cedar crest one 2007 metrics and analytics[1]

8/8/2019 Cedar Crest One 2007 Metrics and Analytics[1]

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CEDARCRESTONE 2007

METRICSAND ANALYTICS REPORT

A Supplement to the Ninth Annual Editionof the CedarCrestone HCM Survey


2/28 Copyright 2007 CedarCrestone, Inc.

Information contained in this survey analysis supplement was compiled and analyzed by CedarCrestone as part of

our commitment to provide knowledge on workforce technologies, trends, and their impact on the performance of the

enterprise. CedarCrestone encourages media, partners, analysts, and other readers to share the information found

herein and to quote liberally from the survey supplement in their own work with appropriate credit to CedarCrestone. We

request that all quotes and references are credited as CedarCrestone 2007 Metrics and Analytics Report.



Table of Contents

Executive Summary 1

Introduction 2

The State of Adoption of Metrics and Analytics 3

The Technology 3

The Organizational Commitment to Metrics and Analytics 8

Case Studies 12

Capital One 12

University of Michigan Health System 15

Value Proposition of Metrics and Analytics 20

Strategy for Success 21



FIGURE 1: Data Repository to Support Workforce Performance Measurement Worldwide

FIGURE 2: Reporting Tools to Support Workforce Performance Measurement Worldwide

FIGURE 3: Analytics Worldwide

FIGURE 4: Workforce Planning Worldwide

FIGURE 5: Presentation Approaches for Metrics Worldwide

FIGURE 6: Most Frequently Reported Measures Worldwide

FIGURE 7: Organizational Objectives Drive Metrics

FIGURE 8: Metrics Examples and Recommendations by IndustryFIGURE 9: Impact, Effectiveness, and Efficiency Metrics Examples

FIGURE 10: Recruitment Dashboard Tool Used at University of Michigan Health System

FIGURE 11: Current Analytics Service Delivery Model at University of Michigan Health System

FIGURE 12: Future Analytics Service Delivery Model at University of Michigan Health System

FIGURE 13: Top Metrics and Analytics-related Savings: From hard-dollar cost savings to strategic value

FIGURE 14: Operating Income Growth with and without Workforce Measurement

Figures



Executive Summary

Organizations have spent years putting employee data into their systems. Now they want it out. At the same time

the vendor community has developed and optimized business intelligence and analytics functionality for enterprise

performance management and for human capital management (HCM). All the pieces are now in place for 2007 to be

the year of full-throttle implementation of metrics-based management with the deployment of warehouses, reporting

functionality, and analytics fine-tuned to include the workforce contribution to enterprise performance management.

For the past few years, the annual CedarCrestone HCM surveys on workforce technologies adoption have highlighted

analytics as a fast-growing market segment. While workforce metrics and analytics are a clear trend, the actua

approaches and technology choices are less clear.

Our latest survey results show financial services, high-tech manufacturing, health care, and large retail organizationsas the early adopter industries achieving benefit from workforce-related metrics and analytics. They are using an

eclectic approach, building on a data warehouse, with reporting, analytics, and presentation technologies. The use of

the underlying data warehouse is most widespread, with usage of an HR-oriented warehouse growing by 20% since

2005. But plans seen in 2005 to move to stand-alone workforce analytics applications have not materialized. However,

we believe organizations with ERP solutions will ultimately move to the more comprehensive workforce analytics

applications available from the major ERP vendors. From a technology perspective, they provide integration, scalable

solutions, and convergence with service-oriented architecture (SOA) components. Most importantly, however, ERP

providers own and provide best practices for the HR business processes through their HCM applications. They understand

that analytics are most meaningful when delivered as part of the daily business processes used by different levels in the

organization and they provide best practices for the analytics most appropriate for these processes through their applications.

Of more importance than the technologies is that the organization commits to a strategy to manage with metrics. A key

success factor is that the organization standardizes and agrees upon a set of metrics. In this report, we provide the most

frequently reported measures from our survey. In subsequent interviews, we looked at organizational strategies and

objectives and found a match between organization objectives of growth, profit, and sustainability and preferred metrics.

For each of these objectives, we provide the drivers, and associated metrics. We further show metrics examples and

recommendations by industry and suggest a framework of metrics that focus on the impact of talent on the organization.

Metrics associated with objectives, metrics by industry, or a metrics framework are all important as starting places to

think about what metrics are appropriate in your organization. We also found that each organization that has adopted

metrics and analytics is unique in it usage and should be. We provide an in depth look at metrics and analytics in action

at two organizations: Capital One and University of Michigan Health System, as examples.

The value proposition of metrics and analytics can be substantial, consisting of both hard-dollar and strategic savings

Further, survey respondents with workforce measurement approaches and technologies report significantly higher

operating income growth than organizations without such initiatives.

We conclude this report with a strategy for success. Actions are necessary on multiple fronts from process

standardization, to technology choices, to expanding the education of your staff, to focusing on the metrics that match

your organizational strategy, to building a business case.



For the past few years, the CedarCrestone HCM Survey on workforce technologies adoption has highlighted metrics

and analytics as a fast-growing market segment.1 In our 2005 survey, it looked like workforce analytics itself was going to

be the next killer application. The latest survey results, released in November 2006, confirm a continuing trend towards

more measurement and analytics activity with 60% of all respondents doing at least a minimum of simple reporting of

one or more metrics. Further, there is almost a 20% growth in the adoption of an HR-oriented warehouse since 2005. In

addition, almost 30% of our respondents indicate they are spending at least a quarter of their time integrating systems in

preparation to do performance measurement and to implement a scorecard or some other visualization of critical data

in support of workforce-related metrics-based management.

But, at the same time, it appears the deployment of a standalone

workforce analytics application has declined in usage with only 10%

reporting they have such an application actually in use. Clearly a

standalone package approach to workforce analytics has not emerged

as the clear choice. We believe that long-term, organization-wide

solutions will be chosen from the business intelligence approaches

and overall toolsets of Oracle and SAP, once the value is solidly

established, as we show in our case stories. But for now the analytics

areaserving HR with all its componentsis fragmented.

So, while interest in workforce metrics and analytics is a clear trend,approaches and choices are less clear. From our respondents, we see

the market as still in the early adopterstage with financial services,

high-tech manufacturing, a few very large retail organizations, and

some health care institutions that respond to our survey being at

the forefront with organizational moves towards analytics. But other

industries, so far, are only slowly adopting metrics and analytics. Thus,

most organizations are missing out on the competitive improvements

possible from metrics-based management.

