Developing analytical skills and data literacy in HR
Transcript of Developing analytical skills and data literacy in HR
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Developing analytical skills and data literacy in HR
CIPD Annual Conference and Exhibition
[W2] Developing Analytical Skills and
Data Literacy in HR
Sam Hill
Sam HillFounder
Workforce Dimensions
@sam_hill_wfd
https://uk.linkedin.com/in/samuelhill68
+44 (0) 7540 783 211
Sam Hill
CONTEXT
Section 1
Defining People Analytics | Maturity Levels | Adding Value | Barriers to Success |
Broad Capabilities
Stages of Maturity
Descriptive2
Operational1
Predictive4
Prescriptive5
Diagnostic3
People Analytics > Adding Value through Insight
Workforce Reporting > Providing Information
Stages of Maturity
Descriptive2
Operational1
Predictive4
Prescriptive5
Diagnostic3
People Analytics > Adding Value through Insight
Workforce Reporting > Providing Information
Project Focus
Process Focus
Definition
Our definition for People Analytics:
Utilising investigative techniques to understand the contribution that people make to
business performance.
To inform and enable data-driven decisions intended to maximise this contribution.
Investment in Human Capital
Investments in Physical v Human Assets (In $ Trillions)
Source: Korn Ferry
Country US UK China France
Human Assets 244 27 110 24
Physical Assets 62 6 49 8
Country India Brazil South Africa Australia
Human Assets 80 32 7 12
Physical Assets 48 13 4 5
Scope of People Analytics
Limited
Scope
HR Analytics
Organisational Analytics
Community Analytics
Limitless
Scope
Value Add People Analytics
• Telling your audience something they didn’t already know Insightful
• About something that mattersRelevant
• Which will realistically trigger a meaningful interventionActionable
Value Add People Analytics
• Telling your audience something they didn’t already know Insightful
• About something that mattersRelevant
• Which will realistically trigger a meaningful interventionActionable
Or may not attach
significance to – we
need to be prepared for
the ‘so what’ response
‘Quantity’ is not our
success measure
Can they (we) mitigate
the risk or maximise
the opportunity?
Stages of Maturity
Descriptive2
Operational1
Predictive4
Prescriptive5
Diagnostic3
What are the barriers to moving
beyond Descriptive Reporting (Level
2?)
Data: Failure Points
100%
Data Accuracy
Diminishing Data Integrity
Perfection
Subjectivity
Timing
Data
Capture
Reporting
Accuracy
Data: Failure Points
100%
Data Accuracy
Diminishing Data Integrity
Perfection
Subjectivity
Timing
Data
Capture
Reporting
AccuracyWe are responsible for
this
We must influence this
We should recognise
these realities
As People Analysts:
Capability
• High performing companies have an urgent People Analytics need
80%
• Reported little or no Analytical Capability in HR85%
Source: IBM Survey
ContextHarvard Business Review July - August 2015:
CEOs know that they depend on their company’s human resources to achieve success.
Businesses don’t create value; people do.
But if you peel back the layers at the vast majority of companies, you find CEOs who are
distanced from and often dissatisfied with their chief human resources officers (CHROs) and
the HR function in general.
Research by McKinsey and the Conference Board consistently finds that CEOs worldwide
see human capital as a top challenge, and they rank HR as only the eighth or ninth most
important function in a company. That has to change.
Capabilities
Top Level
Characteristics
Providing Data FoundationsThe skill to stage data and design systems with workforce reporting and
analytics in mind - and a passion for data quality
An ability to act as the interface between HR and IT on major projects and
implementations
The discipline and knowledge that enables
focus on relevant investigations.
The ability to craft simple, concise, but
actionable conclusions
A curiosity and a passion for problem
solving
An adeptness at articulating the
significance of insight and the ability to
craft – and make a case for – a workable
intervention strategy
The gravitas to build relationships and to
communicate findings and
recommendations to clients
Capabilities
Top Level
Characteristics
Providing Data FoundationsThe skill to stage data and design systems with workforce reporting and
analytics in mind - and a passion for data quality
An ability to act as the interface between HR and IT on major projects and
implementations
The discipline and knowledge that enables
focus on relevant investigations.
