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The Business Value of People Analytics
Lexy Martin, Principal Research and Customer Value Visier
High-Level Business Impact of People Analytics
Bersin by Deloitte: High Impact Talent Analytics CEB Corporate Leadership Council: The Analytics Era
Sierra-Cedar HR Systems Survey
B E T T E R I N S I G H T S B E T T E R D E C I S I O N S B E T T E R O U T C O M E S
30% 6% 79% S T O C K P E R F O R M A N C E G R O S S M A R G I N R E T U R N O N E Q U I T Y
People Analytics Human Capital Productivity Value Chain
Improved workforce data for decision
making
Competitive advantage
People Analytics
Return on Equity
Structural Equation Path Modeling Conducted by Dr. Janet Marler,
School of Business, University at Albany-SUNY
Improved ability to develop
highly qualified workforce
Improved employee & manager
productivity
People Analytics Value
Journey to Value
Technology / Labor
Efficiency Value
Deploying technology cost efficiently and
reducing reporting and analysis labor costs
HR Effectiveness
Value
Making interventions from insights that make a difference to HR and
improving key HR metrics
Business Impact / Strategic
Value
Impacting business metrics that matter to
the C-level
Technology / Labor Efficiency Value
Technology / Labor
Efficiency Value
Deploying technology cost efficiently and reducing reporting
and analysis labor costs
0
10
20
30
40
50
60
70
Operator Steward Catalyst Strategist
Before Change
After Change
Changing from Reporting to Analytics Delivers Headcount Savings and Makes Analysts into Strategists
PE
RC
EN
TA
GE
OF
TIM
E
S T R AT E G I C V A L U E
Avoiding Technology Costs
Additional Data Discovery Licenses
Hardware Purchase & Maintenance
Data Warehouse Software Licenses
Data Integration Tools Licenses
Data Center Maintenance Costs
IT Administrators
Subject Matter Experts
Analysts
Software Developers
Software Maintenance Fees
Other Implementation Costs (i.e. Dashboard, Training)
LICENSE 10%
90%
VISIBLE
HIDDEN
CO
ST
S
HR Effectiveness Value
HR Effectiveness
Value
Making interventions from
insights that make a difference to HR
and improving key HR metrics
Outperforming with 13% Lower Resignation Rates
2010 2011 2012 2013 2014 2015 2016
0%
5%
10%
15%
20%
25%
30%
35%
Visier Customers
U.S. Market
Reducing Manager Resignation Rates by 30%
After two years with Visier,
customers on average are
achieving a 30% reduction in
manager resignations
Reducing turnover for key revenue-producing role
Challenges
HRMS reports did not provide meaningful insights
Analytics team spent most time managing data
Analytics team was unable to increase headcount
Results
Insights from extensive best practice HR metrics & analytics
More time for high-value analysis, without added headcount
44% reduction in turnover for a key revenue-producing role
Reducing resignations enterprise-wide by 2%, for a $12 Million Savings
CHALLENGES
• Demand for data-driven insights a support strategic workforce decisions
• Sales leaders wanted better insights about their employees
• Reducing turnover top concern of business leaders
RESULTS WITH VISIER
• “Being insight led” is now a pillar of their workforce strategy
• Sales leaders receive “transformational” insights on workforce
• Over 2% reduction in voluntary turnover globally ($12 Million savings)
Measuring the value of reduced turnover
CHALLENGES
• High cost of turnover
• Growing shortage of qualified candidates in critical positions
• Inability to talk with business leaders in terms of dollars and cents
RESULTS WITH VISIER
• Projected $15 million savings in turnover in next three years
• Reduced first year voluntary turnover from 17.8% to 15.3%
H E A LT H C A R E
S Y S T E M +
Justifying HR programs: Recruiting through University Relations
CHALLENGES
• HRMS reports difficult to produce
• Reporting environment did not allow for enough analysis
• Analytics team could not keep up with leadership requests
RESULTS WITH VISIER
• Found that new grad hires promoted at a higher rate, more likely to be high performers, and cost less than experienced peers
Business Impact / Strategic Value
Impact business metrics that matter
to the C-level
Strategic reduction in force
CHALLENGES
• Reduce workforce expenses globally
APPROACH
• Analyzed workforce by location against dimensions of revenue generated, costs, and risks
• Answered strategic question:
• Are we in the right regions in terms of cost and productivity of labor.
