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Deloitte’s Analytics
Symposium 2010
Using advanced workforce
analytics to make business-
driven Human Resource
decisions
Russell Clarke
John Houston
Howard Hamilton, ESPN

October 2010
Agenda


• What we are seeing in the marketplace
• Workforce analytics approaches
• Deploying point solutions: Solving
  specific problems
• Workforce planning and optimization
• Recruiting and predicting performance




1   Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
What we are seeing in the
marketplace
A great book about workforce analytics, not baseball




3   Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
The Moneyball story


• In 1999, the Oakland A’s ranked 12th out of 14 in National League
  payroll
    – How could the A’s compete with richer teams to attract top players?
• The A’s manager (Billy Beane) decided to take an analytic approach
    – He hired an analyst (Paul DePodesta) out of Harvard to try to predict player’s
      future performance
    – Example of DePodesta’s calculations

      Runs Created = (Hits + Walks)*(Total Bases)/(At Bats + Walks)

• Beane used this model to hire excellent baseball players who had been
  undervalued by the market
• The result?
    – ―In 2006, the A's ranked 24th of 30 major league teams in player salaries, but
      had the 5th-best regular-season record. This reflects a typical pattern
      throughout Beane's stewardship.‖ — Wikipedia entry on Billy Beane.
4    Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
The importance of business analytics


Visibility into analytics can help business leaders make decisions more
accurately, objectively, and economically — a rapidly developing
consensus in business, education, law, medicine, and even professional
sports.




5   Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
The importance of business analytics (cont.)


                Analytics                                                                 Description
Descriptive reporting                                  Summarize and compare operational and/or financial data
                                                       on key workforce variables within defined time frames.
                                                       These are used primarily to create lagging indicators.
Retrospective analytics                                Analyze one or more internal data sources to discover
                                                       useful information. Used to create both lagging indicators,
                                                       performance benchmarks, and insights.
Predictive analytics                                   Mathematical models are applied to multiple internal and
                                                       external data sources to predict future workforce events.
                                                       Used to create leading indicators and focus limited
                                                       resources on critical employee populations.




6   Using advanced workforce analytics to make business-driven Human Resource decisions          Copyright © 2010 Deloitte Development LLC. All rights reserved.
What’s driving interest/demand for analytics in HR?


• Continued investment in technology infrastructure
    – Enterprise Resource Planning (ERP) systems/data marts aggregate data
    – HR process move to automated point solutions
• New type of HR leaders
    – Come from finance and operations
    – Common practice to use data and analytics for more effective business
      decision making
• Challenging economy is forcing organizations to embrace change
    – Visibility into business issues reduces risk for senior management teams
    – Managing talent spend critical (one of the top three P&L line items)
• Dashboard overload




7    Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Positive financial impacts from workforce analytics


    Company                                                 Impact
    Top-ten national bank                                   Increased redeployment activities from 12% to 18%
                                                            saving the corporation $18M
    Global services company                                 Improved their recruiting yield (hiring ratio) without
                                                            adding additional headcount, driving a $5.6M savings
    Major airline                                           Reduced their Full Time Employee (FTE) headcount
                                                            within their Reduction In Force (RIF) services group by
                                                            50%, saving the company $600,000 annually
    National financial services                             Projected a cost savings of over $7M by reducing
    company                                                 voluntary turnover of key employees by 1%
    Leading wireless company                                Accelerated their decision/selection process during a
                                                            large M&A, saving $5.7M for every 1,000 employees
                                                            separated




8     Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Workforce analytics
approaches
Clients are following two paths


1. Building an HR business analytics capability

2. Deploying point solutions: Solving specific problems
     – Workforce planning and optimization
     – Recruiting and predicting performance




10    Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Where they are and where they want to be


We utilize the Deloitte HR business analytics maturity model when we
work with our clients in implementing reporting and workforce analytics
solutions. These steps are demonstrated to help companies reduce their
risk, optimize their spend, and facilitate executing an integrated
approach:

• There needs to be a single source of the truth
• Tools and data need to be created across all work streams
• Help to ensure that data is consistent, timely, well defined, and careful
• Tools need to be tailored to the business needs and the knowledge and
  capabilities of the user; not one size fits all
• Evolve adoption over time, as capabilities, skills, tools, and data improve


As used in this document, ―Deloitte‖ means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see
www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.




11      Using advanced workforce analytics to make business-driven Human Resource decisions                         Copyright © 2010 Deloitte Development LLC. All rights reserved.
Keys to implementing an effective analytics strategy


1. Tie reporting and analytics to business-driven issues.

2. One technology is not the answer. Rather, a component strategy is
   the key to success.

3. Implement in phases.




12   Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Building workforce analytics capabilities and delivering
benefits
Objective: Build a highly-effective human capital business analytics
capability and organization that is scalable and sustainable.
                            Phase I                       Phase II                        Phase III            Phase IV                            Phase V
                          Nonexistent                    Developing                       Defined              Advanced                            Leading
                                                                                                            In addition to
 Business Analytics




                                                                                                            periodical reports,
                                                                                                            management utilizes
                                                                                                            data to test
                                                                                                            hypotheses and
                                                                                      The organization      improve the quality                Sophisticated
                                                                                      produces periodical                                      predictive modeling
                                                                                                            of business
                                                                                      reports which                                            is used in scenario-
                                                                                                            operations
                                                       Analytics are used             management uses                                          based analysis; data
                                                       on an ad-hoc basis             in decision making                                       points management
                                                       to improve business                                                                     to opportunities for
                          Analytics are not
                                                       operations                                                                              improving operations
                          used in business
                          operations                                                                                                           and mitigating risks




                                                                   Business Analytics Capability
13                    Using advanced workforce analytics to make business-driven Human Resource decisions          Copyright © 2010 Deloitte Development LLC. All rights reserved.
Key business analytics enablers


             Enabler                                                                 Key Questions
 People                                      What kind of organization do we need? How will we
                                             design our organization to leverage current analytical
                                             capabilities and understand what gaps we have?
 Process                                     What is the impact of analytics on how we do business?
                                             Can we improve our decision-support process to more
                                             effectively manage our ―People‖ supply chain?
 Technology                                  What solutions do I need, and when? How do I stitch
                                             together the required technology components to enable
                                             data-driven decision making?
 Data                                        How do I get the most out of my internal and external
                                             data?
 Security/                                   How are analytical decisions made? Who should be
 Governance                                  accountable for facilitating the analysis and leveraging its
                                             insights?