The ability to craft simple, concise, but
actionable conclusions
A curiosity and a passion for problem
solving
An adeptness at articulating the
significance of insight and the ability to
craft – and make a case for – a workable
intervention strategy
The gravitas to build relationships and to
communicate findings and
recommendations to clients
The Mindset for successful People Analytics
WHERE TO FOCUS
Section 2
Mind map for a People Analytics Strategy | Applying Further Focus
Key Employee Segments and Roles
People Analytics Strategy: Basic
Workforce
Issues
HR Process &
Function
Business
Strategy
People Plan
People Analytics
Strategy
People Analytics Strategy: Extended
Workforce
Issues
HR Process &
Function
Business
Strategy
People Plan
People Analytics
Strategy
Strategic
Workforce
Plan
Programmes
&
Initiatives
Challenging
Assumptions
The HR
Agenda
Applying Further Focus
Three Considerations
Will an investigation in this area potentially deliver value?
Insightful > Relevant > Actionable
Are we prioritising our efforts on critical Employee Segments?
Our we differentiating our proposition by Audience Segment?
Key Employee SegmentsHigh
Low High
Uniqueness
Business Impact
Idiosyncratic
‘Mapping Human Capital Architecture’
Source | Scott Snell
Unique but not
generally critical to the
business
Mission Critical
Unique and critical to
the business
Common and fairly
replaceable
GeneralBusiness
Specific
Critical to the business,
but fairly common
Types of Human Capital
Key Employee SegmentsHigh
Low High
Uniqueness
Business Impact
Idiosyncratic
‘Mapping Human Capital Architecture’
Source | Scott Snell
Example:
Legacy IT System
Expertise
Mission Critical
Example:
30 goal a season
footballer
Example:
Administrative Staff
GeneralBusiness
Specific
Example:
Airline Pilots
Types of Human Capital
Job RolesKey Points:
A Job Role indicates explicitly what a person does
It is the language that the business uses – not ‘grade’, not ‘salary band’
Job Role is an important dimension for People Analytics – and vital for Strategic Workforce
Planning
Identifying Critical Job Roles brings additional focus and value
Key Employee SegmentsHigh
Low High
Uniqueness
Business Impact
How do job roles map
in your organisation?
BUSINESS STRATEGY
Section 3
Strategic Aims | A Focus on Retention
Back to the Case Study
IT Services and Consulting Firm
The Business Challenge
• Key Strategy to grow I.P.
• Critical Job Role(s): Developers (Existing Cohort of 950)
The Workforce Issue
• Resignation Rate for Developers had increased from 6% to 11% in the last six months
• Retention is becoming a problem
Segment by Skill Set
Entire Cohort
950 Headcount
Skill Set to Develop
Applications
640
No Skill Set to Develop
Applications
310
Segment by Activity
Entire Cohort
950 Headcount
Skill Set to Develop
Applications
640
ActivelyDeveloping
Applications Now
215
Not Actively Developing Applications
425
No Skill Set to Develop
Applications
310
Segment by Resignation Rate
Entire Cohort
950 Headcount
Skill Set to Develop
Applications
640
ActivelyDeveloping
Applications Now
215
Not Actively Developing Applications
425
No Skill Set to Develop
Applications
310
11%
13% 7%
Apply Different Reward Strategies
Entire Cohort
950 Headcount
Skill Set to Develop
Applications
640
ActivelyDeveloping
Applications Now
215
Not Actively Developing Applications
425
No Skill Set to Develop
Applications
310
Enhanced
Reward and
Environment
Strategy
Apply Different Reward Strategies
Entire Cohort
950 Headcount
Skill Set to Develop
Applications
640
ActivelyDeveloping
Applications Now
215
Not Actively Developing Applications
425
No Skill Set to Develop
Applications
310
Development
Strategy
Outcome
Entire Cohort
950 Headcount
Skill Set to Develop
Applications
640
ActivelyDeveloping
Applications Now
215
Not Actively Developing Applications
425
No Skill Set to Develop
Applications
310
10%
7% 20%
And Increased
Revenues of £££…..
