The Datafication of HR [WHITE PAPER]

Graduating from HR Metrics to Workforce Analytics

Global competition for talent, outsourcing labor, compliance legislation, remote workers, aging populations – these are just a few of the daunting challenges faced byHR organizations today. Yet the most commonly monitored workforce metrics do very little to deliver true insight into these topics. Leaders need to graduate from metrics toanalytics, surfacing the important connections and patterns in their data to make better workforce decisions.

DefinitionsMetrics Analytics

Provide a standard system of measurement Provide systematic computational analysis of data or statistics

Measure single data points Connect multiple data points

Provide information Provide insights

Guide tactics and operations Drive strategy

State the past and present State the past, present, and predict the future

Provide tabular outputs of counts and rates Provide visual outputs of patterns and trends

TheDataficationofHR

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RecRuiting effectivenessRecruitment is the HR function that has the most positive impact on revenue creation and profitability.1 Yet common recruitingmetrics, such as “time to fill” and “cost to fill,” do not answer strategic questions about the quality and value of the people beinghired. Rather, the following analytics provide greater insight, enabling HR to take meaningful action to improve recruitingeffectiveness, driving revenue creation and profitability.

Analytic value

New hire performance Determine if new recruits meet expected performance levels, and adapt your recruiting processes as needed

New hire performance by lead source Identify your best sources for top talent, more efficiently targeting your resources to find the next high quality hire

Recruitment pipeline status Spot “supply chain” problems in your recruitment pipeline, and take remedial action before they become a pain

Employee exits before 90 days service Assess the characteristics of new recruits resigning in less than 90 days to improve your recruitment process

PeRfoRMAnceCompanies that excel at Talent Management achieve earnings that are eighteen percent higher than their peers. For a Fortune1000 company, this can translate into hundreds of millions of dollars in additional EBITDA earnings.2 To truly understand andimprove on performance management, companies need to look beyond metrics, such as “performance appraisal participationrate” and “median performance rating,” to analytics. When it comes to analyzing performance to drive business success thefollowing areas should be considered:

Analytic value

Pay for performance Correlate total rewards, compa-ratio, and performance levels to determine if you are effectively rewarding performance – top performers will revert to average or resign if they do not perceive themselves to be receiving a level of reward that recognizes their differential performance

Top talent characteristics Analyze the characteristics, tenure, work experiences, and managerial connections of your top performers, leveraging your findings to grow future top talent

Career progression Analyze the promotion rates, lateral moves, promotion wait times, and internal hiring rates of top performers to determine whether you are using the tools of opportunity to retain and maximize performance – top performers will typically value opportunities for career progression even more highly than their paycheck

1 Boston Consulting Group, From Capability to Profitability, July 2012. 2 The Hackett Group, Companies with Mature Talent Management Capabilities See 18 Percent Higher Earnings, December 2009.


tAlent RetentionWith voluntary resignations at a five-year high,3 the competition for top talent remains a constant, and retention of top talent is akey objective for most HR teams. Indeed, “turnover” is the single most prevalent HR metric. However, “turnover” does little tosupport strategic business plans. To achieve true insight a more in depth analysis is required.

Analytic value

Predicting the risk of exit Identify employees at risk of leaving, based on analysis of key characteristics of past resignations, and take action to prevent top talent from leaving before they are out the door

Resignation drivers Determine what factors increase and decrease resignations, more effectively targeting and fine tuning retention strategies

Resignation correlations Correlate resignation with factors such as compa-ratio, promotion wait time, pay increases, training opportunities, and so forth, to make better and more cost effective decisions around changes to pay, benefits, and employee development

Resignation segments Compare how resignation rates vary across locations, functions, tenure, age groups, diversity groups, and so forth, to ensure program investments are targeted where they will deliver the biggest results

8.2%Overall Resignation Rate

Increases rateDecreases rate

Analytics, such as the key factors decreasing and increasing resignation rates, enable HR to more effectively target and fine tune retention strategies

3 Bureau of Labor Statistics, Job Openings and Labor Turnover Survey, October 2013.

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eMPloyee MoveMentOrganizations can be thought of as highly complex systems, which have both a structural element and a network element. The structure is the organizational hierarchy, distribution of work, and business units. The network is the relationships andconnections between people within the organization. No matter how correct your structure, if the network element is missingthen your organization will not perform at its best. The primary way in which this network element is created and perpetuated is through employee movement. The following analytics provide a greater understanding of the impact that movement has on an organization.

Analytic value

Movement in and out of Ensure the business units that make the most difference to your organizational units business are increasing in talent quality, and not experiencing

“brain drain”

Build versus buy Track promotions, lateral moves, and the relative performance of individuals to achieve better results at a lower overall workforce cost – internal candidates often perform better more quickly and stay longer than “stars” who are parachuted in from outside 4

Leadership and succession modeling Tracking employee movement, promotions, and key experiences provides insight into the organizational pathways that have developed your top talent, and allow you to identify other likely succession candidates – research by Jac Fitz-Enz5 found a direct correlation between better succession management and revenue

Movement visuals enable organizations to analyze and optimize their workforce network

4 Boris Groysberg, Chasing Stars, 20125 Jac Fitz-Enz, Human Capital Report, 2009.


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totAl RewARDsWith compensation contributing to the largest share of total expenses, it is imperative to ensure that total rewards programs are competitive, yet also aligned with business goals. Typically compensation strategy and budgets are defined centrally, butallocations and decisions are distributed throughout the organization. This can create a disconnect between strategy andexecution. The best analytics approach is to focus on the following areas:

Analytic value

Total direct compensation dynamics Understand the rate at which direct compensation costs are increasing and how this reflects the FTE (full time equivalent) count in the business – if your costs are higher and rising faster than your competition, then you are at a cost disadvantage, which will impact profitability

Flexible workforce costs Identify effective cost management options by analyzing where people costs can be flexed to reduce expenses or speed up revenue creation (for example, overtime spending, budgeted salary for open hiring requisitions, forecasted bonus expenses, costs of contingent workers, and so forth)

Employment movement impacts Understand how entries to and exits from an organization impact on compensation the total compensation expenses

the DAtAficAtion of hRThe challenges in today’s business environment require new approaches to remain competitive in an ever-shrinking world ofglobal competition. By graduating from metrics to analytics, HR professionals and leaders can better understand the contributingfactors that are impacting their organization, and take the right actions to implement programs that will provide a truecompetitive advantage.


The Datafication of HR [WHITE PAPER]

Recruiting & HR

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