14   Using advanced workforce analytics to make business-driven Human Resource decisions       Copyright © 2010 Deloitte Development LLC. All rights reserved.
Example: Workforce business analytics maturity model:
People

                                  “People” maturity dimensions: Definitions
 Leadership and                     Sponsorship leaders provide for championing workforce business
 strategy                           analytics capability and the approach an organization takes towards
                                    this goal
 Talent attraction                  Ability to attract and recruit the talent that the service organization
                                    needs
 Competency                         Skills and capabilities that should be demonstrated by the people to
 development                        meet the objectives of the organization
 Organization                       Structure of the organization designed to deliver maximum value and
 structure                          capability
 Cross-functional                   Level of cross-functional interaction required to make informed and
 integration                        business driven workforce decisions
 Job design                         Identification and definition roles and jobs to achieve the service
                                    organization’s objective
 Culture                            Extent to which analytics driven business decision making is
                                    embedded in day-to-day operations, customs, and behaviors


15   Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Example: Workforce business analytics maturity model:
   People (cont.)
                                                           Nonexistent                                  Developing                                   Defined                          Advanced                                    Leading
                                                        We have limited focus on developing        Our leadership is educated on the         Our workforce business analytics       Our workforce analytics             Our business strategy is informed and
                               Leadership               workforce business analytics
                                                        capability.
                                                                                                   importance of workforce business
                                                                                                   analytics.
                                                                                                                                             capability is an essential component
                                                                                                                                             of our business strategy and
                                                                                                                                                                                    strategy and our business
                                                                                                                                                                                    strategy are seamlessly
                                                                                                                                                                                                                        influenced by our workforce insights and
                                                                                                                                                                                                                        predictions.
                               and strategy                                                                                                  leadership focus.                      integrated and directionally
                                                                                                                                                                                    consistent.
                                                        We rarely seek analytical skills in        We seek ―soft skills‖ in analytics and    We seek candidates with strong         For hiring talent, we focus on      Candidates must have prior experience
                               Talent                   future hires, only transaction-oriented
                                                        Information Technology (IT) skills.
                                                                                                   transaction- oriented IT skills.          backgrounds and experience in
                                                                                                                                             statistics and analytical decision
                                                                                                                                                                                    cross-functional business
                                                                                                                                                                                    analytics and advanced
                                                                                                                                                                                                                        in advanced analytical analysis and
                                                                                                                                                                                                                        relevant background in the subject.
                               attraction
“People” maturity dimensions




                                                                                                                                             making.                                technological capabilities.

                                                        We have limited focus on                   Our employee training touches on a        We have training for designated        We focus on cross- functional       We encourage associates to get
                               Competency               development of analytical skills
                                                        through training or hand-on
                                                                                                   high-level analytics for limited
                                                                                                   functions.
                                                                                                                                             analysts for BI, Analytic
                                                                                                                                             Applications, Data Management,
                                                                                                                                                                                    business analytics and
                                                                                                                                                                                    advanced technological
                                                                                                                                                                                                                        involved in analytics-driven
                                                                                                                                                                                                                        experimentations, and seek
                                                        experience.                                                                          and new technology software.           capabilities.                       opportunities to collaborate on business
                               development                                                                                                                                                                              analytics across functions.


                                                        We currently do                            We have some ad                           We have a                                                                  We have
                                                        not have any                               hoc local                                 dedicated group                                                            implemented an
                                                        workforce                                  resources helping                         of individuals and                                                         organizational
                                                        analytics                                  us generate                               a defined process                                                          structure (Shared
                               Organization
                                                        capability or                              generic workforce                         in place for                                                               Service Center or a
                               structure                service                                    reports without any                       generating                                                                 Center of
                                                        organization.                              specific reporting/                       standardized                                                               Excellence) for the
                                                                                                   organizational                            workforce                                                                  right service
                                                                                                   structure.                                insights.                                                                  level/cost/capability.
                                                        While taking workforce decisions, we       We realize the importance of              We have a well-defined process of                                          We are seamlessly integrated with other
                               Cross                    often do not interact with other parts
                                                        of the business.
                                                                                                   interacting across functions to make
                                                                                                   workforce decisions and are looking
                                                                                                                                             engaging business partners to
                                                                                                                                             provide insight in interpreting data
                                                                                                                                                                                                                        functions for generating business-driven
                                                                                                                                                                                                                        workforce analytics as a service to other
                               functional                                                          for ways to improve it.                   and taking business decision.                                              business functions .


                               Integration
                                                        We currently have not identified any                                                 Job responsibilities, skills and
                                                        job or role responsibility for attending                                             reporting structures are defined to
                               Job design               to workforce analytics.                                                              support workforce business
                                                                                                                                             analytics as a core capability.

                                                        All of our workforce decisions are         The current decision-making culture is    We give high importance to             There is initial adoption of data   We emphasize on acceptance of
                                                        based on hindsight and no analytic         primarily hindsight driven, but we want   data/analytics driven decision         mining and predictive modeling      analytic applications and predictive
                                                        applications.                              to move to data-based decision            making and it is linked to             tools. Analytics is the key to      modeling by mainstream. Analytics and
                               Culture                                                             making.                                   competitive differentiation.           sustainable competitive
                                                                                                                                                                                    advantage.
                                                                                                                                                                                                                        analytics-driven insights drive strategy
                                                                                                                                                                                                                        development.




   16                          Using advanced workforce analytics to make business-driven Human Resource decisions                                                                   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Accelerating progress — Building a high-performing
capability and organization
It’s a journey and regardless of your strategy, most large organizations want to
create an internal capability that is scalable and sustainable. Understanding,
upfront, what are the required components and ―when‖ to invest will allow for an
efficient use of investment dollars.
                                                                                                                                                                               “People” Maturity Dimensions: Definitions
                                                Strategic Alignment                                                                                                                                                                      Capability Assessment                                                                                                                                                           Service Delivery Model
Build centralized capabilities




                                                                                                                                                                                                                                          Business Intelligence
                                                                                                                                                                                                                                                                        Phase I                        Phase II                     Phase III               Phase IV                      Phase V
                                                            Advanced Analytics Enable Business Strategies for Success                                                                                                                                                                                                                                                                                                                                                                                 Method of adding value                          Focus on
                                                                                                                                                                                                                                                                                                                                                                                                                   Focus on standardizing
                                                                                                                                                                                                                                                                      Nonexistent                     Developing                    Defined                 Advanced                      Leading

                                                                                                        • Further independent                                                                                                                                                                                                                                                                                               local delivery                                                                                                            enhancing
                                                                                                                                                                                                                                                                                                                                                      In addition to periodical
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              Low Cost/                   Knowledge Transfer/
                                  Underwriting Excellence                                                                       Marketing and Retention
                                                                                                          variable considerations                                                                                                                                                                                                                     reports, management                                                                                                                                                                             skills and
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         Defined Service Level          Management Involvement
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      governance
                                                                                                                                                                                                                                                                                                                                                      utilizes data to test
                                  • Improve pricing precision                                             and design            • Target the right risks f or non-renewals                                                                                                                                                                            hypotheses and
                                  • Increase objectivity throughout the                                                         • Improve retention of prof itable risks                                                                                                                                                                                                                                                                                                                                                                              and




                                                                                                                                                                                                                                                                                                                                                                                                                                                                   Specific (site,
                                                                                                                                                                                                                                                                                                                                                                                   Sophisticated predictive
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     Site Support                     Business Partner




                                                                                                                                                                                                                                                                                                                                                                                                                                                                    unit, region)
                                                                                                                                                                                                                                                                                                                                                      improves the quality of
                                                                                                        • Modify target variables                                                                                                                                                                                             The organization




