RUDRA NARAYAN PANDEY HCM CONSULTING NIVIDH BUSINESS INTELLIGENCE 919448119930 HTTP://WWW.NIVIDH.COM/BI/ONDEMAND/HRM-BI.JSP

RETURN ON INVESTMENT IN HUMAN CAPITAL

“Human Capital Measurement offers a great opportunity for the HR function to take a lead in developing indicators that demonstrate the value that people contribute. Over time, this will form a measurement tool which maps the impact of people management in the organization. The first step for anyone looking to introduce HCM-linked Key Performance Indicators (HCKPIs) is to identify those metrics which are linked to wider business objectives.”

About Us Nividh is a simple, fast, affordable enterprise data visualization software solution that provides an alternative to complex and expensive business intelligence software. Nividh delivers Analytics on Web and helps companies drive their business by providing insight and access into critical data, KPIs, and metrics . Nividh has been concepted, designed, developed, tested and maintained by a team of best of the breed software professionals who has more than 10+ yrs of BI R&D Experience and 4 years of BI Implementation. IITans form the core of Nividh’s engineering team. Team has skills on all cutting edge technologies, mobile platforms and latest frameworks. While serving BI customers in last 10 years (some of them are Fortune 500 companies), our core team have served across following Industries:Banking and Financial Services.

Life Sciences and Health Care industry. Insurance, Risk and Compliance Manufacturing Retail Education Logistics and Shipping Yoga, Spirituality and Fitness Media & Entertainment Real Estate Having worked in some of the most popular Dashboarding technologies, we are confident that we are providing

the best Data Visualization and Dashboarding expertise in a simple, fast & affordable manner through www.nividh.com. Nividh aims to make Dashboarding affordable for all members in an organization just not only for top management.

WHO IS INTERESTED IN HUMAN CAPITAL MEASUREMENT?

There are different audiences for Human Capital measures: External stakeholders (investors, journalists,

competitors, governments) are interested in confidence, benchmarking and compliance

Internal stakeholders (senior management and managers) are interested in

comparative performance and performance improvement. To be useful

internally, people measures must be linked to performance and be relevant

to specific groups

T TO SUCCEED, ALL YOUR DEPARTMENTS HAVE TO BE CONNECTED AND COLLABORATING WITH INTEGRATED ACCESS TO THE VAST AMOUNTS OF CONTINUALLY-BURGEONING CORPORATE INFORMATION. AND EVERY DEPARTMENT MUST BE ABLE TO QUICKLY SIFT AND ANALYZE THAT DATA … TO DISCOVER NUGGETS OF OPPORTUNITY AND INSIGHTS. THERE’S A NEW WAY TO ACHIEVE THIS ORGANIZATIONAL AGILITY, CONNECTING EVERYONE IN YOUR ORGANIZATION WITH THE INSIGHT, ANALYTICS AND INFORMATION THEY NEED TO MAKE BETTER, FASTER, SMARTER DECISIONS AT EVERY LEVEL, AT EVERY MOMENT! BUSINESS INTELLIGENCE BRINGS TOGETHER EVERYTHING YOU NEED TO MAXIMIZE YOUR COMPETITIVE ADVANTAGE , ROI, REDUCE COST. IT ENABLES AN ENTERPRISE-WIDE INTEGRATION AND DELIVERS A REVOLUTIONARY NEW USER EXPERIENCE WITH REPORTING, PLUS ANALYSIS, SCORE CARDING AND DASHBOARDS. IT ENABLES EVERYONE IN YOUR ORGANIZATION TO THINK, CONNECT WITH OTHERS TO SHARE INSIGHTS, THEN SIMPLY DO. THE NEXT WINNING STRATEGY THAT WILL CATAPULT YOU BEYOND THE COMPETITION CAN NOW COME FROM ANYWHERE IN YOUR ORGANIZATION OR FROM COLLABORATION AMONG A VARIETY OF DEPARTMENTS. LINK TO SEE SOME SAMPLE HR DASHBOARDS HR ANALYTICS CAN BE GENERATED TO SUPPORT AN INTEGRATED VIEW OF THE WORKFORCE. VARIOUS ANALYSES INCLUDE STAFF MOVEMENT AND PERFORMANCE, WORKFORCE ATTRITION BY DEPARTMENT, WORKFORCE PERFORMANCE BY DEPARTMENT, COMPENSATION AND ATTRITION AND ABSENTEEISM. THE HR DATA CAN BE INTEGRATED WITH BENCHMARK FIGURES FOR THE TELECOMMUNICATIONS INDUSTRY AND COMPARED TO HELP IDENTIFY AREAS FOR IMPROVING PROFITABILITY HTTP://WWW.NIVIDH.COM/BI/ONDEMAND/HRM-BI.JSP

