STOP BEING LAZY

TIE HR TO REVENUE

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Presenter Info

• Kris Dunn• CHRO at Kinetix (RPO, Recruiting)• Founder of Fistful of Talent , The HR Capitalist • Hoops Junkie

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HR/Recruiting/Talent

Departments UNITE:

Why do we have to end up holding the

bag?

HR/Recruiting/Talent Pro (In bandana) when Lukewarm Turnover/Recruiting Report comes out

The World Keeps Talking About Big

Data…Why Should HR

Care?

Big Data for HR and Talent• A complete history of employees… and

their experience, skills, work projects, education, certifications, licenses, awards, performance, compensation, benefits, attendance, work products, competencies, comments, conversations, connections…

• All of the same information for all the people that used to work for you

• All of the same information for those people who want to work for you

• All of the same information for those people that you want to recruit

• How all or some or one of those pieces of data you’ve gathered actually influence, impact, and drive business outcomes for your organization

You’re busy, you’re under-staffed, and under-budgeted.

But that’s ok, (you saw Moneyball, right?)

• You – “I don’t have the time/resources/budget/tech expertise to keep up with everything”

• The Universe – ‘‘Waaahh’’

• Snap out of it, you can compete with the Big Boys.

• How?

• By being more aggressive, smarter, faster, willing to take chances, and thinking differently about data and tech… and what they mean to the business.

Why HR and Recruiting Pros

Need to SHIFT/LEAN

FORWARD When It Comes to Thinking About Tying HR to

Revenue…

To Be Strategic, HR has to StopReporting and Start

Predicting• The HR Standard for reporting

has traditionally been about what has happened in the past

• Too little focus has been placed on predictive use of data

• You might not have true predictive analytics, but how comfortable are you and your team at using data to directionally predict the future and identify gaps?

Cops Report and Enforce…Assassins Use Leverage To Get Change

• You’ve got data…• People like Chequed.com

give you increased visibility and access to data…

• MOMENT OF TRUTH: What are you reporting on, how do you position the data as tied to revenue and how do you use the link to drive behavioral change in your organization?

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Tie HR To Revenue By Reporting on What Matters

MostRPE

The Holy Grail– Revenue Per Employee (RPE)

• Think all the talk about a set of 20 metrics is white noise?

• Cut to the chase and report the biggest data lever you have at your disposal – Revenue Per Employee (RPE)

• RPE seamlessly merges what’s most important to most of you – the performance and effectiveness of people – with what’s most important to the people who employ you – the financial health of the business as noted by top-line revenue.

• Use to drive attention and partnership with any autonomous business unit or product line delivering significant revenue.

• Best practice in presentation appears to the left – bar chart for revenue by quarter with line graph of total headcount.

Ways To Use Revenue Per Employee (RPE) To Do Your HR Bidding (evil laugh)

• Is RPE going up or down in various divisions/product lines/territories? Why?

• What do you believe in from an organizational performance perspective as a HR/recruiting pro? Performance Management? Training? Tech Deployment? Better hiring? Better firing?

• What you believe in becomes your angle as an organizational consultant to the leaders of your company. “If we want RPE to go up with the same or added headcount, here’s what we need to do…”

• RPE is about the state of the business and what you can do to fix areas that indicate they are broken. It’s not about HR metrics.

If You Do Nothing Else From this Webinar,Copy this Chart and Use at Your Company

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The Road Gets Muddy Once You Want Something Other Than RPE

(but if you’re brave, it’s available)

Let’s Talk About Linking Revenue to

Headcount Management and

Selection

Salary Cap Utilization• When it comes to managing headcount

dollars and FTEs, there are 3 universal truths:1. HR Departments report FTEs more than

they report $$$2. Business leaders long for max autonomy.

FTE reporting is the opposite of this…3. Most people are familiar with the sports

world concept of a “salary cap.”

• In moving to reporting on company and departmental “salary caps,” smart HR departments focus on flexibility and consultative solutions, which make them an “assassin” instead of a “cop.”