                                                                                                                                                                                                                                                                                                                                                                                                                                    Relationship to the business
                                                                                                                                                                                                                                                                                                                                                      business operations          modeling is used in
                                    underwriting process                                                                        • Increase cross-sell opportunities                                                                                                                                                           produces periodical
                                                                                                                                                                                                                                                                                                                                                                                   scenario based                                                                                    • Distributed to Location(s) for • Aligned with Function/ Unit   deploying
                                  • Enhance risk selection and risk                                     • Modify independent • Identif y geographic and product                                                                                                                                                               reports which
                                                                                                 Operations
                                                                                                          variables                                                                                                                                                                              Analytics are used on        management uses in
                                                                                                                                                                                                                                                                                                                                                                                   analysis, data points
                                                                                                                                                                                                                                                                                                                                                                                   management to
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Local Service Needs            • Line/Management Focus         operationally
                                    avoidance capabilities                                                                        expansion opportunities                                                                                                                                        an ad-hoc basis to           decision making
                                                                                                                                                                                                                                                                                                                                                                                   opportunities f or                                                                                • Required for Local Input/      • Knowledge & Know-How
                                  • Improve pricing competitiveness in                                  • Develop Univariate • Enhance recruiting of prof itable                                                                                                                                 improve business                                                                  improving operations                                                                                Data Capture or Local            Transfer
                                    prof itable segments                                                                                                                                                                                                                                         operations                                                                        and mitigating risks
                                                                                                          Reporting System        producers                                                                                                                                                                                                                                                                                                                                            Programs
                                                                                                                     Underwriting




                                  • Improve underwriter negotiation
                                                                                                                                                                                                                                                                  Analytics are not used
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      • Decision/Action Intensive
                                                                                                        • Document Univariate
                                                                                                                                                                                                                                                                  in business operations
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     • Manual or End-User
                                                                                 Marketing




                                    capabilities
                                                                                                          Analysis results                                                                                                                                                                                                                                                                                                                                                             Intensive




                                                                                                                                                                                                                                                                                                                                                                                                                                                                   (company-wide)
                                                                                                        • Discuss and document                                                                                                                                                                                                                                               Business Analytics Capability
                                                                                                          model validation                                                                                                                                                                                         Business Analytics Enablers
                                  Operational Efficiency                                                                        Enhanced Decision Making                                                                                                                                                                                                                                                                                                                             Transaction Processing          Center of Expertise




                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Generic
                                  • Reduce transaction costs                                              techniques            • Increase f raud detection capabilities                                                                                           People                          Process                     Technology                     Data                 Security / Governance
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     • Consolidated Organization     • Expertise Focus — Ability
                                  • Straight through processing of select risk                         IT                               • Improve monitoring of underwriting                                                                                                                                                                                                                                                                                                                                           to Leverage
                                                                                                                                                                                                                                         What kind of                                      What is the impact of         What solutions do I        How do I get the most         How are analytical                                                                                 • Operational Focus
                                    segments                                                                                              perf ormance                                                                                   organization do we                                analytics on how we do        need, and when? How        out of my internal and        decision made? Who
                                                                                                                                                                                                                                         need? How will we                                 business? Can we              do I stitch together the   external data?                should be accountable                                                                              • Standardized Services         • “Best Practice”
                                  • Improve ease of doing business with                                                                 • Enhance ability to react to market f orces                                                                                                                                                                                                                                                                                                                                   Development
                                    agents                                                                                                sooner
                                                                                                                                                                                                                                         design our organization                           improve our decision-         required technology                                      f or f acilitating the                                                                             • Process Intensive                                              Focus on
                                                                                                                                                                                                                                         to leverage current                               support process to more       components to enable                                     analysis and leveraging
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     • Could Cover Countries or      • Issue/Knowledge Intensive
                                  • Improve claims management activities                                                                • Increase inf ormation processing                                                               analytical capabilities                           ef f ectively manage our      data-driven decision                                     its insights?                                                                                                                                                       enhancing
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       Region                        • Organized by Region
                                                                                                                                                                                                                                                                                                                                                                                                                      Focus on segregating                                                                                                            skills and
                                                                                                                                                                                                                                         and understand what                               customers, employees,         making?
                                  • Improve customer service                                                                              capabilities and data governance
                                                                                                                                                                                                                                         gaps we have?                                     distributors and
                                                                                                                                                                                                                                                                                           suppliers?                                                                                                              and optimizing efficiency                                                                                                          governance




                                                                                                                                                                                                                                   Roadmap Development
                                                                                  Prioritized Opportunities
                                                                                               Phase                                Year 1                                   Year 2                              Year 3
                                                                                                                                                                                                                                                                                                                                                                                                              Roadmap
                                                                                                                                                              Develop New and Renewal
                                                                                                Model           Develop New and Renewal
                                                                                                                                                              Underwriting Models for LOB 2 and     Recalibrate Models for LOB 1
                                                                                             Development        Underwriting Models for LOB 1
                                                                                                                                                              LOB 3
                                                                                                                Score LOB 1 New and Renewal
                                                                                       Interim Scoring          Business Off-Site at Deloitte
                                                                                                                Consulting
                                                                                                                                                              Develop and Deploy Scoring
                                                                                                                                                              Engine for LOB 2 and LOB 3
                                                                                                                                                                                                    Integrate LOB 2 and LOB 3 Models
                                                                                             Technology         Develop and Deploy Scoring
                                                                                                                                                                                                    into Policy Administration Systems
                                                                                             Integration        Engine for LOB 1                              Integrate LOB 1 Models into Policy
                                                                                                                                                                                                    for New and Renewal Business
                                                                                                                                                              Administration Systems for New
                                                                                                                                                              and Renewal Business

                                                                                                                                                              Develop Communications Training
                                                                                                                Develop Communications Training
                                                                                                                                                              and Conduct Pilots for LOB 2 and
                                                                                                                and Conduct Pilots for LOB 1
                                                                                      Communication                                                           LOB 3                                 Monitor, Assess, and Revise
                                                                                        & Training                                                                                                  Training as Necessary
                                                                                                                Launch Communications Training
                                                                                                                                                              Launch Communications Training
                                                                                                                to all LOB 1 Underwriters
                                                                                                                                                              to all LOB 2 and LOB 3 Underwriters

                                                                                                                Develop New and Renewal                       Develop New and Renewal
                                                                                                                Business Rules, Pricing Rules, and            Business Rules, Pricing Rules, and    Monitor, Assess, and Revise
                                                                                                                Reason Messages for LOB 1                     Reason Messages for LOB 2 and         Business Rules and Pricing Rules
                                                                                              Business
                                                                                                                                                              LOB 3                                 as Necessary
                                                                                             Integration        Establish Performance Metrics for
                                                                                                                LOB 1                                         Establish Performance Metrics for     Monitor Performance Metrics
                                                                                                                                                              LOB 2 and LOB 3




17                               Using advanced workforce analytics to make business-driven Human Resource decisions                                                                                                                                                                                                                                                                                            Copyright © 2010 Deloitte Development LLC. All rights reserved.
Deploying point solutions:
Solving specific problems
Traditional, bottom-up approach

Typically, a bottom-up approach creates a gap between data and business
problems by emphasizing the data, leading to a common complaint:

                              ―We have a lot of data, but no useful information.‖

 Relevant, real-time                                                                 Market pressures
 workforce data needed to                                                      Profitability   Cost containment
 make informed decisions.                                                   Credit crunch      Growth
                                                               Customer demographic shifts     Shrinking workforce
                                                                     Technological change      Evolving workplace
 Workforce data is often not                                                 Globalization     Risk and regulatory compliance
 available. Business drivers
 do not dictate what data is
 collected and how.
                                                                            Having relevant data to inform
                                                                                  decision making
                                                                                                                                          GAP
 Data sits in multiple
 repositories. It is not                                                         Translating data into a
 translated into a useful                                                            useful format
 business format and does
 not correlate with critical
                                                                           Company’s data repository
 business drivers.

