Analytics: HR's Next Big Idea

Analytics: HR’s Next Big Idea

The ROI of Human Capital

Presented by:

Dr. Jac Fitz-enz

Founder & CEO

Human Capital Source

June 16, 2010

Jeff Quinn

Senior Director of Research

Monster.com

Sponsored By:

TODAY’S OBJECTIVE

Discover the New Model of Human Capital

Management and How it Drives Organizational

Management (and Profitability)

THE BIG HC QUESTIONS

How do we uncover our true human capital costs?

How do we build a reliable talent supply chain?

How do we attract and retain mission-critical capabilities?

How do we convert data into business intelligence?

How do we sustain employee engagement?

How do we predict effects of investments?

3© 2010, Jac Fitz-enz Sao Paulo, May 24, 2010

How Do You Know Where, How

and How Much to Invest

to Solve a Major Problem

or Exploit a Great Opportunity?

Action Analysis


Finance

(GAAP)

Marketing

(CSM)

HR

(BUSY)

Manufacturing

(MRP)

Business Models


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Resource: Predictive Analytics

FIRST: A Framework / Model

Logical Questioning System to

Analyze Current and Historical Data

and Enable Predictability


1. SCAN

Structural

Relational

Human

2. PLAN

Capabilities

Development

Engagement

3. PRODUCE

Staff – Pay

Develop – Retain

4. PREDICT

Strategic

Operational

Leading

HCM:21 Predictive Management

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© 2010, Jac Fitz-enz Sao Paulo, May 24, 2010

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Predictive analytics

SECOND: ENABLERS

Statistics and Data Mining:

Find Patterns in Historical and

Transactional Data

Identify Risks & Opportunities

Guide Future Investment

Decision Making


Strategic Scan


Planning: Risk Management

Which are our mission

critical capabilities?

How strong is our bench in

each of these?

What is the growth potential

of the incumbents?

How vulnerable are they to

being hired away?

What will be the impact

when these are vacant?


WORKFORCE CAPABILITY PLANNINGIndustrial Era, Supply-Demand, Gap Analysis

CAPABILITY PROGRAMBuilding Capabilities


Competencies for Today

Skills: technical and interpersonal

Knowledge: technical and behavioral

Motivation: willingness to work

Commitment: belief in the company

Engagement: emotional involvement

Creativity: ability to innovate

Potential: ability to grow

Flexibility: deal with change

Leading: bring out the best

Competencies & Capabilities

Capabilities for Tomorrow

Skills: technical and interpersonal

Knowledge: technical and behavioral

Motivation: willingness to work

Commitment: belief in the company

Engagement: emotional involvement

Creativity: ability to innovate

Potential: ability to grow

Flexibility: deal with change

Leading: bring out the best

HOW WILL THEY DIFFER? . . . IF YOU SHIFT FROM . . .

Metal to Composites - Chemistry to Electronics - Analog to Digital

IF CHANGE COMES FROM . . .

Competition – Economics – Labor Demographics


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FROM LAGGING:

Counting Yesterday’s

Operating Results

TO LEADING:

Managing Tomorrow’s Predictors

Leadership, Engagement,

Readiness, Culture, Brand

TO STRATEGIC:

Making Human, Process,

Customer & Financial Connections

Shifting Measurement Focus


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Performance Connections

STRATEGICLabor Cost - Productivity - Attrition

Customer Attraction - Conversion - Spend

Process Efficiency - Operating Margins

Profitability - Mission Accomplishment

Process Costs - Cycle Times

Service Quantity & Quality

Employee Productivity

HR Operations Leading

Readiness - Leadership

Engagement - MC Retention

L & D Investment - Culture


Revenue Per

Full Time Equivalent

Human Capital ROI

R – (E-C) / C

L & D

Investment / ROI

Total Human

Capital Spend

Compensation as a

Percent of Revenue

Mission Critical

Turnover

Board Report


Case: A Corporate Transformation

COMPANY: Successful, multinational, engineering

SIZE: 35,000 employees

OBJECTIVE: Clarify vision and mission

Discuss real and perceived problems

Improve communication

Review goals and objectives

Improve divisional leadership

Develop managers

TIME LINE: NOW!

