measuring talent management effectiveness with integrated analytics

You can listen to today’s webinar using your computer’s

speakers or you may dial into the teleconference.

If you would like to join the teleconference,

please dial 1.408.600.3600 and enter access code: 491 777 946 #.

You will be on hold until the seminar begins.

Measuring Talent Management Effectiveness With

Integrated Analytics

#TMwebinar

Speaker: Kim Lennon

Senior Product Manager

SumTotal Systems

Moderator: Kellye Whitney

Managing Editor

Talent Management magazine

#TMwebinar



Tools You Can Use

• Q&A

– Click on the Q&A icon on your floating toolbar in the bottom right corner.

– Type in your question in the space at the bottom.

– Click on “Send.”

#TMwebinar

Tools You Can Use

• Polling

– Polling question will

appear in the

“Polling” panel.

– Select your

response and click

on “Submit.”

#TMwebinar

Frequently Asked Questions

1. Will I receive a copy of the slides after the webinar? YES

2. Will I receive a copy of the recording after the webinar?

YES

Please allow up to 2 business days to receive these materials.

#TMwebinar

#TMwebinar

Kellye Whitney

Managing Editor

Talent Management magazine



#TMwebinar



Kim Lennon

Senior Product Manager

SumTotal Systems

Presented by:

■ Kim Lennon – Sr. Product Manager

Measuring Talent Management Effectiveness With Integrated Analytics

April 9, 2012 – PROPRIETARY AND CONFIDENTIAL

Agenda

■ Challenges Facing HR

■ All About the Numbers

■ Improvements to Top and Bottom Line

■ Tools – What’s Available Today

■ SumTotal

■ Discussion


Level 2: Fundamental HR Services HR strategy partially or fully defined. Siloed HR functions.

Some standardized processes and policies; core services managed well.

Some automated talent systems, but little integration of data.

Level 3: Strategic HR Department HR aligned with business strategy.

HR functions supporting business needs.

Initiatives split between HR process improvements and talent needs.

Level 4: Business-Integrated HR HR strategy part of the business strategy.

HR helps to drive business decisions through people, data and insights.

Business and HR systems integrated and advanced.

Human Resources Maturity Model

Level 1: Compliance-Driven HR Services No HR strategy.

Personnel function, mostly separate from business and talent needs.

Line managers perform HR activities as they see best.

Bersin & Associates, 2010


HR Maturity Has Direct Impact on Business

0%

10%

20%

30%

40%

HR is a full partner in developing and

implementing the business strategy

Low Market Performers

High Market Performers

HR’s Relationship to

Business Strategy

Bersin & Associates Institute for Corporate Productivity


Bersin 2011 HR Factbook

shows organizations that

have reached maturity

(Level 4) by having

business-integrated HR

functions rather than

compliance drive (Level 1)

HR show significantly higher

performance in the following

metrics

Why Talent Analytics? Analyst research shows direct correlation to business performance


Poll Question # 1: What is your level of maturity?

1. Compliance-Driven HR Services – little to no strategy identified, departments

are still in charge of HR activities

2. Fundamental HR Services – definition of strategy began, still siloed HR

functions, some automated talent systems, but little data integration

3. Strategic HR Department – HR aligned with business strategy with HR support

business needs with initiatives split between employees and process

improvements

4. Business – Integrated HR – HR strategy is part of business strategy and HR

influencing business decisions through integrated and advanced systems


Talent

Management

Learning

Management

Workforce

Management

Payroll

Management

HR

Transformation

Integrated processes are mission

critical for certain industries

Need Integrated Talent management

across Organizational Models

Need Integrated Visibility and

Analytics Across HCM processes

Need Integrated Strategic

HCM Business Processes

Employees Contingen

t

Extended

Enterprise

Visibility of critical talent issues, gaps

and development plans

Align workforce strategy with

business objectives

Learning development suggestions and

assignments based on competency gaps

Demand driven talent succession, hiring, and

development plans based on gaps

Why Integrate Talent Management? Integrated business processes enable HR transformation


CEO

• Alignment and agility to respond to strategic business objectives

• Do we have the right talent and systems to support the growth?

VP of Sales • How can I get my team to meet it’s numbers?

• What are my people risks and mitigation plans?

CLO • Lack of visibility into how learning is impacting talent and

business

• Meet the needs of new multifaceted global organization

VP of Consulting

• Need control to align my teams schedules to spend and demand?

• How do I get schedule based on competencies and certifications ?

Head of HR • Need global view of talent and develop and recruit for talent

gaps?