19   Using advanced workforce analytics to make business-driven Human Resource decisions             Copyright © 2010 Deloitte Development LLC. All rights reserved.
Alternative, strategic approach

A top-down approach can bridge the gap between data and business problems by
providing a repeatable framework for achieving resolutions.


 A top-down approach                                                                       Market pressures
 determines that business                                                                  Profitability   Cost containment
 drivers dictate which workforce                                                      Credit crunch        Growth
                                                                     Customer demographic shifts           Shrinking workforce
 metrics are necessary to make
                                                                             Technological change          Evolving workplace
 informed decisions.
                                                                                      Globalization        Risk and regulatory compliance


 Predetermined Workforce                                                                                                                                   Using data
                                                                                  Workforce Solution Sets
 Solution Sets incorporate                                                                                                                                 to enable
 leading-practice lessons to                                       Workforce                                                                               better
                                                                                                           Organization
 provide leaders with the                                          planning           Workforce                                                            business
                                                                                                            design and            Retention
 information they need to take                                        and             transition                                                           decision
                                                                                                             modeling
                                                                  optimization                                                                             making
 action.
                                                                                     Leadership             Training &           Workforce
 Existing internal and external                                    Recruiting
                                                                                    development              learning           productivity
 data can be leveraged for
 relevant workforce data to
 populate the predetermined
 Workforce Solution Sets.                                                       Company’s data repository


20   Using advanced workforce analytics to make business-driven Human Resource decisions                       Copyright © 2010 Deloitte Development LLC. All rights reserved.
Using analytics to help solve the HR business issues

Deloitte has worked with our clients to develop and deliver innovative analytical
solution sets that are tied directly to today’s pressing business workforce issues.

     Descriptive reporting                          Retrospective analytics                Predictive analytics

 Solutions set                                  Benefit
 Workforce planning and                         Increases accuracy of predicted revenue and talent demand by
 optimization                                   incorporating valuable third-party data

 Workforce transitions                          Allows for enhanced compliance and financial oversight through
                                                centralized reporting

 Recruitment analytics                          Confirms that every resume is reviewed and considered in the
                                                recruitment process

 Retention risk analytics                       Changes the paradigm to a proactive strategy that mitigates risk by
                                                predicting the attrition problem among critical workforce

 Leadership development                         Provides an insight into the recognizable characteristics of those who
 modeling                                       will thrive in leadership roles

 Organization development                       Simulates to-be structures to right size the organization with optimal
 modeling                                       management layers and spans of control


21   Using advanced workforce analytics to make business-driven Human Resource decisions    Copyright © 2010 Deloitte Development LLC. All rights reserved.
Workforce planning and
optimization
Workforce planning and optimization — Creating more
business value
Workforce planning and optimization forecasts and visualizes the supply
and demand of individuals for critical roles and provides the foundation to
evaluate the actions needed to meet the corresponding talent
management objectives.
                   From lagging…                                                                   …to leading practices
 • Once a year, annual planning                                                            • Continual monitoring and planning
 • Macro-level planning                                                                    • Micro-level planning at employee level
 • Reactive organization                                                                   • Proactive organization
 • Ad-hoc reporting                                                                        • Enterprise-level reporting
 • Time-intensive and labor-intensive                                                      • Automated and real-time data visibility
 • Historical view of data                                                                 • Forecasting and scenario planning
 • Internal data only (HR, finance,                                                        • Internal and external data with
   operations, sales)                                                                        macroeconomic insights
 • Limited alignment with strategy                                                         • Integration with business and
                                                                                             HR strategy




23   Using advanced workforce analytics to make business-driven Human Resource decisions               Copyright © 2010 Deloitte Development LLC. All rights reserved.
Workforce planning and optimization process

A broad approach to planning considers combinations of data from multiple sources:

         Step 1:
     Data collection
      Data sources                                 Step 2a: Supply
                                                      projector
          Internal
                                                Visualize the organization
             HR                                 down to the individual
                                                level and calculate
                                                ―inflow‖ and ―outflow‖                                                      Step 4: Report and
           Finance                              trends (i.e., attrition, hires,            Step 3: Scenario                      monitor
                                                mobility)                                      planner                      Provide real-time data,
         Operations                                                                   Allows for ―what if‖                  enterprise data to
                                                  Step 2b: Demand                     planning                              leadership and
           Internal                                                                                                         stakeholders
                                                      projector
         benchmarks
                                                Incorporate
        Sales pipeline                          macroeconomic
                                                data and drivers to
         External                               project workforce demand
                                                for the organization
       Macroeconomic
            data

      Industry specific

                                             Accelerate workforce planning and optimization
        Labor market               Deloitte’s supply, demand, and scenario planning approach leverages
                                  existing systems and data to help organizations make business decision
        Benchmarks                                          on talent solutions.

24   Using advanced workforce analytics to make business-driven Human Resource decisions                     Copyright © 2010 Deloitte Development LLC. All rights reserved.
What is new in demand estimation?

Current approach
• Develop one annual plan
• Labor- and time-intensive process to develop plan
• Plan is closely monitored, but adjustments are infrequent because it requires
  same investment of labor and time

                                        Current approach to workforce planning

                     Mar       Apr       May        Jun Jul              Aug Sep           Oct   Nov       Dec Jan                   Feb
             1
                                                      FY start
                          Long             FY plan                             Plan in action
                        planning          developed
                        process




25   Using advanced workforce analytics to make business-driven Human Resource decisions               Copyright © 2010 Deloitte Development LLC. All rights reserved.
What is new in demand estimation?

Proposed approach
• Develop annual plan and monthly forecasts
• Internal and macroeconomic data incorporated into plan
• Prior month’s information may be incorporated into next month’s forecast,
  enabling frequent comparisons between the forecasted and actual demand
• Adjustments to the plan can be made regularly as new information is available
                                    Proposed approaches to workforce planning
                 Mar         Apr       May       Jun       Jul        Aug        Sep       Oct   Nov        Dec           Jan          Feb


            1                                      FY start
                   Shorter               Plan                                  Plan in action
                   planning            developed                  (more accurate with macroeconomic data)
                   process
           2


                                New data included
                                       for                             Updated plans (monthly or as
                               reforecasted model                                needed)
26   Using advanced workforce analytics to make business-driven Human Resource decisions               Copyright © 2010 Deloitte Development LLC. All rights reserved.
Demand model application — Using reforecasting
 capabilities
      Demand estimation models are ran frequently to reforecast projections (e.g., monthly updates)
      1,700,000
      1,600,000                                                                                                                      Project Hours
      1,500,000
                                                                                                                                      Actuals
      1,400,000
                                                                                                                                      Baseline Plan (3/xx)
      1,300,000
                                                                                                                                      Model Fcst 0
      1,200,000
                                                                                                                                      Model RFcst 2
      1,100,000
                                                                                                                                      Model RFcst 4
      1,000,000
                                                                                                                                      Model RFcst 6
       900,000
       800,000
                      Apr     May      Jun     Jul     Aug      Sep      Oct     Nov     Dec     Jan   Feb       Mar


                                    Salary estimation            Salary excess               Year-end headcount                     Opportunity cost
Apr-Mar Required                      $108,873,457                                                 1,139
Client Plan (@ Mar XX)                $133,463,223                $24,589,766                      1,698
ModelFcst0                            $124,386,621                $15,513,164                      1,499                                 ($9,076,602)
ModelRFcst2                           $121,124,778                $12,251,321                      1,436                               ($12,338,444)
ModelRFcst4                           $117,157,213                 $8,283,756                      1,312                               ($16,306,009)
ModelRFcst6                           $113,911,222                 $5,037,765                      1,167                               ($19,552,001)

 27    Using advanced workforce analytics to make business-driven Human Resource decisions                   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Recruiting and predicting
performance
Recruiting/talent acquisition — Sourcing more
competitively
Companies still struggle managing the top of the recruiting pipeline…how to more efficiently
manage and optimize prospects and suspects. How do we identify qualified candidates who
most resemble our best employees while decreasing recruiting cost and time?

