Using Analytics To Make Smart HR Decisions

Rusty Lindquist
VP Strategic HR Insights
BambooHR
Mykkah Herner
Head of Professional Services
PayScale

—Ion Hewitt
Of the 6 emerging capabilities of
todays HR leaders, the first is
“data- and analytics-based
decision making.

Evolution of HR
Business
Value
H
L
Strategic
Micro Small Mid Large
Operational
HR viewed as a cost center
Transactional HR High-Impact HR
HR as a strategic investment

People Analytics
Companies that build capabilities in people analytics outperform
their peers in quality of hire, retention, and leadership capabilities,
and are generally higher ranked in their employment brand.
-Bersin, by Deloitte
Human Capital Trends, 2015

Competency Gap
Three in four surveyed companies (75 percent) believe that using
people analytics is “important,” but just 8 percent believe their
organization is “strong” in this area.

Competency Gap
Too few organizations are actively implementing people analytics
capabilities to address complex business and talent needs.
Among all the challenges we studied this year, people analytics
presented the second-biggest overall capability gap for organizations.

of HR professionals scorethemselves low in
their ability toanalyze.
80%
-Bersin

It’s time to blow up HR and build something new
Rethinking HR
Why we love to hate HR
What will it take to fix HR
It’s time to split HR
HR faces a crisis of credibility in the boardroom
HR is our “favorite corporate punching bag”
Value Perception Crisis

It’s more than just
Competency
• Outdated Technologies (like spreadsheets)
• Need for data consolidation (like HRIS)
• Need to look externally
• Waiting too long to start measuring
• Don’t know what to measure and how

Increase exposure to the
data you do use

Suck Threshold
Features
Suck
Threshold
Not all growth is good growth
Expected Result
Actual Result
PerceptionofValue
Not doing enough Doing too much

Suck
Threshold
What Matters Most
Not doing enough Doing too much
What To Say No To
Sweet Spot
Features
Not all growth is good growth
PerceptionofValue
Suck Threshold

What are
comp analytics
and why do
they matter?
o Measure performance of
your comp program.
o Identify pay issues that
create unnecessary cost.
o Identify pay issues that
create risk of litigation.
o Condense large amounts of
information into small
understandable nuggets.
o Substantiate your hunches.
o Get your CFO on your side.

Range MidpointMinimum Maximum
$20,000 $32,000
$26,000
Range Midpoint:Range Minimum: Range Maximum:
Lower limit of a pay
range/band.
The proficiency point
aligns to market.
The upper limit of a pay
range/band.
Basic Comp Measures
Pay Ranges

bamboohr.com payscale.com
5 Steps to a Smart Compensation Plan
o Range Width [=(max-min)/min]
o How much flexibility do we give our managers in setting pay?
o Midpoint Differential [=(midpoint grade2-midpoint
grade1)/midpoint grade1)]
o Do we have a more or less hierarchical org structure? Positions with
multiple levels?
Understanding Range Math

o Range Penetration [=(EE Pay-min)/(max-min)]
o How well are employees moving through their ranges – do the
ones at the top deserve it?
o Green-Circled Employees [Below bottom of range]
o We may be untruthful and/or paying un”fair”ly.
o Red-Circled Employees [Above top of range]
o These are employees we decide to pay more, even though the
data doesn’t support it.
Using Ranges

o Compa-Ratio [=EE Pay/Mid]
o Are we on track with our pay philosophy?
o Market Ratio [=EE Pay/Market]
o How are we doing vs our competitors?
o Midpoint to Market Delta [=(Mid-Market)/Market]
o Are our ranges current to market?
Measuring Plan Performance

Communicating
With Execs
About Compensation

How are we doing?
What’s the real concern
o Comp is something nebulous that I can’t control or understand
o I’m afraid we’re far far away from the market
What’s the response
o Educate and update execs regularly on the comp info they need
to know
Proof
o Market-Ratio – report for the org and by dept*
o Compa-Ratio – report for the org and by dept. Provide individual
info to managers, as appropriate

29
Cost to bring Green Outliers to
range minimum:
$115,041 or 2.02%
Amount paid to Red outliers
above range maximum:
$115,041 or 2.02%
Sample CompaRatio Report
How are we doing?

Are we keeping up with the market?
What’s the real concern?
o We’re losing a lot of people to our competitors.
o Someone annoying has been coming into my office every week for the
past quarter asking for an increase.
o Are we overpaying?
What’s the response?
o Share real-time data on your organization’s position relative to the
market.
Proof
o Market-Ratio – report for the org and by dept.*
o Compa-Ratio – report for the org and by dept. Provide individual info to
managers, as appropriate.

Sample Market RatioReport
Are we keeping up with the market?

What about our critical positions?
o We have 12 names in a drawer and we’re willing to pay those people
anything – don’t tie my hands.
o We’ve had 3 of our best 8 people leave a critical job in the past few
months. What’s going on?
o Share current market trends on critical jobs so you can be more
responsive to market shifts in an uncertain time.
Proof
o Market Reports – Hot jobs analysis.

