HR Metrics: Workforce Intelligence for Your CEO HRPA Ottawa Breakfast Series April 16, 2015

Agenda Introduction The ‘datafication’ of HR Why you should care (because your CEO loves this stuff) Essential HR Metrics (what everybody does) HR Analytics (what you can do / upping your game) The HR Annual Report ‘Best in Class’ examples Take Away’s

(Dr. John Sullivan, HR Metrics the World Class Way) Introduction “After 30 years studying HR departments, I have found that the largest single difference between a great HR department and an average one, is the extensive use of metrics” “CEO’s see business as a battlefield. They expect HR to provide the strategies and talent to give the firm a distinctive competitive advantage” (Dr. John Sullivan, HR Metrics the World Class Way)

Introduction - HR Metrics HR numbers Quantifiable measures of the effectiveness of HR programs. Objective, measurable and relevant to the organization. A vital way to quantify the cost and impact of employee programs and HR processes. Measure the success (or failure) of HR initiatives.

Introduction - HR Analytics Talent Analytics, Workforce Analytics and Workforce Intelligence. Combines data mining with business analytics techniques to analyze human resources data. Metrics with predictive data and insights. Show how HR contributes to the business. Opportunity for continuous improvement.

Why You Should Care Most organizations say that employees are their greatest assets, and a large portion of their operating budget. Few say these assets are easy to measure. Are your most valuable assets productive? Can you define ‘productive’? Are they regularly upgraded through targeted training? Does the organization know how to acquire more quality assets cost-effectively? Do the assets stay with the organization long enough to be worth the investment? The problem is not that there is not enough data – it’s that there is too much. Organizations do not know how to make this information meaningful.

Why You Should Care (2) HR metrics help HR become fact-based rather than opinion-based. HR is being required to measure themselves the same way as other business units. CFOs report on financial measurements. COOs report on operational measurements. CHROs report on people measurements – with a human touch. Gain credibility with the C-suite (CEO, CFO, COO) by providing numbers and tangibles that can be used to add value to the business and operations. Metrics allow HR to speak the “language” of CFO and CEO.

Us vs. Them Topic CEO HR Background Aptitude Attitude Goal Focus Business, military, sports Social sciences Aptitude Aggressive type A’s Friendly type B’s Attitude Hurt the competition Build relationships Goal Build competitive advantage Build plans and programs Focus Increase revenues Reduce costs Time Horizon Monthly, quarterly Annual Time Perspective Internet time Island time Success Business results Having a program (Dr. John Sullivan)

What’s NOT on the Mind of Your CEO? Where HR’s desks are located Percentage of Performance Appraisals completed Whether HR has a ‘seat at the table’ HR Transaction volumes Employee Birthdays United Way participation HR File Audits HR’s organizational structure Benefit’s sign-ups Is HR using the latest & greatest tools? Happy employees Social events Helping the less fortunate

What IS on the Mind of Your CEO? Winning What is my risk of losing High Potential Employees Do I have the right people? What is the cost of my turnover? Will I have enough skilled employees to create / develop new product? What is the gap between the Human Capital resources I have and those I need? Will I be able to get enough skilled employees to fill that new factory I’m building? Competitive advantage Are we paying competitively? Revenue! Costs! Productivity! Profits! Stock price!

The ‘Datafication’ of HR Metrics Analytics Standard system of data measurement Systematic statistical analysis Single data points Connects multiple data points Tabular counts and rates Visual patterns and trends Provide information Provide insights Guide operations Drive strategy State the past and present Predict the future www.Visier.com

The ‘Datafication’ of HR (2) Metrics Analytics HR was busy. We filled 45 out of 50 vacancies last year How many were key jobs? Average time to fill jobs? Number who passed probation? Number with high performance ratings after year 1. Manager satisfaction rate with process and results? HR conducted 30 exit interviews last year Why did they leave? What can we do about it? Have you fixed it yet? HR programs are working. Turnover decreased from 8% to 6% Turnover rate of top performers? What is $ impact on productivity / results? Monthly absenteeism is down from 15 days to 10 days What is the change in Revenue per employee and Productivity ratio?

The ‘Datafication’ of HR (3) Metrics Analytics We have 22 Sales Representatives $147K is the average yearly sales of a Sales Rep. It is $197K if they completed our Advanced Sales Training course. It averages $249K if they spend 6 hours a week or more on social networks. It is $304K if the Sales Rep did both. The average turnover is 12% Their average salary is $40K base plus 20 – 40% sales commission Each Sales Rep receives 4 days of training per year Dr. John Sullivan What actions will this drive?