                        25,000 Applicants                                         People   Process Technology                               Data

                                                                                     
                        12,500 career profiles                                                                   
                      6,250 background checks                                                                                              
                      3,500 candidate interviews                                                                                           
                            2,000 new hires                                                                                                

                                                                               Defining your target (what you are trying to
                                                                               replicate) is extremely important in modeling. By
                                                                               segmenting the group of hires, you can define and
                                                                               compare smaller subsets such as high performers
                                                                               and/or long-term employees. This insight can be
             1,000 Employees at Year-End
                                                                               invaluable throughout the entire hiring process.
                     (Yield: ~4%)

29   Using advanced workforce analytics to make business-driven Human Resource decisions           Copyright © 2010 Deloitte Development LLC. All rights reserved.
Traditional recruiting data

Traditional application/recruiting data can make it difficult for recruiters to
differentiate between prospects.

                     Fred                                                   Bill                                       Joe
 • Twelve years of work experience                      • Fifteen years of work experience   • Twenty five years of work
 • Four previous employers in past                      • Two previous employers in past       experience
   10 years                                               10 years                           • One previous employer in the
 • Current employer is small                            • Currently unemployed                 past 10 years
   company                                              • Has completed no relevant          • Current company is a
 • Has completed several relevant                         courses                              large company
   courses                                                                                   • Attended community college



Who would be the most successful?
Who would be the long-term employee?
• Traditional recruiting data makes it difficult to differentiate
  people
     – Simple set of rules comparing work experience and/or education and
       training levels
     – Uniform approach across candidate base


30    Using advanced workforce analytics to make business-driven Human Resource decisions    Copyright © 2010 Deloitte Development LLC. All rights reserved.
Advance analytics — More detailed view

Expanding the data elements from internal/external sources provides a more
comprehensive and detailed view.
                    Fred                                                   Bill                                      Joe
 •   Twelve years work experience                      • Fifteen years work experience     • One employer in past 10 years
 •   Length of residence — two years                   • Length of residence — 10 years    • Twenty five years work
 •   No children                                       • Household size is four with         experience
 •   Currently renting a home                            small children                    • Current company is large
 •   Four previous employers in past                   • Owns home                           company in a different industry
     10 years                                          • Reading: Science Technology       • Attended community college
 •   Foreclosure/bankruptcy                            • Urban single cluster                courses in relevant topic area
     indicators                                        • Premium bank card                 • Renting a home
 •   Medium-estimated household                        • Medium/high-estimated             • Length of residence — one year
     income                                              household income                  • Household size = one
 •   MVR negative correlations                         • No MVR data                       • Revolve large monthly balances
 •   Owns pickup/SUV                                   • Owns two midsized cars            • Suburban Striver Psychographic
 •   Hobbies — Sports                                  • Hobbies — Techie                    Cluster
 •   Low regional economic growth                      • Medium regional economic          • High-estimated household
                                                         growth                              income
                                                                                           • MVR neutral correlation
                                                                                           • Owns three or more cars
                                                                                           • High regional economic growth

            Predictive models built from these and hundreds of other data elements can better
               quantify the likelihood and reasoning of future individual employee events.


31   Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
More detailed view enables better recruiting

Workforce Analytics uses new and traditional sources of information to quantify
the likelihood and reasoning behind future employee events. If effectively
implemented, it allows scarce resources to be better focused, resulting in
measurable benefits.

                                           Fred                                            Bill                                   Joe
 Likelihood of            40% less likely than average to              60% more likely than average         30% more likely than average
 future event             be a successful hire and stay                to be a successful hire and stay     to be a successful hire;
                          with the company for three                   with the company for three           however, low retention
                          years                                        years                                indicators

 Top three                • Suboptimal employment                      • Optimal past employment            • Suboptimal employment
 reasons                    history                                      history                              history
                          • Low household                              • High household                     • No household
                            responsibilities                             responsibilities                     responsibilities
                          • Poor financial indicators                  • Good financial indicators          • Higher financial indicators

 Possible                 • Unlikely pursuit — Third tier              • Actively pursue — Primary          • Possible Pursuit — Second
 actions                                                                 tier                                 tier




32   Using advanced workforce analytics to make business-driven Human Resource decisions             Copyright © 2010 Deloitte Development LLC. All rights reserved.
Summary: Using advanced workforce analytics to make
business-driven Human Resource decisions
The marketplace shows a developing
interest/demand for analytics in HR as
evidenced by:
     – Continued investment in technology
       infrastructure
     – New type of HR leaders
     – Challenging economy is forcing organizations to
       embrace change
     – Dashboard overload


Use an HR business analytics maturity model
when implementing reporting and workforce
analytics solutions. This helps reduce risk,
optimize spend and facilitate an integrated
approach.

33    Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Summary: Using advanced workforce analytics to make
business-driven Human Resource decisions (cont’d)
Workforce planning and optimization forecasts
and visualizes the supply and demand of
individuals for critical roles and provides the
foundation to evaluate the actions needed to
meet the corresponding talent management
objectives.

Predictive models built from hundreds of data
elements can better quantify the likelihood and
reasoning of future individual employee
behavior and events.




34   Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
Questions?
Contact information

Russell Clark
Director
Deloitte Consulting LLP
rclarke@deloitte.com

John Houston
Principal
Deloitte Consulting LLP
jhouston@deloitte.com




36   Using advanced workforce analytics to make business-driven Human Resource decisions   Copyright © 2010 Deloitte Development LLC. All rights reserved.
"This presentation contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of
this presentation, rendering business, financial, investment, or other professional advice or services. This presentation is not a substitute for such
professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision
or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall
not be responsible for any loss sustained by any person who relies on this presentation.

About Deloitte
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each
of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte
Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP
and its subsidiaries.

"This presentation contains general information only and is based on the experiences and research of Deloitte practitioners. Deloitte is not, by means of
this presentation, rendering business, financial, investment, or other professional advice or services. This presentation is not a substitute for such
professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision
or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte, its affiliates, and related entities shall
not be responsible for any loss sustained by any person who relies on this presentation.

