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Metrics and Success How Top Companies Measure Diversity and Critical Human Capital Functions
- Kevin Oakes
CEO, i4cp
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Kevin Oakes CEO, i4cp
About Kevin Oakes Background
Founder, CEO of i4cp Former Chairman, Jambok Former Chairman, ASTD Board Founder, President, SumTotal Systems Former CEO, Chair of Click2learn Founder, CEO Oakes Interactive
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i4cp is the fastest growing and largest corporate network focused on the practices of
high-‐performance organizations.
Institute for Corporate Productivity
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High-‐performance organizations consistently outperform most of their competitors for extended periods of time.
These companies performed better over the past five years, based on these four indicators:
1. Revenue growth 2. Market share 3. Profitability 4. Customer satisfaction
Defining high-performance
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The 5 Domains of High-Performance i4cp research has shown that high-‐performance companies excel in five core areas:
1. Strategy 2. Leadership 3. Talent 4. Culture 5. Market (customer focus)
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What does i4cp do? We help organizations leverage the core areas of high-‐performance through 4 delivery vehicles:
1. Research 2. Peers 3. Tools 4. Technology
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The 5 Domains of High-Performance Organizations
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3M 7-Eleven Adobe Systems Alliance One Allstate American Mgt. Assoc. Ameriprise Amway Apollo Group AT&T Boston Scientific Cameco Catholic Health CitiGroup ConAgra Foods ConnectiCare Darden Restaurants Deloitte & Touche Depository Trust drugstore.com Duke Energy Duke University Edwards Lifesciences
Eli Lilly & Co ExxonMobil FedEx Express FedEx Ground Federal Reserve Fidelity Investments Flextronics General Electric General Mills Home Shopping Network ING Americas Intel Jack in the box KFC Kraft LG Electronics Lockheed Martin
MetLife Microsoft MITRE Northrop Grumman Olive Garden
Pelco PETCO Pfizer Pizza Hut PNC Financial Services Prudential Financial Qualcomm Raytheon Rio Tinto Group Samsung SaskTel Shell Oil Starbucks Takeda Pharmaceuticals Tampa Electric Company T-Mobile Toyota Motor Sales United States Navy U.S. OPM U.S. SEC United Water The Y YUM! Brands
Members (partial list)
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Two faces of human resources
Benefits Time & Attendance Payroll Scheduling
Tactical
Selection & Assessment Learning & Development Performance Succession Planning Compensation Diversity
Strategic
Source: i4cp
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Foreword: Tom Rath Gurus: Peter Cappelli, John Sullivan, Jon Ingham, Ed Lawler, Marshall Goldsmith, Bev Kaye, Noel Tichy, Dave Ulrich Practitioners: Agilent, Novelis, Hertz, Cisco, Edwards Lifesciences, 3M, Deloitte, General Mills
The Executive Guide to ITM
Chapters
1. Overview 2. Recruiting 3. Benefits 4. Performance Mgt. 5. Succession 6. Engagement 7. Leadership
Development 8. Conclusion
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Diversity Resources
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Organizations at all performance levels see diversity as an important issue now, that will be growing in importance in the next 10 years
How important do you believe diversity is in the following scenarios?
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Diversity Practice #1
Higher-performing organizations are more likely to build the
business case for diversity on the need to reflect their
customer base and community demographics
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Seeking to reflect customer base and
community demographics is a solid business
practice among high performers that
demonstrably helps to open talent pools and markets, supporting a
host of other talent and growth goals.
The Business Case for Diversity
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Diversity Practice #2
Organizations at all performance levels indicate that
diversity is an important consideration in developing their
succession plan
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Responses to this question clearly illustrate the evolution of diversity from a compliance driven issue to a talent driven one.
How important is diversity when developing the succession plan?
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Rob Reindl VP Human Resources Edwards LifeSciences
for the average bonus percentage paid to all top talent and the average bonus percentage paid to the rest of the salary exempt employees. Believe it or
significant turmoil due to economic conditions that
performed extremely well. It is talent that executes
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Next
Best Most high-‐performance
companies do it
The Rest Most companies do it, but it has little impact on performance
Highly correlated with high-‐performance, yet most
those in the succession planning pipeline
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Rest 76% of all respondents say their organizations use
nomination to identify candidates for succession planning to a high or very high extent, but this shows the weakest correlation with
succession planning success.
Some succession candidate identification tools have a greater impact than others
Best 57% of use designation as high-‐potential talent to identify candidates to a high or very high extent, with a .23 correlation with success.
Next 16% of use other types of assessment, such as psychological testing,
which has a .30 correlation with success.