RESULTS WITH VISIER
• Identified geographies where a RIF would have the least impact
• Achieved the same expense reduction, but with a strategic focus
• As a result, firm is better set strategically for the future
Making the case that improving Quality of Hire can increase revenue
CHALLENGES
• Improve quality of hire to drive revenue
RESULTS WITH VISIER
• Analyze talent pipeline efficiency to understand sources that generate top performers
• Track recruiter effectiveness and recruiting program effectiveness for sourcing comparable performers
• Increasing new hire sales by $50,000 in first year could drive $37.5 million extra sales per year
Impacting product success through analyzing successful team factors
CHALLENGES
• Understand the relationships between development teams and game performance
APPROACH
• Analyze workforce and business data to discover best predictors of success for each game going to market
RESULTS
• Improve firm performance as the interactions are better understood and higher revenue, more profitable games are produced
Margin improvement in right talent / right cost project staffing
CHALLENGES
• Large professional services organizations needed to:
• Attract and retain qualified staff on an ongoing basis
• Understand the cost of people to to ensure contracts are profitable
• Respond quickly, consistently, and with agility to each RFI and RFP
RESULTS WITH VISIER
• Analyze the total cost of workforce on experience, tenure, salary and location
• Conduct scenario-based workforce planning to determine the optimum mix of consultants
• Lowered costs on consulting projects an average of $1 million each and improving margins
Revenue lift from retained staff
CHALLENGES
• Financial services organization suffered from turnover issues
RESULTS WITH VISIER
• Addressed interventions addressing pay inequities, improved manager communications, improved onboarding and ongoing development
• Revenue lift of retained staff of $200,000 per employee from ongoing development, yielding significant revenue as turnover declined
The strategic impact of safety
CHALLENGES
• Identifying the root causes of safety incidents
RESULTS WITH VISIER
• Review safety incidents across different dimensions to see what actions are needed to address potential issues
• Maintain and improve worker safety
• Contribute to cost savings by reducing insurance premiums when safety performance improves
“With Visier, we can procure other
systems and bring in their data for
analysis, without worrying about data
integration fees.”
— Head of HR Research, Statistics and
Reporting Team, City of Edmonton
Business Outcomes / Strategic Value Key Metrics for C-level Executives
Challenges Assessing corrective actions on degrading employee performance when necessary
Approach Dashboard for executives that includes a key metric of employee performance – EBITDA per employee
Results Executives can see a caution indicator and drill down to assess contributors to determine necessary
corrective actions.
Mitigating the risks of pay inequity
CHALLENGES
• Possible non-adherence to equal pay laws
• Example: Insurance company settled a pay discrimination suit at an average of $133,333 for each plaintiff
RESULTS WITH VISIER
• Analyze pay practices and discover pay equity risks before they turn into issues
• Track whether high pay is due to longer tenure, more education, or higher performance
• Mitigate risks to avoid unexpected costs, improve long-term productivity, and increase employee engagement
Visier Workforce Intelligence Summary of Value: Technology and Labor Cost Efficiencies, HR Effectiveness
T E C H N O L O G Y AN D L AB O R C O S T E F F I C I E N C I E S
BI costs avoided $2,250,000 per organization1
Savings from replacing legacy tools $336,000 per organization2
Data integration costs avoided $240,000 per organization3
HR labor cost savings $60,000 per year4
H R E F F E C T I V E N E S S
Savings from reduced turnover $15 ,354 ,640 per
10 ,000 emp loyees per year 5
Calculating the Cost of Turnover
DIRECT COSTS TO REPLACE AN EMPLOYEE
Average cost per hire
$3,976
Average first-year orientation and training costs per hire
$3,000
Total Direct Costs $6,976
INTERIM REDUCTION IN LABOR COSTS
Average annual labor costs (salary, bonuses, benefits, etc.)
$130,000
Average time to hire
X52 calendar days (14% of year)
Interim Reduction in Labor Costs
$18,200
LOST PRODUCTIVITY COSTS
Average time to hire
52 calendar days
Average time to reach productivity of lost employee
+60 calendar days
Total non-productive days
=112 calendar days / 365 (31% of year)
Average annual revenue per employee
X $390,000
Lost Productivity Costs
$120,900
TOTAL COST OF VOLUNTARY TURNOVER PER LOST EMPLOYEE
Direct Costs $6,976
Interim Reduction in Labor Costs
-$18,200
Lost Productivity +$120,900
Total Cost of Voluntary Turnover
$109,676 per lost employee
Bersin by Deloitte: Calculating the True Cost of Turnover
Visier Workforce Intelligence Summary of Value: Business and Strategic Value
B U S I N E S S AN D S T R AT E G I C VAL U E
Higher margins on professional services contracts $1M-$3M per multi-year contract6
Revenue uplift from retained employees receiving
additional training $200,000 per employee per year7
Reduced risk of pay equity lawsuit $133,333 per employee named in suit8
Workforce planning accuracy $100,000 per headcount improvement in accuracy
per year9
Justifying Workforce Intelligence Reference Material
Visier: Total Economic Impact of Workforce Intelligence
Visier: Data-driven Success Stories with Visier
Visier: Building Your Business Case for Workforce Intelligence
Sierra-Cedar: The Quantified Organization: Creating Data-driven HR
First West Credit Union: First West Credit Union Defending Against Attrition
Electronic Arts: Building a Data-Driven Culture with Workforce Intelligence
BBVA: BBVA-Compass Capitalizing Workforce Insights to Reduce Turnover
Yahoo: Yahoo’s Use of Visier Workforce Analytics Shows $2.5 Million Savings
Bersin: Calculating the True Cost of Voluntary Turnover: The Surprising ROI of Retention
Visier: Insights Report Gender Equity
Reducing turnover of new clinical staff by 49%
CHALLENGES
• Gathering and presenting data a manual, time-intensive process
• Turnover of clinical staff a top concern
RESULTS WITH VISIER
• Based on insights
• Targeted retention of new hires
• Developed program to improve onboarding
• New hire turnover within targeted groups reduced by 49%
H E A LT H C A R E
P R O V I D E R