When we see such conflicting results, we think it is important to dig deeper into what early adopter organizations are

actually doing; so in this report, in addition to survey data on metrics and analytics, we include two case stories. From

these, plus our business case and implementation experience, we recommend a strategy for success to readers.

Introduction

1 Most forecasts by ComputerWorld, Gartner, or Forrester predict that business intelligence and analytics will be hot in 2007. Forrester indicates

that business intelligence software is the top application purchase.2 CedarCrestone 2006 HCM Survey: Workforce Technologies and Service Delivery Approaches, pages iv and v.

About the CedarCrestone HCM Survey

The data for this supplement comes from

the CedarCrestone 2006 Workforce

Technologies and Service Delivery

Approaches Survey, conducted between

June and September 2006 and further

updated in early 2007 with interviews and

case studies. There were 324 respondents

to the Survey from a representative set

of industries and organization sizes.

Respondents are from organizations

with at least 500 employees. The typical

respondent is a manager/director at the

intersection of Human Resources (HR)

and Information Technology (IT). Please

see the full survey for further detail.2



The Technology

The simple view of metrics and analytics from a business intelligence technologies perspective consists of six interrelated

components:

1. An agreed upon system of record that contains workforce information. That system of record is most frequently

the HRMS application, and among our respondents, that HRMS is from an ERP vendor. Most frequently, among

our respondents, the HRMS is Oracles Enterprise solution (PeopleSoft) (45%).

2. The next technology is a data repository or data warehouse. An analytical infrastructure requires data not only

from HR itself, but from other sourcesfor example, payroll for salary and absence information, financial systems

for divisional financial performance, or customer-facing applications showing customer satisfaction levels. Furthersome organizations will look to pull in data from third-party benchmarking organizations to analyze turnover,

performance, salaries, etc. against industry norms.

For 34% of our respondents, up almost 20% since 2005, the primary data repository is an HRMS warehouse that

contains defined data cubes of information to be reported on such as headcount, turnover, or hires (see Figure

1). Some respondents report they also have another warehouse that contains workforce datamost typically an

organization-wide data warehouse. If reports from organizations such as the Data Warehouse Institute or IDC are

correct, we believe that such warehouses are even more prevalent than our respondents indicateand HR may

not always be in the know about such technologies. Still for others, that repository is just a copy of the system

of record, so that transactional performance of the HRMS is not impacted when reports are run. And for some

organizations, the data repository might even just be a spreadsheet that contains information pulled from multiple

sourcesa very common starting place for analytics as we will show in our case stories, although by no means the

best solution for the long term.

The most frequently mentioned data repository by our survey respondents is PeopleSofts HR Warehouse

And IDC named Oracle as the leading business analytics software and data warehousing tool vendor based

on software revenues.3 Infohrm, previously Corporate Leadership Council, is most frequently mentioned for

benchmark information. It offers an on-demand workforce reporting, workforce planning, and analytics. For the

benchmarking, it collects your data and makes a comparison to other organizations of comparable industry/size.The other benchmarking source mentioned is Saratoga with its clearly defined metrics program and attitudina

survey offerings.

The State of Adoption of Metrics and Analytics

3 Worldwide Business Analytics Software 20062010 Forecast and 2005 Vendor Shares, IDC. September, 2006.



Figure 1: Data Repository to Support Workforce Performance Measurement Worldwide

3. The next piece needed is reporting tools. By far, the most common reporting tool is the simple management

reports run from the HRMS, with 62% reporting they do this today (see Figure 2). Simple management reportinghas been the first online interaction for managers since we began tracking employee and manager self service eigh

years ago. Operational and ad hoc reporting follows with 30% usage each. Least used today is multidimensiona

reporting (18%). For those not familiar with multidimensional reporting, this functionality is needed to drill down into

the data to begin to see what might be behind a specific metricsuch as turnoverin a given department.

The reporting vendors most frequently mentioned are Cognos in addition to solutions from the ERP vendors.

Figure 2: Reporting Tools to Support Workforce Performance Measurement Worldwide

4. The next piece of the overall technology solution is the actual analytical tools. The options are vast. At the basic

HRprocess level, traditional HR metrics provide insight into HR process effectiveness from recruiting cycles, to

development activities, to compensation activities, to performance management, and more. But, with data brough

in from other sources, examining workforce metrics in the broaderbusiness context, HR intelligence can enable

metrics-based human capital management and for this, early adopters are using a variety of tools today.

0% 20% 40% 60% 80% 100%

Simple management

reporting

Operational reporting against

warehouse data

Ad hoc reporting against

warehouse data

Multidimensional reporting

against warehouse data

In Use

Budgeted within Next 12 Months

Planned within 3 Years

4

0% 20% 40% 60% 80% 100%

HRMS warehouse

Other warehouse of workforce data

In Use





Choices range from:

Excel. While novices can do simple correlations with Excel, it is also relatively easy to turn Excel into a powerful

what if analysis tool with the addition of BusinessObjects Crystal Xcelsius, a data visualization tool. Data can be

presented graphically and in table form in a PowerPoint presentation and participants can interact with the graphics

or data, adjusting key assumptions to drive further analysis.

Statistical packages from SAS, SPSS, or Cognos adapted to workforce analytics. The Cognos 8 Workforce

Performance, recently announced, is an analytical application that offers over one hundred measures and multiple

workforce-related attributes to support cross-organization reporting and analysis.

Analytics functionality embedded in individual applications such as talent acquisition/recruiting, learning

management, compensation, and performance management. Taleo recently announced a Reporting and Analytics

platform that supports the talent acquisition cycle; Saba has its own that supports its learning and performance

management solutions; and so forth.

Analytics functionality embedded in application suites such as performance or talent management. TheAnalytics and Reporting module from SuccessFactors is a great example of this category. It provides advanced

visualization tools that help managers stay on top of people and processes with an at-a-glance insight into the

entire Performance and Talent Management solution.

