HR data and metrics - overhauling your data approach, 2014

Executive Education

Point of View

HR data and metrics Overhauling your data approach in practice Nick Kemsley, Co-Director, The Henley Centre for HR Excellence

Point of View | Nick Kemsley

‘Insight derived from people data and metrics is possibly the biggest untapped opportunity going forwards for HR to be seen as a credible business partner’

I have written previously on the topic of HR data and metrics, outlining what I felt was the massive opportunity for HR to work differently in this space, and also suggested six steps that HR functions could follow in order to drastically increase the value of their data to business (Kemsley, 2013a). On this occasion, I attempt to provide a practical blueprint to guide HR functions in overhauling their data approaches, and an example of how this could be applied to something tangible – in this case, talent metrics. It is a representation of the kind of top-level process I take organisations through when working with them on their data and metrics approaches, recognising that each may start with a different baseline in terms of what they need or have.

A blueprint for metrics alignment?

Although I’m sure that the diagram below does not cover every nuance, I would hope that it is helpful in showing the way in which HR data and metrics are an integral part of the transition from strategy to execution and renewal, and that there is a logical flow to the various elements.

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Point of View | Nick Kemsley

As you will see, I have grouped the various elements into four main areas:

‘SWP helps us understand what are the most important things to measure, and is therefore the factor that has the biggest impact on creating engagement and credibility at senior level’

‘Key to building credibility is the transition of the HR data pack from a collection of miscellaneous information to a focused set of businessrelevant insights’

1 Strategic workforce planning (SWP) – Examining the people and organisational implications of the business strategy is critical to developing capability and managing organisational risk (Kemsley, 2013b). I have written about some of the challenges and opportunities of SWP at length in the past (Kemsley, 2012a, b) and, when it comes to data and metrics, it is a vital step. SWP helps us understand what are the most important things to measure, and is therefore the factor that has the biggest impact on creating engagement and credibility at senior level.

2 M etrics development & synthesis – this is the area where we assemble the right suite of metrics, and identify how they can be configured to create relevant insights, rather than just information. It is also where top-down data demand meets bottom-up data supply, helping us to make the most of what we already have in the context of what is most important to the business.

In past articles, I also talked about the importance of looking at outcome metrics at least as much as process metrics. HR functions often think of process as a comfort area, and an inability to link process and outcome has been identified as a key barrier to developing credibility in research by the HR Centre and others.

3 D ata presentation & reporting – this is where we ensure that the insights we identify are presented in the most impactful and engaging way, in order to tell the best story that the data can support. Key to this is the transition of the HR data pack from what is sometimes an unchanging wad of partially relevant information, to a much more palatable topically focused summary of key insights relating to critical business issues.

4 C orrective action & monitoring – the critical importance of monitoring risks or key indicators, and establishing whether any actions to address them are making a difference. This is absolutely vital if HR is not to snatch defeat from the jaws of victory in using data and metrics to drive functional credibility.

Applying this approach to talent metrics So, let’s get tangible. Imagine an organisation with a strategy that, like many others, requires it to make a shift from A to B in terms of product and service offer, territory, profitability etc. Many organisations already have talent metrics, but how many of them would really stand up to the acid tests referred to in the blueprint? How specific are they in relation to strategic aims? How insightful are they in terms of identifying risks to be managed or opportunities to be leveraged? What do they tell us about the effectiveness of our people processes? Do they give us a clear idea as to how much progress we are making?

The initial question here is in the area of strategic workforce planning. It relates to the talent implications of the business objectives, and the degree to which we have put in place the right things to deliver against these talent needs in the right places at the right time.

Imagine a technology-based organisation, with an established engineeringbiased and long-tenure culture, wishing to migrate much of its future business to an e-commerce platform. SWP methodologies would explore the organisational implications of key strategic planks such as these. Such an approach might, for example, identify the following issues: • digital marketing capability is a key skills gap • work must be done on employer brand in order to appeal to those with these skills 2

Point of View | Nick Kemsley

• there may be cultural issues in assimilating those with these skills into the existing organisation and retaining them So now that we have some context through SWP, we can start to look at metrics development and synthesis. In this organisation, imagine that existing talent data covers typical areas such as: • time to hire • % internal vs external hire

‘Without the context

• total attrition

of SWP, metrics can be

• basic performance data, e.g. rating profiles

very generic, and therefore potentially lack insights which can create business value’

• basic succession data, e.g. roles with ‘ready now’ successors Without the context of the SWP phase, this is terribly generic. How relevant is % internal vs external hire? Is the total attrition figure good or bad? SWP hints at the need for some much more insightful metrics. Contrast what the organisation currently measures with metrics such as: • Brand recognition among target candidate groups (provided by resourcing partners or a specialist third party) – the need to know if awareness is being created in candidate groups that may not currently think of the organisation as an employer of choice. Trends can be monitored over time.

