Human Resources Management (HRM) metrics and analytics diagnostics, tools, processes and best practices

1. HUMAN RESOURCES
MANAGEMENT (HRM) METRICS
AND ANALYTICS
CHARLES COTTER
MAY 2016
www.slideshare.net/CharlesCotter

2. TRAINING PROGRAMME OVERVIEW
• Introduction to and review of prominent and
strategically relevant HRM Metrics
• Building a business case for the value/benefits
of HRM Metrics
• Application of key HRM Metrics – Workforce
Planning; Learning & Development and
Employee Engagement Metrics
• Transforming from Metrics to (Predictive)
Analytics

4. • There is a low degree of awareness of the impact of HRM programs
whether, positive or negative, because HR leaders have not been delivering
metrics that show the value of their programs or investments.
• If HR professionals don’t measure their function’s effectiveness and
providing decision-making leaders the data they need, HR will continue to
be undermined and eventually sidelined when it comes to having a seat at
the table – strategic business partner.
• Quantification issue - metrics enable leaders and decision makers in
organizations towards more efficient and better delivery of HR services
• “Based on corporate culture, organizational values and strategic business
goals and objectives, human capital measures indicate the health of the
organization.” (Lockwood, 2006)
INTRODUCTION TO HRM METRICS

5. • Metrics are simply measurements. Metrics track activity,
but don’t necessarily show a causal relationship.
• HRM Metrics - Measurements used to determine the
value and effectiveness of HR strategies.
• Human capital analytics examine the effect of HR
metrics on organizational performance. In more general
terms, analytics look for patterns of similarity between
metrics.
• By using analytics over time, you can become predictive.
DEFINING THE FUNDAMENTAL
CONCEPTS

6. • What type of HRM Metrics does your organization
currently utilize?
• Describe the organizational impact, level of maturity and
credibility (as perceived by executive management) of
these HR Metrics
• What does your organizational HR Metrics architecture
look like?
• Refer to pages 43-46 in the Learner Manual. Review the
benefits of HR Metrics. Is there a business case for applying
HR Metrics? Argue from a viability, feasibility and
sustainability perspective.
INTRODUCTORY HRM METRICS
QUESTIONS?

8. BALANCED SCORECARD

9. EXAMPLE: STRATEGY MAP

10. EXAMPLE: STRATEGY MAP

11. BROAD CATEGORIES OF HRM
METRICS
• Refer to page 1 in the Learner Guide
 Workforce Demographics
 HR Efficiency
 Remuneration
 Skills Development, Training & Education
 Productivity
 Provisioning and Recruitment
 Risk Analysis
 Staff Retention

12. FREQUENTLY USED HRM METRICS
(PWC)

13. STRATEGIC HRM METRICS THAT CAN BE
REGARDED AS BEST PRACTICE
• Refer to pages 46-48 in the Learner Manual
First-tier metrics
Second-tier metrics
• 2nd Tier metrics are still important, but they
tend to be less valued among senior
executives.

18. HOW DO I MAKE A SUCCESS OF MY
METRICS?
• A point-in-time measurement very often appears to be
meaningless, unless you can compare it to a set standard
or benchmark, and/or view its position in a trend that may
be emerging.
Put it in the right context
Asking the right questions
Framing of my results
Reports the complete story
Always strive for improvement

19. HOW TO USE HRM METRICS
EFFECTIVELY?
• Measure what is important
• Involve Key Stakeholders
• Work out the implications
• Drill down to meaningful chunks
• Convince and Influence
• Dig deeper and explore the root causes
• Set achievable goals for improvement
• Own the goals in partnership with the line
• Ensure action takes place as a result
• Keep the momentum going

20. SOURCES FOR INFORMATION COLLECTION,
RETRIEVAL AND ANALYSIS
• Employee and management surveys and interviews
(for employee contentment, communications, rewards
system)
• Performance appraisals (to measure productivity,
attendance)
• HRM records (to track communications, turnover,
recruiting efficiency, retention, promotions, and
succession planning)
• Employee files (to research productivity, attendance,
training)