Standalone workforce analytics applications such as Daily Business Intelligence for HRMS from Oracle

Enterprise Performance Management with its focused workforce analytics components from PeopleSoft, or the

comprehensive technology business intelligence stack including SAP NetWeaver and a rich set of pre-built

functionality for workforce analytics from SAP. Our survey indicates that such a standalone package is only in use in

10% of respondent organizations today, with another 20% planning to implement this within three years (see Figure 3).

Predictive analytics. Predictive analysis is a modeling technology that allows organizations to carry out wha

if analysis. Its use is among early adopter organizations and is not yet widespread (see Figure 3). One or more

variables are used to predict future behavior by combining them into a predictive model where scenarios can then

be run to forecast future probabilities. An example is using data from successful performers to identifyprospective

high performers or their likely turnover. Another example is showing the impact of HCM policies and practices

towards a positive impact on shareholder value (i.e. ProCourse ROI from Capital Analytics, a tool that measures

the impact of human capital business initiatives such as training, benefits, or retention strategies).

Figure 3: Analytics Worldwide

0% 20% 40% 60% 80% 100%

Workforce analytics(standalone package)

Predictive analytics (variety

of tools ranging from Excel

to statistical packages)

In Use





A specific predictive analytics solution is the workforce planning application. Currently 14% of respondents

report they have this application, but over 30% will have this within three years (see Figure 4). This application

helps create planning scenarios that balance acquisition, development, and retention to meet current and future

strategic needs for skills and competencies in alignment with strategies. Several vendors offer such solutions

including the major ERP vendors, but the state of workforce planning as predictive analytics is still characterized by

organizations that cobble together solutions to perform optimized workforce planning (see our case studies), and

by vendor organizations that offer a tool with consulting services (Aruspex).

Figure 4: Workforce Planning Worldwide

The standalone workforce analytics solutions that looked so promising last year are likely not going to be the

leading analytics solution, in the short term, as most best of breed applications provide analytics functionality and

will offer a much easier entre to this domain. In addition, the emergence of lower cost solutions from Business

Objects, Cognos or Cornerstone appears much more attractive as a way to get started with analytics. We think,

however, that long-term, organization-wide solutions will be chosen from the business intelligence approaches of

Oracle and SAP, once the value is solidly established, as we show in our case stories later.

5. Presentation/visualization. Metrics and analytics are most useful when presented in a visual paradigm tha

enables the viewer to easily and intuitively drill down into the presented metrics to examine the underlying numbers

and ultimately to determine what action should be taken. A visual paradigm may initially be just a simple report

from the reporting facility or single metrics presented on the Intranet or portal. But these are not as effective

as a scorecard or dashboard. The HR scorecard and/or dashboard is currently the domain of early adopters

among our survey respondents, most typically financial services and health care organizations, that have made

the organizational commitment necessary to make these truly useful in supporting enterprise performance

measurement and analytics (see Figure 5). The vendor solutions in this category include all those mentioned in

the reporting section above. Further, there are numerous reporting and dashboard vendors such as Information

Builders, MicroStrategy, Business Objects, and more. Their products can be used to build and present scorecards

and dashboards.

0% 20% 40% 60% 80% 100%

Workforce planning

In Use





Figure 5: Presentation Approaches for Metrics Worldwide

One further emerging area of interest is the vendors that provide organization chart functionality who are using tha

visual model to present metrics and support analytics. Among these vendors are Aquire, HumanConcepts, and

Nakisathe latter engineered as a web services solution to co-exist with and enhance Oracle and SAP business

intelligence. Users are presented with 30,000 foot views of workforce information in the form of dynamic, clickable

graphs, charts, and tables. Users can drill down to determine human resource competencies, identify talent gaps

and evaluate workforce needs. And the web services aspect may make the Nakisa solution of great interest to the

IT community that will only support scalable solutions.

6. Distribution. Metrics and analytics address how any of the above pieces are distributed to managers andemployees. Data can be presented on a scorecard, portal, or Intranetrequiring that users pull the information

A more ideal approach is to push the information, through workflow notifications and email, along with contextua

information as to what the data means and even how to use it. A push approach will also be roles based.

0% 20% 40% 60% 80% 100%

HR scorecard

HR metrics on the Intranet

HR metrics on portal (from

an HRMS or portal vendor)

In Use





The Organizational Commitment to Metrics and Analytics

But, of more importance than the technologies in use or planned is whether the organization is committed to a strategy

to manage with metrics.

Only 14% of respondents report they are successful with their initiatives aimed at enabling employees and managers

to make better decisions. Those that are successful are in financial services, high-tech manufacturing, and health care

Of note is that North American-based organizations are further along than organizations headquartered elsewhere.

A mandatory component of an organizational move to metrics and analytics is a standardized and agreed-upon set

of metrics definitions. One of the first areas that must be addressed is what is headcounttypically an area where

Finance and Human Resources disagree, as we show in the Capital One case study. To Finance, it is typically full-time

equivalents and associated salaries, but to HR it is the total headcount used for planning purposes, encompassing the

total number of people who serve the organization and need services, whether full-time, part-time, contractors, or intodays parlance, people of interest.

One of our questions in the latest survey was what do you measure and in the table below we show the mos

frequently reported measures.

Figure 6: Most Frequently Reported Measures Worldwide

But these measures by themselves are not meaningful. So, we looked at the organizational strategies and objectives

and the issues being addressed by respondents. Looking first at objectives, we found a match between organization

objectives of growth, profit, and sustainability and preferred metrics. In subsequent interviews with respondent

organizations and metrics experts, we found that for these major organizational objectives, there are associated

business drivers. The linkage between objectives, drivers, and metrics is clear as shown in Figure 7.

% Responding% Responding

Headcount

New hiresTurnover

Terminations

Performance appraisals completed on time

Time to fill

Employee satisfaction

Promotions

Time to hire

Call center metrics

Cost per hire

Employee engagement

Revenue per employee

Personal/professional development hours

Operating income per employee

Manager span of control

Other

Headcount

New hires

Turnover

Terminations

Performance appraisals completed on time

Time to fill

Employee satisfaction

Promotions

Time to hire

Call center metrics

Cost per hire

Employee engagement

Revenue per employee

Personal/professional development hours

Operating income per employee


Other

90%

84%83%

76%

55%

53%

51%

46%

45%

36%

35%

27%

24%

22%

20%

15%

4%

90%

84%

83%

76%

55%

53%

51%

46%

45%

36%

35%

27%

24%

22%

20%

15%

4%



Figure 7: Organizational Objectives Drive Metrics*

We also looked at workforce issues reported:

Retiring workforce, particularly in transportation, public utilities, and public sector

Skill shortages: These may be due to a retiring workforce, changing strategies, changing demographics, reduced

supply of a particular skill set, or other factors

Retention

Employee engagement

Escalating benefit costs

Non-competitive or unaligned compensation and compensations contribution to turnover

Merger/acquisition activity.

