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HR ROI tool
28 februari 2011
Agenda
• Strategic value
• Objectives• Scope of this tool
• Analysis process– General approach (how does it work)
– Timing– Deliverables (reporting)
– Example client case
• What’s in it for your company
Talent and Talent and Talent and otherotherother resources are resources are resources are scarcescarcescarce...We must act We must act We must act cautiouslycautiouslycautiously...
Our proposition: detect your ROI…
Objectives
• Consciousness on hr
• Calculate the actual costof human resources for the client in general and some crucial HR domains in particular(“as is”)
• Calculate the possible optimalisations and cost implicationsof human resources for the client and some crucial HR domains in particular(“to be”)
• Support the strategic HR decision processby calculating the impact of hr improvement actions, helping the client to forecast the hr budget andHR ROI KPI’s.
• Facilitate the decision on HR priorities.
Out of scope
• Exclusive “what we will not do with this tool”
– Comp&ben strategy
– Exit data– HR domains and process analysis
Scope
• Inclusive “what we can do”
– Feedback to client sponsor and assessee– Cost calculations (‘as is’ and ‘to be’)
• Attrition• Absenteeism• Recruitment• Training• Performance appraisal
– General report, including effect of consulting and 4 year ROI
– Supporting the definition of hr-priorities
General approach & timing
Day 0 Day 10Day 5 Day 15
Deliverables
• Report• Presentation• Transfer of kpi
Data collectionsheet
Company information MeasureCompany
dataRevenue 0Operating profit 0Sales quota 0Number of FTEs (blue collar) 0Number of headcount (blue collar) 0Number of FTEs (white collar) 0Number of headcount (white collar) 0Average cost blue collar (year) 0Average cost white collar worker (year, including 13th & 14th month if applicable) 0Average variable compensation (year amount) 0Payroll months (blue collar) 0Payroll months (white collar) 0Working hours/day 0Number of days worked monthly 0Number of weeks worked yearly (standard 46 weeks) 0
HR Element Measure As Is data# of total workforce terminating (in probation period) 0
# of total workforce terminating (after probation period, < 5 year) 0
# of total workforce terminating (+ 5 year) 0Cost of replacing attrition : overtime, investment temps, other 0# of total workforce terminating (in probation period) 0
# of total workforce terminating (after probation period, < 5 year) 0
# of total workforce terminating (+ 5 year) 0Cost of replacing attrition : overtime, investment temps, other 0# of total workforce terminating (in probation period) 0
# of total workforce terminating (after probation period, < 5 year) 0
# of total workforce terminating (+ 5 year) 0Cost of replacing attrition : overtime, investment temps, other 0# of total workforce terminating (in probation period) 0
# of total workforce terminating (after probation period, < 5 year) 0
# of total workforce terminating (+ 5 year) 0Cost of replacing attrition : overtime, investment temps, other 0
Workforce absenteism(blue collar) Total cost absenteism (input= average # days absenteism) 0Workforce absenteism(white collar)
Total cost absenteism (input= average # days absenteism)0
Workers compensation LTA (Long Term Absence due to working accident) # working absence (with absence of min 3 days) 0
Number of vacancies/year 0Number of cv's per vacancy (average or estimation) 0Number of retained candidates per vacancy (average or estimation)
0
Number of interviews per candidate 0Number of interviewees per interview 0
