HRM Metrics & Analytics Training

HUMAN RESOURCES MANAGEMENT
(HRM) METRICS & ANALYTICS
CHARLES COTTER
HOLIDAY INN, SANDTON
15-16 AUGUST 2016

TRAINING PROGRAMME OVERVIEW
• Introduction to and the evolution of HRM metrics
• Defining the fundamental concepts
• Building a business case for HRM Metrics and
Analytics – benefits and challenges
• Identifying best practice and critical success factors
• Applying the 5-step, HRM Analytics process

• What type of HRM Metrics does your organization currently
utilize?
• Describe the organizational impact, level of maturity and
credibility of these HRM Metrics
• What does your organizational HRM Metrics architecture look
like?
• What is the current degree of HRM practitioner competency of
HRM metrics/analytics?
• Review the benefits of HR Metrics. Is there a business case for
applying HR Metrics?

HRM ANALYTICS TASK TEAM – 2016?

INTRODUCTORY ACTIVITY
• Individual activity:
• Complete the following statement by inserting one
word only. As a HR Manager, in order to effectively
apply and utilize HRM analytics, I need to/to
be………………………………………………
• Jot this word down and find other learners who have
written down the same word. Write this word down on
the flip-chart.
• Each learner will have the opportunity to explain their
choice of word.

• Metrics are simply measurements. Metrics track activity, but
don’t necessarily show a causal relationship.
• HRM Metrics - Measurements used to determine the value
and effectiveness of HR strategies.
• Differentiation between People and HR Measures
• Human capital analytics examine the effect of HRM metrics
on organizational performance. In more general terms,
analytics look for patterns of similarity between metrics. By
using analytics over time, HRM can become predictive.
• Measures - #1 HRM measure?
DEFINING THE FUNDAMENTAL
CONCEPTS

ENGAGEMENT’S EFFECT ON 9 KEY
PERFORMANCE INDICATORS

STRATEGIC PERSPECTIVE – HRM
METRICS/ANALYTICS
• Strategic HRM and correlation to metrics/analytics
• The Balanced Business Scorecard
• Strategy Mapping
• HRM Scorecard:
 Key people measures from the organization’s scorecard
 The second class of measures should be the HR measures
• Linking business strategy to personal objectives

LEARNING ACTIVITY 1
• Group discussion:
• Evaluate to what extent your current HRM
Analytics processes and practices comply with
the principles of strategic management i.e. use
of Balanced Scorecard and HR Scorecard
methodologies and Strategy Mapping etc.
• Identify gaps and recommend improvement
strategies.

BUILDING A BUSINESS CASE FOR HRM
METRICS/ANALYTICS
• Introduction to the organizational
performance impact of HRM metrics and
analytics
• Value of HRM M-E-T-R-I-C-S
• Strategic business partnering

ORGANIZATIONAL IMPACT OF HRM
METRICS/ANALYTICS
• According to a HRO Today Institute study (2013), number-crunchers rule
the HR roost - companies that use employee-performance data to improve
ongoing talent acquisition outperform their competition 58% of the time
and by margins of up to 200%.
• According to the CIPD, HR analytics enables HR managers and teams to
understand more about the people in their organization, how they’re
performing and how they’re creating value for the organization.
• In turn, this enables HR practitioners and business leaders to make better
business decisions.
• It’s also the main way that HR teams can demonstrate the impact that HR
policies and processes are having on the organization.
• Business managers are increasingly interested in how to use HR concepts
more effectively, and so HR analytics is an important way in which HR
teams can evaluate and improve people and business performance.

THE VALUE OF M-E-T-R-I-C-S
• Measure the contribution of employees and predict the quality of
performance
• Explore evidence-based relationships between employee
engagement and learning and development
• Tap into new sources of competitive intelligence and stay ahead of
the pack
• Retain and engage your organization’s top talent by utilizing tools
needed to anticipate future success
• Implement process mapping across HR for hiring and inducting new
employees
• Communicate the most relevant and actionable data to top
management
• Strategize optimal measurement methodologies and marshal
resources that create value for customers, investors, executives,
and employees

BENEFITS OF HRM METRICS
• Metrics help you ensure that you are meeting your goals
and customer needs
• Metrics help you focus
• Metrics tell you where to spend your money
• Metrics tell you what to stop doing
• Metrics eliminate confusion – “What you measure and
reward takes away all doubt about what is important”
• They help push continuous improvement