• Self-service system for business to empower the organization

Why Integrate Talent Management? Typical pain points without integrated Talent Management


Business Drivers, How Will They Measure Success?

■ Improve / automate manual processes

■ Gaps within business visibility (compensation budget)

■ Improve data accuracy and consistency

■ Compliance for training

■ Provide visibility to feeder populations for executives through

senior management around the org

■ Provide good reporting (standard and ad hoc) for management to

“see” into these feeder groups

■ Provide flexible reporting structures since they have a globally

diverse, “non-flat” organization


Business Problem ■ Difficult to timely enforce

adherence of compliance

across divisions

■ Lack of global view of talent

■ Lack of business alignment

■ Low predictability in

performance

■ Inconsistency in business

decisions

■ Inability to quickly pinpoint

leading and lagging parts of the

business

■ Time wasted gathering

information – cycle time to pull

data together

■ Low data quality of data and

gathered results

Problem

Cannot Get Integrated Data for HCM

HRMS

Recruiting

Perf. Comp.

LMS

Succession

Manual &

Inconsistent

MODELING ANALYZE

PERFORMANCE

GOAL

SETTING

OPERATIONAL

PLANNING

MONITOR

RESULTS


Agenda





■ SumTotal

■ Discussion


How to Transform Your HR?

Source – Adapted from Bersin & Associates 2010


Why Measure Performance?

Learn & Improve

Report Externally & Demonstrate Compliance

Control & Monitor People


KPI Checklist

1. Which strategic objective is this indicator relating to?

2. What question do you want to have an answer to? What are

your information needs?

3. Who is asking this question? Who is the information customer?

4. What will they do with the information? Why are they asking?

■ Additional considerations:

■ What is the data collection method?

■ What is the source of the data?

■ What is the formula / scale / assessment method?

■ How often, when and for how long do you collect the data?

■ Who collects the data?

■ What is the target or performance threshold(s)?

■ What are the costs for collecting the data? Justified?


Workforce Measurement Strategy

■ Employee Engagement

■ Recruiting

■ Retention

■ Overall HR Costs

■ Manager Satisfaction

■ Compensation and Benefits

■ Employee Relations

■ Training and Development


Key Performance Indicators

$ Cost of Turnover

$ Cost of Benefits

$ Cost of Employee Training

% Employee Satisfaction

% Employee Motivation

% Employee Demographics

# Lost Time

% Absenteeism


Key Performance Indicators

% Turnover

% Involuntary Turnover

% Voluntary Turnover

# Hiring Cycle

# Average Length of Employment


HR Questions Answered Through KPIs

• % New hire retention

• % Vacancies filled internally

• # Average open time of positions

Is time-to-fill positions impacting company performance?

• % Average employee tenure

• % Talent retention

• # Bench strength penetration

Do we have sufficient labor to meet next quarter’s demand?

• % High performing employees

• % Turnover

• % Total compensation tied to performance

Does compensation policies for top performers impact retention?


Agenda





■ SumTotal

■ Discussion


■ "A mere 7% of employees today fully understand their company's business

strategies and what's expected of them in order to help achieve company

goals." Robert S. Kaplan and David P. Norton, "The Strategy-Focused Organization," Harvard Business School Press, 2001

■ “The performance differential between top and average performers is as

high as 10:1. Jack Welch, Former CEO, GE and Jerry Yang, Former Chairman of Yahoo

Corporate Executive Board Research shows the ratio to be 12:1 for “superstars”

■ “Organizations with superior human capital practices not only are correlated

with financial returns, but are a leading indicator of increased shareholder

value” Watson Wyatt’s Hyman Capital Index Research Report, 2004

■ “Cost of replacing an employee ranges from 25% - 200% of annual salary” Keeping the People Who Keep You In Business, American Management Association, 2000

How do you quantify ROI? Typical “Soft” Measures, what research shows…


“Soft” ROI Measures Employer of Choice = Best Employees

■ Compensation isn’t as important as career advancement and

working for an “employer of choice”

Gallup Research, 2011- Employee Engagement Overview Brochure


“Soft” ROI Measures Engaged Employees = EPS Growth

■ High employee engagement translates to improvements across

the business

Gallup Research, 2011- Employee Engagement Overview Brochure

"Companies that increase

employee engagement see

improvement in operating

margins.“

Towers Perrin, New Realities

in Today's Workforce


■ Human Capital Return on Investment (HCROI) – relation of human

capital investments to the profitability of the organization (The ROI of

Human Capital, Jac Fitz-enz, 2000)

■ HCROI = (Revenue – Pay and Benefits)/(Pay and Benefits)

How do you quantify ROI? Sample Calculations


Typical factors to consider related to IT Systems expenses:

■ Fewer systems, fewer data centers, less infrastructure

■ Lowered helpdesk support cost from fewer tickets and fewer systems to managed

■ Lower administrator cost of administering multiple systems

■ Cost of data not aligned between systems

How do you quantify ROI?

