Monday, January 31, 2011

HR: Make Your Case!!!!

In preparation for an interview with IQPC this morning regarding their upcoming HR Metrics Summit, I am pondering the following question:

Do you often find it difficult to build a solid business case for investment in HR? How are you meeting this challenge?

I will answer this from our experience and from a client's perspective. I do see many HR professionals struggle with getting budget and resources for HR related investments. This exercise is especially difficult when HR is competing with other functional areas competing for the same dollars.

I have a strong bias on how to accomplish the business case....get your data and tell a great story. For example, say that HR is looking to invest in a training program and/or a rewards program for a call center. At the same time marketing wants a new CRM and sales wants to add staff. All options are competing for the same budget dollars.

The key for all functional leaders is to make a LINK to the desired business outcome. So, let's say in this example the desired result is growth measured in market share.

The HR leader will need to create a Business Strategy Map and determine how the training and/or rewards program links to the desired business result. After the linkage has been made, then statistical testing can take place by analyzing data like turnover, performance scores, engagement scores and by performing analysis on pilots to determine if training has the desired impact.

The analysis piece becomes just HALF of the battle. Your analysis is only AS GOOD AS YOUR STORY. So, many times the data becomes the story, you have seen those presentations with 30 pages of numbers. Don't do that! Although, the tendency is to show off ALL your work, try to keep your story to 1-2 "killer" slides. The goal is to show how the HR investment impacts the business result....growth...and by how much. Obviously, there are other factors that impact outcomes, but by using statistics you can prioritize those investments from most impactful to least impactful.

You don't have to have a PhD to accomplish this analysis. All you need is an understanding of the business, a curious mind, and some good analytical tools....and you too can make your business case!!

What is your experience when asked to defend your HR investments?

Monday, January 24, 2011

Success Stories and Predictive Analytics

Thanks to Andy Spence (@andyspence) for asking me the question, "Do you know any success stories from predictive analytics in HR?

I do know some success stories and I hear and read more and more everyday. But before I discuss the successes, I would like to define what "predicative analytics" mean. As defined by wikipedia:

Predictive analytics encompasses a variety of techniques from statistics, data mining and game theory that analyze current and historical facts to make predictions about future events.

In business, predictive models exploit patterns found in historical and transactional data to identify risks and opportunities. Models capture relationships among many factors to allow assessment of risk or potential associated with a particular set of conditions, guiding decision making for candidate transactions.

Predictive analytics is being used more and more in companies to make predictions about behavior, investments, and performance as it relates to a firm's human capital.

Here are a few examples from my experience:

1) A company needed to understand what its labor needs would be 5 years out as certain jobs were extremely hard to fill. By using historical data, the company was able to predict the number of engineers it would need at certain points in time based on past movements in and out of the organization. This information allowed them to PLAN and act in a proactive manner rather than a reactive one when it came to recruiting.

2) Another company needed to reduce cost in recruiting and improve new hire performance. By analyzing historical recruiting and performance data the company was able to create a candidate profile and an interview guide that was based on the knowledge, skills and abilities of the companies current top performers. This insight allowed the company to reduce it's cost per hire and increase it's average new hire performance rating. Productivity also had an increase as well.

3) Another company needed to analyze HR investment choices. Due to a limited budget the company needed to determine if it should invest in sales training for the organization or a new rewards program for call center employees. By using historical data and constructing a model based on the outcome of increased market share, the company was able to prove that a new rewards program would have the highest impact on market share.

In order to really get great insight, start bringing all your data sets together to see what kind of story it begins to tell. For example by analyzing your customer satisfaction data, financial data and engagement data, you can predict with a high degree of certainty what will happen to your financial results if your employee engagement scores decrease by X amount. It is important in this scenario to understand what is driving engagement with your employees so that those drivers can be tracked and continuously improved upon.

What has your company been doing in the area of predictive analytics?

Thursday, January 20, 2011

HR Measures, Metrics and Analytics Summit-Recap

The American Strategic Management Institute hosted the HR Measures, Metrics and Analytics Summit this week in Arlington, VA. This conference is my third HR metrics in the last six months. I ALWAYS learn something new. Below is a list of just a few observations from this week:

  • HR must take the lead on metrics, before someone else does.
  • It’s not good enough anymore for HR to align with organizational strategy, HR needs to actually BUILD organizational strategy. (Jeremy Shapiro, Stanley Morgan)
  • Metrics and Analytics will be used, paid attention to, and acted upon if you can relate them to organizational outcomes.
  • Many organizations are at the infancy stage of HR metrics, just starting to track HR effectiveness and efficiency but….
  • Organizational leadership is more demanding for evidenced based decision-making
  • The future of HR Metrics is predictive analytics….the future is now! (Darren Shearer, SuccessFactors)
  • Insight from data can’t happen until you begin to integrate your HR data with other functional data
  • HR tracking metrics like those found on scorecards are important, but analytics will prove impact and show insight enabling HR to show how people really make the difference in the organization.
  • Workforce planning analytics is a great place to start in the analytics journey as having the right people, in the right seat, at the right time will be critical for companies to gain competitive advantage.
  • Doing the analysis does not necessarily require a PhD, just a curious mind that understands the business environment.
  • Continuous improvement occurs when action is taken on the insights uncovered. Actions will not be taken unless managers and leadership are HELD ACCOUNTABLE.
  • Don’t be so proud of your data that you display ALL of it rather than tell a compelling data story.
  • Talent Management metrics like quality of hire and how/who is high performing ar e critical analytics as these measures have big financial impact to organizations. (Darren Shearer, SuccessFactors)

Every time I have attended a metrics conference, I leave more optimistic than I came. I meet very savvy HR professionals that are determined to not let HR metrics fall into someone else’s hands!!

Monday, January 17, 2011

How Clean is Your Human Capital Data?

Over the last few weeks, we have discussed the importance of HR Analytics. We discussed last week about looking at linkage to business strategy in order to start the process. Another important issue to look at, at the beginning of the project is the data itself. The one common theme/issue I have heard from conferences, clients and colleagues is the issue of data hygiene.

I believe that data cleanliness has to be a priority in HR as analysis of Human Capital data is more and more common every day. The one "stopping block" in the analysis process is the state of the data. By having strong data entry rules on the front end will save a lot of heart ache on the analysis end.

Here are some data pitfalls we have experienced:

1) Data is not entered into HRIS in a uniform manner thus creating issues when trying to perform data analysis

2) Data is not entered in a manner that allows for comparison across data sets. In other words, in the HRIS you enter data at the divisional level and in the CRM system you enter data at a location level.

3) Data is not normalized across data sets. Different scales, statistics and types of data are used within and across functions.

4) Missing data. Many times when looking at HRIS data, you see missing job titles, missing dates, etc.

5) Inaccurate data. We find there is a lack of quality control in HR data. Unlike in finance where data is constantly verified generally HR lacks this process.

What other data issues have you run across in your experience? Also, what are your processes for keeping your data clean? Comment below to keep the conversation going...

Tuesday, January 11, 2011

Where to Start the HR Metrics Journey?

Many times I have been asked by students, attendees and colleagues, "Where do I start with HR Metrics?"

I have answered that question in the past by saying, "Start with low hanging fruit, maybe with efficiency measures in recruiting like time to fill or cost measures in training like training cost per employee."

I still believe those are important EFFICIENCY TRACKING metrics, but I believe we are so past metrics like those. We need to be focused on those metrics that give us some INSIGHT into a decision, an issue, or strategic outcomes.

So my answer today, is quite different. I believe you start your metrics journey with your business strategy. It has to begin there. Leaders are looking for metrics that let them know how they are doing against their strategic objectives, what investments make the most sense (ROI) and what are areas that need improvement.

So, HR is key in this role, since approximately 60-80% of organizational budgets are tied to people related investments and/or costs.

Let's look at an example. Say your company has a strategic outcome to grow market share by 10% in the next 2 years. After cross functional team meetings the leadership team creates the following list of action items to accomplish the growth goal:

1) Reduce call center turnover in order to get new and retain current customers
2) Provide training to call center employees to increase product knowledge in order to increase sales
3) Increase employee engagement by 5% which leads to an increase of customer satisfaction leading to repeat business.
4) Increase sales hit ratios in order to close more business.

Here are my questions for consideration:

1) How do you determine which action item or combination of items is the right investment (s)?
2) Should the actions above be part of the HR scorecard?
3) Would metrics based on the business strategy be the metrics that the C-Suite would be interested in?

What do you think?

Sunday, January 2, 2011

HR Analytics: Learning the Language of the Business

We have been discussing HR Analytics over the last few weeks with such topics as "The 3 Most Important HR Measures" and "How to Introduce Analytics into the Organization."

I have been thinking about how to make sure HR Analytics are not only a part of the overall HR Strategy but that they produce information and insights that are actually USED.

So, like with any information that we have in our organizations, adoption really depends on a few things:

1) Ease of use
2) Access to the information
3) Understanding of the information
4) WIIFM-why should the end user care?

I believe when you embark on an analytics strategy you have to adapt the language of the business into your outputs. Reports, charts, graphs and studies need to address the following:

1) What is the business issue?
2) How does the issue relate to the current strategy?
3) Keep information simple
4) Don't show off math skills, show off a real understanding of the business issue while using cool analytic skills.
5) Show how solutions directly impact results by telling a data story not a data dump

HR Analytics are a hot topic right now. The actual analysis is only half the battle...the ultimate goal is that the organization can use the insight to:

1) Take action
2) Make better decisions
3) Decide between possible investments

How have you been successful in your communications of HR Analytics within your organization?