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Promotion Rate Promotion Rate is defined as a change in job code and an increase in salary in the HRIS system of record including progression promotions, internal hires, development assignments
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Internal Placement Rate Internal Hire is defined as a current employee is selected for a role that was posted on an external job board
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Quality of Movement Scorecard
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Diversity Practice #3
Higher performers place more importance on framing diversity
as a business relevant issue and on creating accountability
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The apparent focus on framing diversity as a
business relevant issue and creating
accountability in helping to promote diversity
success may relate to the apparent lack of focus on them in earlier evolutions
of diversity initiatives.
How important are the following drivers to diversity success? Top five responses by scores of higher performers
Drivers of Diversity Success
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system is often the major differentiator between organizations
Edward Lawler III Distinguished
Professor of Business USC
motion of formulaic performance appraisals with
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1. The performance management process includes developmental plans for the next work period
2. Manager training is provided on conducting a performance appraisal meeting
3. The quality of performance appraisals is measured 4. There is a system in place to address and resolve poor
performance 5. The appraisal includes information other than that based on the
judgment of managers 6. The performance management process is consistent across the
organization 7. Employees can expect feedback on their performance more often
than once a year 8. multi-‐rater feedback is used to support the performance
management process 9. The performance management process includes ongoing goal
review and feedback from managers
9 Keys to Performance Management
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The decline of forced ranking
0%
5%
10%
15%
20%
25%
Forced Distribution Forced Ranking
Forced Distribution & Ranking Trends Among High-‐Performance Organizations
2009 2011
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Diversity Practice #4
Higher performers have a more inclusive definition of diversity
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Such broad definitions are indicative of a desire for an inclusive culture
that does not view diversity as primarily
compliance driven, but sees it as more of a talent
management strategy.
Definitions
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Diversity Practice #5
Higher performers are less likely than lower performers to
sponsor employee resource groups that are based on
traditional diversity labels or categories
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While higher performers are less likely to sponsor many of the traditional affinity groups than are
lower performers, they are more likely to sponsor
groups centered on other traits, such as sexual orientation, age and
tenure. It may be that higher performers have created cultures that are
diverse and inclusive enough that there is little need for traditional affinity
groups.
What types of affinity/employee resource groups are recognized in your company?
Group Sponsorship
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Diversity Practice #6
Higher performers are more likely to specifically budget for
diversity initiatives
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The amount budgeted for diversity initiatives, predictably, is tied more to organizational size than to market performance.
Does your organization specifically budget for diversity initiatives?
Budgets
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Does your company include diversity commitment / branding on the corporate website?
Budgets
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Diversity Practice #7
Higher performers are more likely to assign responsibility for
leading and executing the diversity strategy to the
executive team
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Keep leadership and execution responsibility
as high in the organization as possible while maintaining a close
relationship to other human capital related
functions. Executive level buy-in is a key to
successful diversity initiatives.
Who in your organization is responsible for leading and executing the diversity strategy?
Responsibility for Diversity
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Larger organizations are more likely to have a senior person who is primarily focused on diversity strategy
Does your organization have a senior person whose primary role is to lead and execute the diversity strategy?
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In organizations with a senior person dedicated to diversity, they are most likely to report to HR
Where does the person indicated in the previous question report in the organization?
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Diversity Practice #8
Higher performers place greater emphasis on diversity recruiting
and are more likely to concentrate training on diversity
skills
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Use of diversity recruiting programs varied greatly.
While only 37% of respondents reported
having a recruiting program, half of high-performing and highly effective organizations
have one.
What infrastructure is in place to support diversity and inclusion strategies and efforts in your organization?
Support for Diversity
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skill sets so much easier. Hiring the right person sets
Leslie Joyce Chief Talent Officer
Novelis
ruined my handiwork by choosing the person they
that there were other equally qualified candidates with
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Lower-performers are often more likely to measure tactical recruiting metrics than higher-performers
56%
50%
56%
82%
68%
45%
46%
57%
66%
59%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Percent of offers accepted
Acceptance rate of first offers
Cost to fill
Hiring cycle time
Number of recruiter requests
High Market Performers
Low Market Performers
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Higher-performers are more likely to measure quality of recruiting efforts than lower-performers
15%
19%
39%
43%
26%
61%
0% 10% 20% 30% 40% 50% 60% 70%
Employee referral rates by specific segment
Cycle time to competency or full productivity
Employee referral rates
High Market Performers
Low Market Performers
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Correlated with High Market Performance .14% Correlated with Talent Management Effectiveness .44%
Measuring Quality of Hire is an opportunity to gain a competitive advantage
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Quality of Hire Scorecard
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Diversity Practice #9
Higher performers are more likely than lower performers to use themselves as the primary
benchmark
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Although higher performers are the most
likely to say that their business driver for
diversity is to reflect their customer base and
community demographics, they are
not very likely to use community demographics
as a metric of comparison.*
When reviewing diversity metrics, what do you compare your results against?
targets are originally set based on community demographics, and that success is better gauged by progress over time or by looking at the pool of available applicants.