Assumptions

Annual IT FTE Fully-Loaded Cost 75,000$

System 1 IT Expense Cost Notes Cost Notes

Direct IT Expense 125,000$ 150,000$

System administration cost 75,000$ 1 FTE 75,000$ 1 FTE

Help Desk Cost 37,500$

Typically calculate based on cost per

incident or dedicated support

heads. In this case, using 1/2 FTE 56,250$ 3/4 FTE

System 2 IT Expense

Direct IT Expense 175,000$ -$

System administration cost 37,500$ 1/2 FTE -$

Help Desk Cost 18,750$

Typically calculate based on cost per

incident or dedicated support

heads. In this case, using 1/4 FTE -$

Integration Cost (cost of keeping data integrations in sync between)

Non-TM systems (HRIS, etc.) 11,538$ 2 weeks per quarter 5,769$ 1 week per quarter

Analytics data in sync between applications 5,769$ 1 week per quarter No cost

Total 486,058$ 287,019$

Yearly Savings 199,038$

Notes

You may have more existing systems and more consolidated systems but hopefully you are moving to fewer systems!

Existing Systems Consolidated System


How do you quantify ROI? Performance Management

Typical factors to consider related to

Performance Management:

■ HR Productivity

■ Employee/Manager Productivity

■ Improved Organizational Effectiveness

HR Productivity Cost Notes Cost Notes

Performance Management Administration 13,846.15$ 2 people 20 hours per month 2,076.92$ 1 person 3 hours per month

Roundtable/Ratings Calibration Support 6,442$

(2) review sessions per year with

100 hours time per session 1,442$ 25 hours per review session

Employee and Manager Productivity

Time spent writing performance reviews 399,038$

2 hours per manager and 1 hour per

employee 299,279$

1.5 hours per manager and .75 hour

per employee

Optimization of compensation budget (335,000)$

.05% improvement in overall $570M

comp budget

Time spent creating/aligning goals 161,058$

30 mins per goal (5 goals per

employee) 96,635$

20 minutes per goal (5 goals per

employee)

Improve organizational effectiveness

Increased revenues based on goal alignment (100,000)$ .01% increase in productivity

Decreased cost based on goal alignment (70,000)$ .01% decrease in cost

Improved productivity based on global performance

management 250,000$

.5% increase in productivity per

employee. 50% contribution margin,

10% attributable to TM integration

Lawsuit avoidance (cost per case) 500,000$ 5 cases per year @100k 400,000$ 5 cases per year @80k

HR Time per case 11,538$ 80 hours per case 4,615$ 32 hours per case

Total 1,091,923$ 549,048$

Yearly Savings 542,875$

Existing Systems Consolidated System


How do you quantify ROI? Performance Management Systems Integration

Category Existing

System

Consolidated

System

IT Expenses 486,058 287,019

HR Admin Costs 20,288 3,519

Employee/Manager Costs 560,096 60,913

Org Productivity Gains - (420,000)

Wrongful Termination Lawsuit $511,538 $404,615

■ Annual Savings = $1.1M

■ If the new system investment is $500k/yr, that results

in a 5.3 month ROI


■ Compensation

■ Comp Team Productivity

■ Time developing/deploying comp policies

■ Less time spent planning and approving comp recommendations

■ Reduce compensation budget overspending

■ Reduce time required to develop merit plans

■ Increase results by retaining top talent

■ Attract top talent due to compensation plans

■ Succession Planning

■ Succession Planning Team Productivity

■ Reduce Recruiting Costs

■ Reduce manager time spent on annual assessments

■ Reduce time create management reports

■ Reduce risk of business gaps due to lack of qualified personnel

■ Improve speed/success of entering new markets

■ Proactively develop plans to retain top performers

How do you quantify ROI? Other Modules


Poll Question #2: Which area of ROI is most important to your organization when evaluating Talent Management?

A. Efficiency gains – savings in time to execute HR processes across the company

B. Direct cost avoidance – not having to pay maintenance, hardware or headcount

related to multiple systems

C. Productivity gains – More productive employees /organization due to better

alignment / execution of business objectives

D. Talent Acquisition – Becoming an employer of choice to attract the best

candidates

E. Reduced turnover – better employee morale driving reduced turnover, especially

among high performers in org.