In Figure 8, we show the metrics reported by industry. In interviews, we found additional metrics used within industries

and provide CedarCrestone recommendations.

GROWTH

SUSTAINABILITY

PROFIT

OBJECTIVE

Improved productivity Workforce development supports strategies

Pay for performance

Leadership staffed appropriately

Leadership stability

Optimized turnover

Appropriate HR investments

Optimized labor deployment

Optimized turnover

Appropriate pay

Optimal workforce return on investment

DRIVERS METRICS

Succession planning leadership depth

Voluntary separation rate

HR expenditures per employee

Labor cost as a percent of revenue

Cost of turnover

Compensation per employee

Human capital return on investment

Revenue/operating income per employee Promotion rate

Bonus pay as a percent of revenue


* Adapted from Saratoga work on Scorecard Measures



Figure 8: Metrics Examples and Recommendations by Industry

0

Other

manufacturing

Other

manufacturing HealthcareHealthcareHigher

Education

Higher

Education RetailRetail

Percent reporting

Metrics examples

Additional

CedarCrestone

recommendations

Percent reporting

Metrics examples

AdditionalCedarCrestone

recommendations

57%

High performer

turnover, retirement

eligible, costs per

processes

Retirement eligible,

healthcare costs per

employee, succession

planning depth

57%

High performer

turnover, retirement

eligible, costs per

processes

Retirement eligible,healthcare costs per

employee, succession

planning depth

56%

Workers Comp. and

employee health

metrics, diversity

related to hiring

Time/cost to hire,

quality of hire,

hiring source

effectiveness, cost

per hire, first year of

service voluntary

separation rate,

patient satisfaction,

applicant/employee

satisfaction with

HR, employee

engagement

56%

Workers Comp. and

employee health

metrics, diversity

related to hiring

Time/cost to hire,quality of hire,

hiring source

effectiveness, cost

per hire, first year of

service voluntary

separation rate,

patient satisfaction,

applicant/employee

satisfaction with

HR, employee

engagement

50%

EEO goals and

metrics, retroactivity

Retirement eligible

of faculty, student

satisfaction

50%

EEO goals and

metrics, retroactivity

Retirement eligibleof faculty, student

satisfaction

41%

Top performer

retention, food

safety/ accidents,

diversity

Cost to hire, hiring

source

effectiveness,

customer

satisfaction / length

of service, internal

accession rates

41%

Top performer

retention, food

safety/ accidents,

diversity

Cost to hire, hiringsource

effectiveness,

customer

satisfaction/length

of service, internal

accession rates

Public SectorPublic Sector

29%

Grievances

resolved, personal/

professional

development hours

Citizen satisfaction,

transaction process

costs and cycle

times

29%

Grievances

resolved, personal/

professional

development hours

Citizen satisfaction,transaction process

costs and cycle

times

High-tech

manufacturing

High-tech

manufacturingFinancial

services

Financial

servicesComm, Pub util,

& Trans

Comm, Pub util,

& TransOther Services

Other Services

Percent reporting

Metrics examples

Additional

CedarCrestone

recommendations

Percent reporting

Metrics examples

Additional

CedarCrestone

recommendations

74%

ROI of various

programs, revenue per

employee

New hire quality,

patent applications,

hiring source

effectiveness,

employee

engagement, high

performer separationrate, Six Sigma-

related

74%

ROI of various

programs, revenue per

employee

New hire quality,

patent applications,

hiring source

effectiveness,

employee

engagement, high

performer separationrate, Six Sigma-

related

69%

New hire quality,

revenue per

employee,

application and

portal usage

Hiring source

effectiveness,

employee

engagement, high-

performer turnover,

customer

satisfaction, userexperience

69%

New hire quality,

revenue per

employee,

application and

portal usage

Hiring source

effectiveness,

employee

engagement, high-

performer turnover,

customer

satisfaction, userexperience

65%

Safety metrics, costs

per processes

Hiring source

effectiveness,

retirement eligible,

customer

satisfaction

65%

Safety metrics, costs

per processes

Hiring source

effectiveness,

retirement eligible,

customer

satisfaction

62%

Applicant/emp sat.

with HR, % emps

with professional

dev. plans,

vacancies filled

internally

New hire quality,

hiring source

effectiveness,

employee

engagement,

internal accession

rate, high performerseparation rate, skill

gap analyses

62%

Applicant/emp sat.

with HR, % emps

with professional

dev. plans,

vacancies filled

internally

New hire quality,

hiring source

effectiveness,

employee

engagement,

internal accession

rate, high performerseparation rate, skill

gap analyses



The above sections may give readers ideas of metrics to report in their organizations. But ultimately what must be done is

to report workforce metrics that have an impact on organizational performance. An organizing framework we found tha

is quite useful in supporting organizations to focus on metrics that really matter, is the HC BRidge taxonomy developed

by Boudreau and Ramstad.4 The framework encompasses metrics used to show HR efficiency and effectiveness, but

goes beyond to address the key question of what is the impact of talent of our workforce on the organization?

Impact: Are we working on the talent that matters? Do we report revenue and/or productivity by talent pools, do

we know what turnover of high performers is, and are we tracking performance by source of hire that we know by

trend analysis to be most effective in having an impact on our organizational strategy?

Effectiveness: Do our practices have the intended effect on the targeted talent? So, if we are focused on improving

customer services, for example, are our vacancies filled internally since typically employees that have history with

the organization and with customers understand their needs better?

Efficiency: Do we deploy our practices without wasting resources? Are we using self service, for example, to serve

our workforce, and increasing the percentage of use?

Figure 9 shows some of the metrics used by respondents categorized within this framework.

