EmpIndex - Measuring the Value of Human Capital (20160407)
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Transcript of EmpIndex - Measuring the Value of Human Capital (20160407)
Mark Sweeny Founder, Owner, Chief Executive
Certus Solutions
Measuring the True Value of Human Capital
The Employee Index
So What Your About To See
Origins are from My Own Research 2009!
Private & Confidential 2007-2016 © Certus Solutions All Rights Reserved
The Challenges of a Small Medium Enterprise
Cloud Professional Services Business
Survival - Cash is King!
Balancing Growth v Sustainability
Happy Customers! – Maintaining Reference-ability
Delivery Capability in a Fast Changing Space
“War On Talent”
Employee Engagement & Retention
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So How Do We Rise To
the Challenge?
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We Focus On Our People
and For me … HR is in the People Delivery Business
“Right People, Right Place, Right Time, Right Cost”
Management Clichés & Jargon
People are our business
People are our greatest assets
Seize the day
Talent Management Human Capital
Paradigm shift Step Change
Excellence through people
Make A Difference
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Do You Feel The Same Way? A Quick Survey….Google Says…
People are our greatest asset
People are our most important asset
People are our business
People are our most valuable asset
1,590,000
2,980,000
97,600,000
229,000,000
2016 Hits
516,000
2,240,000
13,200,000
193,000,000
2009 Hits
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The Challenge of HR Today
For HR To Be Relevant Today
Play it’s role in achieving sustainable competitive advantage
Show a return in delivering value to the organisation
HR Director Should Constantly Be Asking…
How effective is my “People Proposition”?
And “am I making a difference?”
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“So What Do We Instinctively do? – We Try to Measure!” But… What Are We Measuring? When Are We Measuring it? and how Are We Measuring it?
Traditional Measures of
HR Effectiveness are Flawed
Flaws in Traditional HR Measures
Not linked to the overall business objectives
Identified in isolation
Focused heavily efficiency rather than effectiveness
High degree of subjectivity
Performance reviews are not ratified at corporate level
Do not financially quantify the concept of “value”
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Examples of Traditional Measures of
HR Effectiveness from 2009
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n = 91 organisations; 506 measures
Source: IRS
Everyone has a different opinion?
Its all about People, it always has been…
Professional Sport in America has been measuring performance since its origins Performance measures contribute to “MVP” – Most Valuable Player awards Determines a players value to the team and influences contract negotiations
Applied Learning from Professional Sport – Before MoneyBall !!!!
So Why can’t we apply the same approach to the Private or the Public Sector?
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It’s a Question of Value & Contribution
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Sir Alex Ferguson Former Manchester United Manager
Recruitment was centred around collecting and working with talented youths
Growing up and training together for years created a loyal team that had an incredible spirit, character and force
Combined with older players created high standards and maintained the clubs culture
Always focused on the future - building a club and not just a team- creating stability and consistency
Also concentrated on the value each player brought- only players with work ethic, energy, perseverance, comradery, who were tactically smart and a superb athlete were chosen for the club
Bill Belicheck
Head Coach of the New England Patriots
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Culture beats Strategy - talent alone is not enough
Created a sophisticated screening mechanism that targets a players fit rather than talent alone
Seeks like-minded players who share core values
Team chemistry over individual talent
Accountability
Three Core Values:
Passion - players have a love of the job and not just the lifestyle (found via specific interview questions)
Intelligence - players need to be intellectually curious, committed and have a strong work ethic
Value - each position is budgeted and does not change regardless of factors such as talent. This means the patriots are never controlled by the market or a player
Billy Beane
Executive Vice President of Baseball Operations
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Objective, advanced data to hire instead of the traditional “statistics and gut instincts” approach
Broke down success into a factors specific to each position
Decisions were not emotionally made
Being successful & having talented individuals can forge a better culture
Don’t disregard culture but don’t rely solely on it either
Consider objective talent, performance measurements first to widen the channel of prospective candidates and then consider culture
Lies, Dam Lies and Statistics? - Possibly
Can you really measure Human Behaviour?
Can you really measure Culture?
Can you be consistent and fair?
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Business Need Defined
What do we really mean by human capital? … Its about “value” and “contribution” towards goals
… So how do we identify and quantify it in business?
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So how can we measure Employee Value ?
-100 +100 0
Employees can either create value …
So Where are Your People ?