Retention ConsiderationsWhy is Retention
Important?
Stability
Hold Knowledge
Keep Expertise
Who do we want to Retain?
Good Performers
High Potential
Critical Skills
Scarce Skills
Retention Strategy Options
Differentiated Reward Strategies
Better Onboarding
Development Pathways
Predict ‘Flight Risk’
Find a Focus Area Devise a Plan Execute and Measure the Plan
WORKFORCE ISSUES
Section 4
Staff Turnover (Resignations) | Manager Dissatisfaction
A typical Workforce Issue
Metrics Concerns Potential Cause
Sickness Absence
ABC Corporation:
Contact Centre (Kent)
The rate of sick absence has
increased from a typical 4.5% of
days lost to 6.2% in the last 3
months
Are we incurring direct costs in
the form of overtime to cover for
increased absence levels?
Will customer service be
compromised? Will this impact
future revenues?
Uncertainty after recent
announcement of a merger may
have impacted employee
engagement
Staff Turnover: How People Exit
Employee Action
Resignation
Employer Action
Dismissal (Performance or Conduct)
Redundancy
Divestment or TUPE Deal
Other
Retirement
Ill Health
End of Fixed Term Contract
Why do people resign?
Internal Factors External Factors Other
Focus on Manager Dissatisfaction
“The single biggest decision you make…..is who you name manager. When you name
the wrong manager, nothing fixes that bad decision. Not compensation, not benefits,
nothing....” Gallup 2016
A growing number of workers are leaving their employers because of poor people
management (37 per cent) and cite it as a major shortcoming in the organisation
according to CEB (Gartner)
Poor People Management costs UK PLCs £84bn a year according to Investors in
People
Cause of Manager Dissatisfaction?
Personal Characteristics Actions / Non-Actions Other
Cost of Turnover
Consider:After Resignation – Before Exit After Exit – While the Position is
Vacant
In the weeks after a
Replacement starts
Direct Costs
Indirect Costs
HR PROCESSES & FUNCTIONS
Section 5
Staffing | Employee Benefits | L&D | Performance Management & Reward
HR Processes
“... HR perfect processes are the enemy of what is good
for the business.”
― Alec Levenson, University of Southern California
“... your job is not to get the business to do HR; HR’s
job is to assist the business to do their job.”
― Dave Ulrich, University of Michigan
The Scenario
Metric: Average Time to Fill
The Staffing Process
The Staffing Function has been tasked to make interventions that will shorten the
period it takes to fill vacancies
Staffing Illustration: Consider Results before interventions
Time to Fill (‘The KPI’)
Performance
Tenure
Engagement
Efficiency v Effectiveness
Staffing Illustration: Consider Results after interventions
Time to Fill (‘The KPI’)
Engagement Performance
Tenure
Scenario 1
Related Measures
stay the same or
improve
Efficiency v Effectiveness
Staffing Illustration: Consider Results after interventions
Scenario 2
Related Measures
deteriorate
Time to Fill (‘The KPI’)
Engagement Performance
Tenure
Efficiency v Effectiveness
Employee Benefits
• Aviva, is to give its16,000 workers in the UK the same
entitlement to carers' leave as for parental leave
• Four unpaid weeks a year
• The insurer will also offer 35 hours' paid leave a year for
planned events such as hospital visits and a further 35 hours
for emergencies
Source | The Sunday Times, October 2017
Benefits in your Organisation?
