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@workforcedimensions.co.uk

@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@workforcedimensions.co.uk

@sam_hill_wfd

https://uk.linkedin.com/in/samuelhill68

+44 (0) 7540 783 211