HR Analytics 6th module of Human resource analyticse.pptx

HR Analytics 6th module of Human resource analyticse.pptx

1. Module - 6

2. Some of the HR Metrics Examples HR Metrics example in Recruitment and Selection Time to hire Cost per hire (total cost of hiring / the number of new hire) Early turnover (percentage of recruits leaving in the first year) Time since last promotion( avg time in months since last internal promotion)

3. Some of the HR Metrics Examples HR Metrics Related to Revenue Revenue per employee (revenue/total number of employees) Performance and potential (the 9-box grid) Billable hours per employee Engagement rating

4. Potential GEM Average Performer Risk High Performers Core Player Inconsistent Player High Potential S t ar Solid Performer L o w L o w Hi gh

5. Some of the HR Metrics Examples Other HR Metrics Cost of HR per employee (e.g. $ 600) Ratio of HR professionals to employees (e.g. 1:60) Ratio of HR business partners per employee (e.g. 1:80) Turnover (number of leavers/total population in the organization) Effectiveness of HR software Absenteeism (absence percentage)

6. Assessing HR Program, engagement and Turnover - What is the degree of efficient and effective utilisation of human resources in order to achieve goals of the organisation? It is important to assess how well and how far employees of the organisation have been utilised in achieving the organisational goals. Ideally each of the HRM functions needs to be performed successfully and then objectives of HRM will be achieved. Achievement of the objectives of HRM will lead to achievement of the strategic goals of HRM that will lead to achievement of the generic purpose of HRM.

7. Why Assessment is Important? is to know whether HRM functions are performed in good way. is to ascertain whether the HRM schemes being implemented contribute to achieve the strategic objectives, mission and vision of the organisation. What is the impact of HRM on achieving the strategic objectives of the organisation? Is there a significant impact?

8. If so, how much is it? Is the degree of impact increasing over the past years? is to promote the importance of HRM within the organization. Justifying the costs involved in implementing HRM programmes is a reason for HRM evaluation. Also evaluation results can be used to identify strengths and weaknesses of the HRM systems and then take remedial actions to improve the efficiency and effectiveness of the HRM systems.

9. Four Purposes of Evaluating the HRM Function . To justify HRM’s existence and budget. To improve the HRM function by providing a means to decide when to drop activities and when to add them. To provide feedback from employees and operating managers on HRM effectiveness. To help HRM make a significant contribution to the organization’s objectives.

10. With the increasing emphasis placed on strategic contribution, competitiveness, and cost control, there has been a greater need to justify the existence of human resource practices, activities, and programmes

11. Three Dimensions of evaluation of HR Evaluating the quality and the quantity of each HRM function - whether each function has been performed in the appropriate way Attainment of the HRM objectives and strategic goals evaluating the degree to which the HRM objectives and strategic goals have been achieved Evaluation of the department for human resources in the organisation how well and how far the HR Department of the organisation has performed

12. Finding money in Analytics? Are you finding money making data insights fast enough? How Fast? How Much Accurate? How Much Relevant How it relates to the business outcome?

13. Finding money in Analytics? Sources: Recruiting costs (associated with turnover) Training Cost (In-terms of ROI) Reducing overtime and other types of payroll (through better planning and management) Top-line growth that comes from better sales performance Span of control analysis and absence management

14. Operational P erformance Is it the satisfaction of your customers? Sales? Cost reduction? Measuring all business objectives and metrics is vital to streamlining operational efficiency. Every company needs to have clear what are the top metrics, what is usually known as the scorecard, but also what are the dimensions, metrics and information that they want to be able to understand deeper.

15. Need to know the Operational performance Knowing the operational Performance by measurements of management are needed when dealing with customer satisfaction, internal processes and activities directed at improvement and innovation in the organisation, which lead to future financial returns. Manufacturing performance, which encompasses part of the operational performance previously mentioned, is commonly used in the field of operations management. This type of result takes into account the company’s performance in reaching its basic objectives, that is, productivity, quality and service.

16. Effect of HRM on aspects of operational performance Such as T he hours of labour required to manufacture a particular product T he percentage of programmed time that the production line is in operation the defects rate T he pe r c e n t a g e o f p r o d uct i o n th a t me e ts the r equi r ed quality standards and defects costs D egree of utilization of equipment M inimization of waste P roduct quality and in-time delivery

17. Effect of HRM on aspects of operational performance Irrespective of the type of operational result on which they are focused, show the introduction of high-commitment HRM practices to have an impact not only on the plant’s productive system performance but also on business performance. Hence , dat a driven decisions on HRM Practices has got lot of relevance in improving the operational performance.

18. Need to know the Operational performance Knowing the operational Performance by measurements of management are needed when dealing with customer satisfaction, internal processes and activities directed at improvement and innovation in the organisation, which lead to future financial returns. Manufacturing performance, which encompasses part of the operational performance previously mentioned, is commonly used in the field of operations management. This type of result takes into account the company’s performance in reaching its basic objectives, that is, productivity, quality and service.