Figure 9: Impact, Effectiveness, and Efficiency Metrics Examples

Metrics associated with objectives, metrics by industry, or a metrics framework are important and interesting as starting

places to think about what metrics are appropriate in your organization. But, we also found that each organization tha

has adopted metrics and analytics is unique in its usage. While the Boudreau/Ramstad framework in Figure 9 may be

a new human resources decision sciences framework, there really is no one set of metrics or models that is universally

adopted. Each organizations adaptation of metrics and underlying theories really is and should be unique. So, in the

next section we provide an in depth look at metrics and analytics in action at two organizations.

IMPACT

Are we working on the

talent that matters?

IMPACT

Are we working on the

talent that matters?

EFFICIENCY

Do we deploy our practices

without wasting resources?

EFFICIENCY

Do we deploy our practices

without wasting resources?

EFFECTIVENESS

Do our practices have the intended

effect on the targeted talent?

EFFECTIVENESS

Do our practices have the intended

effect on the targeted talent?

Part-time headcount and costs

Retroactivity

Time to hire, time to fill

Percent using self service

Vacancies filled internally

Grievances successfully resolved

Accident/food safety

Source of hires

Turnover of high performers

New hire quality

Performance by source of hires

Revenue and/or productivity by talent pools

Source: CedarCrestone 2006 HCM Survey, adapted from the HC BRidge Framework: Boudreau/Ramstead

4 John W. Boudreau & Peter M. Ramstad. Beyond HR: The New Science of Human Capital. 2007. Boston: Harvard Business School Publishing



Capital OneGlobal diversified financial services company with 32,000 employees serving over 50 million customers worldwide

Background

Public since 1995, Capital One has grown rapidly to #187 on the Fortune 500 and is among Fortunes Most Admired

Organizations in the consumer credit category. It is the top company on Information Weeks 500 most innovative

companies. Recently it has diversified from credit card to consumer loans and to further grow entered the banking field

in 2005. It closed another acquisition in December 2006 to become one of the top 15 banking organizations. Driving

growth and success across its business lines is that its leaders are very analytical and require extensive data-driven

due diligence for any decisions. In terms of human capital management, Capital One brands itself as an organization

that appreciates and makes an effort to attract new employees with the skills to support that growth and success:

Each year, Capital One seeks out the top undergrads in analytical and quantitative majors to help us reinvent

and reinvigorate the financial services industry.

Driving Forces for Metrics and Analytics

Being a data-driven decision organization, to achieve a place at the executive table HR recognizes it must use data

to acquire and retain the best people. Its recruiting process is rigorous and HR has validated key assessment tests to

predict success of candidates before bringing them on board. In fact, all decisions of the Associate Life Cyclerecruiting

development, compensation, performance management, and retentionare data driven, as are HRs decisions to

embark on new analytical endeavors. The justification for a new HR dashboard was based on releasing HR reporting

staff towards more value-added analytics rather than spending time reconciling reports.

Getting Started

Prasad Setty, Vice President of Workforce Analytics identifies four aspects as the foundation for metrics-based human

capital management at Capital One:

1. Single system of record. At Capital One, this is its Oracle/PeopleSoft GlobalOne system of record.

2. Single and common definition of key measurements such as those needed around the size of the workforce

For financial purposes, workforce size is measured in full-time equivalents, whereas for human resources planning

total headcount is utilized. But, the definition process is an ongoing one. Capital One has gone through phases

of defining key measurements starting first with headcount, evolving to various attrition measurements, then to

focusing on presenting them in a more usable fashion on its dashboard, and to again focus on additional key

metrics.

3. Change management. Understanding key processes for collecting and reporting data across the organization

and proactively planning for change management is critical. To be successful, Human Resources (HR) needed a

partnership with Finance to develop a mutually acceptable headcount definition. HR also conveyed the need to

report full and part time employees as well as various active and leave of absence headcount categories, needed

for HR service delivery requirements.

Case StudiesCase Studies

2



4. Technology. In addition to the PeopleSoft system of record, Capital One created a data warehouse using

PeopleSofts EPM. They also developed an HR dashboard with 30 human capital metrics, in partnership with

DoubleStar, using Hyperion Brio reports. They provided single sign-on direct access to more than 1,000 users

across the company. In addition, the group uses various software packages such as SPSS, SPSS Text Analyzer

JMP and Powersim for advanced analytics and modeling.

Evolution to True Analytics

Capital One includes various metrics on its HR dashboard so that over 1,000 HR and business leaders can run their

own reports. As a result, the Workforce Analytics group no longer has to spend time creating reports and has now

evolved to providing true analytical services. Its focus today is on workforce planning (translating Capital One business

goals to the optimum organization design) and in achieving high levels of workforce engagement. Through workforce

planning, HR is able to create a blueprint of the organization of the future by taking a quantitative view of the optimum

workforce size, staffing mix (internal vs. contractors), layers and span of control. These factors allow a gap analysis tobe conducted between the current organization design and a future optimized blueprint, and an understanding of the

staffing dynamics (recruiting, attrition, advancement and movement) required to close the gap.

The Workforce Analytics group builds workforce planning models that are used in various consultative sessions with

business leaders, HR, and workforce planners. The group facilitates discussions on the required workforce of the future

the key tradeoffs, and hiring and development needs. A scenario discussion might focus on the tradeoffs between

organizational efficiency and advancement opportunities. Increasing the span of control achieves higher efficiency and

a lower budget; but it also means reducing the number of managerial positions, and thus reduces the opportunities fo

promotion. Fewer opportunities for promotion may lead the best performers to go elsewhere in search of advancement

This will be expensive in terms of knowledge loss and hiring costs. The analytical models built by the Workforce

Analytics group shows these tradeoffs so that senior leaders can make effective choices in organizational design

parameters. Such dialogue is not possible without data.

Another example of analytics in action is the work to identify and address the causes of attrition. The workforce analytics

group is using regression modeling, specifically an approach called hazard modeling, to mine the data warehouse to

predict the likelihood and timing of associate attrition. This type of analytical approach allows for better understanding o

key attrition drivers and augments the results from typical instruments such as exit interviews. For instance, one of the

interesting early findings is that people managers are 50% less likely to leave than individual contributors. Discussions

can now be held on how Capital One can address the reasons individual contributors leave, and also to lay out thecareer path for individual contributors to take on people management responsibilities.

