Data Science and Analytics in Human Resources - Moneyball comes to HR

Copyright © 2011 Bersin & Associates. All rights reserved. Page 2 Bersin & Associates  Who We Are • Bersin & Associates empowers HR and learning organizations to drive bottom line impact through world class research and consulting  Practices - Human Resources - Enterprise Learning - Talent Management - Talent Acquisition - Leadership & Succession  Offerings • WhatWorks® Membership: Research, Tools, Education, Consulting • IMPACT: The industry’s premiere conference on the Business of Talent • BersinBasics®: Fundamentals of Talent Management for Business Professionals at All Levels Human Resources Leadership Development Learning & Development Talent Acquisition Talent Management

Copyright © 2011 Bersin & Associates. All rights reserved. Page 3 Introduction to Performance Management Understanding Multi-Rater Assessments Planning for Succession Management Understanding Pay for Performance Understanding Leadership Development How to Assess People Intro to Competencies in Talent Management Intro to Competencies in Talent Management Using Competencies in Talent Management Understanding and Using Job Profiles Cascading & Aligning Goals Fundamentals of Goal Setting Understanding Performance vs. Potential Conducting a Performance Appraisal Introduction to Learning & Development Strategy Introduction to Informal Learning Learning Capability Development & Culture Creating Development Plans Conducting a Performance Appraisal Fundamentals of Goal Setting Fundamentals of Coaching How to Assess People Understanding Pay for Performance Performance & Succession Management Leadership Development Fundamentals Competencies & Job Profiles Coaching & Goal Development Learning & Development Strategy Fundamentals of Performance Appraisals F U N D A M E N T A L S O F T A L E N T M A N A G E M E N T F O R B U S I N E S S P R O F E S S I O N A L S

Copyright © 2011 Bersin & Associates. All rights reserved. Page 4 Agenda  Today’s Business Environment  Talent Markets: Out of Balance  Modern High-Impact Talent Management Strategies  Need for Assessment Science  How Moneyball applies to HR  Why Data Science Matters

Copyright © 2011 Bersin & Associates. All rights reserved. Page 6 2011 Business Environment Globalization, Innovation, Cost Containment What Are Your Organization’s Top Business Challenges for 2011? © Bersin & Associates, Corporate TalentWatch® Research, Senior HR and Business Executives, 1/2010 ■ June 2011 ■ June 2010 0% 10% 20% 30% 40% 50% 60% 70% Rapid business growth Acquisition or mergers Global expansion Launching new products and services New top management team Diminished access to capital Declining margins Need to Accelerate Innovation Competitive threats Severe business downturn Financial pressure to cut costs +90% Increase +100% Increase +400% Increase 35% of organizations see the need to accelerate innovation and globalize – the highest level in four years…. yet… 51% struggle to hire the right talent, despite high unemployment…

Copyright © 2011 Bersin & Associates. All rights reserved. Page 7 The Global Auto Marketplace Automobile Sales – U.S. vs. China 0 2 4 6 8 10 12 14 16 18 20 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 MillionVehiclesSold U.S. China 13.9 million 10.4 million

Copyright © 2011 Bersin & Associates. All rights reserved. Page 8 Ford Figo Story Designed in India for the Indian Market Manufactured in Chennai by Indian Staff Size, Shape, and features designed for lifestyle and roads in India Colors, face, and styling designed for Indian tastes Ford Figo – Fastest Selling Car in India

Copyright © 2011 Bersin & Associates. All rights reserved. Page 10 What would You Be Willing to Give Up for a Week to Keep your Mobile Phone?  Brushing teeth: 22%  Sex: 33%  Exercise: 54%  Caffeine: 55%  Gaming is now the fastest growing application on mobile devices

Copyright © 2011 Bersin & Associates. All rights reserved. Page 11 The Borderless Workplace Employee Mentor Peer Partner Candidate Customer W O R K P L A C E Transparent Dynamic Performance-driven Specialized Interconnected New Models for HR & L&D W O R K F O R C E Connected Global Multi-Generational Mobile Transient New Models for Career Manager L I F E S T Y L E 750 million people on Facebook 135 million people on LinkedIn 75% of workers are mobile BigData is Everywhere