Benchmarking
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Diversity Practice #10
Higher performers are more likely to conduct an annual CEO
review and to tie results to compensation
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From these numbers, one can conclude that
creating leadership accountability for diversity remains a challenge that most organizations know they should be meeting
but are not likely engaged in yet.
How are leaders held accountable for driving diversity within your organization?
Accountability
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Hertz to implement integrated structures, thus eliminating
Karl-Heinz Oehler VP, Global Talent
Management Hertz
implemented, and sustained if they are properly
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0% 20% 40% 60%
To recognize and reward high performers
Low Performing Orgs High Performing Orgs
Rewarding high performers What are the primary drivers for pay-for-performance programs in your organization?
32%
47%
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37% of HPOs consider their P4P strategy to be highly effective at improving individual performance 16% of LPOs consider their P4P strategy to be highly effective at improving individual performance
31% of HPOs give their highest performers merit increases of 7% or more 17% of LPOs give their highest performers merit increases of 7% or more
25% of HPOs give their highest performers 150% or more of their annual bonus target 0% of LPOs give their highest performers 150% or more of their annual bonus target
Rewarding high performers
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Diversity Practice #11
Most organizations do not calculate the ROI of their
diversity investments
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track program effectiveness.
Does your organization calculate a return on its diversity investment (ROI)?
Return on Investment
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Diversity Practice #12
Higher performers monitor both their applicant pools and their
ability to retain once the talent is in the door
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When it comes to measuring the success of
their programs, organizations at all
performance levels agree that retention and
engagement top the list.
What does your organization use to measure success in its diversity strategy?
Top five responses by scores of higher performers
Workforce Analytics
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Attrition Metrics Tactical
Finding: When comparing large organizations (10,000+ employees), there is no significant difference between higher-‐ and lower-‐performerstactical retention metrics.
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Attrition Metrics Strategic
Finding: When comparing large organizations (10,000+ employees) higher-‐performers are more likely to measure who is leaving the organization than lower performers.
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Quality of Attrition Scorecard
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Quality of Attrition Scorecard
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Attrition Rates by Category
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Disengaged 23.40%
Moderately Engaged42.60%
Highly Engaged 34.00%
Estimate the percentage of your workforce that you believe fit into the following categories
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Highly Engaged
22%
Moderately Engaged
42%
Disengaged or
Minimally Engaged
36%
Low Market Performers High Market Performers
Highly Engaged
42%
Moderately Engaged
42%
Disengaged or Minimally
Engaged 16%
Perceived degree of worker engagement
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What do you look for in new recruits?
Engagement starts with recruitment
Organizations with Highly Engaged
Employees
Organizations with Disengaged Employees
1. Has passion for work 1. Intelligent
2. Has positive attitudes toward peers and customers
2. Confident in work abilities
3. Has desire to set and achieve goals 3. Has excellent job skills
4. Adaptable 4. Has positive attitudes
toward peers and customers
5. Intelligent 5. Emotionally mature
6. Confident in work abilities 6. Has passion for work
7. Has excellent job skills 7. Has desire to set and achieve goals
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Who is responsible for calculating the workforce results? HR Analytics Team (22.0%) Head of HR (21.2%) Within the Business (11.4%)
What systems/technology are used to calculate the workforce results?
HRIS system (41.1%)
Note: Spreadsheets & Databases (34.7%) are not correlated to TM Success
How often workforce results are produced? Monthly (28.5%) Quarterly (30.2%)
The Who, How and When of reporting is not as
No Significant Statistical Difference
No Significant Statistical Difference
No Significant Statistical Difference
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Executive Team / CEO are the only groups correlated to High Market Performance
Who receives the workforce reports is important
Q: Who receives the workforce metrics reports? (Select all that apply)
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2006 2007 2008 2009 2010 2011 2012
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For C-‐Levels Strategies for building high-‐impact diversity programs
Diversity and Inclusion Highlight Report Slides?
Diversity Accelerator Working Group
For Directors Rapid Program Development Performance Assessment
Global Diversity Pulse Survey Findings Diversity and Inclusion Scorecard
Managers Communication and Execution Guides
General Management Strategies for Diversity and Inclusion Human Resources Strategies for Diversity and Inclusion Diversity and Inclusion Corporate Examples
How i4cp can help with Diversity
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411 First Avenue South, Suite 403 Seattle, WA, U.S.A. 98104
866-‐375-‐i4cp (4427)
www.i4cp.com
For More Information: [email protected]
© 2011 Institute for Corporate Productivity, Inc. Member companies may reproduce and distribute this file on an unlimited basis to their employees for internal management purposes only. Nonemployees (including outside consultants) may not be given
