February 9, 2011

© Human Capital Management Institute

Presents:

Creating a Talent Management Index

Agenda

• Welcome

• Overview

• Building a Talent Management Index

• The Future of Talent Management and the Workforce Intelligence Consortium

• Q&A

• Next Steps

2© Human Capital Management Institute

About Human Capital Management Institute

HCMI Background:

Specialized in HR analysis & measurement

Deep expertise in Workforce Analytics & Planning

Board made up of CFOs and HR heads

Over 40 years of experience

What We Do:

Measure the immeasurable in human capital

Transform workforce data into business intelligence

Provide Tools and Training so HR can Partner with Finance

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Workforce Assessment w Strategic Consulting w Training

Best Practices w Workforce Analytics and Planning w Benchmarking

The Human Capital Management Institute (HCMI) was founded on the belief that organizations can and must, find better ways of measuring their investments in human capital. Our vision of the future is one in which human capital measurement and information is as integral to business decision making as financial information is today.

We Bring Financial Discipline, Standards and Rigor to the HR Function

© Human Capital Management Institute

Workforce Planning and AnalyticsAnalyze the Past to Predict the Future

WorkforceAnalytics

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Past Present

WorkforcePlanning

DecisionMaking

Historical Workforce

Future Workforce

Current Workforce

Future

Trend Analysis Future ScenariosWorkforce Knowledge

Predictive Analytics

Key performance

Indicators

Workforce Optimization

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The Challenge of Measuring Human Capital

Compensation

Transfers

New Hire Turnover

Succession Data

Turnover

Training

Recruiting

Em

ploy

ee D

ata

Benefits

Span

of Control

Workforce

Planning

SuccessAdvanced

Analytic

Insights

Complexity of Workforce Data

Employee/Full-Time-Equivalent (FTE)

Jobs/Roles/Skills

Time - Tenure

Compensation ($ vs. Equity)

Frequency of Change

Promotions, Transfers, Hires, Terminations

Jobs/Roles/Skills

Time - Tenure

Measuring the Intangible

Lack of Standards

Lack of Analytic Skills

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• Revenue

• Expenses

• Assets

• Liabilities

What is Workforce Intelligence?

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Business

Financials

• Hiring

• Paying

• Developing

• Engaging

• Retaining

• Diversity

Human Capital

Customer

How do we get from Human Capital to Financials and deliver actionable data?

• Unit Cost

• Cycle Time

• Sales

• Ops

• Quantity

• Quality

• No. attracted

• Conversion rate

• Spend amount

• Margin

• Satisfaction

• Return rate

© Human Capital Management Institute

Quantifying Manager Effectiveness

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Can you quantify which of your managers are more effective at managing talent?

Manager A Manager B

• Hires experienced employees

• Exceeded business performance goals

• High employee turnover

• Low employee mobility

• Hires junior employees

• Exceeded business performance goals

• Trains and grows team members

• Employees stay and move up in the organization

• High employee performance

Measuring Complex Activities and Actions

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Base Data - No Metrics

Calculated Metrics (e.g. turnover rate)

Simple Metrics ( e.g. headcount, terminations )

Combined Source Metrics (e.g. Time to profitability)

Insightful Metrics (e.g. Revenue per FTE)

Advanced Metrics(e.g. Career path ratio)

Index Metrics (e.g. New hire success rate)

Complex Index Metrics (e.g. Quality of Hire)

Measuring manager effectiveness requires

advanced measures and metrics

HCMI Metrics Hierarchy

Building a Talent Management Index

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• Career Path Ratio

20%

• New Hire High Performer Rate

Mobility

• High Performer Turnover Rate

• % of High Performers

Performance Management

Turnover and Retention

• Total Cost of Workforce % of Expenses

Cost ofWorkforce

20% 20% 20% 20%

Recruiting and Hiring

Talent Management IndexThe Talent Management Index is a holistic measure encompassing a manager’s totaltalent management practical results and impacts. Such a metric can be used as anincentive compensation modifier. It is designed to hold senior managementaccountable for Talent Management. Ideally, all index metric components should becalculated on an individual manager basis.

Example Talent Management Index

Case Study: Key Turnover Driver – ManagementScofield Financial Corp

* Managers with under 1 year of supervisory experience

** Managers with only 1 direct report

Management Group

Percent of Managers

Percent of Turnover

30%

34%

22%

14%

10%

81%

8%

2%

Low Turnover

High Turnover

New Manager*

1 Employee**

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In most companies, the quality of management is a key component of employee turnover

It is possible to segment management population by high and low turnover managers

Look for managers with turnover disproportionate to the size and mix of their workforce

© Human Capital Management Institute

Example: Custom Manager Scorecard

Weighted average benchmarks* of all workforce categories, based on proportional representation in workforce.

Benchmark turnover rate for each workforce category

* Example benchmarks for illustrative purposes only

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Case Study: Metrics in Organization ChartsVoiceCo Communications

High Level Org Chart View• Color coding by performance level• Span of Control / Total EEs managed• Management / Non Management at a glance• Additional manager data and detail breakouts

Turnover Data by Manager• Supervised and total managed turnover• New hire and high performer turnover• Custom weighting Talent Management

Index roll-up

Custom Metrics: Talent Management Index• Custom index metric combines multiple KPIs• Measures development, retention, and performance• Managers evaluated and graded on how well they create

and retain talent at the organization

Note: Org charts developed using Org Plus software by Human Concepts

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Sums and averages vertically to the leader and creates

Custom scorecards with unique information is for each manager

© Human Capital Management Institute

The Future of Talent Management:Human Capital Financial Statements

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Link workforce metrics and indices to business results across all elements of the employee and talent management lifecycle:

Objective

For most organizations, the workforce is both the largest expense and biggest asset. However, traditional financial reporting categorizes employees like disposable products and contains no information with which to measure this critical asset. For years, organizations have struggled to quantify the value of human capital, until now.

Background

© Human Capital Management Institute

Human Capital Financial Statements measure the value creation and overall productivity impact of the workforce.

• Training Effectiveness Index

• Quality of Hire Index

• HR Value Delivery Index

• Employee Engagement Index

• Organization Stability Index

• Aging Workforce Index

Additional Index Metric Examples

Build Talent Management Capabilities

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Awareness Action Competence Effectiveness Excellence

QuantifyIntegrate

Predict

The Workforce Intelligence Consortium

accelerates your workforce planning and

analytics competency

Bu

sin

ess

Im

pa

ct

Align HR and business strategy

Create a Center of

Excellence

Utilize benchmark standards

Conduct root cause analysis

Leverage advanced metrics and ROI analysis

Workforce Intelligence Consortium

Workforce IntelligenceConsortium

Universities/ Educators

Thought Leaders

Benchmarking Organizations

Member Companies

HCMI

A partner-driven organization dedicated to quantifying and solving workforce planning and analytics issues

Dr. Jac Fitz-EnzSponsors

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Question and Answer

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Next Steps:

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For more information about HCMI and the Human Capital Metrics HandbookTM, visit

http://www.hcminst.com/hcmi.html

For inquiries about the Workforce Intelligence Consortium, contact Cheryl Farley, Program Director at

cheryl.farley@hcminst.com

Presenter information: Jeff Higgins, CEO HCMI at jeff.higgins@hcminst.com

Grant Cooperstein, Senior Consultant and Principal at grant.cooperstein@hcminst.com

Workforce Intelligence Consortium Group

@HCMI

Thank you

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