Agenda





■ About SumTotal

■ Discussion


Levels of Analysis Required

Visibility

• Pre-built reports

• Self service & Configurable Ad-hoc reporting

• Guided Navigation

• Alerts

Analysis

• Dashboards

• Key performance indicators (prebuilt & adhoc)

• Trend Analysis

Strategy

• Target and benchmarking

• Top & bottom performers

• Proactive strategy and planning

Excellence

• Management and operational excellence

• Actionable intelligence

• Continuous Improvement


Intelligence Through Analytics

Standard Reports

Ad Hoc Reports

Drill Down (Through)

Alerts

Statistical Analysis

Forecasting

Predictive Modeling

Prescriptive Modeling

Degree of Intelligence

Com

petitive A

dvanta

ges

Now and Past

Future


Don’t Do All the Heavy Lifting Yourself

■ Web based / desktop based

■ Mobile (phone / tablet)

■ Export formats

■ Office Integration

■ Dashboard and scorecards

■ Alerts and subscription delivery

■ External data imports

■ Database Versions

■ Rich design environment (WYSIWYG)

■ Drill-down & drill-through

■ Actionable Intelligence


Analytics Tools of the Trade

■ External applications

■ Spreadmarts - heavily siloed Microsoft Excel workbooks

■ Business Intelligence vendors

■ Hardware / Software / Model

■ Company business intelligence platform (ERP Analytics)

■ Data warehouse supporting business areas – such as finance

■ Embedded reporting applications (HCM Analytics)

■ Existing reporting platform in your Talent Management or Learning

Management Platform


Strategic Workforce Analytics

Learning Performance

Compensation

Succession

Career

Development Hiring

Legacy & Custom Data Warehouse

3rd Party systems - SAP, Oracle, PeopleSoft

Flat Files (CSV, XLSX)

External Business Data

Role

Based

Dashboards

Pre Built

Key Performance

Indicators (KPIs)

Interactive &

Ad-hoc

Reporting

Alerts

&

Actions

Talent/

Custom

Portal

Integrated Strategic HCM - Talent Data Warehouse

■ Most comprehensive Strategic HCM-Talent

Data warehouse

■ 200+ HCM interlinked business objects

across learning, performance, succession,

compensation hiring and career development

■ Rationalized data and security across these

dimensions and processes

■ Pre-built & Ad-hoc key performance

indicators for most industry needs

■ Pre-built role based dashboards and 50+

KPIs most critical to companies

■ Flexible and quick ad-hoc KPIs and reports to

enable dynamic analysis

■ Strategic workforce analysis integrated with

external business data

■ Measure the impact of strategic HCM

processes based on impact to any business

drivers and data like financial, sales,

customer satisfaction

■ Easy to add any external data source and

create integrated reports

■ Actionable Intelligence for execution

excellence

■ Drill down into the detail transactional

information from any analysis

■ Drive closed loop execution and continuous

improvement with integration transactional

actions from reports


You can't manage what you don't measure!


Poll Question # 3: When do you think your organization will deploy actionable analytics?

A. Already using analytics to make a difference

B. Within next six months

C. From six to twelve months

D. Not on the radar – but should be…


Agenda





■ About SumTotal

■ Discussion


SumTotal Making HR More Strategic

Company and Business Executive Right talent strategies to meet my

business objectives

HR Executive/Manager Making HR more

strategic

Employee or Contractor Driving Engagement and

Retention

Information Technology Low TCO; Scalable for global

diverse organization

Global visibility of Talent

Pool and Gaps

Enable actionable insight and align

workforce strategy with company

objectives

Enforce compliance across

employees, partners, and contractors

Scale to the needs of global

growing organization


About SumTotal

Global Scalability

Mark

et S

hare

(users

)

SumTotal Worldwide Leader in Strategic HCM

3,500+

Customers

Over 43+ Million

End-Users

Leader in SMB, Mid-Market &

Enterprise Solutions

Worldwide Leader in Strategic Human Capital Management Solutions

http://www.imdex.com.au/index.php


Agenda





■ About SumTotal

■ Discussion


It’s your turn! Ask our expert…

Kim Lennon

[email protected]

Join Our Next TM Webinar

Tuesday, April 17, 2012 •

TM Webinars start at 2 p.m. Eastern / 11 a.m. Pacific

Register for upcoming TM Webinars at

www.talentmgt.com/events

Join the Talent Management magazine Network http://network.talentmgt.com/

#TMwebinar

The Evolution of Reference-Checking Into a

Strategic Hiring Solution