Number of candidates interviewed by management per vacancy 0
Time to fill 0Request effort 0
Org
anis
atio
nal
pro
file
Staffing
Company details
Company figures
Headcount (blue collar)
Headcount (white collar)
Ret
enti
on
Workforce attrition (voluntary)(blue collar)
Workforce attrition (involuntary)(blue collar)
Workforce attrition (voluntary)(white collar)
Workforce attrition (involuntary)(white collar)
Report
• Costs “as is”– attrition B/WC, absenteeism B/WC, training,
recruitment, appraisals• Costs “to be”
– Including assumptions in agreement with client, based on market KPI
• ROI – Including possible effectiveness savings
• 4 year ROI– Including general consultancy cost estimation
• Business benefits
750025Total estimated savings (in €)
106288Possible effectiveness savings (in €)
643737Possible savings (in €)
1.013.4731.657.210Total expenditure HR Situation (in €)
7.92031.68039.600Workforce administration
0Exit management
23.099128.819151.918Performance management
0Remuneration
25.478025.478Succession management
66.93066.930Training (effectiveness loss)
95.541541.397636.938Staffing
37.40037.40074.800Workforce compensation
2.1822.909Workforce absenteism (white collar)
15.21645.64960.866Workforce absenteism (blue collar)
125.0000125.000Attrition WC (involuntary)
121.026121.026242.052Attrition WC (voluntary)
75.2405.00080.240Attrition BC (involuntary)
50.160100.320150.480Attrition BC (voluntary)
WinTO BEAS IS
DASHBOARD COST REDUCTION
Cost reduction
0
100.000
200.000
300.000
400.000
500.000
600.000
700.000
Attr
ition B
C (vol
untary
)
Attr
ition B
C (invo
lunta
ry)
Attr
ition W
C (volu
ntary
)
Attr
ition W
C (invo
lunt
ary)
Wor
kforc
e ab
sente
ism (b
lue co
llar)
Wor
kforc
e ab
sente
ism (w
hite c
ollar)
Wor
kforc
e co
mpen
satio
n
Staffi
ng
Trai
ning
(effe
ctiv
eness
loss
)
Succ
essio
n mana
gem
ent
Remuner
atio
n
Perfo
rmance
man
agem
ent
Exit
man
agem
ent
Wor
kforc
e ad
min
istr
ation
AS IS TO BE Business Benefits
Business Benefit
50.160
75.240
121.026
125.000
15.216
37.400
95.541
66.930
25.478
0
23.099
0
7.920
0 20.000 40.000 60.000 80.000 100.000 120.000 140.000
Attri tion BC (voluntary)
Attri tion BC (involuntary)
Attri tion WC (voluntary)
Attri tion WC (involuntary)
Workforce absenteism (blue col lar)
Workforce absenteism (white col lar)
Workforce compensation
Staffing
Training (effectiveness loss )
Success ion management
Remuneration
Performance management
Exit management
Workforce adminis tration
405%376%350%224%ROI (Hard Facts + Business Benefits)
227%197%171%95%ROI (Hard Factors)
75.421 57.823 42.520 (4.023)Total net savings
59.500 59.500 59.500 82.500 Total cost consulting + services
106.288 106.288 106.288 106.288 Total savings (Business Benefits)
134.921 117.323 102.020 78.477 Total savings (Hard Factors)
25.474 22.151 19.262 14.817 Total savings Time consumption
109.447 95.172 82.758 63.660 Total savings Investment
5.447 4.736 4.118 3.168Workforce administration
Exit management
15.885 13.813 12.011 9.239Performance management
Remuneration
17.521 15.236 13.248 10.191Succession planning
(92.056)(80.049)(69.608)-53.544Training (effectiveness loss)
42.493 36.951 32.131 24.716 Recruitment (TI)
23.210 20.183 17.550 13.500 Recruitment (RI)
25.720 22.365 19.448 14.960 Workforce compensation
10.464 9.099 7.913 6.087 Workforce absenteism
51.743 44.994 39.125 30.096 Attrition - involuntary
34.495 29.996 26.083 20.064 Attrition - voluntary
Year 4Year 3Year 2Year1Project Implementation BMW
15,00%15,00%30%40%
Example client case
DASHBOARD COST REDUCTION
AS IS TO BE Win