• There is a low degree of awareness of the impact of HRM programs
whether, positive or negative, because HR leaders have not been delivering
metrics that show the value of their programs or investments.
• Quantification issue - metrics enable leaders and decision makers in
organizations towards more efficient and better delivery of HR services
• “Based on corporate culture, organizational values and strategic business
goals and objectives, human capital measures indicate the health of the
organization.” (Lockwood, 2006)
• If HR professionals don’t measure their function’s effectiveness and
providing decision-making leaders the data they need, HR will continue to
be undermined and eventually sidelined when it comes to having a seat at
the table – strategic business partner.
IMPERATIVE OF HRM METRICS

• Metrics allow you to come across as an expert
• Distributing metrics can change individual behaviour
• Metrics are superior to culture in changing the behaviour
of your managers
• Metrics can help to improve your relationship with the CFO
and CIO
• Metrics can build coordination/cooperation
• Metrics can help to build self-confidence

• Using metrics sends the message that you are “new
school”
• Metrics tell you what to reward
• Modern ERP and ATS systems make it easier
• Metrics can allow HR to provide evidence of its strategic
impact
• Metrics can demonstrate the rand impact of HR programs
• Create a HRM business value chain

LEARNING ACTIVITY 2
• By means of a cost-benefit analysis,
determine if there’s a viable, feasible and
sustainable business case for HRM Metrics
and Analytics.

CRITICAL SUCCESS FACTORS AND CHALLENGES
OF HRM METRICS AND ANALYTICS
• Best practice principles
• Critical success factors
• Top vendors for HRM analytics
• Constraints and Criticisms

BEST PRACTICE PRINCIPLES OF HRM
METRICS/ANALYTICS
• Top performing companies drill down metrics to a deeper level and
communicate to decision-makers more effectively.
• Data becomes part of a “holistic solution” The data is more accessible and
used by more people than with lower-performing companies. Given that
it’s an integrated solution, it has fewer inconsistencies and offers greater
reliability of data.
• Top performers have a dashboard of Key Performance Indicators KPIs).
• They have a centralized, standardized, cloud-based depository that is
distributable and searchable by standard key words and search strings.
• Top performers will have records that include hyperlinks—such as a link to
someone’s LinkedIn profile—for real time updating.

BEST PRACTICE PRINCIPLES OF HRM
METRICS/ANALYTICS
• They have established a dashboard that summarizes the
data into meaningful segments along with overall
statistics.
• Metrics are most commonly reported on a monthly basis
or quarterly basis, and then rolled up into a year-end
report.
• Top performers had a specific approach to metrics: What
separated the top performers from everyone else was not
only what the metrics are, but how well the data was
segmented or drilled down.
• A similar best practice is to deliver metrics that roll up to
specific business units and divisions.

CRITICAL SUCCESS FACTORS FOR HRM
METRICS/ANALYTICS
• Showing HR's real value
• Knowing how to interpret the results about the status of
human capital in a meaningful manner.
• If measurement, assessment and evaluation are to play a
part in achieving sustainable organization performance,
they should be impact-oriented, forward-looking and
focused on the entire HR system, not just on individual HR
practices.
• The importance of HR capability
• Guarding against point-in-time measurements only

HOW DO I MAKE A SUCCESS OF MY
METRICS?
• A point-in-time measurement very often appears to be
meaningless, unless you can compare it to a set standard
or benchmark, and/or view its position in a trend that may
be emerging.
Put it in the right context
Asking the right questions
Framing of my results
Reports the complete story
Always strive for improvement

HOW TO USE HR METRICS
EFFECTIVELY?
• Measure what is important
• Involve Key Stakeholders
• Work out the implications
• Drill down to meaningful chunks
• Convince and Influence
• Dig deeper and explore the root causes
• Set achievable goals for improvement
• Own the goals in partnership with the line
• Ensure action takes place as a result
• Keep the momentum going

TOP VENDORS FOR HRM
METRICS/ANALYTICS
• The real leaders in analytics are:
 Oracle
 SAP
• They have the most sophisticated and integrated analytics solutions
• In terms of smaller vendors the frontrunners are:
 SumTotal Systems
 PeopleFluent
• The real value is in providing actionable information and
recommendations.
• Top performers are more likely to ask themselves one vital question: What
will the CEO or CFO do as a result of learning this information?