WHAT HR PROFESSIONALS SEE AS IMMEDIATE CHALLENGES

The second generation of measures (such as performance metrics, employee productivity, benefits awareness and training effectiveness) has become more established in the last five years, delivering HR business value as opposed to control and compliance, cost per hire, health care costs and workers’ comThird-generation metrics like training ROI, revenue factor and yield ratio will gain importance in the coming years compensation costs per employee.. HR professionals can help their organizations remain competitive by aligning their processes and skills in such a way that all HR services and human capital metrics are working toward the overall business goals of the enterprise; this is, after all, the stated goal of CEOs.

DEMOGRAPHIC SHIFTS AND WORKFORCE GLOBALIZATION HAVE CREATED A WAR FOR TALENT

Aging Workforce + Less Skilled

Workforce = Talent Crisis

Each Generation in the Workplace Has Its Own Set of Experiences

and Expectations – Conflict Can Occur

Executives Are Demanding Answers to Key Questions CEOs (Chancellors) are asking: What workforce segments create most value? How will business (institutions) be impacted by impending retirement

and are we prepared? Where is talent demand outpacing supply? What skills will we need in next 5 years that we don’t have today? Turnover? How much is it costing in lost enrollment? In productivity? In

innovation? In quality? Do we have a workforce plan to communicate financial consequences of

talent decisions on our business?

Aging Workforce Insight – Succession Planning How Are We doing at Acquiring Key Talent ? Job Function New Hire Head Count How Are We Doing at Promoting Talent?

Year Comparative Analysis on Promotion Count How Are We Doing at Retaining Key Talent? Top Ten Separation Count variance by Job Function How has our Compensation Changed in Key Market Locations?

Top ten annual rate variance by Country How are we doing with our retention rate ?

Involuntary termination Vs Voluntary Termination Pay for Performance –

Analyses relationship between compensation / promotions and employee performance

Trends – Displays analysis of compensation, promotions, and employee performance over time

HCM ANALYTICS

To effectively drive an organization’s workforce, provide accurate and timely guidance on corporate strategic initiatives in support of business growth and

even to justify the value of the team’s very existence, HR must have a solid handle on its knowledge capital (i.e., data). It is imperative for HR professionals to think strategically, input the right value–add information and use the results as effectively as possible. It may seem obvious to HR professionals, but they can still have a

fight on their hands for recognition at the board level. When money is tight, sales directors can show how they’ve boosted the pipeline; the procurement team can calculate how much they’ve saved by squeezing suppliers — what can HR do? The answer is Human Capital Management analytics.

PUTTING ANALYTICS IN PLACE

Workforce Planning Workforce Rewards

Workforce Profile

Compensation

Learning & Development

Recruiting

HR Scorecard

Operational & Management

Reporting

Strategic Alignment

Planning

Drivers and challenges to the business are transitioning HR’s core efforts

toward providing a competitive advantage.

Organizations are transforming HR to effectively manage human capital.

Optimisation

Focus on continuous

improvement

Effectiveness

Efficiency

Costs

10%

30%

60%

Focus on positioning HR

to impact organizational

effectiveness and drive profit

Focus on reducing HR costs

and improving HR processes

Phase I

• Benchmarking

• Baseline Metrics

• Streamline Processes

Phase III

• Strategy & Consultation

• HR Analytics

• Talent Management

Phase II

• HR Service Delivery

• HR Reporting

• Quality/ Cost Tradeoffs

60%

30%

10%

Value-Added

TALENT MANAGEMENT A SET OF BUSINESS PRACTICES THAT MANAGE THE PLANNING, ACQUISITION, DEVELOPMENT, RETENTION AND ADVANCEMENT OF TALENT IN ORDER TO ACHIEVE BUSINESS GOALS AND OPTIMIZE PERFORMANCE.

PEOPLE ARE THE ULTIMATE SOURCE OF COMPETITIVE ADVANTAGE AND ONLY PEOPLE CAN DRIVE EXCEPTIONAL ORGANIZATIONAL PERFORMANCE AND CREATE SUSTAINABLE VALUE. MANY HR DEPARTMENTS HAVE MADE GOOD PROGRESS IN AUTOMATING BUSINESS PROCESSES AND HAVE INTRODUCED METHODS OF MEASURING THE EFFICIENCY OF THESE PROCESSES.