Copyright © 2010 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited

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7. fri 840 930 houston - workforce analytics for hr decisions

  • 1. Deloitte’s Analytics Symposium 2010 Using advanced workforce analytics to make business- driven Human Resource decisions Russell Clarke John Houston Howard Hamilton, ESPN October 2010
  • 2. Agenda • What we are seeing in the marketplace • Workforce analytics approaches • Deploying point solutions: Solving specific problems • Workforce planning and optimization • Recruiting and predicting performance 1 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 3. What we are seeing in the marketplace
  • 4. A great book about workforce analytics, not baseball 3 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 5. The Moneyball story • In 1999, the Oakland A’s ranked 12th out of 14 in National League payroll – How could the A’s compete with richer teams to attract top players? • The A’s manager (Billy Beane) decided to take an analytic approach – He hired an analyst (Paul DePodesta) out of Harvard to try to predict player’s future performance – Example of DePodesta’s calculations Runs Created = (Hits + Walks)*(Total Bases)/(At Bats + Walks) • Beane used this model to hire excellent baseball players who had been undervalued by the market • The result? – ―In 2006, the A's ranked 24th of 30 major league teams in player salaries, but had the 5th-best regular-season record. This reflects a typical pattern throughout Beane's stewardship.‖ — Wikipedia entry on Billy Beane. 4 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 6. The importance of business analytics Visibility into analytics can help business leaders make decisions more accurately, objectively, and economically — a rapidly developing consensus in business, education, law, medicine, and even professional sports. 5 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 7. The importance of business analytics (cont.) Analytics Description Descriptive reporting Summarize and compare operational and/or financial data on key workforce variables within defined time frames. These are used primarily to create lagging indicators. Retrospective analytics Analyze one or more internal data sources to discover useful information. Used to create both lagging indicators, performance benchmarks, and insights. Predictive analytics Mathematical models are applied to multiple internal and external data sources to predict future workforce events. Used to create leading indicators and focus limited resources on critical employee populations. 6 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 8. What’s driving interest/demand for analytics in HR? • Continued investment in technology infrastructure – Enterprise Resource Planning (ERP) systems/data marts aggregate data – HR process move to automated point solutions • New type of HR leaders – Come from finance and operations – Common practice to use data and analytics for more effective business decision making • Challenging economy is forcing organizations to embrace change – Visibility into business issues reduces risk for senior management teams – Managing talent spend critical (one of the top three P&L line items) • Dashboard overload 7 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 9. Positive financial impacts from workforce analytics Company Impact Top-ten national bank Increased redeployment activities from 12% to 18% saving the corporation $18M Global services company Improved their recruiting yield (hiring ratio) without adding additional headcount, driving a $5.6M savings Major airline Reduced their Full Time Employee (FTE) headcount within their Reduction In Force (RIF) services group by 50%, saving the company $600,000 annually National financial services Projected a cost savings of over $7M by reducing company voluntary turnover of key employees by 1% Leading wireless company Accelerated their decision/selection process during a large M&A, saving $5.7M for every 1,000 employees separated 8 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 11. Clients are following two paths 1. Building an HR business analytics capability 2. Deploying point solutions: Solving specific problems – Workforce planning and optimization – Recruiting and predicting performance 10 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 12. Where they are and where they want to be We utilize the Deloitte HR business analytics maturity model when we work with our clients in implementing reporting and workforce analytics solutions. These steps are demonstrated to help companies reduce their risk, optimize their spend, and facilitate executing an integrated approach: • There needs to be a single source of the truth • Tools and data need to be created across all work streams • Help to ensure that data is consistent, timely, well defined, and careful • Tools need to be tailored to the business needs and the knowledge and capabilities of the user; not one size fits all • Evolve adoption over time, as capabilities, skills, tools, and data improve As used in this document, ―Deloitte‖ means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. 11 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 13. Keys to implementing an effective analytics strategy 1. Tie reporting and analytics to business-driven issues. 2. One technology is not the answer. Rather, a component strategy is the key to success. 3. Implement in phases. 12 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 14. Building workforce analytics capabilities and delivering benefits Objective: Build a highly-effective human capital business analytics capability and organization that is scalable and sustainable. Phase I Phase II Phase III Phase IV Phase V Nonexistent Developing Defined Advanced Leading In addition to Business Analytics periodical reports, management utilizes data to test hypotheses and The organization improve the quality Sophisticated produces periodical predictive modeling of business reports which is used in scenario- operations Analytics are used management uses based analysis; data on an ad-hoc basis in decision making points management to improve business to opportunities for Analytics are not operations improving operations used in business operations and mitigating risks Business Analytics Capability 13 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 15. Key business analytics enablers Enabler Key Questions People What kind of organization do we need? How will we design our organization to leverage current analytical capabilities and understand what gaps we have? Process What is the impact of analytics on how we do business? Can we improve our decision-support process to more effectively manage our ―People‖ supply chain? Technology What solutions do I need, and when? How do I stitch together the required technology components to enable data-driven decision making? Data How do I get the most out of my internal and external data? Security/ How are analytical decisions made? Who should be Governance accountable for facilitating the analysis and leveraging its insights? 14 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 16. Example: Workforce business analytics maturity model: People “People” maturity dimensions: Definitions Leadership and Sponsorship leaders provide for championing workforce business strategy analytics capability and the approach an organization takes towards this goal Talent attraction Ability to attract and recruit the talent that the service organization needs Competency Skills and capabilities that should be demonstrated by the people to development meet the objectives of the organization Organization Structure of the organization designed to deliver maximum value and structure capability Cross-functional Level of cross-functional interaction required to make informed and integration business driven workforce decisions Job design Identification and definition roles and jobs to achieve the service organization’s objective Culture Extent to which analytics driven business decision making is embedded in day-to-day operations, customs, and behaviors 15 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 17. Example: Workforce business analytics maturity model: People (cont.) Nonexistent Developing Defined Advanced Leading We have limited focus on developing Our leadership is educated on the Our workforce business analytics Our workforce analytics Our business strategy is informed and Leadership workforce business analytics capability. importance of workforce business analytics. capability is an essential component of our business strategy and strategy and our business strategy are seamlessly influenced by our workforce insights and predictions. and strategy leadership focus. integrated and directionally consistent. We rarely seek analytical skills in We seek ―soft skills‖ in analytics and We seek candidates with strong For hiring talent, we focus on Candidates must have prior experience Talent future hires, only transaction-oriented Information Technology (IT) skills. transaction- oriented IT skills. backgrounds and experience in statistics and analytical decision cross-functional business analytics and advanced in advanced analytical analysis and relevant background in the subject. attraction “People” maturity dimensions making. technological capabilities. We have limited focus on Our employee training touches on a We have training for designated We focus on cross- functional We encourage associates to get Competency development of analytical skills through training or hand-on high-level analytics for limited functions. analysts for BI, Analytic Applications, Data Management, business analytics and advanced technological involved in analytics-driven experimentations, and seek experience. and new technology software. capabilities. opportunities to collaborate on business development analytics across functions. We currently do We have some ad We have a We have not have any hoc local dedicated group implemented an workforce resources helping of individuals and organizational analytics us