Jameson GreinerDirector, EPM Business Development & Client Engagement

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

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• 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

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• 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 over 1000 consultants world-wide

About EPI-USE

Niche HCM Service Provider with SAP as the Core!

The Business Case For Workforce Analytics

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Are you making decisions about your people with the samerigor, 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 &AnalyticsNot Using

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)

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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

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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 WorkforcePercentage 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

Workforce Analytics: What It Is & What It Isn’t

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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.

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Link Corporate Strategy to Measurable Business Impact

ACTION IMPACTGrow 20%Expand new marketsCut operating costsImprove serviceCut time to marketInnovate

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 tenureStaff turnoverQuality of hirePay distribution

Workforce planningOptimizepay distributionChangeon-boarding

GrowthCost reductionEffective leadershipProductivity

ASK THE RIGHT QUESTIONS

INSIGHTSTRATEGY

BASEANSWERS ONFACTS VS. GUT FEELINGS

KNOW THEIMPACT 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?

A Simple Definition of the Terrain

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Valu

e /Im

pact

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?

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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…

Roadblocks, Challenges, & Pitfalls

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Do We Have A Workforce Analytics Strategy?

“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?”

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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.

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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

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What is the biggest challenge your organization has encountered in your workforce reporting, workforce

analytics, or workforce planning efforts?

Discussion Question #2

Making It Stick

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Best Practices for Making It Stick

Alignment with

Business Strategy

Executive Level Reporting

Dollarize

Reporting Strategy

Communication Plan

Quick Wins

Pilot Program

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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 CapitalMetrics

Functional Strategy

Increase Market Share

Customer Retention

Customer Acquisition

Requests for Data AnalysisRequest: Investigate company age profileReason: Anticipated spike in retirements by 2015Business 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 headcountsBusiness Case:?

Summary: Low Priority

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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)

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• 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

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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

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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

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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 leave Threats

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

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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

Lessons Learned

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A Different Approach:100 Critical Human Capital Questions

Workforce Demographics and DiversityWhat 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 ProductivityIs the ROI on Human Capital higher than the ROI on working capital, invested capital or plant and equipment?

Workforce Health and SafetyWhat is the dollar cost impact of short- and long-term disability absences and claims?

Workforce Relations and SatisfactionWhat 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 MobilityWhat percentage of our workforce moves internally each year between lines of business or functional areas?

Workforce PlanningWhat is the magnitude of competency “gaps’ between needed and actual capabilities?

Staffing and RecruitingDo our new hires continually increase the overall quality and productivity of our workforce?

Workforce Compensation and BenefitsBased 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 DevelopmentHow have leadership development programs impacted productivity, profitability or employee satisfaction?

HR FunctionWhat is the ROI of our daily HR activities?

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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 SourceWhat 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

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Example of a KPI Framework

Maximise Return on Assets

Business DriversWorkforce

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

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Exercise

Become a Preferred Employer

Business DriversWorkforce

Implications

Market Expansion

Workforce Capability

Engaged Employees

People Management Initiatives KPIs

Customer Focused

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Critical Decision Points for Metric SuccessD

ata-

Driv

en M

omen

tum

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

miningQuick wins are not capitalized upon

Skeptics point to the lack of ROI

metrics

Data producers are supported with training

and development opportunities

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• 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

Does Your Workforce Analytics Program Incorporate The Following?

Facilitated Discussion

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Questions

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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.

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Jameson GreinerDirector, EPM Business Development & Client EngagementMobile: 678.978.4147Email: jameson.greiner@us.epiuse.com

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