly provide real insights Trends and Forecasting productivity changes into the future- indicate whether you’re going in the right direction or going down a dangerous path Benchmarking creates contest both for where you are and where you are going- how will you compare in 5 years at the current rates? Digging deeper Segment by workforce category (See “Optimizing Workforce Analytics through Workforce Segmentation” Less time on this and next One example: organization which was behind competitors, but rapidly growing and projected to catch up to competitors
  • #38 -BroadTek compared company performance to its competitors using traditional metrics such as Revenue and Profit per FTE. -Its workforce productivity seemed relatively low, leading the board of directors to propose reductions in workforce to improve efficiency and financial performance. ----- -Management asked HCMI to further analyze BroadTek’s productivity to see if this was necessary. -BroadTek was improving productivity by investing in the growth of core, revenue generating job categories such as sales and service staff while reducing costs in administrative and support staff.