• Offer-to-acceptance ratios for those in critical skills groups – again, this helps gauge the attractiveness of the organisation to target groups. If this ratio is not favourable, or trending down, why is this?

• % New hires in critical skills groups leaving within one year – helps identify what may be cultural or career influences on retention of individuals with critical skills.

• How many ‘out of band’ salary offers are we making? – helps hint at attractiveness as an employer, but also provides insights as to the alignment of reward policies with strategy.

‘Succession planning is an area where there is a tendency to use process rather than outcome metrics’

• Are we keeping up with, or falling behind, our resourcing profile for critical skills? – broadly, are we putting in place the capability we require at the right rate and in the right places?

The above examples just happen to have an attraction and retention focus due to the nature of the scenario I chose, but the same principles could be applied to internal capability. For example, SWP may equally have thrown up some needs around future leadership capability. As such, the following, more internally-focused talent metrics may be of interest: • % Occasions a critical role is filled by the named successor – this is a really insightful metric. Succession planning is an area where there is a tendency to use process metrics instead of outcome metrics. Measuring % roles with ‘ready now’ successors does little more than identify how many empty boxes we have on a chart. It won’t tell us if John Smith is successor to 12 different roles, or if we end up recruiting externally because Annette Dubois does not want to move to Dubai.

• What happened to those people we said were great three years ago? – how many HR functions actually measure this? If these people are still broadly where they were, or have left, then something is clearly wrong with how we identify potential, or act on it. Another insightful metric in the same arena is to examine promotions over a period of time and correlate to potential ratings.

One organisation I worked with identified that 75% of promotions were applied to individuals rated ‘remain in role’. What does this tell you?

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Point of View | Nick Kemsley

• Mobility – if the organisation wishes to grow into new geographies, but operates in a niche sector, it is important to the business that it understands the potential for moving its existing people around.

‘Diversity also has a top-down element – what diversity is required to deliver the strategy?

Expressed in this way, diversity is synonymous with SWP’

• Diversity – how many of us present data on gender or nationality with no real context at all? Yes, it is important to ensure that we are promoting inclusiveness and equality of opportunity, but diversity also has a top-down element – what diversity does the organisation need to deliver its objectives?

Expressed in this way, diversity is just another way of saying ‘what talent do we need?’ If, like a financial services organisation I worked with, your customer profile is evolving to include a higher proportion of female entrepreneurs and a growth in Eastern European wealth; to what degree is this diversity reflected in your organisation? In this context, measuring gender and national diversity is of critical relevance, but how many times do we lead with this data when other elements may be of much greater strategic importance?

What about data presentation and reporting? Let’s go back to our hypothetical example of the engineering-biased technology business. The current data pack is quite lengthy, and comprises a large number of metrics chosen by HR from its existing data warehouse. There is a ‘dashboard’ on the front page, with certain data highlighted for discussion, for example, the number of current resourcing assignments, average time to hire etc.

Currently, HR data forms a 45-minute slot on the board agenda each month, but attention seems to drop among board members during this session, and it is frequently postponed in favour of more pressing business.

Imagine if the data pack was reworked in the following way: • The front page showed a table of key business objectives vs critical organisational risks, with each marked red, amber or green to summarise progress. There is a ‘points of note’ section.

• The second page comprised a set of carefully chosen metrics to provide the best possible insights relating to the organisational enablement of these business objectives (for example, some of the talent metrics relating to digital marketing skills). There are easy-to-read graphics showing trends over time or highlighting data of interest, along with a concise narrative offering a view on what is going on and what needs to be done.

‘More insightful data, presented in a more focused and exceptiondriven way, may well be more successful in engaging a senior audience’

• The remainder of the document is a summarised version of ‘background data’ on diversity, recruitment, FTE etc. Anything of note has been pulled forward into earlier sections, and the default position is not to review this data in the actual board meeting unless it is relevant to the agenda. Board members may read it at their leisure before or after the meeting.

We can perhaps imagine that the more insightful data, presented in a more focused and exception-driven way, may well be more successful in engaging a senior audience in people data and metrics – therefore pulling HR into a more credible partnership space because it can bring to bear insights based on its own expertise that the business lacks.

However, reporting the metrics is only part of the story. HR has to be seen to be proposing strategies to validate and address issues identified through such measurement approaches, and reporting back on progress. When an issue is raised to a CEO, his or her next question is likely to be ‘so what should we do about it?’ This is where HR can reap the reward of having developed a set of outcome and process measures, since this can help it identify where people

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Point of View | Nick Kemsley

‘Overhauling capability in this area may well involve investment in system capability, but there is a very significant opportunity to do a lot more with what we already have’

processes need to be improved or redesigned in the context of business objectives (e.g. changes to reward and flexible working policies), or where more fundamental strategies should be proposed (e.g. creating partnerships with specific universities, or moving to new downstream suppliers etc). Trend measures then allow HR to show to what degree gaps are being closed.