generate a defined process structure (Shared Organization capability or generic workforce in place for Service Center or a structure service reports without any generating Center of organization. specific reporting/ standardized Excellence) for the organizational workforce right service structure. insights. level/cost/capability. While taking workforce decisions, we We realize the importance of We have a well-defined process of We are seamlessly integrated with other Cross often do not interact with other parts of the business. interacting across functions to make workforce decisions and are looking engaging business partners to provide insight in interpreting data functions for generating business-driven workforce analytics as a service to other functional for ways to improve it. and taking business decision. business functions . Integration We currently have not identified any Job responsibilities, skills and job or role responsibility for attending reporting structures are defined to Job design to workforce analytics. support workforce business analytics as a core capability. All of our workforce decisions are The current decision-making culture is We give high importance to There is initial adoption of data We emphasize on acceptance of based on hindsight and no analytic primarily hindsight driven, but we want data/analytics driven decision mining and predictive modeling analytic applications and predictive applications. to move to data-based decision making and it is linked to tools. Analytics is the key to modeling by mainstream. Analytics and Culture making. competitive differentiation. sustainable competitive advantage. analytics-driven insights drive strategy development. 16 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 18. Accelerating progress — Building a high-performing capability and organization It’s a journey and regardless of your strategy, most large organizations want to create an internal capability that is scalable and sustainable. Understanding, upfront, what are the required components and ―when‖ to invest will allow for an efficient use of investment dollars. “People” Maturity Dimensions: Definitions Strategic Alignment Capability Assessment Service Delivery Model Build centralized capabilities Business Intelligence Phase I Phase II Phase III Phase IV Phase V Advanced Analytics Enable Business Strategies for Success Method of adding value Focus on Focus on standardizing Nonexistent Developing Defined Advanced Leading • Further independent local delivery enhancing In addition to periodical Low Cost/ Knowledge Transfer/ Underwriting Excellence Marketing and Retention variable considerations reports, management skills and Defined Service Level Management Involvement governance utilizes data to test • Improve pricing precision and design • Target the right risks f or non-renewals hypotheses and • Increase objectivity throughout the • Improve retention of prof itable risks and Specific (site, Sophisticated predictive Site Support Business Partner unit, region) improves the quality of • Modify target variables The organization Relationship to the business business operations modeling is used in underwriting process • Increase cross-sell opportunities produces periodical scenario based • Distributed to Location(s) for • Aligned with Function/ Unit deploying • Enhance risk selection and risk • Modify independent • Identif y geographic and product reports which Operations variables Analytics are used on management uses in analysis, data points management to Local Service Needs • Line/Management Focus operationally avoidance capabilities expansion opportunities an ad-hoc basis to decision making opportunities f or • Required for Local Input/ • Knowledge & Know-How • Improve pricing competitiveness in • Develop Univariate • Enhance recruiting of prof itable improve business improving operations Data Capture or Local Transfer prof itable segments operations and mitigating risks Reporting System producers Programs Underwriting • Improve underwriter negotiation Analytics are not used • Decision/Action Intensive • Document Univariate in business operations • Manual or End-User Marketing capabilities Analysis results Intensive (company-wide) • Discuss and document Business Analytics Capability model validation Business Analytics Enablers Operational Efficiency Enhanced Decision Making Transaction Processing Center of Expertise Generic • Reduce transaction costs techniques • Increase f raud detection capabilities People Process Technology Data Security / Governance • Consolidated Organization • Expertise Focus — Ability • Straight through processing of select risk IT • Improve monitoring of underwriting to Leverage What kind of What is the impact of What solutions do I How do I get the most How are analytical • Operational Focus segments perf ormance organization do we analytics on how we do need, and when? How out of my internal and decision made? Who need? How will we business? Can we do I stitch together the external data? should be accountable • Standardized Services • “Best Practice” • Improve ease of doing business with • Enhance ability to react to market f orces Development agents sooner design our organization improve our decision- required technology f or f acilitating the • Process Intensive Focus on to leverage current support process to more components to enable analysis and leveraging • Could Cover Countries or • Issue/Knowledge Intensive • Improve claims management activities • Increase inf ormation processing analytical capabilities ef f ectively manage our data-driven decision its insights? enhancing Region • Organized by Region Focus on segregating skills and and understand what customers, employees, making? • Improve customer service capabilities and data governance gaps we have? distributors and suppliers? and optimizing efficiency governance Roadmap Development Prioritized Opportunities Phase Year 1 Year 2 Year 3 Roadmap Develop New and Renewal Model Develop New and Renewal Underwriting Models for LOB 2 and Recalibrate Models for LOB 1 Development Underwriting Models for LOB 1 LOB 3 Score LOB 1 New and Renewal Interim Scoring Business Off-Site at Deloitte Consulting Develop and Deploy Scoring Engine for LOB 2 and LOB 3 Integrate LOB 2 and LOB 3 Models Technology Develop and Deploy Scoring into Policy Administration Systems Integration Engine for LOB 1 Integrate LOB 1 Models into Policy for New and Renewal Business Administration Systems for New and Renewal Business Develop Communications Training Develop Communications Training and Conduct Pilots for LOB 2 and and Conduct Pilots for LOB 1 Communication LOB 3 Monitor, Assess, and Revise & Training Training as Necessary Launch Communications Training Launch Communications Training to all LOB 1 Underwriters to all LOB 2 and LOB 3 Underwriters Develop New and Renewal Develop New and Renewal Business Rules, Pricing Rules, and Business Rules, Pricing Rules, and Monitor, Assess, and Revise Reason Messages for LOB 1 Reason Messages for LOB 2 and Business Rules and Pricing Rules Business LOB 3 as Necessary Integration Establish Performance Metrics for LOB 1 Establish Performance Metrics for Monitor Performance Metrics LOB 2 and LOB 3 17 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 20. Traditional, bottom-up approach Typically, a bottom-up approach creates a gap between data and business problems by emphasizing the data, leading to a common complaint: ―We have a lot of data, but no useful information.‖ Relevant, real-time Market pressures workforce data needed to Profitability Cost containment make informed decisions. Credit crunch Growth Customer demographic shifts Shrinking workforce Technological change Evolving workplace Workforce data is often not Globalization Risk and regulatory compliance available. Business drivers do not dictate what data is collected and how. Having relevant data to inform decision making GAP Data sits in multiple repositories. It is not Translating data into a translated into a useful useful format business format and does not correlate with critical Company’s data repository business drivers. 19 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 21. Alternative, strategic approach A top-down approach can bridge the gap between data and business problems by providing a repeatable framework for achieving resolutions. A top-down approach Market pressures determines that business Profitability Cost containment drivers dictate which workforce Credit crunch Growth Customer demographic shifts Shrinking workforce metrics are necessary to make Technological change Evolving workplace informed decisions. Globalization Risk and regulatory compliance Predetermined Workforce Using data Workforce Solution Sets Solution Sets incorporate to enable leading-practice lessons to Workforce better Organization provide leaders with the planning Workforce business design and Retention information they need to take and transition decision modeling optimization making action. Leadership Training & Workforce Existing internal and external Recruiting development learning productivity data can be leveraged for relevant workforce data to populate the predetermined Workforce Solution Sets. Company’s data repository 20 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 22. Using analytics to help solve the HR business issues Deloitte has worked with our clients to develop and deliver innovative analytical solution sets that are tied directly to today’s pressing business workforce issues. Descriptive reporting Retrospective analytics Predictive analytics Solutions set Benefit Workforce planning and Increases accuracy of predicted revenue and talent demand by optimization incorporating valuable third-party data Workforce transitions Allows for enhanced compliance and financial oversight through centralized reporting Recruitment analytics Confirms that every resume is reviewed and considered in the recruitment process Retention risk analytics Changes the paradigm to a proactive strategy that mitigates risk by predicting the attrition problem among critical workforce Leadership development