What about our critical positions?
HotJobsAnalysis

How are our top performers doing?
o We just lost a really critical, high-performing, employee to our
competitor.
o Share info about where your top performers fall in range.
Proof
o Flight Risk Report.
o Underpaid over-achievers.

How are our top performers
doing? Flight Risk Report
How are our top performers doing?
FlightRisk Report

o Where are we open to law suits?
o We have a report due on our compliance with EEO.
o Share info on disparate pay/potential risk areas.
o Provide assurance that there are no risk issues.
Proof
o Disparate pay report, divided by EEO classes.
What are our potential risks?

Are there any potential risks?
Disparate Pay and Reports by EEO
Gender-based Report
What are our potential risks?
Disparate Pay andReports by EEO
Disparate Pay

o We’ve had a lot of folks who have been here a while leave! Is that
ok?
o We’ve had some critical positions turnover, is that ok?
o Get to the reasons behind the turnover. Not all turnover is bad.
o Share the physical costs of turnover.
Proof
o Turnover calculation.
Any Turnover Issues?

Any turnover issues?
Calculating the Cost of Turnover
Additional Resource: http://www.isquare.com/turnover.cfm
Any Turnover Issues?
Calculating the costofturnover
Monetary
o Costs due to leaving
o Recruitment
o Training
o Low Productivity Costs
o New Hire
o Lost sales / opportunity costs
Morale
o Bad turnover vs good turnover
Typical Projections
o Line Staff = 150% of annual salary
o Managerial staff = 200-250% of annual salary

Examples of Recruitment
Measures
40
Examples of Recruitment
Measures
• Average Time to Hire
X days
• How often do employees negotiate their offer?
X% of offers negotiated
• Number of non-accepted offers due to
compensation
• Win Rate vs. Competitors
# of head-to-head wins vs. competitors
The idea is that recruitment should improve in relation to the comp program’s success

• Flight Risk - # flight risk EE
• 90 Day Turnover Rate =
• Good Turnover vs. Bad Turnover
The idea is that retention should improve in relation to the comp program’s success
Examples of Retention
Measures
# Separations in the Quarter
Avg # EE in the Quarter
X 100
Low
performer
Avg
Performer
High
Performer
Voluntary X% Y% Z%
Involuntary P% D% Q%
41
Examples of Retention
Measures

www.payscale.com
the rate at which people leave a
place, company, etc., and are
replaced by others

Examples of Budgetary Impact
Measures
43
• Compensation as a % of Revenue or
Total Compensation as a % of Revenue
The idea is that comp $ don’t have to increase to spend comp better
• Gut check on over/under payment vs. Actual
(Range & Market) relative to performance
The intent is to show that gut checks aren’t always accurate – value in doing comp studies
Examples of Budgetary
Measures

Examples of Engagement
Measures
• Engagement Survey Scores
• Absenteeism – Average # of unplanned
absences by employee
• Exit Interview Responses re: compensation
44
Examples of Engagement
Measures

eNPS
(Employee Net Promoter Score)
“On a scale of 1 to 10, how likely are you to
recommend this company as a place to work?”
10 9 8 7 6 5 4 3 2 1 0
Promoters Passives Detractors
eNPS = Promoters (%) – Detractors (%)

General Guidelines
• Start small (the journey of a thousand miles)
• Pick something meaningful and get started
• Align your efforts with your business strategy
• Build (or hire) competency in your team
• Partner with IT
• Focus on ROI
• Leverage technology

Companies that excel in talent and HR
analytics can be positioned to out-
compete and outperform their peers in
the coming years.
—Bersin

Who are our key partners?
Who are our key suppliers?
Which key resources are we
acquiring from partners?
Which key activities do
partners perform?
What key activities do our
value propositions require?
Our distribution channels?
Customer relationships?
Revenue Streams?
What value do we deliver to
the customer?
Which one of our customer’s
problems are we helping to
solve?
What bundles of products and
services are we offering to
each Customer Segment?
Which customer needs are we
satisfying?
What type of relationship
does each of our Customer
Segments expect us to
establish /maintain with them?
Which ones have we
established?
How are they integrated with
the rest of our business
model?
For whom are we creating
value?
Who are our most important
customers?
Through which Channels do
our Customer Segments want
to be reached?
How are we reaching them
now?
How are our Channels
integrated, and which ones
work best, or are most cost-
efficient?
How are we integrating them
with customer routines?
What Key Resources do
our Value Propositions
require?
Our Distribution Channels?
Customer Relationships?
Revenue Streams?
What are the most important costs
inherent in our business model?
Which Key Resources are most
expensive?
Which Key Activities are most
expensive?
For what value are our customers really willing to pay?
For what do they currently pay?
How are they currently paying? (How would they prefer to pay?)
How do we report on this “revenue” to the rest of the
organization?

Follow BambooHR and PayScale on social media:
bamboohr.com/blog | payscale.com/compensation-today
Thank you!

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Using Analytics To Make Smart HR Decisions

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