Summary HR data and metrics remain a critical and largely under-exploited opportunity for HR to crystallise its value in business. Overhauling capability in this area may well involve investment in system capability, but there is a very significant opportunity to do a lot more with what we already have. Key to this is the creation of context through strategic workforce planning approaches, which helps us identify which data is going to be most important in the first place.

Insight is the key currency, and HR should synthesise its data in areas such as talent management to ask the right question, rather than relay random answers.

When augmented by more concise and business-focused presentation formats and reporting approaches, the opportunity for HR to revolutionise its alignment to business objectives, articulate its value and improve its credibility remains one with perhaps the most obvious ROI.

References Kemsley, N (2012a) Strategic workforce planning – the challenge of moving from words to action [Accessed 17 January 2014] www.personneltoday.com/hr/ strategic-workforce-planning-the-challenge-of-moving-from-words-to-action/ Kemsley, N (2012b) How to get strategic workforce planning right [Accessed 17 January 2014] www.personneltoday.com/hr/how-to-get-strategic-workforceplanning-right/ Kemsley, N (2013a) Six steps to double the business value of HR data and metrics. Point of View Paper. Henley Business School. [Accessed 17 January 2014] www.henley.ac.uk/web/FILES/ corporate/cl_HR_Metrics_6_steps__to_double_the__business_value_Nick_ Kemsley.pdf To find out more about the HR Centre of Excellence and the topic please contact Nick Kemsley nick.kemsley@henley.ac.uk

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Kemsley, N (2013b) Organisational capability and risk – HR’s biggest untapped opportunity. Point of View Paper. Henley Business School. [Accessed 20 January 2014] www.henley.ac.uk/ web/FILES/corporate/cl-Organisational_risk_and_capability_Point_of_view. pdf0.pdf

Point of View | Nick Kemsley

Nick Kemsley Nick joined the Henley Centre for HR Excellence as Co-Director in November 2010. Nick is an experienced, senior HR leader, now working with boards and HR functions all over the world on aligning organisation to strategy and increasing HR functional and individual effectiveness in the context of the new economic landscape. He has followed a successful corporate career to Global Group Vice-President level across six industry sectors, and has set up and led strategic HR functions in world-renowned businesses.

In performing these roles, Nick has set up and led organisational development (OD), resourcing, talent & leadership, performance and learning & development (L&D) functions at global, regional and local levels. At the Henley Centre for HR Excellence, Nick works to upskill HR functions and individuals in order to deliver real value to business, and is a frequent contributor to publications and conferences on a range of HR topics, including strategic workforce planning, OD, HR data and metrics. At a time when HR is under increasing pressure in a new economic landscape to make a real difference to long-term capability and short-term profitability, Nick brings a wealth of experience and a challenging, yet practical and pragmatic perspective to the discussion around HR capability.

In addition to HR teams, Nick also works with multi-functional boards and senior leadership teams on the subject of organisational capability and risk, strategy development and business operating models – and has particular expertise in balancing centralisation versus localisation requirements in organisations.

Nick has worked with a range of organisations, including Bank of China, RBS, the NHS, Mencap, GlaxoSmithKline, Aviva, Saudi Telecom, B&Q, Sanofi, KPMG, Oxfam and Siemens, to name but a few. The Henley Centre for HR Excellence also has a number of globally-renowned member organisations including Mercedes-Benz, AugustaWestland, Danone, Amey and Oxford Instruments.

Nick’s earlier roles include Group VP Organisation Effectiveness for Travelport, Director of Talent & Capability at Prudential UK & Europe, Global OD Director and HRD Central Functions for Linde Group, and an eight-year period at Mars, including five years in European OD and management development. During his HR career, Nick has performed both specialist and generalist roles, and worked with a number of very different organisational cultures and approaches.

Although Nick is known for his work in HR, the first half of his career was spent in wider business, which gives him a broad understanding to underpin his OD work. An engineer by training, Nick spent the first years of his career in project and business management for highly regarded businesses such as GE, GEC-Alsthom and Rolls-Royce Aerospace, and has spent considerable time working on supply chain, manufacturing and sales & marketing issues.

The Henley Centre for HR Excellence The Henley Centre for HR Excellence is a group of leading national and international organisations that share a common interest in achieving excellence in HR. It is led by highly experienced practitioners with outstanding records in taking a pragmatic, results-driven approach to organisational development. The Centre has been operating since 2005 and has built a strong reputation, both for thought leadership in the HR arena and for supporting the development of HR functions and individuals.

The Centre operates on a corporate membership basis and offers a wide range of activities.

These include: applied research carried out twice a year, events on topics chosen by the Centre’s members, open programmes that focus on specific capability areas in more depth, bespoke customer solutions using practical and pragmatic ways to upskill HR teams and deliver change within organisations, and networking and community benefits.

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Point of View For more information, please contact: Executive Education Henley Business School Greenlands Henley-on-Thames Oxfordshire, RG9 3AU exec@henley.ac.uk Tel +44 (0)1491 418 767 www.henley.ac.uk