Financial Time Off Development Perks Other
Typical Benefits by Type
Financial
Pension Contribution
Stock Options / Share Incentives
Performance Bonus
Insurances
Time Off
Annual Leave
Sabbaticals
Volunteer Leave
Sick Pay
Family Leave
Development
Professional Qualification
Support
Apprentice / Graduate Schemes
Perks
Gym Membership
Car Allowance
Season Ticket Loan
Discounts
Other
Benefits: Assumption v Reality
More
Important
Less
Important
More
Important
Importance
Overestimated
by Executives
Actual Importance to Employees
Bonus
Base Salary
Work Challenge
Manager
Quality
Child
Care
Stock
Options
Flexibility
Season Ticket Loan
Note: for illustrative purposes only
Pension
Contribution
Kirkpatrick Philips Model
Image Source: Equiteq Edge
Kirkpatrick Philips Model
Image Source: Equiteq Edge
ROI of L&D
Scenario:
A mobile phone retailer with over 200 stores is preparing for the launch of the latest handset
from one of the world’s best known technology companies.
The same handset, which deliver attractive profit margins, will also be stocked and retailed by
multiple competitors.
The vast majority of sales are made in the two weeks immediately after release. It is recognised
that the customer has a choice of retailers.
It is felt that expert knowledge of the handset, in its many versions, is a key differentiator in
terms of customer service – and the ability to recognise the opportunity, and then to upsell
associated products, is key to maximising revenues.
ROI of L&D
Scenario:
The last time a handset was released, the organisation sent 100 customer service staff on a
half-day offsite workshop to learn about the product and its accessories in advance of launch.
Anecdotally the senior management team considered the scheme to be a great success and is
strongly considering a repeat of the programme.
However, opinion amongst local (store) management is divided, with many commenting that
‘the money could’ve been better spent elsewhere’
As a member of the People Analytics team, you see this as an opportunity to investigate further.
ROI of L&D
£810 100 £81,000 TotalBenefit
CourseDesign £5,000
CourseDelivery £34,000
CourseHosting £20,000
OpportunityCost £20,000
£79,000 TotalCost
£2,000
2.5% ROI
Working with the Business you learn that last time:
• The average profit margin delivered by those attending the course was £810 greater than
those not attending the course
• Cost were incurred (predominately) in four ways The maximum number of
attendees that is operationally
viable
In the two weeks following the
launch of the new handset
Calculation:
(Benefit – Cost) / Cost *100
ROI of L&DSegmenting Benefit by Performance:
Lower Performers appear
to gain more from the
course
Increases once sunk cost of
course design is removed
AverageMarginIncrease Attendees Total
HighPerformers £600 50 £30,000
Mid-LevelPerformers £900 30 £27,000
LowPerformers £1,200 20 £24,000
£810 100 £81,000 TotalBenefit
CourseDesign
CourseDelivery £34,000
CourseHosting £20,000
OpportunityCost £20,000
£74,000 TotalCost
£7,000
9.5% ROI
Maximising ROI?If we were to favour low performers:
Delegate Mix Reversed
And therefore a significantly
better ROI
AverageMarginIncrease Attendees Total
HighPerformers £600 20 £12,000
Mid-LevelPerformers £900 30 £27,000
LowPerformers £1,200 50 £60,000
£990 100 £99,000 TotalBenefit
CourseDesign
CourseDelivery £34,000
CourseHosting £20,000
OpportunityCost £20,000
£74,000 TotalCost
£25,000
33.8% ROI
Predicting increased
benefits
Maximising ROI?And if low performers were our only attendees:
Only Low Performers
And therefore a significantly
better ROI
Predicting increased
benefits
AverageMarginIncrease Attendees Total
HighPerformers £600 0 £0
Mid-LevelPerformers £900 0 £0
LowPerformers £1,200 100 £120,000
£1,200 100 £120,000 TotalBenefit
CourseDesign
CourseDelivery £34,000
CourseHosting £20,000
OpportunityCost £20,000
£74,000 TotalCost
£46,000
62.2% ROI
In Summary
2.5%
9.5%
33.8%
62.2%
InSummary:ROI
Original
Programme
Excluding
Course
Design Costs
Favour Low
Performers as
Delegates
Only Low
Performers as
Delegates
So what is our advice to the business?