21. DEFICIENCIES IN HUMAN CAPITAL
MEASUREMENT
• Logic
• Analytics
• Measures
• Process

23. 10
TYPICAL STATISTICS OBTAINED IN COMPILING HRM METRICS
• Refer to pages 6-7 in the Learner Guide
 Revenue factor, which is company total revenue divided by the amount of full
time employees
 Human capital value added (revenue minus operating expense and cost of
compensation/benefit divided by the total amount of full time employees)
 Human capital return on investment: Revenue minus operating expenses and
cost of compensation benefit divided by cost of compensation/benefit
 Total compensation revenue ratio which is cost of compensation/benefit
divided by revenue
 Labour cost revenue ratio, which is cost of compensation/benefit plus other
employee costs (bonuses, mileage paid, incentives) divided by revenue

24. 10
TYPICAL STATISTICS OBTAINED IN COMPILING HRM METRICS
• Training investment factor equals the total cost of training divided
by total amount of training attendees
• Cost per hire, which includes advertising, agency fees, relocation,
and others divided by operating expenses
• Health care costs per employee (total health care cost divided by
total amount of employees)
• Turnover costs, which is equal to hiring costs plus training costs plus
other costs (turnover rate during first year of employment is key)
• Voluntary separation rate is the total number of people who quit
or retired divided by the total amount of employees

25. KEY HRM METRICS
• Productivity (refer to pages 14-15)
• Remuneration and Compensation (refer to pages 17-18)
• Sourcing and Recruitment (refer to pages 20-24)
• Staff Retention (refer to pages 26-29)
• HR efficiency (refer to pages 31-32)
• Skills Development and Training (refer to page 34)
• Workforce Demographics (refer to pages 36-38)

26. PRODUCTIVITY MEASURES
• Present x Productive 
• Q: Are your employees contributing to the success of the organization? Are you
connecting human capital & business measures?
• Specific metrics:
 Return on Human Capital Investment
 Revenue per Full-Time Equivalent (FTE)
 Profit per FTE
• Productivity measures on an annual and a quarterly basis
• Compare to national averages

27. SOURCING AND RECRUITMENT
MEASURES
• Time to fill vacancy x Quality of hire 
• Q: Are you recruiting new talent of a high calibre? Are they staying? Are they
performing?
• Specific metrics:
 Vacancy Rate
 First Year Turnover Rate
 New Hire Performance
 Time to Fill
• Business-impact shortfalls in capacity
• Consistently increasing organization’s performance through improved talent

28. STAFF RETENTION
• Rate of Turnover x Retention of critical top talent 
• Q: Is your top talent / your vitally important workers / your competitive advantage
– resigning, or at risk of resigning, at a greater rate than your less crucial
employees.
• Specific metrics:
 Resignation Rate
 Resignation Rate of Top Performers
 Promotion Rate and Promotion Wait Time
 Engagement Index
 Market Compensation Ratio
• Overall tenure trends
• Career development

29. LEARNING ACTIVITY
• Review the HR Metrics (pages 14-38).
• Identify and prioritize the most crucial and
strategically relevant measures.
• Justify your rationale.
• Present a summary of your group discussion.

30. HRM METRICS PROCESS

31. • It includes involving HR in overall business strategy
• Enlisting leaders outside of HR to help develop the KPIs.
Collaborating with business managers to ensure KPIs link to
business unit strategic goals
• Focusing more attention on links between people measures and
intermediate performance drivers (e.g., customer satisfaction,
engagement etc.)
• Increasing manager acceptance through training programs and
concrete action plans
• Working with HR to simplify metric and automate data collection.
BEST PRACTICE PROCESS GUIDELINES

34. CURRENT: HRM-BASED WORKFORCE
PLANNING ARCHITECTURE

35. REQUIRED: BUSINESS-BASED SWP
ARCHITECTURE

36. • Inventory of available organizational core competencies?
• Inventory of organizational scarce skills?
• Mission critical organizational jobs (to enable strategy
achievement)?
• Critical employee segments (to promote business
continuity/sustainability)?
• Competitivity and readiness of organizational talent pipeline?
• Identification of organizational talent gaps?
CLEAR VIEW?