DEFICIENCIES IN HRM
METRICS/ANALYTICS
• Logic
• Analytics
• Measures
• Process

COMMON ERRORS WITH HRM
METRICS/ANALYTICS
• One of the biggest mistakes that are so often reported is
TOO MANY MEASURES - Developing more metrics than it
is feasible to maintain and utilize
• Developing and implementing HR metrics in a vacuum
• The Top 20 Major Faults with Most HR Metric Approaches
according to Sullivan (refer to pages 38-45)
• “HR teams are not very analytical in their thinking yet.
That is holding them back from doing more data-driven
decision making.” (Bersin)
• Over-reliance on Spreadsheets

Source: The State of Workforce Analytics and
Planning 2014 Survey Report
for workforce metrics and analytics
- With low satisfaction rates

Source: Visier WFA Usage Survey, 2012
SURVEY - AREAS TO IMPROVE TO EXPAND
WORKFORCE ANALYTICS CAPABILITIES

Source: The State of Workforce Analytics and
Planning 2014 Survey Report

LEARNING ACTIVITY 3
• By referring to the best practice principles,
critical success factors and expert criticism,
evaluate your organization’s current degree
of HRM Analytics maturity/sophistication.
• Identify gaps and recommend improvement
strategies.

HRM ANALYTICS MATURITY MODEL
(BERSIN BY DELOITTE)

TRANSFORMING HRM TO A DATA
SCIENCE-DRIVEN FUNCTION

HindSIGHT InSIGHT ForeSIGHT
Gather Data and Report Make sense of data by
Monitoring and
Analysis
Develop Predictive Models
Akshay Raje, Director, Fab.com

HR METRICS PROCESS – BASIC MODEL

HRM METRICS AND ANALYTICS
PROCESS

5-STEP HRM ANALYTICS PROCESS
• Step 1: Identify where HRM can make a strategic
impact in the organization
• Step 2: Develop appropriate metrics around these
areas
• Step 3: Obtain data relating to relevant metrics
• Step 4: Draw out insight from the data
• Step 5: Project and take action to communicate
metrics and related insights information to provide a
robust basis for strategic change and improvement

THE 5 E’s OF HRM ANALYTICS
• Exploration
• Examination
• Extraction
• Evaluation
• Extrapolation

STEP 1: IDENTIFYING WHERE HRM CAN MAKE A
STRATEGIC IMPACT (EXPLORATION)
• This process step focuses on determining the areas
where HRM can make a strategic impact within the
organizational context.
• It enables HRM management team to identify priority
areas for measurement which are aligned with
organizational goals and strategies.
• Identify capability opportunities or problem areas
from a business partner perspective.
• Sources for information collection, retrieval and
analysis.

SOURCES FOR INFORMATION COLLECTION,
RETRIEVAL AND ANALYSIS
• Employee and management surveys and interviews
(for employee contentment, communications, rewards
system)
• Performance appraisals (to measure productivity,
attendance)
• HR records (to track communications, turnover,
recruiting efficiency, retention, promotions, and
succession planning)
• Employee files (to research productivity, attendance,
training)

STEP 1: EXPLORATION
• A critical first step is to ensure that HRM is measuring the right things.
• The design and development of relevant HR metrics requires reflection
and discussion in order to determine what it takes for the organization to
succeed and to understand how HR can add value.
• Identify organizational burning issues
• Three issues underpin effective measurement (CIPD, 2011):
 Aligning measurement with goals
 Take a business partner perspective
 Adding value by focusing on building capability

STEP 2: SELECTING APPROPRIATE METRICS FROM
WHICH ORGANIZATIONAL INSIGHTS CAN BE DRAWN
(EXAMINATION)
• HRM Measures:
 Efficiency (10%)
 Effectiveness (20%)
 Impact (70%)
• Categories of HRM Metrics:
 First Tier (most valued)
 Second Tier (lesser valued)
• Commonly used HRM Metrics
• Refer to Annexure A: Comprehensive HRM Metrics (pages 76-114)
and Annexure B: HRM Effectiveness Metrics (pages 115-123)