Results Achieved

It is very important to link human capital metrics to business outcomes, and to ensure that workforce analytics focuses

on solving key business problems. If we tell our leaders, there is an attrition issue, they get it, according to Prasad Setty

Workforce planning makes our organization lean and ensures our employees are engaged and more productive. At

Capital One, HR is not dealing with just HR issues, but has a strategic status and is dealing with business issuestruly

elevated to a seat at the table.



Guidance for Others

Hire MBAs and ex-consultants. The Workforce Analysis group is composed of nine people, six of whom came

from finance and credit card marketingthe business side. All of these people have an analytical tendency. Such

skills, according to Prasad, come from hiring MBAs and ex-consultants with statistical experience. But, they are

not just comfortable with the approaches and technologies and able to build models, but also have an analytica

curiosity, along with an ability to explain results and influence others. Those are the skills and tendencies necessary

to get started with metrics-based management.

Look at bootstrapping. Investor Words, the best investing glossary on the web, defines bootstrapping as building

a business out of nothing, with minimal outside capital. While over the past few years, Capital One has invested in

workforce analytics technologies, the HR function applied its own version of the bootstrapping principle by starting

small, first defining metrics and making a few accessible across the organization, then growing from that base.

Dashboards. A dashboard that makes metrics available for review in a common framework that supports common

understanding of metrics is a next step. Capital One worked with DoubleStar to develop its solution. This ensuresthat workforce data is ubiquitous, transparent, and consistently used and defined throughout the organization.

Pick a pilot that addresses a key business issue. When finally moving to true analytics, pick an issue that is

critical, such as attrition, and then make sure the results can be actionable.

Future Directions

Prasad reports that at Capital One, they have a three-block strategya continuous process improvement approach

they will continue to practice.

Innovate: Talk to academics and others doing workforce analytics to see the key issues they are addressing for the

next few years. This is how Capital One began to do its hazard modeling approach to attrition analysis.

Consult: Take the results into the field to consult with business leaders. Make the modeling and analytical results

practical through discussions that identify the actions to be taken.

Automate: Migrate established metrics and analytics to the HR Dashboard so that users across the organization

can access these tools directly, thereby freeing the Workforce Analytics group to continue to innovate.

Many HR professionals express concern about automation and the potential loss of a high-touch orientation which

is a primary reason they chose the HR field. At Capital One, with its high technology adoption and high use of data

and analysis, there is also an extraordinarily collaborative and strategic environment. The HR focus is now turned

to truly strategic initiatives of workforce planning, leadership development, and workforce engagement. Capital One

demonstrates that it is entirely possible for an HR organization to be both high-tech and high-touch, and for HR to moveinto a role as a genuine strategic partner in the business.

4



University of Michigan Health SystemExcellence in patient care, medical education and research with 17,000 employees

Background

The University of Michigan Health System (UMHS) was started in 1848 when the Board of Regents of the 30-year-old

University of Michigan established a medical department with just three members. The hospital was established in

1869 with 20 beds in a former residence, with no operating facility. Today, UMHS encompasses 3 hospitals, 30 health

centers and 120 outpatient clinics and is staffed by 17,000 employees who support more than 247,000 patient days,

60,000 surgical cases, 73,000 emergency/urgent care visits and 1.5 million clinic visits per year. UMHSs strategies

are based on principles of integration and teamwork, innovation and adaptation, growth and investment, high value and

fiscal soundness. Its tactics are increasingly based on knowledge derived from metrics and analytics.

Driving Forces for Metrics and Analytics

UMHS is a health care organization that understands both the need for practical business tactics and the value of long-

term strategies. According to Kent Seckinger, Director of Finance and Decision Support in HR, were just data driven

Our leadership team utilizes a data driven approach to decision making, so we in HR, to be considered a valuable

business partner, needed to develop that competency.

In 2002, UMHS undertook an analysis of its workforce as they felt that they might have some difficulty in meeting its

future staffing needs due to an aging workforce and planned investments in clinical capacity. Much of this analysis

focused on the organizations retirement picture, knowing that nurses would be a staffing problem in a few years.

Initially they did just basic counts. One of the outcomes of the analytical work is a Workforce Investment Plan designedto minimize or avoid staffing problems uncovered by ongoing workforce analyses. In examining the retirement picture

UMHS realized that a potential nursing shortage is not its only risk: shortages in talent in administrative leadership wil

pose an even bigger problem in the near future.

Getting Started

One of the strategies outlined in their Workforce Investment Plan, was to develop a scorecard of HR metrics to be

delivered at the department level. Their first attempt was to develop a simple, paper-based scorecard for one large

department that compared the departments turnover rates, along with other HR metrics, to the organization as a whole

Kent says that the immediate reaction was thats great can we see the same kind of thing only in more detail within

the department? Can we see how we compare to other departments of comparable size? Now Im a victim of my own

success, he explains. The more numbers I give my customers, the more they want.

Seckinger plus his staff of three immediately realized that the standard, hard-copy method of compiling and reporting

data was going to be cumbersome, hard to maintain, and always out of date. They have been long time participants

of the Saratoga benchmarking service; therefore they had a good feel for the types of metrics that they wanted to

make available to the organization. They partnered with several departments across the University to implement the

dashboard tool offered by the Corporate Leadership Council, now Infohrm.

Case StudiesCase Studies


20/28 Copyright 2007 CedarCrestone, Inc.6

In addition to the dashboard tool they work with three data environments. First is an online data store (ODS) that has a

one-day lag with the production environment. Next is a data warehouse that is denormalized in order to make querying

simple. Third is a data mart for the hospitals and health centers that contains more detailed departmental rollups.

For reporting, each environment has its unique tools. PeopleSoft query is used with the ODS. BusinessObjects is used

against the data warehouse which is an Oracle database. Siebel Analytics is used with the data mart. They also use

SAS for programming and statistics and BusinessObjects Xcelcius for interactive model development. One of thei

goals is to simplify this data, reporting, and analytical environment.

Kents group has produced a periodic Human Capital Report which includes basic demographic information such as

headcount, FTEs, ethnicity, gender, years of service, etc. The report also links HR metrics to its organizational pillars

or goals. Examples of this linkage are:

Finance: Measurement includes revenue per FTE. In addition, they report revenue per dollar spent by total salaryand wages in order to show return on investment.

Service: The goal is patient satisfaction. The related metrics are time to fill and number of applicants per position

on the assumption that with insufficient applicants, or protracted job vacancies, service to patients will be

inadequate.

