leadership effectiveness and productivity
DESCRIPTION
Effective leadership is critical to managing the workforce and driving productivity. In order to understand the impact of their leaders, companies must first identify insightful talent management metrics and KPIs, and then link them to financially quantifiable measures of workforce productivity. This webinar guides attendees through a few key metrics and methods of quantifying, forecasting, and optimizing leadership effectiveness. Including examples of dashboards and scorecards.See a complete list of our webinars: http://www.hcminst.com/thought-leadership/human-capital-management-webinars/TRANSCRIPT
LeadershipEffectiveness&ProductivityAWorkforceIntelligenceConsortiumWebinarSeries
MounPeterson,PhDStephenWeltz,MA
HumanCapitalManagementInstitute
Introductions
MounPeterson,PhDDirectorofWorkforcePlanning&[email protected]
StephenWeltz,[email protected]
2© Human Capital Management Institute
About Human Capital Management Institute
Workforce Assessment ▪ Strategic Consulting ▪ Training
Best Practices ▪ Workforce Analytics and Planning ▪ Benchmarking
- We Bring Financial Discipline, Standards and Rigor to the HR Function -
© Human Capital Management Institute
HCMI Background:
World leading tools/methodology
100+yrs experience Analytics & Planning
Deep Finance & HR expertise
Advisory Board CFOs and HR heads
What We Do: Measure the immeasurable in human capital
Full service tools, consulting & training
Transform workforce data into intelligence
Tools so HR can make the business case
The Human Capital Management Institute (HCMI) was founded on the belief that organizations can and must find better ways of measuring their investments in human capital. Our vision of the future is one in which human capital measurement and information is as integral to business decision making as financial information is today.
3
Have You Found Your Analytics Pot of Gold?
Human Capital Metrics HandbookTraining and Advisory Support• Workforce Analytics Training• Workforce Planning Training• Custom onsite training
HCMIProducts&Services
© Human Capital Management Institute 4
620+ Metrics and Detailed Definitions
Data Integration Blueprint
Workforce Analytics Assessment
Analytic Consulting On‐Demand
Analytics COE and Roadmap Design
Statistical Prediction
InitialReports&Analysis
DataGathering
FirstGood Metrics
HRData WarehouseDrill‐down,standardreports
ScenarioAnalysis
ExternalBenchmarkingContextfordecisions
DataDrivenDecision
Making!
Turnover,Headcount,Hiring
HRISsystemdata
COEFormation
Data Errors
HRAnalyticsMandate
HRStandardsEstablishedLost HR
CredibilityHRdata/systems
Assessed
HRDataCleansedhistoricaldatascrubbed
Bus. Units Reject
Analysis
Data Errors Historical data
still bad
1st AnalyticsStudy
AdvancedAnalyticStudies
HRAnalysisValidated
IntegratedHRDatabases
COELaunchesTrainingCourses
Bus.UnitsDemandmore
Analyticsjourneysteps
Setbacksalongtheway
Journeypathandgoal
CONSULTINGSERVICES
Integrated Dashboard
DASHBOARDSPRO
TECHNOLOGYSOLUTIONS
Human Capital Financial Statements• Human Capital Impact Statement• Human Capital Asset Statement• Human Capital Flow Statement
Workforce Quantifier™ ROI Calculator• ROI of Workforce Decisions• Cost of Turnover, Cost per Hire
Workforce Planning• Link Workforce and Financial Metrics• Forecast Skills, Costs, Talent and Productivity
Job Framework Mapping• Integrated Taxonomy 15,000+ jobs• Map Critical Job Roles
Span of Control Optimizer™ Tool• Benchmark and Optimize Spans • Optimize Management Layers
Career Path Quantifier• ROI of Career Path• Build, Buy or Lease Talent Analysis
$$$ Financial Impact
Metrics
Data Blueprint
Predictive Modeling
TRAINING&SUPPORT
Agenda
1. DefiningWorkforceProductivity
2. MeasuringLeadershipEffectiveness
3. TyingitAllTogether
4. Q&A
© Human Capital Management Institute5
1 Canweaccuratelyforecastourworkforceneedsinthefuture?
2 Whatpercentofourworkforceiscustomer‐facingorrevenue‐generating?Whatisthetrend?
3Canwemodelourworkforcetooptimizecost,profitandproductivity?
4Whatisourworkforceproductivity?Isithigherthanpeers?
5Whatisthemarginalreturnofonedollarinvestedinworkforce?