Copyright © 2011 Bersin & Associates. All rights reserved. Page 14 The Ill-Prepared US Workforce  Only 32% of college graduates have “excellent” skills to enter the workforce  Only 16% of high school graduates have such skills. Missing are: • Professionalism/work ethic • Creativity and Innovation • Lifelong learning/self-direction • Critical thinking/problem solving  Only 18% of workforce training programs raise skills from “deficient” to “adequate”

Copyright © 2011 Bersin & Associates. All rights reserved. Page 15 A Free Agent Workforce  Job tenure for under-35 year olds is 2.5 years  The average worker today will have 11 jobs by the age of 45  2/3 of all employers are increasing their percentage of contingent workers  We estimate that as much as 40% of the US workforce is currently on a contingent basis

Copyright © 2011 Bersin & Associates. All rights reserved. Page 16 High Performing Organizations Understand This Increasing Specialization  Expertise drives competitive advantage  Specialization improves quality and reduces cost  Deep skills developed through “deliberate practice” and reinforcement  Deep skills come from a range of developmental experiences  We need career development in all critical job roles Back Office, Operational, Contingent Employees Functional Specialists / Front-Line Employees Top Management Senior Management Middle Management Senior Specialists First Line Management The Experts

Copyright © 2011 Bersin & Associates. All rights reserved. Page 17 Change in Employment Contract  In 2011 32% of employees are “planning on leaving” their employers, vs. 19% two years ago  59% of employees believe their employer is a sound “long term” place to work vs. 65% over last three years  Only 42% of employees believe that promotions go to the “most qualified” employees Mercer Whats Working Research, October 2011 Loyalty Career Equity

Copyright © 2011 Bersin & Associates. All rights reserved. Page 18 The Workforce Really Is Younger…. “By 2013, 47% of employees will be those born after 1977. -- US Census Bureau And…Younger employees are much more likely to leave their employers. Under 25 year olds are 10% more likely to want to leave, and under 35 are 5% more likely. Mercer October 2011 This generation has a very different view of work and, therefore, of loyalty. They see work as a mutually beneficial exchange with their employer and, when it’s no longer working for them, they plan to move on. There is no strong sense of allegiance to the organization or expectation of long-term employment. Their allegiance is primarily to themselves and their careers, and that has major implications for how employers manage this youngest segment of their workforce.” Mercer October 2011

Copyright © 2011 Bersin & Associates. All rights reserved. Page 19 What Makes People Want to Stay? 3 2 1 So….hiring and promoting the “right people” and developing the “right leaders” has a multiplying effect on retention, engagement, and performance.

Copyright © 2011 Bersin & Associates. All rights reserved. Page 21 Why Talent Management is Needed Learning&Development Sourcing&Recruiting PerformanceManagement LeadershipDevelopment SuccessionPlanning WorkforcePlanning Compensation-Benefits Traditional Silos of HR  Slow Response to Changing Business Needs • Inability to identify current and future talent gaps • Hiring strategy and development planning not in sync • No clear picture of future “talent profile” • Leadership pipelines in jeopardy  Disconnected Decision Making • Data and processes not integrated • Talent not shared across business units • Learning plans not linked to assessments and skills gaps in current talent pool • Lack of visibility into talent gaps  Not responsive to Employee Demands • Employees want career development • Defined career paths and competencies not clear and consistent • Talent mobility difficult during change • Managers still the weakest link in organizational performance  Administratively Intensive • Data entry is repetitive • High volume of manual work to complete HR review processes • Difficult to obtain executive-level talent information • Hard to plan for the future

Copyright © 2011 Bersin & Associates. All rights reserved. Page 22 Talent Strategy & Planning Sourcing & Recruiting 1 2 Performance management Learning & Development 4 Succession planning 5 Leadership Development 6 Integrated Talent Management 3 HR Systems & Metrics Compensation 7 Competency Management Global Recruiting Efficiency and Effectiveness Team alignment Pay equity Managerial expertise Deep expertise Generational evolution Productivity Career Development New leadership models and needs Total talent mobility Talent pools and segments Effective pay equity and efficiency Comparative pay analysis Pay for performance Future planning Scenarios Business level talent plans Gap and risk analysis