19. HR Data and S tock P erformance Human capital investments have a positive causality to stock performance. The fact that human capital investments affect stock performance is important for investors to know when taking investment decisions, which is a sort of practical contribution Need for new guidelines and regulations about how human capital should be disclosed in financial reports. So that investors can take better investment decisions. Human capital is only one of many valuable intangible resources that are excluded in financial statements and thereby is difficult to value.

20. HR Data and Stock Performance The research proves that human capital is a valuable resource for companies and can increase financial performance, and that information about investments in human capital is important for investors and shareholders In a society where knowledge becomes more and more important it is clear that information about human capital has to be included in the valuation of companies to decrease market-to-book values. Source: The Causal Relationship between Human Capital & Stock Performance - A quantitative study on the Stockholm Stock Exchange Authors: Daniel Larsson & Anton Mörling Supervisor: Catherine Lions

21. Creating HR Scorecard Five Step Process Create an HR strategy map. Identify HR deliverables. Creation of HR policies, processes, and practices. Aligning HR systems. Creating HR efficiencies. Source: https://www.analyticsinhr.com/blog/hr-scorecard/

22. Creating HR Scorecard Five Step Process Create an HR strategy map. T o ide n tify h o w H R c an c onnec t t o this b usines s ou t c om e , one can create a strategy map. Th e s t r a t egy map he l p s t o ide n tify h o w H R i s dr i ving these business outcomes. Th e q ue s t i o n he r e i s : w h a t H R p r actices d ri v e the s t r a t egic goals of the company?

23. Creating HR Scorecard Five Step Process Create an HR strategy map. You’ll find an example below, which was created specifically for the recruitment function. As you can see, the company’s strategic goal is on top. Next, HR has identified its recruitment contribution to this goal .

24. Creating HR Scorecard Five Step Process Identify HR deliverables. To measure this, HR deliverables or KPIs are created. This HR scorecard example shows how these strategic goals can be measured. For example, the lead time is measured as the ‘time to hire in days’, which is currently 38, but has to be decreased to 25, a 34% improvement!

25. Creating HR Scorecard - Five Step Process 2. Identify HR deliverables. Because of these very clear indicators, the HR department knows that an increase in those two HR deliverables will lead to the company’s goal of becoming more innovative, giving HR a very strategic role.

26. Creating HR Scorecard Five Step Process Creation of HR policies, processes, and practices. Policies : A strong employer branding policy will help in building a strong reputation that will help in becoming a top employer . P r oce s ses : K e y t o dec r easi n g lead ti m e will b e an optimization b e t w e en h o w r e c ru i t e r s and mana g e r s communicate. P r a ctice s : T hi s loo k s a t the sp e cific p r actices th a t he l p HR achieve the aforementioned deliverables.

27. Creating HR Scorecard Five Step Process Aligning HR systems. System alignment is not about software systems. Rather, it is about aligning the different HR practices to create synergy. For example, the employee branding efforts should focus on the type of workers that the employer is actually looking for. In addition, decreasing lead time by rushing through the process may lead to a lower quality of hire, resulting in a mismatch between what HR is doing, and some of the goals it tries to achieve.

28. Creating HR Scorecard Five Step Process Creating HR Efficiencies Traditionally, HR has focused a lot on creating efficiencies. When it comes to creating an HR scorecard, some efficiencies have to be thrown out of the window. The simple reason here is that to get, for example, a higher quality of hire, your cost to hire someone might go up. In our example, the quality of hire is a strategic HR measurement. Investing money into increasing the quality of hire is well worth it. This justifies investments in assessments, employer branding projects, and other HR initiatives that boost the main HR deliverables.

29. The HR balanced S core card A common misconception is that there is an HR balanced scorecard. The HR balanced scorecard is a mix-up of the HR scorecard and the balanced scorecard. The balanced scorecard was first published about by Kaplan and Norton in the early ‘90s. In 1996 the two published a book that bore that title. The balanced scorecard is a strategy performance management tool. The scorecard lists financials goals, customer goals, internal business goals, and innovation & learning goals. These four goals give a good overview of what the company tries to achieve, i.e. the company strategy.

30. As we know, the HR strategy follows the business strategy, so the HR scorecard is heavily influenced by the business scorecard. Indeed, the HR scorecard takes the strategy as defined in the balanced scorecard as the starting point and then identifies the HR deliverables that drive these outcomes. However, do keep in mind that both are different documents!

31. Develop an HR measurement system Select Correct HR Measures and Deliverables Establish high performance HR Work System Alignment measures to check consistency HR Efficiency Measures Cost efficiency measures – Significant expenditure items like benefit and salary cost etc. Strategy efficiency measures Cost per new hire, HR Expenses per employee.

32. Guideline to implement HR scorecard Keep track of early success. Maintain investment in the Scorecard . Build on continuous learning about what is working and what is not working. Adapt to changing conditions. Celebrate progress. Integrate with other work. Learn from experience.

33. Thank You