6IstheROIonHumanCapitalhigherthanotherinvestments?
7Isworkforceproductivityincreasing,decreasingorstatic?Howareweperformingversuspeers?
8Whatistheaveragetime‐to‐full‐productivityfornewhires?Fornewhiresincriticalroles?
9Whatarepredictiveindicatorsofturnover?Whatpercentageofemployeesareatrisk?
10Areleaderseffectivelymanaginghumancapital?Doleaderscorrelatetoemployeeengagement,retentionandperformance?
11Whatbusinessareas/positions/managershavethehighestvoluntaryturnover?Howdowecomparetopeers?
12Wheredoesourbesttalentcomefrom?Whichmanagersarethebesttalentscoutsandcoaches?
13Whatisthecostofturnovertoourbusiness? Theoverallimpact?
25KeyHumanCapitalQuestions14 Arewelosingtherightpeople(lowperformers)orthewrongpeople(highperformersorcriticalroles/skills)?
15Doweknowtheleadingdriversofemployeeturnover?Doweknowtheleadingdriversofretention?
16Whatisourqualityofnewhires?(Canwemeasureit?)
17Whatrecruitingsourceyieldsthemosthighperformers?Whatrecruitingsourceyieldsthebestculturalfits?
18Istherealinkbetweenemployeeperformanceandtotalrewards?Ifso,doweknowtheoptimalpay/performancemix?
19Whatisthetotalpay/rewardsdifferentialbetweenhighperformersandaverageemployees?
20Couldweoffercompensationandbenefitsthatbothcostlessandengage/retainemployeesbetter?
21WhatisourTotalCostofWorkforceasapercentofrevenue?Ofexpenses?Howdowecomparetopeers?
22 WhatistheROIoftrainingtothefirm?Wherecouldtraininginvestmentsimproveproductivityandprofitability?
23Isinternalmobilityasourceofvalueorturnoverandcost?Whatpercentoftheworkforcemovesinternallyeachyear?
24Whatpercentoftheworkforcehasadefinedcareerpath?
25 Whatisthelinkbetweenemployeeengagement,customersatisfaction,revenueandprofits?Whatarethedrivers?
© Human Capital Management Institute6
ValueCreationinToday’sMarketplace
IntangibleCapitalValue
TangibleAssets/Value
• HumanCapital=employeeknowledge,training,productivity,experience,culture,leadership,development,performance,creativity,etc.
Arewemanagingtherightthingsorjustmanagingwhatweknowhowtomanage?
MeasuresarewellestablishedformodernFinanceasaDecisionSupportScience
HardtoMeasure
EasytoMeasure
Marketvaluedrivenbyfactorsnotonabalancesheet“IntellectualorHumanCapital”
vs.
© Human Capital Management Institute 7
ProductivityandtheWorkforce
ProductivityOutputs Inputs
Outputs Inputs Productivity
• LaborCosts(Workforce)• MaterialCosts• Time/Speed• Overhead(Labor/Other)• Technology,Process&Tools
• Revenue(Budget)• UnitsofProduction• NewProducts• Inventions/IP• Technology/Assets
• Profit• Quality• Efficiency• Satisfaction
Workforceproductivityistheamountofgoods,services,productionorworkunitsproducedinagivenamountoftimewithagivenamountofinputs.
© Human Capital Management Institute 8
CriticalInputMetric
Totalworkforcedirect businesscosts+HR,including:+Employeecompensation (salaries/wages,incentives,overtime,equity&otherpay)
+Contingenttemporary/contractlabor (costs)
+Employeebenefits andperks(costs)
+HRfunction (costse.g.,recruiting,training&support)
+Retiree orinactiveworkforcecosts*(costs)
TotalCostofWorkforce(TCOW)
TotalCostofWorkforce =
TheBottomLine:ControllingWorkforceCosts=ControllingProductivity
• 1%TCOWsavingsataFortune500™co.=$30million
• Workforcecostsarethelargestcost(average70%ofoperatingexpenses)
• Whatgetspoorlymeasuredgetspoorlymanaged
Whyisitimportant?
Revenue TCOW
© Human Capital Management Institute 9
ReturnonHumanCapitalInvestment
ReturnonHumanCapitalInvestment =
TotalOperatingProfit
TotalCostofWorkforce
Description:ROIofworkforcecostsrelativetoprofit.ExpressedasapercentageofTCOW.Bestuse:ReturnonHumanCapitalInvestmentisastronglylinkedleadingindicatorofgrowth.Organizationsmeasuringortrackingthismetriccaneffectivelymeasurethelinkageofoverallorlargescaleworkforcechangestotrendsintheorganization'smarketvalueovertime.