37. • #1: Aligned with organization’s strategic business plans and priorities.
• #2: Future-focused, adopting a strategic, medium to long-term forward-
looking approach.
• #3: Pro-active, sensitive and responsive to (internal and external)
environmental change and trends.
• #4: Provides accurate and reliable (clear view) talent
planning/management information e.g. available core competencies;
scarce skills; critical jobs and employee segments and talent gaps.
• #5: Collaborative, well coordinated and partnering effort (HRM has co-
opted business partners e.g. line managers to the process).
DIAGNOSIS: 10 BEST PRACTICE
GUIDELINES FOR EFFECTIVE SWP

38. • #6: Integrated (bundled) with other HR value chain processes e.g.
Recruitment, Succession Planning, Retention and Leadership
Development.
• #7: Generates meaningful business intelligence which shapes, informs
and influences business planning and supports strategic decision-
making.
• #8: Integrates both scientific (HRM metrics, predictive analytics and
strategy maps) with artistic (planning) principles.
• #9: Dynamic - regularly and systematically monitored, reviewed,
evaluated and adapted (committed to continuous improvement
processes).
• #10: Yields a positive ROI, with tangible/demonstrable outcomes and
impact i.e. creates sustainable HCM competitive advantages
DIAGNOSIS: 10 BEST PRACTICE
GUIDELINES FOR EFFECTIVE SWP

39. • Individual Activity:
Diagnose your current Workforce Planning
practices against the ten (10) best practice
criteria.
• Group Discussion:
Identify gaps and recommend improvement
strategies.
LEARNING ACTIVITY

40. LEVELS OF SWP MATURITY

41. • Although 92% of companies have some level of workforce planning,
only 21% take a strategic, long-term approach to addressing the
talent demand, talent supply and the actions necessary to close the
gap between the two.
 Only 11% of organizations have currently reached Level 3 of Maturity.
 Only 10% have reached Level 4.
• Only 25% of workforce plans are effective at helping business
leaders forecast revenue and operating budgets.
• Only 27% of workforce planning processes are conducted by
recruiting and staffing departments. The majority of workforce
planning processes are owned by individual business leaders – so
they are disjointed from recruiting and even HRM.
RESEARCH-BASED (BERSIN) REALITY
CHECK

42. HOLISTIC SWP PROCESS

43. SYSTEMS VIEW - SWP PROCESS
ILLUSTRATED

47. • Group Discussion:
Review the previous slide (effectiveness of WFP).
By referring to each process step, indicate how
each one can be improved.
Present a summary of your group discussion.
LEARNING ACTIVITY

49. L&D METRICS
• Measures of training activity (concerning how
much training and development occurred with
the focus on formalised, structured learning)
• Measures of training efficiency (concerning the
extent to which training and development
maximises resources in pursuit of its mission)
• Measures of training results (concerning how
well training and development achieved its goals)

50. DEFINING TRAINING ROI FORMULA
ROI is a key financial metric of the value of training investments and costs. It
is a ratio of net benefits to costs, expressed as a percentage.
The formula can be expressed as:
[(monetary benefits – cost of the training) / cost of the training] x 100