Attrition BC (voluntary) 473.875 315.917 157.958Attrition BC (involuntary) 234.205 20.000 214.205Attrition WC (voluntary) 0 0 0Attrition WC (involuntary) 1.398 30.000 -28.602Workforce absenteism 35.734 18.073 17.661Workforce compensation 74.800 37.400 37.400Staffing 4.569 4.569 0Training (effectiveness loss) 15.682 15.682Succession management 0 0 0Remuneration 0Performance management 0 2.140 -2.140Exit management 0Workforce administration 0 0 0
Total expenditure HR Situation (in €) 840.263 428.099
Possible savings (in €) 412165Possible effectiveness savings (in €) 68861
Total estimated savings (in €) 481026
Client caseCost reduction
-100.000
0
100.000
200.000
300.000
400.000
500.000
Attriti
on BC (v
olunta
ry)
Attrit
ion B
C (invo
lunta
ry)
Attriti
on WC (v
olunta
ry)
Attr
ition W
C (invo
lunt
ary)
Wor
kforc
e ab
sente
ism
Wor
kforc
e co
mpen
satio
n
Staff
ing
Trai
ning
(effe
ctiv
eness
loss
)
Succ
essio
n mana
gem
ent
Remuner
atio
n
Perfo
rmance
man
agem
ent
Exit
man
agem
ent
Wor
kforc
e ad
min
istra
tion
AS IS TO BE Business Benefits
Client caseBusiness Benefit
157.958
214.205
0
17.661
37.400
0
15.682
0
0
-2.140
0
0
-50.000 0 50.000 100.000 150.000 200.000 250.000
Attri tion BC (voluntary)
Attri tion BC (involuntary)
Attri tion WC (voluntary)
Attri tion WC (involuntary)
Workforce absenteis m
Workforce compens ation
Staffing
Tra ining (effectivenes s los s)
Succes s ion management
Remuneration
Performance management
Exi t management
Workforce administration
Client case40% 30% 15,00% 15,00%
Project Implementation BMW Year1 Year 2 Year 3 Year 4Attrition - voluntary 63.183 82.138 94.459 108.628 Attrition - involuntary 85.682 111.386 128.094 147.309 Workforce absenteism 7.064 9.184 10.561 12.145 Workforce compensation 14.960 19.448 22.365 25.720
Recruitment (RI) - - - -
Recruitment (TI) - - - - Training (effectiveness loss) -9.202 (11.962) (13.757) (15.820) Succession planning 0 - - - RemunerationPerformance management -856 (1.113) (1.280) (1.472) Exit managementWorkforce administration 0 - - - Total savings Investment 148.865 193.525 222.554 255.937 Total savings Time consumption 11.967 15.557 17.890 20.574
Total savings (Hard Factors) 160.832 209.081 240.444 276.510 Total savings (Business Benefits) 68.861 68.861 68.861 68.861 Total cost consulting + services 82.500 59.500 59.500 59.500 Total net savings 78.332 149.581 180.944 217.010
ROI (Hard Factors) 195% 351% 404% 465%
ROI (Hard Facts + Business Benefits) 278% 467% 520% 580%
HR process investment
return
HR time improvement
Improved use of HR
Processes
Cost Reduction Effectiveness Increase Better Execution
Pro
• Objectify the personnel relatedcosts
• Identify the major cost drivers
• Allow to define actions that have an impact oncost (reduction)
• Based on marketstudies and KPI
• Relatively little time investment is needed• Supporting HR to provide KPI, numeric data and
business justification for HR action plans
Extra
• Hr process analysis– Questionaire– Maturity grid– Advise on next steps
• Depending on the domain this needs:– Interviews with jobholder, hr, management– Study KPI and raw data– Plot on maturity grid– List possible options– Present this and advise on next steps
StrategicPartner
ChangeAgent
AdministrativeExpert
EmployeeChampion
Perform
ance &
Reward
Selec
tion
Organisational
design& development
CoachingCareer counseling
EngagementTalent &
succesion
Sourcing
Secondement
Organisational
HR Strategie
Strategy
Mis
sio
n
Visio
n
Culture
Con
text Leadership
Hr servicesstrategy
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