External Internal Ability to Pay

o Time to hire o Compa-ratio o Budget

o Salary offers o Compression o Benefits as a % of payroll

o Cost of turnover o Tenure/ Retention o Market Index

o Salary distribution by division, dept, mgr, location

o Complaints

o Variable costs vs. fixed o Awards tied to organization

results

o Communication o Compliance: salary

differences by gender, age or minority status

o Revenue / Operating Budget per employee

Ability to Pay

Budget, balance sheet & organization success

Where Your organization

Is

Where the Market Is

Succession Planning Illustration Supply Analysis

•Workforce analysis and trends

•Employee competencies

•Workforce demographics

•Current workload analysis

GAP Analysis

•Comparison of future

workforce competencies

with future needs

•Analysis of how

workforce demographics

will change

•ID of areas in which

management action will

be needed to reach

workforce objectives

Demand Analysis

•Workforce knowledges, skills

and abilities to meet projected need

•Staffing patterns

•Anticipated programs and workload

changes

Solution Analysis

•Planning workforce

transition

•Employee

development and

retraining

•Changes in staffing

patterns

STRIVE

3

STAY

2

SAY

1

Have an intense desire

to be a member of the

organization.

Consistently speak positively

about the organization to

coworkers, potential

employees, and customers.

Exert extra effort and

engage in behaviors

that contribute to

business success.

Employee engagement is the state of emotional / intellectual commitment to a group

It produces behavior that will help fulfill an organization’s promises to customers and individuals, driving improvements in both satisfaction and business results

MEASURES MONITOR PLAN OUTCOMES

Completion, attendance ratios

Program, certification expenses

Activity profitability

Performance outcome ratios

Satisfaction ratings

...

ROI per employee

Headcount cost

Headcount variance

Requisition fulfillment cycle time

Termination cost per employee

Termination cost

Turnover rate

Absence rate

Accident rate

Exposure hours

Accept ratio

Agency effectiveness

Cost to hire

Vacation days balance

Vacation days entitlement

Performance review result

Contribution factor

Maintained qualification count

Review result

Scarcity level

Succession percentage

Training % of revenue

….

Annual compensation

Benefit plan enrollment

Compensation % increase

Increase Variance

]Customer service award variance

Dependant count

Employee, Employer contribution

Employee opt out ratio

Incentive award

Hourly pay rate

….

Absence days count

Accident Severity Rate

Accident Lost time Rate

High Performance ratio

Low Performance ratio

Employee Development cost

Development cost per employee

High Performance turnover rate

Incentive Pool variance

Benefit cost per employee

Merit Pool Variance

increase variance count

termination rate

FTE count

Human capital ROI

Time to hire

Turnover rate

....

Headcount,

Planning

Compensation & Salary

Planning

Improve

Growth

and

Profitability

Headcount & Turnover

Compensation, Incentive

Performance, Succession

Recruiting , Absence & Accident Analysis

Learning Management

Benefits Planning

Restructuring

planning

Payroll & Reconciliation Analysis

Payroll Liability

Planning

Recruitment

Planning

Trained, certified headcount

Investment factors

Training cost factors

Revenue/expense ratios

A ROADMAP FOR HUMAN CAPITAL MEASUREMENT

LEVEL 1: BASIC WORKFORCE COMPOSITION

Most organizations now have a basic Human Resources Information System that

should be able to produce workforce composition reports using the following types

of data: Personal data: remuneration, gender, nationality,

length of service, time in post, ethnic group, age, qualifications, career

history Job Data: job title, job family, location, grade,

terms and conditions Organization data: managers and subordinates This core data is the first building block towards a

Human Capital measurement strategy. It may be produced either as physical paper-based reports or exported into spreadsheets for further analysis.

LEVEL 2: RATIO ANALYSIS Once basic data is established, more complex analysis

can be performed, which usually involves relating one type of data to another in the form of ratios. This data can be from within the HR system or perhaps even linked to data from other organizational systems such as finance.

This type of data is often used to assess the performance and efficiency of the HR function but is also invaluable for supporting the development and implementation of HR strategy. Some organizations have begun to issue a Human Capital report alongside their statutory accounts for use by external investors as a means of demonstrating their commitment to employees. Looks at retention and motivation,

size and composition of the workforce, skills, competencies and training,

remuneration, leadership and succession planning.