10
AdvancedHumanCapitalProductivityMetrics
HumanCapitalROIRatio
HumanCapitalROIRatio =
TotalOperatingRevenue–(TotalExpenses– TotalCostofWorkforce)
TotalCostofWorkforce
Description:Netoperatingprofitimpactofeachdollarinvestedinhumancapital(orTCOW).Bestuse: HumanCapitalROIRatiocaneffectivelymeasurethelinkageofoverallworkforcechangestotrendsintheorganization’smarketvalueovertime.Thismetricisoptimizedwhenanalyzedbyemployeeproductivity,performance,turnover,andfutureworkforcechangesinsupportofdrivingoverallmarketcapitalizationalongwithvalueprovidedperFTEemployeeorworker.
© Human Capital Management Institute
AdvancedMetricsGainingGround
© Human Capital Management Institute 11
• FeaturedonthecoverofCFOMagazine
• BeingimplementedandutilizedbyanumberofforwardlookingS&P500organizations
• DowJonesSustainabilityIndexhasadoptedtheuseofHumanCapitalROIintheirframeworksince2014
Dow Jones Sustainability Index
OptionsforIntroducingProductivityMetrics
2. Pickacoupleofadvancedmetricstoanalyzeandpotentiallyreport
1. Throwafewtraditionalmetricsintoadashboard(andhopenobodynotices)
3. Implementafoundationalframework
©HumanCapitalManagementInstitute 12
13
AdvancedProductivityAnalysisMethods
CompetitiveInsights
Benchmarking
TrendAnalysisand
Forecasting
AdvancedMetrics
• AdvancedMetrics– WhatistheROIofourinvestmentintheworkforce?
• TrendAnalysisandForecasting– Isourproductivityincreasing,decreasingorremainingstatic?
• Benchmarking– Comparedtocompetition,areweleadingorlagging?
© Human Capital Management Institute
TheTalentManagementLifeCycle
Leadershiphastheabilitytoaddvalueandimpactproductivityacrossallelementsofthetalent
managementlifecycle.
Recruiting & Hiring
Training (L & D)
Performance & Engagement
Mobility Career Path
Turnover & Retention
Leadership & Management
© Human Capital Management Institute14
15
QuantifyingLeaderEffectivenessCanyouquantifywhichofyourmanagersaremoreeffectiveatmanagingtalent?
ManagerA ManagerB• Exceedsbusinessgoals
• Hiresexp’demployees
• Notraining
• Highturnover
• Lowmobility
• Mixedperformance
• LowEngagement
• Exceedsbusinessgoals
• Hiresjunioremployees
• Trainsteampersonally
• Lowturnover
• Moretransfers/promotions
• Highemployeeperformance
• Highengagement
© Human Capital Management Institute
16
CaseStudy:FinancialServicesIndustry
*Managerswithunder1yearofsupervisoryexperience
**Managerswithonly1directreport
ManagementGroup
PercentofManagers
PercentofTurnover
30%
34%
22%
14%
10%
81%
8%
2%
LowTurnover
HighTurnover
NewManager*
1Employee**
ManagerQualityisakeycomponentofemployeeturnover
Cohortanalysisissegmentedbyhighandlowturnovermanagers
Result:Spottingmanagerswithturnoverdisproportionatetoworkforcesize
Highturnovermanagersdrivehighercostofworkforce
© Human Capital Management Institute
SampleScorecard
17© Human Capital Management Institute
GlobalProductivityAcrossAllIndustries
18© Human Capital Management Institute
1.00
1.50
2.00
2.50
‐30.0% ‐10.0% 10.0% 30.0% 50.0% 70.0% 90.0% 110.0%
Hum
an Cap
ital R
OI
Return on HCI
Accomodation & Food Services Admin Support & Waste Mgmt Svcs Arts & EntertainmentFinance and Insurance Health Care and Social Assistance InformationManufacturing Oil & Gas Professional & Tech ServicesReal Estate, Rental, Leasing Retail Trade Transportation and WarehousingUtilities Wholesale Trade Mining
ContactInformation&UpcomingEvent
MounPeterson,[email protected]
WorkforceIntelligenceConsortiumGroup
StephenWeltz,[email protected]
HumanCapitalManagementInstitutewww.hcminst.com(323)522‐HCMI(4264)[email protected]