People: Reporting includes results of employee surveys and terminations, both voluntary and involuntary, particularly

related to years of service and last-known performance rating (to track whether UMHS is losing high performers)

As appropriate, HR does follow-up conversations to mitigate further losses.

Evolution to True Analy tics

The first work in analytics was focused on the specific problem of turnover by department with internal and externa

benchmarks. That evolved quickly into an examination of employee terminations from many angles, such as ethnicity

years of service and reasons for leaving, as they searched for correlations and trends that would help managemen

understand the reasons for high turnover and lead to possible solutions.

Their analytical work looks not only at trends and reasons for what has been, but also delves into forecasting and

projection. Part of their toolsetdeveloped internally more than purchasedis a sophisticated recruitment tool tha

helps managers see and understand recruitment patterns (see Figure 11). The tool incorporates both UMHS experience

and Bureau of Labor Statistics data regarding projected vacancy rates in all types of standard health care jobs. It allows

managers to calculate when they need to begin the search for specific types of positions by considering patterns oftime to fill and time to start and orientation period (the time to productivity for a new employee). With growing health

care needs in the community, and UMHSs plans for expansion, this planning capability is practical in the extreme.



Figure 10: Recruitment Dashboard Tool Used at University of Michigan Health System

Results Achieved

The Workforce Investment Plan focuses heavily on recruitment but also on retention. Seckinger estimates that UMHS

has invested about $1 million in this Plan. I think weve spent this money more wisely because, first of all, we could see

the problem coming before it became a crisis, and second, our managers could make intelligent decisions about how

to spend the money, rather than guessing.

Guidance for Others

Seckinger offers three pieces of advice for organizations just getting started with workforce analytics:

1. If you dont have the skill set you need, partner for skills with someone who does. That might be a consultant, bu

it could also be someone internal to your organization, such as a business analyst in the Finance function.



2. Start small, but be flexible. Requirements change and questions change as soon as people begin to see data

So you may need to remain flexible to changing needs. This should not be seen as an IT project with defined

requirements. Business leaders will want more: what was adequate last month is not adequate this month. This is

not just a technology exercise, but more about what is the question, and then how do we use technology to answer

the question.

3. Stay focused with metrics. There are no top 5 or top 10 metrics applicable to every organization. There will

be five or ten that are most important to any given organization, but which five or ten is entirely dependent on the

problems, goals and strategies of each.

Future Directions

Among the future plans is further in-depth analysis of workforce planning. Kents group would like to move further along

in using more advanced techniques such as data mining and predictive modeling to get at patterns and to determine

if there are new questions to ask, the answers to which will enable UMHS to continuously improve its workforceoptimization. The goal is to get the right data and information into the right peoples hands in the right format at the righ

time to make decisions.

Kents first step in this direction is an analysis of the current analytics service delivery model.

Figure 11: Current Analytics Service Delivery Model at University of Michigan Health System

Time Focused

Value

totheOrganization

Reporting Ad Hoc Requests Regular Programs

OperationalSupport Negotiations

TrendAnalysis Benchmarking

In-Depth Analysis Workforce Investment Plan

Predictive

Modeling Forecasting Proactive Data Use

Highly

Structured

Unstructured

and

Semi-Structured



He finds that they spend most of their time performing reporting and analyses that are highly structured and routine

such as monthly reports and on-going trend analysis. The work that would be of the greatest value to the organization

such as predictive modelinggets the least attention and dedicated time. The service model that he hopes to put in

place looks more like this:

Figure 12: Future Analytics Service Delivery Model at University of Michigan Health System

Another step toward greater value to the organization is to tie analytics to the organizations strategic principles. Fo

example, revenue and expenses per FTE are already being calculated as part of the Financials pillar. These directly

support the organizations principle of fiscal soundness. The challenge is to define what fiscal soundness is and how

these measures contribute to it, and then communicate to managers and employees the ways in which these measures

and the strategic principle itself, are relevant to every-day tasks. Employee engagement and termination analyses relate

to the principle of taking care of our own and building a satisfied workforce. The stated vision of UMHS is to be The

first place people want to come when they need health care and Kent Seckinger and his staff will work closely with HR

professionals and managers to identify, develop and interpret the measures that will enable decision-making to support

that vision.

Time Focused

ValuetotheOrganiz

ation

Reporting

OperationalSupport

TrendAnalysis

In-Depth Analysis

Predictive Modeling

Highly

Structured

Unstructured

and

Semi-Structured



CedarCrestone for years has conducted countless return on investment analyses to support the business case for mos

HR technologies, including an HR data warehouse and workforce analytics. These analyses, and the results reported

by our survey respondents, suggest that the value of workforce analytics has two major components of interest to any

organization moving forward with metrics and analytics: hard-dollar savings and strategic savings. We offer this section

to support your business justification efforts.

The CedarCrestone approach to cost justification is to focus first on quantitative hard-dollar savings; second, to review

whether productivity savings can yield actual staff elimination or whether these are important in terms of freeing staff

for true value-added activities; and third to include strategic savings as icing on the cake.

CedarCrestone has seen from its business case work on data warehouse, reporting, and analytic solutions, that one

of the most important value propositions of an ERP-based, comprehensive solution with a pre-built data warehouse

embedded analytics in key business processes, pre-built metrics, and role-based dashboards, is that there is a lower tota

cost of ownership and faster time to value. In other words, it is cheaper to buy than build. Further, hard-dollar savings

and productivity benefits come from streamlining data integration and operational reporting and from the elimination o

multiple reporting systems and associated hardware, software, and maintenance. Strategic savings revolve around the

impact of better decision makingmanagers will have more options to select the optimal course of action and faster/

better access to information enables managers to see trends, expanding revenue or savings opportunities and avoiding risks

In Figure 14 , we show hard-dollar to strategic savings based on an analysis done for an organization with 50,000 employees

Figure 13: Top Metrics and Analytics-related Savings: From hard-dollar cost savings to strategic value

Value Proposition of Metrics and Analytics

Eliminating special analysis tools maintenance, development,

Eliminating overpayments and losses on employee terminations

Aligning staff performance with organizational goals by providing

Source: Organization with 50,000 employees

1. Deploying reporting and analytics(buy vs. build savings)

2. Data integration streamlining

3. Eliminating multiple reporting systems (hardware/software and

maintenance)

4. Streamlining operational reporting

5.

and training of power users

6.

