how can hr shape the business?

How can HR shape the

business?

Zurich, 25 March 2014

2

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CEO Challenges 2014The Top 5

An appetite for change: Leveraging people to build a customer-centric, performance-based culture.

Human Capital was named the top challenge of global CEOs (first in Europe and Asia, second in

North America and Latin America). It is also intimately linked with all the other top challenges for 2014.

1 Human Capital

2 Customer Relationships

3 Innovation

4 Operational Excellence

5 Corporate Brand and Reputation

Source: http://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2681

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CEO Challenges 2014Derived Strategies on Human Capital

Provide employee training and development1

Raise employee engagement2

Improve performance management processes

and accountability3

Require the use of analytics to articulate the

business impact of key human capital …

The strategy to require the use of analytics to articulate the business impact of key human capital

initiatives and programs is one of the lowest ranked strategies to meet the human capital challenge.

1 Human Capital

19

:

Increase efforts to retain critical talent4

Source: http://www.conference-board.org/publications/publicationdetail.cfm?publicationid=2681

5

View on HRC-Level and BU leaders view HR as lagging in strategic performance

Source: McKinsey & The Conference Board Research, 2012

Legend: Rating on scale of 1-6, 1 = “needs improvement”, 6 = “best practice”

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Shaping the business means …Note Guiding Principles

Standards of practise lead to a reliable and credible approach to human capital analytics. There are

four key themes:

Source: Human Capital Analytics, A Primer, The Conference Board

1Human capital analytics must drive strategic

outcomes

2Human capital analytics must represent multiple

perspectives

3Human capital analytics must balance analysis

with information needs

4Human capital analytics must be sustainable

and transferable

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Shaping the business means …Rely on Evidence-Based Management

Identification of general

causal relations (theories)

Identification of specific

practices (instruments)

Science Practice

Based on: Brodbeck, F.; Woschée, R.: Grundlagen und Möglichkeiten eines evidenzbasierten Personalmanagements, 2013

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inte

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tion-

sp

ecific

facts

ba

se

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tica

lly c

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ata

the interaction creates a collective intelligence

Meta-

analyses

Controlled

laboratory/field

experiments

Comprehensive

correlation studies

Systematic

reviews

Systematic

evaluation

Systematic

Follow-up

Expert

survey

Case

study

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Shaping the business means …Unterstanding the Decision Framework: Overview

Source: Beyond HR. John W. Boudreau, 2010

Do we achieve our effects

where they matter most to our

sustainable strategic success?

How much resource is

invested in the portfolio of

our policies and practices?

How much effect do our

policies and practices have

on their target population?

Impact

EfficiencyEffectiveness

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Shaping the business means …Following the LAMP Framework: Overview

HR Metrics and

Analytics That Are

A Force For

Strategic Change

„The Right Logic“

Rational Talent Strategy

(Competitive Advantage, Talent

Pivot Points)

L„The Right Measures“

Sufficient Data

(Timely, Reliable, Available)

M

„The Right Analytics“

Valid Questions and Results

(Information, Design, Statistics)

A

„The Right Process“

Effective Knowledge Management

(Values, Culture, Influence)

P

Source: Investing in People. Financial Impact of Human Resource Initiatives. Wayne Cascio and John Boudreau

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Shaping the business means …Following the LAMP Framework: Logic – Employee Turnover

Voluntary versus Involuntary Turnover

Functional Versus Dysfunctional Turnover

Employee Turnover (pivotal talent pools): Each separation is replaced by an acquisition.

Source: Investing in People. Financial Impact of Human Resource Initiatives. Wayne Cascio and John Boudreau

Starting Workforce Value

Quantity of employees

X

Quality of employees

Effect of Separations

Quantity of employees removed

X

Quality of employees removed

Ending Workforce Value

Quantity of employees

X

Quality of employees

Effect of Acquisitions

Quantity of employees added

X

Quality of employees added

Change in Workforce Value

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Shaping the business means …Following the LAMP Framework: Logic – Map of causalities

Managerial

Leadership

TrainingHuman

Capital

Relational

Capital

Structural

Capital

Human

Capital

Effectiven.