PROCESS: Predictive Management

INVOLVEMENT: 44 senior managers initially


What The Client Said

(IN JUST 6 MONTHS)

“We successfully implemented our management evaluation program

through which we identified our high potential employees. We

developed their career paths and identified their training and

development needs. We were also able to identify potential

successors and now we are working on their development needs.

The best thing we achieved after the session was change in mindset

of our business area heads.”

Head - Human Resources


The New Game

Tomorrow versus Yesterday

Predict versus Monitor

Business Results versus HR Functions


Using Analytics

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• Enterprise Holdings, through its subsidiaries, owns and operates more than

1 million cars and trucks, the largest fleet of passenger vehicles in the

world today, under the Alamo Rent A Car, Enterprise Rent-A-Car and

National Car Rental brands.

• The company is run by chairman and CEO Andrew Taylor, whose father,

Jack Taylor, founded the Enterprise Rent-A-Car in 1957 on the simple

philosophy. "Take care of your customers and employees first, and profits

will follow."

• Enterprise’s business model is a direct result of Jack Taylor's simple, but

powerful, belief and of how that belief relates to customer satisfaction,

employee development, fleet growth, and profitability.

http://www.enterprise.com/car_rental/home.do?link=Rent-a-Car-logo&cm_sp=Rent-a-Car-logo-_-NAV-_-US_EN

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Enterprise Business Situation

1.Approached Monster to help in the decision process of where

to locate a new customer contact center

2.Enterprise had considered dozens of various locations, and

believed that by using Monster’s real-time labor market

information, it could help determine the most effective city to

locate the new contact center

http://www.enterprise.com/car_rental/home.do?link=Rent-a-Car-logo&cm_sp=Rent-a-Car-logo-_-NAV-_-US_EN

The Framework

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1. Identify business need and capabilities required

Analytical Framework:

• Projected occupational growth

• Typical candidate profiles for this occupation

• Sector-specific information that impacts hiring (e.g., increased outsourcing,

technology advances, generational makeup of the workforce, etc.)

Monster proposed a multi-pronged analytical framework that included the

following steps, which can be applied to any business situation that involves

staff site selection

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2. Develop a short list of possible site locations

QUALITATIVE Factors Include:

• The location of current company facilities/offices

• Locations that provide the company with a

competitive or business development advantage

• Ease and/or cost of site location

• Company culture fit with a location

• Infrastructure (e.g., universities, public

transportation, commercial real-estate, airports)

• Local business and economic development

incentives

Qualitative and quantitative factors will be analyzed:

QUANTITATIVE Factors Include:

• Unemployment rate

• Payroll change

• Rate of economic growth

• Concentration of desired occupations in

each market

• Typical annual salary of desired occupation

A short list of locations can also be created by identifying quantitative factors

for each location and then sorting a large list of locations on those factors

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3. Evaluate the Talent Pool

After 3-6 locations have been selected for consideration, the first step is to evaluate

and compare the talent pool across locations.

Supply:

• Calculate the talent density

• Compare a national and local job search index

• Understand the talent profile for each location

Demand:

• Evaluate posting trends

• Calculate the Talent Demand Index for each occupation

• looking at supply versus demand for each of the markets

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4. Analyze the economic situation

The following should be included in each market summary:

• Unemployment and payroll trends

• Major industries and employers of the region

• Rate of economic growth or decline in the market

• Basic demographics of the workforce

• Economic incentives for companies to locate in the region

• Cost of facilities/office space in the market

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5. Identify the competition

Evaluate potential competitors in various ways:

• Use job posting trends to identify your close competitors’ presence

and recruitment activities in each location being considered

• Identify which industries hire the most for the occupation your

company will recruit

• Identify and profile top companies in each location being considered

Client Analysis

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1. Identifying The Business Need | Where do we start

10,000

Calls/Day

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2. Develop List of Site Locations | Client selected (4) sites

Market A

Market B

Market C

Market D

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Top 5 Job Seeker Locations within Customer Service, %