CHALLENGING ASSUMPTIONS
Section 6
Workforce instability negatively impacts profitability
Example Assumption
‘Workforce instability negatively impacts profitability’
Based on this assumption the organisation pays a loyalty bonus
The Analytical Mindset
• Treat the statement as a hypothesis
• Test the hypothesis
• Understand that there is value in proving the hypothesis true; and value in
proving it false
• Provide advice based on your investigation
Subject: Retail Stores
Low Staff Turnover Rate 2013/14 High
Sta
ff T
urn
over
Rate
2012/1
3
Lo w
Hig h
Subject: Retail Stores
Low Staff Turnover Rate 2013/14 High
Sta
ff T
urn
over
Rate
2012/1
3
Lo w
Hig h Profit per FTE
Lower Quartile
Upper Quartile
Scenario 1:
The pattern does not suggest a
correlation between lower staff turnover
and higher profit.
Curtail the investigation
Provide Advice
Subject: Retail Stores
Low Staff Turnover Rate 2013/14 High
Sta
ff T
urn
over
Rate
2012/1
3
Lo w
Hig h Profit per FTE
Lower Quartile
Upper Quartile
Scenario 2:
The pattern does suggest a correlation
between lower staff turnover and
higher profit.
Provide Advice
But investigate further
PROGRAMMES + INITIATIVES
Section 7
Graduate Schemes
Graduate Programme
Scenario:
• Cohort of 20 Graduates
• Salary Cost £30k per Person
• Programme lasts 24 Months
Plus:
• Attraction Costs
• Onboarding Costs
• Costs of Running Programme (Direct and Indirect)
Graduate Programme
0
20
40
60
80
100
120
140
160
TotalCosts(£kperMonth)
-6 Months Start Date 36 Months
Attraction
Costs
Onboarding
Costs
Salary Costs + Programme Costs
24 Months
End of
Programme
Salary Costs
Investment Timeline
Graduate Programme
0
20
40
60
80
100
120
140
160
TotalCostsvPayback(£kperMonth)
Start Date 36 Months21 Months
Payback Starts Payback Positive
Costs Recovered
Excluding
Attraction and
Onboarding
Projected benefit to be delivered by the cohort to the business
Graduate Programme
0
20
40
60
80
100
120
140
160
TotalCostsvPayback(£kperMonth)
Payback Positive
Start Date 36 Months21 Months
Costs Not Yet
Recovered
- 2 Months
- 90k
-3 Graduates
Resign-4 Graduates
Not Retained
12
Months
3 Months
But in reality there is a drop out rate of 35%
What’s the Problem?
Hypothesis 1: It’s one of the graduate managers….?
Manager Starting
Numbers
Exits within 3 months Exit at 1 year
A 4 1
B 5 1 1
C 5 1 1
D 6 1 1
20 3 7
False
What’s the Problem?
Hypothesis 2: It’s the source of the recruits….?
University Starting
Numbers
Exits within 3
months
Exit at 1 year Remaining
Numbers
Russell Group 8 3 2 3
Traditional University
(non Russell Group)6 2 4
Other 6 6
20 3 4 13
Investigate Further
What’s the Problem?
Additional Questions
University Share of Attraction Costs Reaching Senior Positions within 5
Years
Russell Group Above Average
Similar Career PathsTraditional University (non Russell
Group)Average
Other Below Average
And so on….