7. Maintain sales revenue from top performers by being able to

identify and retain them

8. Avoiding a discrimination lawsuit by being able to refute with

comprehensive workforce composition data

9.

employees and managers with easy and regular information

regarding organization performance

Quantitative

Savings

Qualitative

Value

$1,560,000

$23,000/system

$43,000/system

$130,000/year

$60,000/system

$1,840,000

$11,800,000

$13,900,000

$64.000,000rev-$32,000,000exp



One other area indicating that metrics and analytics actually contribute significant value to organizations is that survey

respondents with workforce measurement approaches and technologies report significantly higher operating income

growth than organizations withoutsuch initiatives (see Figure 15).6 While survey respondents with such initiatives are

from all industries, they are primarily high-tech manufacturing and financial services. At these organizations, applications

such as a data warehouse, operational reporting, and workforce analytics provide management with measures o

organizational and individual performance such that timely actions can be taken to continuously reduce process costs

or increase revenue, contributing to operating income growth.

Figure 14: Operating Income Growth with and without Workforce Measurement

Adoption of metrics-based management that includes workforce data requires the coordination of multiple activities

and is not just a plug-and-play of technology. The technology is available, but there is no one-size-fits-all approach to

success.

The getting started and lessons learned sections from the two case studies are great advice for implementing

metrics and analytics: these two organizations have succeeded. To further synthesize, we offer the following ideasActions are necessary on all fronts:

Increase the accuracy and consistency of information by standardizing processes, which are the source of data.

Move to implement a single repository from which to report data. Collect data from HR, finance, and customer-

facing applications at a minimum into the repository.

Educate your HR IT staff. This group has a great opportunity to drive application strategy and direction, but first

must educate itself on metrics and analytics. Look to organizations such as the Data Warehouse Initiative for

business intelligence knowledge. Look also to the major ERP vendors with workforce analytics functionality to

understand their technology components.

Address HR IT skill requirements. The top barrier to warehouse and analytics according to our survey respondents

is that the technical skills are not available. Look for staff with data warehouse experience for the necessary

technical skills. Such skills may already be available within your IT staff. Partner with them. At some point the HR

group will need to understand ITs requirements of low cost, compatibility, and scalability.

Partner with finance and operational units. The first group has the financial and analytical skills needed to support the

successful rollout of meaningful solutions. If HR needs a role model, the finance departments ability to crunch data and

report it is a great source of talent. The role of operational groups is that they are the ones that already know what

workforce information they need to optimize operations.

Growth

with

Growth

with

Workforce MeasurementWorkforce Measurement 17%17%

Growth

without

Growth

without

7%7%

Strategy for Success

6 CedarCrestone 2006 HCM Survey: Workforce Technologies and Service Delivery Approaches, page 3.



Hire MBAs or consultants with analytical skills and curiosity, along with the ability to communicate results and

influence and teach others to use metrics and analytics.

Be prepared to manage a culture changemetrics-based management is a paradigm shift not only for HR and

HR IT, but even for operational managers in most industries. There is much to do to succeed with metrics and

analyticsdo not underestimate the need for and cost of change management to ensure successful deployment.

Agree upon a set of key metrics. Start small, with fewer than 10 metrics, and be prepared to change the list as

your organization starts to use these. Consider what the organizational strategy isgrowth, profit, or sustainability

and focus on the metrics that contribute to those strategies. Refer back to our examples and recommendations by

industry as a star ting place for determining the metrics most appropriate for your environment. Measure what matters

by addressing the workforce issues most critical to your organization.

Develop a technology blueprint that addresses requirements for reporting; analytics; presentation through

scorecards, dashboards or other visualization approaches; and distribution. While you may start small by using

the analytics solution of a point application that addresses a specific workforce-related issue such as recruiting,development, or compensation, your ultimate solution will eventually be a more integrated solution from a single

vendor that has the entire tool setmost typically that of your ERP vendor.

Build your business case once you have succeeded with your initial approach. Hard-dollar cost savings are possible

as shown in our earlier section. But the strategic benefits from impacting the effectiveness of your workforce are

even more substantial.

Our 2006 survey results show financial services, high-tech manufacturing, health care, and large retail organizations

as the early adopter industries achieving benefit from metrics and analytics. Our data show they are using an eclectic

approach, building on the data warehouse, with reporting, analytics, and presentation technologies also playing roles

as the norm. The use of the underlying data warehouse is most widespread, but plans seen in 2005 to move to stand-

alone workforce analytics applications have not materialized. However, we believe, organizations will ultimately move

to the more comprehensive workforce analytics applications available from the major ERP vendors, but only afte

they have first shown the value of smaller-scale metrics and analytics initiatives. Organizations that first succeed

with these smaller-scale initiatives can then build a winning business case that justifies the costs of a move to a more

comprehensive solution. The value of the ERP-based solution sets, from a technology perspective, includes tighte

integration, scalable solutions, and convergence with service-oriented architecture (SOA) components. For the long

term, such convergence with SOA will enable the best enterprise-wide solutions to support metrics and analytics. Mos

importantly, however, ERP providers own and provide best practices for the HR business processes through their HCM

applications. They understand that analytics are most meaningful when delivered as part of the daily business processesused by different levels in the organization. They further provide best practices for the analytics most appropriate for

these processes through these applications.

Readers should understand, however, that more important than the technology and the application solutions is the

ability of your organizations to commit to management by metrics as a guiding principle in support of overall business

strategygrowth, profit or sustainability. This requires on-going collaboration and partnership among HR, IT, finance

and operational groups. Our survey, case studies and interviews demonstrate this over and over. With collaboration and

commitment to the use of workforce metrics and analytics, the evidence is strong that competitive advantage follows.


28/28

ABOUTCEDARCRESTONE

CedarCrestone provides consulting, hosting, and managed services for the

deployment, management, and optimization of Human Capital Management

(HCM), Financial Management (FMS), and Campus Solutions (CS) along with

complementary Strategy and Analytics services. As a Certified Advantage

Partner of Oracle Corporation, CedarCrestone has extensive expertise in

Oracle technology and PeopleSoft Enterprise applications.

Visit www.CedarCrestone.com

cedar crest one 2007 metrics and analytics[1]

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