1. Regan Klein EPI-USE Principal Consultant, Workforce Planning & Analytics Making Workforce Analytics Stick: Pitfalls, Challenges, and Stick-and-Stay Strategies

2. Welcome & Introductions The Business Case for Workforce Analytics Common Roadblocks, Challenges & Pitfalls Making It Stick Lessons Learned Q&A Agenda 2

3. About EPI-USE Niche HCM Service Provider with SAP as the Core! 3

4. Some Of Our Clients 4

5. The Business Case For Workforce Analytics

6. Are you making decisions about your people with the same rigor, logic and confidence as your decisions about money, customers, products and technology? 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) 6

7. 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 7

8. Data Empowers CFOS, CIOS AND SALES EXECS have credibility with CEOs because their views and decisions are based on data. NEW HR LEADERS win executive authority with credible data, business cases, and ROI forecasts. “If you and your head of HR haven’t recently discussed ideas for using data to generate a talent strategy that’s more closely linked to business results, it’s time to start. 8

9. Roadblocks, Challenges, & Pitfalls

10. When All Else is Equal Technology enables, but does not create results. It’s how you use it that matters. 10

11. Average number of human capital data points on SuccessFactors member dashboards: Why The Adoption Problem? Cannot Be Lack of Data… 230 Metrics 112 Analysis Dimensions 68 Time Periods 3122 Org Units = 5.5 Billion Data Points Q: Which ones matter and to whom? Q: Do you trust the data? Q: What’s really impacting your organization? 11

12. 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. 12

13. 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 13

14. Making It Stick

15. Best Practices for Making It Stick Alignment with Business Strategy Executive Level Reporting Dollarize Reporting Strategy Communication Plan Quick WinsPilot Program 15

16. Strategic Alignment: Prioritize Workforce and Business Issues For Analysis A Top-Down ApproachA 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 Capital Metrics Functional Strategy Increase Market Share Customer Retention Customer Acquisition Requests for Data Analysis Request: Investigate company age profile Reason: Anticipated spike in retirements by 2015 Business 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 headcounts Business Case: ? Summary: Low Priority Requests for Data Analysis Request: Investigate company age profile Reason: Anticipated spike in retirements by 2015 Business 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 headcounts Business Case: ? Summary: Low Priority 16

17. 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) 17

18. Key Learnings For Presenting and Packaging Executive Level Data 1.Regular Reporting is a Must Data credibility Rhythm Standardization (Formulas, Definitions, etc.) 2.Balancing Breadth and Depth Scorecards KPIs Clear linkage to business issue 3.Combining Data and Analysis Effective story-telling Target-setting Benchmarking Recommended action 18

19. Cost of Turnover = Average Salary x # of Exiting 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 Multipliers (e.g., High Performer Multiplier = 1.5 x regular employees) Money Talks: Quantify and Dollarize 19

20. 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 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 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 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 20

21. 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 21

22. Different Strokes for Different Folks AudienceCommunication NeedsTheir Concerns Executive Team Secure approval Obtain funding for new policies What is the ROI/cash flow impact of this data? HR Team Redefine role in business Enable strategic consulting What should be HR’s strategic priorities? Line Managers Gain broad support Illustrate opportunities for “wins” Will this help me achieve my business goals? 22

23. Analysis of your organization’s Strengths, Weaknesses, Opportunities, and Threats will help identify quick wins and prioritize resources towards problem areas. Identify Quick Wins 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 23

24. 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 24

25. Lessons Learned

26. Critical Decision Points for Metric Success Data-Driven Momentum 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 mining Quick wins are not capitalized upon Skeptics point to the lack of ROI metrics Data producers are supported with training and development opportunities 26

27. 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 Source What 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 27

28. 3M’s: Measure, Monitor, Manage 3R’s: Re-evaluate, Rebrand, Relaunch Executive Level Reporting Strategic Alignment: What are the Metrics that best answer the questions that drive the business? Key Takeaways 28 Does Your Workforce Analytics Program Incorporate The Following?

29. Questions 29

30. Regan Klein EPI-USE, Principal Consultant, Workforce Analytics & Planning Telephone:310.318.2137 Email: Regan.Klein@us.epiuse.com Web: http://www.epiuse.com http://www.epiuse.com Thank You! 30