STRATEGIC WORKFORCE
PLANNING
Section 8
Defining Workforce Planning
Aim: reduce business strategy execution risks associated with the workforce
An Ongoing Process to:
identify the workforce needs of the future
quantify and qualify the gap between this demand and workforce supply
inform a strategic and long term people plan
Desired Outcome
Correct Volume
Appropriate Skills
Right Place Right Time Best Cost
Probability of job losses within the
next two decades
High Probability
- Retail Sales
- Tax Accountants
Low Probability
- Dentists
- The Clergy
Source: “The Future of Employment: How Susceptible are
Jobs to Computerisation” by C. Frey and M. Osbourne
(2013) and The Economist January 18th, 2014
Operational v Strategic Planning
Forecast
Horizon
1 year 3 years 5+ years
Short Term Tactical
Reactively Filling Vacancies
Coverage of Entire Workforce
Training for the Jobs of Today
Insular -– Bottom Up
Long Term Strategic
Consideration of Future Workforce Composition
Focus on Key Roles
Development for the Roles of Tomorrow
Holistic – Top Down
Transition is typically at circa 18 months
However they are not mutually exclusive exercises
Ideally Strategic Planning should inform Operational Planning
Process
Strategic
Analysis
Supply
Projections
Readiness
Review
Demand
Projections Intervention
Execution
Intervention
Blueprint
Prepare & Research Forecast & Quantify Design & Action
Corporate
Strategy Review
Environmental
Scanning
Workforce
Profiling
Movements
Analysis
Determine Key
Job Roles
Kick-Off Meeting
Data Availability &
Integrity
Tools &
Technology
Leadership
Engagement
Skills &
Resources
Age and Pension
Analysis
Historical
Resignation Rate
Analysis
Isolate Demand
Drivers
Agree and Apply
Demand
Algorithms
Assign
Accountability
Agree Timelines
and Success
Criteria
Measure and
Report
Review Based on
Success Levels
and Changing
Context
Shortlist Alternate
Intervention
Strategies
Consider One-Off
and Ongoing
Costs
Cost Benefit
Analysis
Consider Non-
Financial Impacts
Determine Plan
Quantitative & Qualitative Techniques | Job Roles Considered Separately or in Logical Clusters | Workshops, Interviews & Focus Groups
Gap Analysis
Quantify Gap between Demand and Supply
Determine Drivers
Assess Associated Risk
Understanding the Gap
30
35
40
45
50
55
60
65
2015 2016 2017 2018
Headcou
nt
Time
IncreasingDemandvDecreasingSupply
Supply
Demand
30
35
40
45
50
55
2015 2016 2017 2018
Headcou
nt
Time
FallingDemandvDecreasingSupply
Supply
Demand
Process
Strategic
Analysis
Supply
Projections
Readiness
Review
Demand
Projections Intervention
Execution
Intervention
Blueprint
Prepare & Research Forecast & Quantify Design & Action
Corporate
Strategy Review
Environmental
Scanning
Workforce
Profiling
Movements
Analysis
Determine Key
Job Roles
Kick-Off Meeting
Data Availability &
Integrity
Tools &
Technology
Leadership
Engagement
Skills &
Resources
Age and Pension
Analysis
Historical
Resignation Rate
Analysis
Isolate Demand
Drivers
Agree and Apply
Demand
Algorithms
Quantitative & Qualitative Techniques | Job Roles Considered Separately or in Logical Clusters | Workshops, Interviews & Focus Groups
Gap Analysis
Quantify Gap between Demand and Supply
Determine Drivers
Assess Associated Risk
This Output will inform
the People Plan
Informing the People Plan
A well formed Strategic Workforce Plan is a vital to a coherent long term People
Plan
It will inform these HR functions, processes, strategies and initiatives:
Recruitment
Retention
Reward
Learning & Development
Career Paths
Job Redesign
Succession Planning
Retirement Planning
The Diversity Profile
Employee Value Proposition
Not Exhaustive
Informing the People Plan
A well formed Strategic Workforce Plan is a vital to a coherent long term People
Plan
It will inform these HR functions, processes, strategies and initiatives:
Recruitment
Retention
Reward
Learning & Development
Career Paths
Job Redesign
Succession Planning
Retirement Planning
The Diversity Profile
Employee Value Proposition
HR will most likely invest in SWP to be better (i.e. more efficient and effective) at
delivering the above.
The Business aim and benefit is more holistic: to reduce business strategy
execution risks associated with the workforce
WRAP UP
Section 9
Sam HillFounder
Workforce Dimensions
@sam_hill_wfd
https://uk.linkedin.com/in/samuelhill68
+44 (0) 7540 783 211