How to Report Headcount Via Salary Cap Utilization and Tie To

Revenue• Salary Cap (per department or by manager with large spans of

control) = Budget Salary Dollars for month/year (recommend month-to-month breakout)

• Salary Cap Utilization = % of Salary Cap spent for month.• Report month and chart trend. Report headcount if needed but

eliminate budgeted headcount – just report actuals.• Call it the “Salary Cap”• Makes HR consultative via flexibility with the following topics –

merit increases, equity increases, offers above budgeted amount, retention of high priced talent vs. performance expected, etc.

• “Can you reinvent your department with the same cap number?”• “You want to do something new? What are you willing to give

up?”• Advanced Play – Turnover Factor baked in to reduce salary cap for

open position “float.”• THE KEY – YOU HAVE TO HAVE C-LEVEL SPONSORSHIP THAT

WON’T ALLOW EXECS TO NOT HIRE TO MAKE BUDGET (SANDBAG) – COMMITMENT TO THE FACT THAT GOOD MANAGERS STAFF UP AND GO AFTER REVENUE RATHER THAN MANAGE EXPENSE.

Hiring Manager Batting Average

• Have you ever had a hiring manger who:– Was awful at interviewing and making

hiring decisions, and/or;– Couldn’t keep good talent once she

onboarded it?

• You know who your best hiring managers are – in interviewing, marketing the company to candidates, making the right offer and giving them what they need once they’re part of the team…

• It only stands to reason you should be reporting on that...

How to Calculate Hiring Manager Batting Average (HMBA) And

Tie it To Revenue• On HMBA – A miss is a miss…• Use the rolling stats of at least a year’s worth of

data…• Unlike raw turnover reporting, HMBA gets to

quality of interviewing, quality of match (not overshooting or undershooting) as well as micro-culture considerations on individual teams…

• THE FORMULA – <All employees hired by manager over time period still with company>/<All employees hired by manager over time period, including those who have left>

• Want to launch this piece of big data? Go back over the last 3 years of hiring data and put it together. If you want to be PC, report it out by department, then report the actual HMBAs to the department head, along with your recommendations, of course…

• THE KEY – YOU NEED C-LEVEL SPONSORSHIP THAT EXECS/Managers WHO CAN’T HIRE WELL COST THE COMPANY REVENUE IN ALL AREAS – NOT JUST SALES.

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DO YOU BELIEVE THAT TIME TO PRODUCTIVITY

DRIVES REVENUE?Then you should look at turnover in a

dramatically different fashion…

Start Predicting Turnover Over Simply Reporting On It

• #1 All Time post on the HR Capitalist – Turnover Calculator

• Most of us are reporting turnover, but we’re not predicting it.

• Reporting turnover is a start.

• Turnover is the biggest lever you have to getting organizational change that is friendly to talent – often from leaders that are hostile to HR and recruiting.

• Always start any data play using turnover with no less than a year’s worth of data.

3 Ways to Experiment with Turnover Prediction that

Impact Revenue1. Project Turnover for Next Month/Quarter

based on annualized run rates.

2. Pick the variable(s) you think has the most juice and add it as an influencing factor (example – You think a mix of age, tenure, comp-ratios and size of last increase impact turnover. You study and implement it into your reporting.) Note that the best way to find influencing factors is to study what’s happened in the past.

3. Our Recommendation – Focus on Turnover in the 1-3 year tenure range – easiest argument related to time to proficiency.

4. It’s not cost of turnover that drives revenue, it’s the cost of BAD Turnover that drives revenue.

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DO YOU BELIEVE HIGHER

ENGAGEMENT & EMPLOYEE

DEVELOPLEMENT DRIVE REVENUE?

Leadership Birth Rate (LBR)• What it is:

– A metric that shows which leaders are growing new leaders.

• What you need:– Leader pipeline and succession data.

• Why it will make a difference:– The most important thing a leader can

do is develop new leaders for the organization.

Leadership Gravity• What it is:

– A metric that shows you who your best employees are going to work for in your organization.

• What you need:– Employee performance data, internal

mobility data.

• Why it will make a difference:– Your employees will tell you a lot – who

your best leaders are, who your worst leaders are, etc.

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Thank you to our webcast sponsor:

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Kris:kdunn@kinetixhr.comwww.fistfuloftalent.comTwitter: @kris_dunnCell – 205.383.9600LinkedIn: www.linkedin.com/in/krisdunn