Question

Assignment Objectives:

Understand the difference between metrics and analytics.

Describe which characteristics of HR metrics and workforce analytics are most likely to have an organizational impact.

Purpose: This assignment will help you understand and HR metrics and analytics, and discuss the differences between metrics and analytics for HR efficiency, and operational effectiveness.  

Assignment Description:

To complete this written assignment, you will need to read chapter six of the text and access the PDF file entitled: “Data Analytics in Human

Resources: A Case Study and Critical Review” located here: http://u.camdemy.com/sysdata/doc/a/a0eabde691d9d6f3/pdf.pdf

Based on the case study:

1. Explain whether you believe a program of HR metrics and workforce analytics might be useful in predicting attrition.

2. Discuss the variable that most closely mapped to attrition. Identify how the institution in question could evaluate the possibility of attrition.

3. Based on the model created by this study, what actions would you suggest the institution undertake? Ensure to include a financial justification for this policy.

Answer 1

There are numerous organisations today where employees have become the most expensive asset to maintain. The costs comprising of salaries, perks, insurance and training often exceed more than 50 per cent of their operating budget. Regardless of such expense, it is widely accepted that organisations devote only around 10% of their time and effort to enhance the workforce effectiveness (Oracle Human Capital Management, 2015) .

Also, the workforce has become increasingly diverse with varying age, skills, preference and experience, both culturally and geographically. This increasing diaspora of the workforce has forced organisations to adapt metrics for staffing, engaging, restructuring and downsizing of workforce effectively. Currently, as HR shifts from an administrative to a strategic function, organisations have adopted a top-down approach whereby they choose the metrics in alignment with business goals and objectives which further help in building the infrastructure to deliver upon them (Deloitte, 2015). These emergent metrics to track workforce effectiveness (i.e. how well the goals are met) are now discussed below.                        

The three primary classifications of measurements with different HR objectives are:

1. Reports – They present the metrics generated out of daily operational data to enable short-term decision making.
2. HR Dashboards - It is a pictorial representation that communicates workforce effectiveness by matching HR outcomes with potential and visually tracks the success. The dashboard displays some data sets (not more than six) in a concise graphical presentation for realizing a set of operational and HR strategic goals.
3. HR Scorecards - They are most advanced and innovative technique of visualizing HR metrics by using Key Performance Indicators. It also gives a snapshot of combined HR performance vis-à-vis strategic goals at a single point in time.

Within these three classifications, top five emergent metrics are:

1. Total Workforce Cost – In the industries like airlines, law-firms, etc., human capital needs to be highly-skilled and thus is an expensive asset at an individual basis. Total Workforce Cost is the chief financial metric and includes compensation, benefits, and other employee (permanent and contract) associated costs. It can also be evaluated as the ratio of revenue or expenses across various business units, and so on. This metric allows organizations to develop a real picture of their spending on workforce and make improved strategy decisions for workforce. Using the output from workforce cost metrics into innovative tools develops an analytic capability that allows managers to more effectually manage the respective workforce.

Other sub-metrics included in it are ROI ((total benefit - costs) x 100) and cost per employee (recruitment costs÷(compensation + benefits cost)) among others.

2. Span of Control in Management (Human Capital Management Institue, 2016) – It’s the best metric to check workforce cost and organisation structure, along with enhancing productivity. It is calculated as the ratio of Total population (management and non-management) and Total management population having direct reports.

By changing the span of control, management can decide the amount of intervention, guidance, and correct structure for a particular workforce. E.g., Finance and IT’s target would have been a lower span of control compared with Sales or Operations. Thus, with this metric, a company will understand workforce mix for better control so that turnover risk can be mitigated with increasing effectiveness.

3. Turnover rate of High-Performers (Human Capital Management Institue, 2016) : Conventionally, the turnover rate i.e. percentage of employees leaving the workforce at a time is considered as the main parameter to judge the effectiveness. But high or low turnover rate (except when extremely high) does not portray abnormality but may indicate a trend. For instance, if there is a redeployment or reshuffle, turnover rate may go high, but this can be positive for the business overall. Suppose, the overall turnover rate is only 2% to 3%, but what if high performers are leaving in high numbers at the rate of 8% that goes unnoticed. Most of the time, it severely increases the cost in the long term as the company may need to hire even two to three persons for the replacement or restructure the department. This metric measure the value of this loss and therefore, what is important is number of high-performing workers leaving the company. It is calculated as: Total terminations of high performers and Average headcount of high performers.

4. Career Path Ratio (Human Capital Management Institue, 2016): This metric quantifies the mobility and describes the upward versus lateral movement rate in an organisation. By increasing transfers, both lateral and cross-functionally with promotions, one can be prepared for different executive roles by enhancing their skills and permitting retention. This is a cost effective way to generate capability of workforce as shown in below example. It is calculated as Total Promotions and Total Promotions and Transfers.

5. Talent metric or management index (Deloitte, 2015) – This index provides organizations to estimate and examine practices for employing, mobility, performance tracking, training, turnover, retention and gauges the competency gaps of the staff. This also recognizes the improvement prospects that will boost employee productivity and make management more accountable. Some sub-metrics are included whose weighted average as per their impact quantifies this index. They are:

• New Hire, High Performer Rate (SABA, 2016) – Percentage of new hires evaluated high potential employees.
• Percentage of High Performers (SABA, 2016) – A part of a particular workforce, division or BU that are identified as high performers.
• Turnover Rate of High-Performer (SABA, 2016) – Calculated for an individual manager this measures the retention rate of topmost performers in an organisation.
• Promotion Rates – This includes succession plan that measures the percentage of promotions.

Apart from these metrics that can be applied in all industries, some industries, such as retail have developed their own metrics (footfall metrics, conversion metrics, etc.) to track the effectiveness (Team Synerion, 2015). A report, namely Cedar Crestone ROI study concluded that even slight alterations to a workforce could severely impact the bottom line. Thus, it is vital for all organisations today to adapt these emergent metrics and take data-driven decisions.

Works Cited

Deloitte. (2015). Enabling business results with HR “Measures that matter”.

Human Capital Management Institue. (2016). Human Capital Management White Papers.

Oracle Human Capital Management. (2015). Modern Workforce Management: Impacting the Bottom Line.

SABA. (2016). SABA. Retrieved 3 29, 2017, from www.saba.com: www.saba.com

Team Synerion. (2015). Synerion. Retrieved 03 31, 2017, from Synerion website: www.synerion.com/us