Copyright © 2011 Bersin & Associates. All rights reserved. Page 23 Talent Management Maturity Model® Level 1: Siloed HR Processes Individual HR processes or silos; may have systems in place but not connected Level 2: Standardized Talent processes Talent processes consistent and tailorable, some integration; several systems connected through manual processes Level 3: Integrated Talent Management Heavy focus on connecting systems and processes; single person or team responsible for talent initiatives Level 4: Strategic Talent Management Fully integrated processes and systems used to make business decisions. TM is business-integrated 7% 20% 45% 28%

Copyright © 2011 Bersin & Associates. All rights reserved. Page 25 Back Office, Operational, Contingent Employees Top Management Senior Management First Line Management Creating Talent Mobility SMEs (Consultants) Senior Specialists Functional Specialists / Front-Line Employees Middle Management Emerging Leaders Emerging Leaders

Copyright © 2011 Bersin & Associates. All rights reserved. Page 26 Back Office, Operational, Contingent Employees Top Management Senior Management First Line Management Implementing Talent Mobility SMEs (Consultants) Senior Specialists Functional Specialists / Front-Line Employees Middle Management Top Management Contract Hire Job Intern Developmental Assignment Lateral Promotion Stretch Assignment External AssignmentUpward Promotion Lateral Assignment New Assignment Part Time Loan New Candidate New Leader Exec Succession

Copyright © 2011 Bersin & Associates. All rights reserved. Page 27 Managing Talent Mobility DESIRED COMPETENCIES (KNOWLEDGE, BEHAVIOR, SKILLS) OPEN POSITIONS & OPPORTUNITIES INDIVIDUAL NEEDS / DESIRES INDIVIDUAL DEVELOPMENT PLAN (IDP) VISION STRATEGIC INITIATIVES DESIRED BUSINESS OUTCOMES VALUES MISSION ORGANIZATION NEEDS MOBILITY STRENGTHS DEVELOPMENT NEEDS CAREER ASPIRATIONS ANNUAL GOALS Succession Management Coaching Assessment Strategic Competencies Organizational Planning / Restructuring Performance Management Individual Development Plan (IDP) Career Management

Copyright © 2011 Bersin & Associates. All rights reserved. Page 28 High-Impact Talent Mobility Facilitated Talent Mobility – New Market for Integrated Career Development Strategic Workforce Planning Talent Assessment Talent Outreach & Exploration Talent Deployment Talent Onboarding & Development

Copyright © 2011 Bersin & Associates. All rights reserved. Page 29 Value of Development Planning  Organizations with highly effective development planning significantly outperform those without. With Without Voluntary Turnover 8% 11% Turnover among High-Performers 2% 3% Ability to “develop great leaders” 23% 7% Ability to “plan for future talent needs” 22% 6% Median Revenue per Employee $169,000 $82,800

Copyright © 2011 Bersin & Associates. All rights reserved. Page 30 Value of a Coaching Culture A coaching culture is the #1 driver of employee engagement 0% 10% 20% 30% 40% 50% 60% 70% 80% Below Average Average Above Average Employee Results No or Weak Cultural Support for Coaching Good Cultural Support for Coaching Excellent Cultural Support for Coaching Employee Engagement Index Bersin & Associates High-Impact Performance Management® 2011

Copyright © 2011 Bersin & Associates. All rights reserved. Page 31 Agile Performance Management  Continous goal setting “OKR – Objectives and Key Results” not cascading goals  Continuous feedback from all directions including bottom up  Daily or weekly “scrums” to review job and team performance  Managers continuously look for ways to remove bottlenecks  Delegate authority within guidelines  Make people successful with coaching and work simplification  Reward people with feedback and purpose

Copyright © 2011 Bersin & Associates. All rights reserved. Page 32 Open Career Development -20% -15% -10% -5% 0% 5% 10% 15% 20% 25% Individually Manager Level Business Unit Level Enterprise Level Business Impact (12 measures) Engagement and retention %Improvement inbusinessimpact “Manage your Own Career” A Career Development Strategy Today people want “open” career opportunities

Copyright © 2011 Bersin & Associates. All rights reserved. Page 34 How do Companies Hire People? 2/3 of hiring done without any significant assessment  Background checking: 79%  Managerial interviews: 64%  Interview training: 47%  Behavioral assessments: 34%  Reference calls: 32%  Skills-based assessments: 25% % of Organizations Which Regularly Use Following Assessment Practices Bersin & Associates High-Impact Talent Acquisition Study, Fall 2010, 158 organizations responded 2/3 use no real assessment process at all … leaving the process to hiring managers or recruiters