Change in Resumes

26%

26%

29%

63%

69%

0% 10% 20% 30% 40% 50% 60% 70% 80%

New Orleans

Mobile-Pensacola (Ft Walt)

Orlando-Daytona Bch-Melbrn

Colorado Springs-Pueblo

Ft. Myers-Naples

2. Develop List of Site Locations | Picking the Location

32Source: Monster internal data

3. Evaluating the Supply & Demand | Supply

Market A

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Top 20 U.S. Markets Rank

Waco-Temple-Bryan, TX 1

Flint-Saginaw-Bay City, MI 2

Toledo, OH 3

Detroit, MI 4

Tallahassee-Thomasville, FL 5

South Bend-Elkhart, IN 6

Huntsville-Decatur (Florence), AL 7

Wichita-Hutchinson Plus, KS 8

Atlanta, GA 9

Shreveport, LA 10

Greenville-N.Bern-Washngtn, NC 11

Columbia, SC 12

Jackson, MS 13

Colorado Springs-Pueblo, CO 14

Charlotte, NC 15

Augusta, GA 16

Florence-Myrtle Beach, SC 17

Evansville, IN 18

Savannah, GA 19

Omaha, NE 20

Locations with the Highest Resumes per

Posting within Customer Service & Call Center

Source: Monster internal data, 2007

• Monster ranked over 200 markets

based upon the number of resumes

per job posting

• Additional analyses was conducted on

the top 20 locations with the highest

resumes per job posting within

customer service and call centers

3. Evaluating the Supply & Demand | Supply

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Market (A) Analysis

3. Evaluating the Supply

& Demand | Demand

Market A

Market A

35Source: Call Center Employment, 1997-2007 (source: BLS.gov)

4. Economic Conditions | Call Center Employment

• As an industry, dedicated call

centers had experienced a

dip in employment over the

past 10 years

• By the end of 2004, there

were approximately 2.1

million customer service

representatives employed in

the U.S. which was 1.5% of

the overall workforce.

• Projected employment growth

between 2004 and 2014 for

the customer service

occupation was 23 percent,

greater than the average of

all occupations

36Source: BLS.gov

4. Economic Conditions | Payroll and Unemployment

Market A metropolitan area

jobless rate had decreased to 4.7

percent in May (2007), down from

5.1 percent a year earlier

Payroll in Market A grew 1.1 percent

year over year in May (2007), slower

than the U.S. as a whole

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5. Competition | Who are the players

1. Monster identified companies who had existing call centers or were in the

process of opening up such facilities within the considered markets

a. For example, the Market E and Market F markets (within 50 miles of the Market

D location under consideration) had become home to over 200 new customer

service centers

2. The competition and cost for talent in these markets were much higher

than in other markets and was a key influencer in Enterprise’s final

decision

3. The favorable competitive situation in Market A, combined with many other

factors, provided support for the recommendation that the client select

Market A as the location for its new customer service center

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In summary . . .

• Enterprise selected Market A for its contact center

• Enterprise chose Market A for several reasons, including strong labor supply relative to demand

• Enterprise also found Market A to be a good site for the contact center because of its

proximity to a university, which provides for a consistent source of educated and skilled

employees who are flexible with their schedules and in need of part-time opportunities

“The workforce here is great," said a local contact center director, "We're so lucky to be in a city

where we have access to a skilled, educated workforce.”

The Contact center began taking calls for Enterprise in April 2008. Employees at the new center now handle more than

10,000 reservations and customer service calls a day for Enterprise, National and Alamo

The performance of the contact center has been outstanding, with high customer resolution rates and high employee

and customer satisfaction. The care and diligence Enterprise exercised in analyzing all of the factors during the process

of selecting a site for its new contact center led to a successful site implementation and a desirable business outcome

Thank You & Questions

FREE Resource Center: www.humancapitalsource.com

Papers: Workforce and Succession Planning

Leadership - Retention - Outsourcing

Predictive Management - Rebranding HR

Metrics and Analytics Cases (FutureThought series)

Commentaries and Blogs

Books: 12 on HR Strategy and Measurement

May 2010: The New HR Analytics

[email protected]

408 223 7750

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Analytics: HR's Next Big Idea

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