Provides an insight into the recognizable characteristics of those who modeling will thrive in leadership roles Organization development Simulates to-be structures to right size the organization with optimal modeling management layers and spans of control 21 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 24. Workforce planning and optimization — Creating more business value Workforce planning and optimization forecasts and visualizes the supply and demand of individuals for critical roles and provides the foundation to evaluate the actions needed to meet the corresponding talent management objectives. From lagging… …to leading practices • Once a year, annual planning • Continual monitoring and planning • Macro-level planning • Micro-level planning at employee level • Reactive organization • Proactive organization • Ad-hoc reporting • Enterprise-level reporting • Time-intensive and labor-intensive • Automated and real-time data visibility • Historical view of data • Forecasting and scenario planning • Internal data only (HR, finance, • Internal and external data with operations, sales) macroeconomic insights • Limited alignment with strategy • Integration with business and HR strategy 23 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 25. Workforce planning and optimization process A broad approach to planning considers combinations of data from multiple sources: Step 1: Data collection Data sources Step 2a: Supply projector Internal Visualize the organization HR down to the individual level and calculate ―inflow‖ and ―outflow‖ Step 4: Report and Finance trends (i.e., attrition, hires, Step 3: Scenario monitor mobility) planner Provide real-time data, Operations Allows for ―what if‖ enterprise data to Step 2b: Demand planning leadership and Internal stakeholders projector benchmarks Incorporate Sales pipeline macroeconomic data and drivers to External project workforce demand for the organization Macroeconomic data Industry specific Accelerate workforce planning and optimization Labor market Deloitte’s supply, demand, and scenario planning approach leverages existing systems and data to help organizations make business decision Benchmarks on talent solutions. 24 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 26. What is new in demand estimation? Current approach • Develop one annual plan • Labor- and time-intensive process to develop plan • Plan is closely monitored, but adjustments are infrequent because it requires same investment of labor and time Current approach to workforce planning Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 1 FY start Long FY plan Plan in action planning developed process 25 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 27. What is new in demand estimation? Proposed approach • Develop annual plan and monthly forecasts • Internal and macroeconomic data incorporated into plan • Prior month’s information may be incorporated into next month’s forecast, enabling frequent comparisons between the forecasted and actual demand • Adjustments to the plan can be made regularly as new information is available Proposed approaches to workforce planning Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb 1 FY start Shorter Plan Plan in action planning developed (more accurate with macroeconomic data) process 2 New data included for Updated plans (monthly or as reforecasted model needed) 26 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 28. Demand model application — Using reforecasting capabilities Demand estimation models are ran frequently to reforecast projections (e.g., monthly updates) 1,700,000 1,600,000 Project Hours 1,500,000 Actuals 1,400,000 Baseline Plan (3/xx) 1,300,000 Model Fcst 0 1,200,000 Model RFcst 2 1,100,000 Model RFcst 4 1,000,000 Model RFcst 6 900,000 800,000 Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Salary estimation Salary excess Year-end headcount Opportunity cost Apr-Mar Required $108,873,457 1,139 Client Plan (@ Mar XX) $133,463,223 $24,589,766 1,698 ModelFcst0 $124,386,621 $15,513,164 1,499 ($9,076,602) ModelRFcst2 $121,124,778 $12,251,321 1,436 ($12,338,444) ModelRFcst4 $117,157,213 $8,283,756 1,312 ($16,306,009) ModelRFcst6 $113,911,222 $5,037,765 1,167 ($19,552,001) 27 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 30. Recruiting/talent acquisition — Sourcing more competitively Companies still struggle managing the top of the recruiting pipeline…how to more efficiently manage and optimize prospects and suspects. How do we identify qualified candidates who most resemble our best employees while decreasing recruiting cost and time? 25,000 Applicants People Process Technology Data  12,500 career profiles    6,250 background checks     3,500 candidate interviews     2,000 new hires     Defining your target (what you are trying to replicate) is extremely important in modeling. By segmenting the group of hires, you can define and compare smaller subsets such as high performers and/or long-term employees. This insight can be 1,000 Employees at Year-End invaluable throughout the entire hiring process. (Yield: ~4%) 29 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 31. Traditional recruiting data Traditional application/recruiting data can make it difficult for recruiters to differentiate between prospects. Fred Bill Joe • Twelve years of work experience • Fifteen years of work experience • Twenty five years of work • Four previous employers in past • Two previous employers in past experience 10 years 10 years • One previous employer in the • Current employer is small • Currently unemployed past 10 years company • Has completed no relevant • Current company is a • Has completed several relevant courses large company courses • Attended community college Who would be the most successful? Who would be the long-term employee? • Traditional recruiting data makes it difficult to differentiate people – Simple set of rules comparing work experience and/or education and training levels – Uniform approach across candidate base 30 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 32. Advance analytics — More detailed view Expanding the data elements from internal/external sources provides a more comprehensive and detailed view. Fred Bill Joe • Twelve years work experience • Fifteen years work experience • One employer in past 10 years • Length of residence — two years • Length of residence — 10 years • Twenty five years work • No children • Household size is four with experience • Currently renting a home small children • Current company is large • Four previous employers in past • Owns home company in a different industry 10 years • Reading: Science Technology • Attended community college • Foreclosure/bankruptcy • Urban single cluster courses in relevant topic area indicators • Premium bank card • Renting a home • Medium-estimated household • Medium/high-estimated • Length of residence — one year income household income • Household size = one • MVR negative correlations • No MVR data • Revolve large monthly balances • Owns pickup/SUV • Owns two midsized cars • Suburban Striver Psychographic • Hobbies — Sports • Hobbies — Techie Cluster • Low regional economic growth • Medium regional economic • High-estimated household growth income • MVR neutral correlation • Owns three or more cars • High regional economic growth Predictive models built from these and hundreds of other data elements can better quantify the likelihood and reasoning of future individual employee events. 31 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 33. More detailed view enables better recruiting Workforce Analytics uses new and traditional sources of information to quantify the likelihood and reasoning behind future employee events. If effectively implemented, it allows scarce resources to be better focused, resulting in measurable benefits. Fred Bill Joe Likelihood of 40% less likely than average to 60% more likely than average 30% more likely than average future event be a successful hire and stay to be a successful hire and stay to be a successful hire; with the company for three with the company for three however, low retention years years indicators Top three • Suboptimal employment • Optimal past employment • Suboptimal employment reasons history history history • Low household • High household • No household responsibilities responsibilities responsibilities • Poor financial indicators • Good financial indicators • Higher financial indicators Possible • Unlikely pursuit — Third tier • Actively pursue — Primary • Possible Pursuit — Second actions tier tier 32 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 34. Summary: Using advanced workforce analytics to make business-driven Human Resource decisions The marketplace shows a developing interest/demand for analytics in HR as evidenced by: – Continued investment in technology infrastructure – New type of HR leaders – Challenging economy is forcing organizations to embrace change – Dashboard overload Use an HR business analytics maturity model when implementing reporting and workforce analytics solutions. This helps reduce risk, optimize spend and facilitate an integrated approach. 33 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 35. Summary: Using advanced workforce analytics to make business-driven Human Resource decisions (cont’d) Workforce planning and optimization forecasts and visualizes the supply and demand of individuals for critical roles and provides the foundation to evaluate the actions needed to meet the corresponding talent management objectives. Predictive models built from hundreds of data elements can better quantify the likelihood and reasoning of future individual employee behavior and events. 34 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
  • 37. Contact information Russell Clark Director Deloitte Consulting LLP rclarke@deloitte.com John Houston Principal Deloitte Consulting LLP jhouston@deloitte.com 36 Using advanced workforce analytics to make business-driven Human Resource decisions Copyright © 2010 Deloitte Development LLC. All rights reserved.
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