STEP 2: EXAMINATION - HRM
MEASURES

BROAD CATEGORIES OF HRM
METRICS
 Workforce Demographics
 HR Efficiency
 Remuneration
 Skills Development, Training & Education
 Productivity
 Provisioning and Recruitment
 Risk Analysis
 Staff Retention

FREQUENTLY USED HRM METRICS
(PWC)

10
TYPICAL STATISTICS OBTAINED IN COMPILING HRM METRICS
 Revenue factor, which is company total revenue divided by the
amount of full time employees
 Human capital value added (revenue minus operating expense and
cost of compensation/benefit divided by the total amount of full time
employees)
 Human capital return on investment: Revenue minus operating
expenses and cost of compensation benefit divided by cost of
compensation/benefit
 Total compensation revenue ratio which is cost of
compensation/benefit divided by revenue
 Labour cost revenue ratio, which is cost of compensation/benefit plus
other employee costs (bonuses, mileage paid, incentives) divided by
revenue

10
TYPICAL STATISTICS OBTAINED IN COMPILING HR METRICS
• Training investment factor equals the total cost of training divided
by total amount of training attendees
• Cost per hire, which includes advertising, agency fees, relocation,
and others divided by operating expenses
• Health care costs per employee (total health care cost divided by
total amount of employees)
• Turnover costs, which is equal to hiring costs plus training costs plus
other costs (turnover rate during first year of employment is key)
• Voluntary separation rate is the total number of people who quit
or retired divided by the total amount of employees

Present x Productive 
Productivity
Q: Are your employees contributing to the success of the organisation.
Are you connecting human capital & business measures.
? Productivity measures on an annual and a quarterly basis
? Compare to national averages
Specific metrics -
 Return on Human Capital Investment
 Revenue per Full-Time Equivalent (FTE)
 Profit per FTE
Critical HR Measures - forTrue Business Impact

Time to fill vacancy x Quality of hire 
Recruitment Effectiveness
Q: Are you recruiting new talent of a high calibre. Are they staying.
Are they performing.
? Business-impact shortfalls in capacity
? Consistently increasing organization’s performance through
improved talent
Specific metrics -
 Vacancy Rate
 FirstYearTurnover Rate
 New Hire Performance
 Time to Fill

Rate ofTurnover x Retention of critical top talent 
Critical Talent Retention
Q: Is your top talent / your vitally important workers / your competitive
advantage – resigning, or at risk of resigning, at a greater rate than your
less crucial employees.
? Overall tenure trends
? Career development
Specific metrics -
 Resignation Rate
 Resignation Rate ofTop Performers
 Promotion Rate and PromotionWaitTime
 Engagement Index
 Market Compensation Ratio

LEARNING ACTIVITY 4
• Apply step 1 (Exploration) and step 2
(Examination) of the HRM Analytics process
to a defined organization.
• With step 2, refer to Annexures A and B, for
guidelines.

STEP 3: OBTAIN DATA RELATING TO RELEVANT
METRICS (EXTRACTION)
• The top performing companies were using a variety of
drilled-down metrics, having the people to analyze
them, and communicating them effectively.
• This process step focuses on how HRM can most
effectively communicate the insights drawn from
metrics to inform action and hence enable HRM to
deliver maximum strategic impact.
• Effective decision-making, based on robust measures
and metrics, therefore, requires HR professionals to
think carefully about the relationships that need to be
established to enable appropriate information-sharing
of these insights.

STEP 3: EXTRACTION – PROCESS STEPS
• #1: There is the initial “harvesting” or gathering of unstructured
data from the web.
• #2: The normalization stage—preparing harvested data for analysis.
Normally, a relational database such as MySQL is used, but NoSQL
can also be used.
• #3: The data is given additional structure with metadata, or
tagging. Analytics can then be presented through a dashboard.
• The process of collecting and updating the data from the myriad of
internet sources has to be automated. Advanced Programming
Interfaces (APIs) can enable different digital platforms to share
dynamic data and feed it into other applications, such as a
company’s own database.