51. ILLUSTRATION: TRAINING ROI
PROCESS

52. TRAINING EVALUATION – KIRKPATRICK (4-
LEVELS) AND PHILLIPS (5-LEVELS)

53. LEVELS OF LEARNING EVALUATION

54. DIAGNOSIS OF CURRENT TRAINING AND
DEVELOPMENT PRACTICES
• How efficient is the training process; is the
attendance of scheduled training programmes
good and are learners satisfied post-training? –
LEVEL 1: EFFICIENT
• What is the submission rate of PoE’s and is there
a good success rate? – LEVEL 2: EDUCATIONAL
• What is the degree of transfer and application of
learning to the workplace and improved
behavioural change and performance? – LEVEL
3: EFFECTIVE

55. DIAGNOSIS OF CURRENT TRAINING AND
DEVELOPMENT PRACTICES
• What is the impact of training programmes on
organizational business results and metrics e.g.
productivity; competence; customer service etc. – LEVEL
4: VALUABLE
• What is the Return-on-Investment (ROI) of the training
programmes? Do the benefits exceed the costs? – LEVEL
5: ECONOMICAL
• To what extent do training programmes directly
contribute to the achievement of strategic objectives;
drive innovation; generate business solutions and create
sustainable competitive advantages for the organization?
– LEVEL 6: STRATEGIC

59. • Are employees COMMITTED to the organization?
• Are employees proud to work for the organization –
company/brand ambassadors? CITIZEN
• Do employees put forth extra/discretionary effort to help the
organization and their colleagues achieve business objectives?
COMRADE
• Are employees enthusiastic and passionate about their
work/jobs? CREATOR
• Are employees CONNECTED (intellectually and emotionally) to
their work/jobs – offer value add?
DIAGNOSIS: THE 5 C’S OF EMPLOYEE
ENGAGEMENT

60. • Gallup’s Q12 survey:
 #1 Role clarity and expectations
 #2 Resources – materials and equipment
 #3 Role optimization and opportunities
 #4 Receipt of recognition and praise
 #5 Managerial care and interest
 #6 Encouragement of personal and professional development
DIAGNOSIS OF EMPLOYEE
ENGAGEMENT

61. • Gallup’s Q12 survey:
 #7 Opinions and inputs are valued
 #8 Job/task significance
 #9 Fellow employee commitment to performance excellence/quality
 #10 Collegial and harmonious working relationships
 #11 Managerial interest in career progression and development
 #12 Ample opportunities to learn and grow
DIAGNOSIS OF EMPLOYEE
ENGAGEMENT

64. THE STRATEGIC IMPERATIVE OF
EMPLOYEE ENGAGEMENT

65. ENGAGEMENT’S EFFECT ON 9 KEY
PERFORMANCE INDICATORS

67. Is HR?

69. HRM METRICS AND ANALYTICS
PROCESS

70. TRANSFORMING TO PHASE 5:
IMPACTFUL PREDICTIVE ANALYTICS

71. Source: The State of Workforce Analytics and
Planning 2014 Survey Report

72. Source: The State of Workforce Analytics and
Planning 2014 Survey Report

73. TALENT ANALYTICS MATURITY MODEL
(BERSIN BY DELOITTE)

74. Source: Visier WFA Usage Survey, 2012
Survey - Areas to improve to expand workforce
analytics capabilities

75. Source: The State of Workforce Analytics and
Planning 2014 Survey Report

76. Source: The State of Workforce Analytics and
Planning 2014 Survey Report

77. Source: The State of Workforce Analytics and
Planning 2014 Survey Report
for workforce metrics and analytics
- With low satisfaction rates

78. TRANSFORMING HRM TO A DATA
SCIENCE-DRIVEN FUNCTION

79. • Describe how your organization can
transform to the most sophisticated level:
Impactful Predictive Analytics.
• Present a summary of your group discussion.
LEARNING ACTIVITY

80. CONCLUSION
• Key points
• Summary
• Questions

81. CONTACT DETAILS
• Charles Cotter
• (+27) 84 562 9446
• charlescot@polka.co.za
• LinkedIn
• Twitter: Charles_Cotter
• http://www.slideshare.net/CharlesCotter