Download pdf - Hr Roi Tool Version 1.42 General Introduction

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 (+ 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