STEP 3: EXTRACTION – CHALLENGES
CONFRONTED
• Struggling to use unstructured data
• Difficulty tying talent acquisition data to business results
• Problems with storing, retrieving and integrating data
• There is rarely a systematic approach to integrating disparate systems. Legacy data
systems often don’t talk to each other. There are missing links between ATS and
HRIS systems.
• The data exchange is often clumsy at best, requiring rekeying of data and manual
interventions.
• The successful transfer of data from multiple sources, such as an ATS, a recruiting
site or a social network with an HRIS System is the most problematic part.
• Failure to get the most of ATS

STEP 4: DRAWING OUT INSIGHTS
FROM DATA (EVALUATION)
• The HRM function and measurement capability
• HR professionals have long been data collectors, amassing
and keeping track of employees’ personal information,
salary rates and the annual number of retirements. But to
grasp the potential of HR analytics, HR managers need to
become data interpreters.
• Top performing companies invest in personnel who have
analytic and process-oriented capabilities, those people
who can install the necessary methodological disciplines
necessary to use the information effectively.
• Action planning

HRM ACTION PLAN (INTERVENTION)
TEMPLATE

LEARNING ACTIVITY 5
• Apply step 3 (Extraction) and step 4
(Evaluation) of the HRM Analytics process to
a defined organization.

STEP 5: PROJECT AND TAKE ACTION TO COMMUNICATE METRICS AND
RELATED INSIGHTS INFORMATION TO PROVIDE A ROBUST BASIS FOR
STRATEGIC CHANGE AND IMPROVEMENT (EXTRAPOLATION)
• Projection of data (PREDICTIVE ANALYTICS)
• To communicate HRM Analytics, tell a story (NARRATIVE)
• “Data is abundant, but if you don’t give it context, it’s just
a bunch of numbers.”
• Internal benchmarks (to compare their business units to
others in the organization)
• Support comes after results are delivered, not before. “It
really comes back to how credible you are. You get buy-in
when you show up repeatedly with accurate numbers and
you can relate the story to how the company’s performing.”

STEP 5: EXTRAPOLATION - REPORTING
• HR analytics reporting
• How the information is communicated to the organization, particularly
the C-suite, is critically important.
• Companies simply produce spreadsheets that offer no easy and timely
way to present what is happening in the business.
• Like any good research report, it is vital to present meaningful
information and identify actionable insight that can be used to make
positive change.
• Tactically, the best practice organizations, distribute multiple reports to
multiple levels. Tailored reporting to address the specific needs, and
ideally focuses on very specific business impacts.
• If the metrics being shown convey business impact, quarterly reporting of
5-10 of the most critical, agreed-to KPIs is warranted.

DIFFERENT OBJECTIVES, DIFFERENT
METHODOLOGIES
http://www.inostix.com
(Reporting)

Historical metric
 “Last year’s corporate turnover rate was 8%.”
Predictive analytic
 “As a result of a drop in the regional unemployment rate, there is an 86% chance that the turnover
rate in this job family will dramatically increase from last year’s 8% up to 12% within the next six
months, and up to 16% within 10 months.”
Actionable Predictive Analytic
 Adds a cost element - “We project that this 100% increase in turnover will reduce your group’s
productivity over the next 10 months by 17% resulting in a reduced output value of R812,000.”
 Also adds a ‘recommended action’ - “we should implement personalized retention plans for the top
performing 20% in this job family; they cost R2,000 each to develop and have a 89% success rate.
ACTIONABLE, PREDICTIVE ANALYTICS —
THE NEXT BIG THING IN TALENT MANAGEMENT
Dr. John Sullivan, Professor, Talent Management Speaker and Advisor

LEARNING ACTIVITY 6
• Apply step 5 Extrapolation and Reporting of
the HRM Analytics process to a defined
organization.

CASE STUDIES
• CASE STUDY 1: FOUR BEST PRACTICES AT WORK AT GOOGLE
 A retention algorithm
 Predictive modeling
 Improving diversity
 An effective hiring algorithm
• CASE STUDY 2: BIRMINGHAM CITY COUNCIL
 The context
 Metrics
 Acting on the information
 Informing decision-making
 Sharing knowledge

LEARNING ACTIVITY 7
• By reviewing the two case studies, identify
what best practice principles, lessons and
insights can be drawn.

CONCLUSION
• Key points
• Summary
• Questions

CONTACT DETAILS
• Charles Cotter
• (+27) 84 562 9446
• charlescot@polka.co.za
• LinkedIn
• Twitter: Charles_Cotter
• http://www.slideshare.net/CharlesCotter

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