Retention

of Key

People

Business

Perfor-

mance

Knowledge

Generation

Employee

Engage-

ment

Employee

Satisfaction

Employee

Motivation

Value

Alignment

Strategy

Execution*

Knowledge

Integration

Knowledge

Sharing

Human

Capital

Depletion

Remark: Referring to Nick Bontis and Jac Fitz-Enz: Intellectual Capital ROI, 2010

* for further remarks: Mark A. Huselid, Brian E. Becker, Richard W. Beatty: The Workforce Scorecard, 2005

Motivation Risk

Failure and Availability Risk

Occupational

Skill Risk

Integrity

Risk

Alignment

Risk

Resignation

Risk

0,506

0,442

0,530 0,326 0,360

R2=68,2%

R2=28,5%

R2=44,1%

R2=28,5%

0,751

0,3580,307

0,475

0,327

-0,337

0,439

0,456 0,4290,394

0,430

0,285 -0,233

0,262

-0,372

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Shaping the business means …Following the LAMP Framework: Measures – Employee Turnover: Measuring separation costs

Total separation costs (ST) = S1 + S2 + S3 + S4

Source: Managing Human Resources: Productivity, Quality of Work Life, Profits. Wayne F. Cascio;

Investing in People. Financial Impact of Human Resource Initiatives. Wayne Cascio and John Boudreau

relevant in the

United States

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Shaping the business means …Following the LAMP Framework: Measures – Employee Turnover: Measuring replacement costs

Source: Managing Human Resources: Productivity, Quality of Work Life, Profits. Wayne F. Cascio;

Investing in People. Financial Impact of Human Resource Initiatives. Wayne Cascio and John Boudreau

Total replacement costs (RT) = R1 + R2 + R3 + R4 + R5 + R6 + R7 + R8

14

Shaping the business means …Following the LAMP Framework: Measures – Employee Turnover: Measuring training costs

Source: Managing Human Resources: Productivity, Quality of Work Life, Profits. Wayne F. Cascio;

Investing in People. Financial Impact of Human Resource Initiatives. Wayne Cascio and John Boudreau

Total training costs (TT) = T1 + T2 + T3

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Shaping the business means …Following the LAMP Framework: Analytics – Retention Rate / (www.tronox.com)

Retention Rate = (Start of Quarter HC + External Hires – Terminations) / (Start of Quarter HC +

External Hires) * 100. Percentage of all HC in the quarter that did not terminate.

Global HR

Dashboard

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Shaping the business means …Following the LAMP Framework: Analytics – Employee Turnover

Total cost of turnover (CT) = ST + RT + TT + DP

The purpose of measuring turnover costs and using analytical strategies to reveal their implications is

to improve managerial decision-making.

Compen-

sationEmployee

Signs

Benefits

Co-

Determination

Training &

Development

implications

Employee Turnover

Firm-spec.

Human Capital

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Shaping the business means …Following the LAMP Framework: Process – Employee Turnover / (http://superiorenergy.com/)

Managerial

Leadership

TrainingHuman

Capital

Relational

Capital

Structural

Capital

Human

Capital

Effectiven.

Retention

of Key

People

Business

Perfor-

mance

Knowledge

Generation

Employee

Engage-

ment

Employee

Satisfaction

Employee

Motivation

Value

Alignment

Strategy

Execution*

Knowledge

Integration

Knowledge

Sharing

Human

Capital

Depletion

Remark: Referring to Nick Bontis and Jac Fitz-Enz: Intellectual Capital ROI, 2010

Source: Investing in People. Financial Impact of Human Resource Initiatives. Wayne Cascio and John Boudreau

= Workforce Value

Pay for

Perfor-

mance

(+)

(-)

One-on-

one-

coaching

voluntary vs. involuntary turnover

functional vs. dysfunctional

turnover

(+)

(-)

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Key Lessons To Take Away

Create buy-in and ownership whilst taking guiding principles into account

Be committed to fact based / evidence-based decision making

Ensure close alignment between strategic and operational level / use of data

Start with logic, followed by measures, analytics and process (LAMP framework)

Create focus on data quality throughout the business

Create tighter integration between business KPIs (leading indicators) and analytics

Focus reporting and analytics on the future (predictive HR, maturity process of analytics)

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Learn more about it

Talent Relationship Management: May 22

Human Capital Analytics: September 19

Talent Relationship Management : June 6

Human Capital Analytics : October 17

Talent Relationship Management : June 26-27

Human Capital Analytics : October 30

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Your Personal Point of Contact

Chairman and CEO at

STRIMgroup AG, Zurich / CH

Senior Fellow at The

Conference Board in New York

Lecturer in the Master's

program in Human Capital

Management at Lake

Constance Business School /

Germany

845 Third Avenue

New York, NY 10022-6600

Telefon: +49 (0)172 7590 688

volker.mayer@conference-board.org

Gütschstrasse 22

CH-8122 Binz (Zürich)

Telefon: +41 (0)43 366 05 58

volker.mayer@strimgroup.com