Copyright © 2011 Bersin & Associates. All rights reserved. Page 35 Large Managerial Skills Gap Managerial skills rated lower than skills of entry-level workers 24% 26% 38% 38% 42% 50% 59% 2% 5% 2% 5% 10% 7% 6% Top Executives Engineering-Professional Director-Level Customer Service Sales representatives Entry-Level Line Managers % Uneven % Weak Current Capabilities by Role, June 2011 Weakest © Bersin & Associates, Corporate TalentWatch® Research, Senior HR and Business Executives, 9/2011

Copyright © 2011 Bersin & Associates. All rights reserved. Page 36 Assessment Science Works  16,500 retail employees  Turnover rate - 72%  Shift in business from collectors to jewelry buyers Clearly Define Role Design High Value Assessment Implement (Games and Assessments) Incredible Results Turnover reduced by ½ to 36% Sales improvement of 26% 90% improvement in screening

Copyright © 2011 Bersin & Associates. All rights reserved. Page 37 But… there is a Surprise Effect  What is the most important baseball statistic that drives a winning team? • Team batting average? • Runs batted in (RBI)? • Pitcher’s earn run average (ERA)?  On Base Percentage (OBP)  Not a Characteristic of the Player (candidate)

Copyright © 2011 Bersin & Associates. All rights reserved. Page 38 How do Scouts Find Top Players?  They look for “traditional performance characteristics” • Speed and athleticism • Ability to hit, home runs • Appearance, confidence • Just like corporate recruiters look at grades, experience, prior roles…  But what really matters is their ability to get on base

Copyright © 2011 Bersin & Associates. All rights reserved. Page 47 BigData in US Business 6 billion photos uploaded to Facebook every month 14 Exabytes of Data in US Corporations (1 Exabyte is 40,000X the library of congress) YouTube uploads more content each day than all networks combined 1.5 million more data-savvy managers needed to leverage big data in the United States US Businesses will be short 140,000-190,000 analytic positions in the next three years We are at an inflexion point: Organizations which learn to leverage big data will far outperform those who do not. - McKinsey

Copyright © 2011 Bersin & Associates. All rights reserved. Page 48 Data Analysis Skills Important to HR Top HR Skills | Capabilities Correlation Business Partner relationship management .52 Managing and leading people .51 Coaching and Mentoring .49 Change management and communications .48 Analyzing and interpreting data .47 Knowledge Sharing and expertise directories .47 Managing your Personal Development .45 Top Organizational | Managerial Capabilities Developing a high performance culture .77 Developing a strong learning culture .77 Developing strong talent segmentation .74 Developing high levels of career development and mobility .73 Attracting and selecting the right talent .64 Measuring business impact of HR .64 Developing high levels of engagement .54 Giving people honest feedback .49

Copyright © 2011 Bersin & Associates. All rights reserved. Page 49 HR Organizations are Not Ready What percentage of HR organizations do you believe feel have strong skills in data analysis and interpretation? 6% Rate themselves “High” 56% - “Poor” Bersin & Associates High-Impact HR Organization® 2011 and 2010, n=741 organizations

Copyright © 2011 Bersin & Associates. All rights reserved. Page 50 The Lowest Rated HR Skill 17% 15% 7% 6% 4% 1% -4% -5% -6% -11% -12% -18% Attracting and selecting the right talent Promoting health and wellness Onboarding new talent Fairly allocating compensation Understanding skills needed by role Encouraging innovation and collaboration Creating a high-performance culture Enabling a learning organization Identifying and developing future leaders Driving internal mobility Developing workforce analytics for management Measuring HR program effectiveness Relative Strengths of HR Skills and Capabilities Bersin & Associates High-Impact HR Organization® 2011 and 2010, n=741 organizations Measurement, analytics, and segmentation are the lowest rated skills in HR teams today

Copyright © 2011 Bersin & Associates. All rights reserved. Page 52 In Conclusion  Businesses today are focused on globalization, innovation, employee engagement, and preparing for growth  The talent markets are out of balance, making it more important than ever to find the “right people” for your organization  Leadership, coaching, mobility, career development, and employment branding are the keys to building a highly engaged workforce  The science of assessment plays an ever-increasing critical role  Skill, focus, and dedication to data and data science will differentiate you in the coming years

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