First you have to define it…
… or destroy value
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Employee Value Dynamics
Identifying Who Creates Value…
Employee Value linked directly… to Organisational Objectives
Pressure on
Public
Finances
Government
Policy
Election
All Change?
Equal
Opportunity
Agenda
Trade Unions
Civil Service
Reform
European
Legislation
Global
Economy
Level of
Public Debt
UK
Legislation
Public Sector
Efficiency
Agenda
Pressure on
Public
Services
Public Value
Education
Health
Justice Security
Emergency
Services
Culture
Trade
Employee
Value
Employee
Value
-100
+100
0
Val
ue S
cale
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Employee Value Dynamics
Fundamental Concepts of System Dynamics from MiT in 1950’s
Index
value increasing value reducing
+40.72
Stock or Reservoir Flow
We need to define what increases value and what reduces value
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Lies, Dam Lies and Statistics? - Possibly
Creation of an “Employee Index”…
A conceptual idea in Employee and Organisation value measurement
provides alignment, clarity and focus in delivering a sustainable people proposition
minimises subjectivity around human performance
focuses upon measured contribution to determine value
commercialises HR by financially quantifying the value of human capital
Formula based upon weighted averages?
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To Measure Contribution,,,,
You Need a Set of Value Factors that are Relevant to the Organisation
Technical Skills Usually based upon Competency Levels
Delivery Performance Results Related
Behavioural & Soft Skills Most difficult to Measure due to Subjectivity
Team Player – Interaction with Others?
“Would I go for a drink with this person?”
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Establishing “The Bridge”
Value Factors Outcome Determined by Weighting
%
Value
Score (-100 to +100)
Weighted
Score
Attendance
Management
Average number of sick days per employee
per quarter 0.35 40 14.00
Financial Control Percentage budget variance relating to
employee costs per quarter 0.25 80 20.00
Personal Performance
Review
Score from performance appraisal per
annum 0.25 -20 -5.00
Conduct & Discipline % number of grievances raised that are
satisfactory resolved from staff per quarter 0.10 20 2.00
Training Delivery Average number of Training Days delivered
per employee per quarter 0.05 65 3.25
34.25
Example Scenario: Organisation metrics for determining the value contribution of an HR Business Partner in relation to a departmental strategic objective and local objectives
Link
Link
Link
Link
Link
INDEX SCORE OF Private & Confidential 2007-2016 © Certus Solutions. All Rights Reserved
De
pa
rtm
en
tal S
tra
teg
ic
Ob
jec
tive
“Corporate Moneyball!” – Think Stockmarket Linking to Financial Measures
Identifying Value and Quantifying Human Capital
0
10
20
30
40
50
60
70
80
90
100
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
EmpIndex
Employee 1
Employee 2
Employee 3
Employee 4
Employee 5
£££
0
10
20
30
40
50
60
70
80
90
100
1st Qtr 2nd Qtr 3rd Qtr 4th Qtr
Org EmpIndex
HR Business Partner
Senior Management
Business Unit 1
Business Unit 2
Business Unit 3
£££
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Delivering Insight
Identifying “Value of Connection” across an Organisation
67
66 49 62
61 32
55 68
45 45 79 63
62 61 65 59
How Organisations truly work
67
66 49 62
61 32
55 68
45 45 79 63
62 61 65 59
Traditional Organisational Chart
EmpIndex allows you to identify where the value exists across the entire Organisation
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Is this the Next Step in the Journey?
A Talent Management Index – A System that…
Allows an organisation to identify employee value (talent) across an organisation
Demonstrates an employees contribution against organisational goals
Delivers in-depth workforce analytics based upon value and contribution
Facilitates objective comparison of individual employee’s contribution
Ability to determine the performance gap between workforce and organisation
Enables an Organisation to financially quantify its Human Capital
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Is this the Next Step in the Journey?
But With All Concepts, there are Questions? Would you want to measure your people to this instinct?
You need huge amounts of nearly REALTIME data to make this work?
Doesn’t it just become another system that can be manipulated?
Would it drive the right behaviour?
Is this a Step to Far and to intrusive?
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Key Take Aways – Regardless of Tech!
Employee Measurement Systems need to reflect both Technical & Behavioural Skills you value
You need both elements to build a “Winning” team
You need to maintain objectively and minimise subjectivity! – but can you really measure culture?
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Mark Sweeny
Owner, Founder, Chief Executive
@CertusCEO
www.certus-solutions.com
Thank You For Listening Questions?