LEVEL 3: HUMAN CAPITAL DATA

TRUE HUMAN CAPITAL MEASURES EMPHASISE PEOPLE DATA IN THE CONTEXT OF BUSINESS RESULTS, SO FOCUS ON MEASURES SUCH AS THE FOLLOWING:

Revenue per fulltime equivalent head (FTE) Fully loaded costs per FTE Average profit per FTE Wealth created per FTE (added value) Human capital ROI = (Revenue – Paycost)/Paycost Remuneration/Revenue Average remuneration per FTE Recruitment acceptance rate Training investment per FTE Proportion of employees covered by the performance management system Number of employees covered by employee engagement survey Employee stability index Key employee retention rate

LEVEL 4: WORKFORCE SCORECARDS

The idea of the balanced scorecard has been around for some time and is based

on the original work of Kaplan and Norton in the 1990s.(1996).

Basically, it suggests that measures of

organizational performance should be based not just on financial outcomes, but also take into account customer, learning and growth and internal measures.

This idea has been adapted for people

management and essentially requires the development of a series of Key Performance

Indicators that can be combined and weighted to provide an overall assessment of

the performance of the organization.

DEVELOPMENT OF A FULL WORKFORCE SCORECARD IS COMPLEX

NIVIDH HCM: USING TECHNOLOGY

A company with a strategic focus on innovation might measure time spent on new ideas, number of ideas generated, number of new products reaching the market, etc. Using absence as an example, it’s not

enough to simply measure absence rates – it’s also important to measure what actions are being taken to assess what are the

most successful strategies. These data can then form the basis for training

managers in the best ways to handle absence cases.

SAMPLE HR DASHBOARDS

Profit* – Staff Costs

Staff Costs

Profit* – HCM Costs

HCM Costs

HC ROI (%) measures the return on investment for funds a company spends on its employees...

Profit* - level depends on the particular industry and the accounting principles

Staff Costs = salaries incl. social and health insurance, employee benefits

Human Capital Management (HCM) Costs

= Staff Costs

+ HCM Direct Costs (HR department overhead i.e. equipment, HRIS maintenance...)

+ HCM Indirect Costs (HR related costs not under full control of HR department i.e. recruitment agencies and advertisements, training costs, health & safety costs, ...)

The most advances companies include other HCM related costs

e.g. costs related to conducting performance appraisal process.

Used for benchmarking

Used for measuring trend within a company

Lessons learned from measuring Human Capital

Measure the right things • it‘s easy to measure the wrong things; just because we can count

something, doesn‘t mean that it counts • companies frequently measure time and cost because it is easy

to get these data; it‘s harder to develop measures for such meaningful criteria as quality, results and value

Choose fewer things to measure but do a better job • the tendency is: if it moves, measure it, because someone,

somewhere, someday might want to know the number; the result is data paralysis and confusion

• the art of metrics is to focus on a core set of meaningful things

Move beyond summary data • a statistic like „our turnover rate is 9%“ is useful to compare with

competitors, but it could be more useful if, e.g. it looks at turnover by talent level, department, or by manager

• averages can mask significant variations; segment data to look for more specific things

It‘s about what you do with the data • metrics are only valuable if they result in better decisions • gathering data that isn‘t used is a waste

of everyone‘s time and patience

Increased Need for measuring HC ROI Through Nividh

• Competitive pressures on costs and productivity are increasing

• Top executives are requiring ROI information

• HR budgets are under increasing review

• Accountability in all functions is increasing

• Technology makes acquiring information easier

“Talent management of more senior

workforce contributors to ensure organizations organically grow future workers with similar work ethics, values, morals, culture and passionate contribution. HR metrics tools must measure employee value and contribution towards the businesses success so future workers can be measured against such a standard of success.”

“I believe that as HR metrics become standardized, business intelligence models currently applied primarily in marketing, customer service and finance will begin to find their way into the HR department and the HRMS data repository. That information will then be pushed out to line managers in the form of dashboards and scorecards, which will assist in the overall health and development of the Organisation”

• Sales – Vipul Sharma +91-950-588-4888 sales@bdisys.com, hr.transformation@bdisys.com vipul.sharma@bdisys.com

• COST SAVINGS:

– Moving to a service center approach shows the strongest streamlining and cost savings

– Evaluate the potential for hosted services • FUTURE:

– Specifically focus on talent management

– Educate yourselves on analytics

– Focus on improving the user experience