nividh hcm bi
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BI AnalyticsTRANSCRIPT
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 7+ 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 Challanges • 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?
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
A good HR data management
process, one that gives HR, line
managers, and senior
management access to data at
their fingertips, is essential for
these very factors.
In order to be effective, HR
professionals must fully
acknowledge data, identify key
performance indicators and
settle on a technology approach
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.
Compensation reports how
the compensation impacts
performance, ensures
compensation is equitable
and consistent across roles,
and aligns incentive
compensation with
objectives and company
goals.
HR performance reports HR
performance against
recruitment and retention
goals, monitors and
improves employee productivity, and assesses
compensation
competitiveness to attract
top talent.
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.
Attrition Retention reports provide
information on the drivers of
employee turnover,
proactively identifies top
performers who are likely
being recruited by
competitors, and reduces
recruiting and involuntary
termination costs.
Workforce profile and
compliance reports describe
the reduced time and cost
of compliance reporting,
increases in employee
satisfaction and retention,
and manages overall
profiles and backgrounds of
the workforce.
SAMPLE PROCESS: Exit Process
TYPICAL INDICATORS (Examples)
Indicator Unit of measurement Why it is important/ what it measures
1 Rate of voluntary terminations per year % of population Indicates percentage of staff leaving voluntarily during the
period - indicator in assessing effectiveness of retention
policies
2 Rate of early retirements per year % of population Assessing effectiveness of retention policies
3 Rate of personnel made redundant % of population Assessing company's effectiveness at manpower planning
4 Rate of outgoing personnel successfully out-placed % of outgoing personnel Assessing effectiveness of outplacement services
5 Average length of time for successful outplacement Average elapsed days oer successful
placement
Assessing efficiency of outplacement services
6 Average cost of up-skilling outgoing employees $ per person Financial cost of "no return" investment
7 Average time on administration related to retirement Hours per retirement case Assessing financial (time and expense) costs
8 Average time spent related to exit interviews per year Hours per interviewer Assessing financial (time and expense) costs
9 Effectiveness of exit interview information % satisfaction with qualitative turnover
reports
Assessing ability to capture pertinent information to
improve retention policies
10 Costs of redundancy pay-outs per year $ per person or % of overall personnel costs Assessing financial impact of involuntary resignations
Manage administration of retirement
cases
Manage administration of voluntary
termination
Resource
requirement
analysis
Manage redundancy process
Design exit
plans
Offer out-
placement and re-
skilling services
Conduct
exit
interviews
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
• Sales – Vipul Sharma +91-9483-265110 [email protected], [email protected] [email protected]
• 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
• “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”