HR Metrics Standard HR metrics include: Population demographics / Workforce Profile # of staffing requisitions filled Staffing time-to-fill Cost per hire Success rates of recruiting sources Training expenses / hours / # of employees trained Turnover rate / costs Absenteeism rate Health care costs per employee # of accidents / days since last accident

HR Analytics Costs – Know the costs of attrition, poor hiring, sub- optimal compensation, retaining poor employees and not training. “What if we train employees and they leave?” “ What if we don’t train them and they stay?” Flight Risk Assessment - Identify high performers at risk of leaving the organization?  Critical position + Top Performer + Flight Risk = Trouble Recruiting - Develop a “high performer profile” that enables you to hire the right people the first time. Revenue: Measure the revenue generated by hiring and retaining top performers compared to the revenue generated by an average performer.

HR Analytics (2) Workforce analytics include: Turnover Human Capital ROI Training Investment Factor Workforce Productivity Measures Turnover Resignation segmentation Slice and dice data looking for the root cause of turnover. By: Manager Tenure Generation Location Department Reason for leaving Performance level (High performers) Engagement scores When collecting data, the HR Department should determine what metrics are important to the organization and the department. Analyze reliable workforce data to improve and provide fact-based decision-making. Determine program/department effectiveness and help determine priorities.

HR Analytics (3) Recruiting Effectiveness Performance Talent Retention New hire performance, new hire performance by source Performance Top talent characteristics Career progression of top performers Talent Retention Flight risk Resignation drivers, resignation correlations (pay, promotion wait time, training) Compensation Pay for performance correlation Market pay policy position analysis Flexible workforce costs

HR Analytics (4) Employee Movement Brain gain vs. brain drain in key operational units Build vs. Buy correlation analysis Succession modeling

Predictive HR Analytics Turnover Modeling Predict future turnover in business units in specific functions or geographies. Targeted Retention Map critical positions to HiPo’s to Flight Risk profile to focus retention activities on a critical few people. Talent Forecasting Predict which new hires are likely to be high fliers and move them in to fast track programs. Revenue Projections From the recruitment / retention of top performers.

The Journey to HR Analytics Phase 1: Justification Foundational human capital investments Data collection Reporting Tools Phase 2: Measurement Metrics defined HR scorecards and dashboards Leadership accountability Standardization Phase 3: Effectiveness Key Performance Indicators Process Improvement Expanded organizational accountability More sophisticated tools Phase 4: Value Creation Genuine insights Decisions based on data and learnings Connections between people investment and business outcomes defined Predictive models Phase 5: Impact Achieving strategic goals

HR Analytics - Stages Business Value Complexity REPORTING What happened? ANALYSIS & MONITORING Why did it happen? What is happening now? PREDICTIVE ANALYTICS What can happen? Business Value Complexity HINDSIGHT Gather data Report data INSIGHT Make sense of data FORESIGHT Predict data

The HR Annual Report An end-of-year synopsis of the performance and results of the HR Department. Offers a gauge or snapshot of performance data used to support organizational and departmental decision- making. Summarizes and reminds all stakeholders of the concrete results HR provides. Best in class examples: HR department at Memorial University in Newfoundland. http://www.mun.ca/humanres/HR_Annual_Report.pdf Ryerson University and can be found at: http://ryerson.ca/content/dam/hr/about/annual_reports/2012-HR-Annual-Report.pdf

‘Best in Class’ examples Starbucks and Best Buy Can precisely identify the value of a 0.1% increase in employee engagement among employees at a particular store. AT&T Quantitatively established that a demonstrated ability to take initiative is a far better predictor of high performance than high grades from a prestigious school. Sprint and Oracle Have identified the factors that best foretell which new employees will leave after a relatively short time. Can predict which top performers were more likely to leave the organization and why. Google An average employee generates $1.3 million revenue. A ‘game changer’ software developer produces 300x that in revenue.

HR Analytics for Public / Non-Profit Sectors Organizations Impact United Way Ottawa Better HR / OD => Enhanced performance => Better fundraising results => 50,368 lives changed Hospitals Improved HR management => Evidence-based practices => Better patient care and lower cost of care Mills Community Support Person-centered approach to Org Design => Better Property Services programs => Affordable housing for people with disabilities and seniors Engender Health Effective HR management => Medical programs planned and staffed effectively => 50% reduction in maternal deaths in target geographies MicroNutrient Initiative / GAIN Effective organization, staffing and performance => better Food Fortification programs => Reduced malnutrition rates in LDC’s

Take Away’s Do you have an HR strategy? Do you have an HR business plan? What metrics / analytics do you currently use? What could you use? How? Develop an HR annual report / dashboard. Target results and business impacts. Move to fact-based, data driven decisions. Find out what your CEO / CFO wants.

Take Away’s (2) Focus on top performers. Don’t wait for the business to ask for your data, be proactive and start now. For example: “Why are sales down at XYZ location?” By digging into sales, customer, and employee data, you may be amazed at what you find. Quantify the revenue generation differential between top and average performers. Identify and target the jobs and employees that generate the most revenue / profit and organizational impact. Identify direct links between strategic impact areas (see slide 24) and HR programs using HR analytics.

Thank You! QUESTIONS?