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Visier Workforce Analytics 5 Critical Indicators White Paper
Visier Workforce Analytics 5 Critical Indicators White Paper
FROM HR METRICS TO
WORKFORCE ANALYTICS:
Five Key Workforce Insights That
Every Employer Should Capture
for Greater Business Impact
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2. Recruiting Effectiveness
3. Productivity
4. Compensation and Pay Equity
5. Performance Management
HR Metrics, including time to hire or employee
turnover, simply do not get to the heart of how people
(and people strategies) are affecting organizations. To
glean these deeper insights, HR leaders need to focus
on related metrics that highlight the connections that
drive business performance and productivity.
2. Recruiting Effectiveness
The flip side of retaining critical workers is ensuring that
an organizations recruiting strategies are attracting
new talent of the same caliber. Historically, recruiting
metrics have focused purely on time to fill, which by
itself fails to give a true measure of the basic goal of
recruitingto ensure their organization has the best
people to achieve its business goals. To adequately
understand whether this goal is being met, HR leaders
should look beyond how fast positions are filled to
understand business-impact shortfalls in capacity,
whether new hires stay on with the organization,
and whether their performance exceeds or lags
that of other employees. Ultimately, the result of
recruiting initiatives should consistently increase the
organizations performance through improved talent.
To understand the true recruiting effectiveness,
organizations should look at time to fill, but also look
to understand quality of hire and business capacity
measures. Specific metrics would include:
Vacancy Rate: The average number of vacant
positions as a percentage of all positions in
the company.
First Year Turnover Rate: The ratio of new
hires that left the organization within the first
year compared to the total number of new
hires.
New Hire Performance: The ratio of new
hires whose performance ratings are above
the lowest ranking, compared to all new
hires.
Time to Fill: The average number of days
from when a position was opened until a
new hire accepts an offer of employment.
3. Productivity
According to a survey conducted by the Society of
Human Resource Management (SHRM), the total cost of
a workforce represents nearly 70 percent of operating
expenses for Fortune 500 companies. Without
question, if an organization were considering a capital
investment that represented almost 70 percent of its
operating expenses, that investment would be subject
to intense analytic scrutiny and would be measured
carefully to ensure that it created a real return-oninvestment (ROI). Therefore, the ROI of human capital
should be a core metric for every HR leader, and
to understand the ROI of human capital requires
organizations to measure the productivity of their
workforce in financial terms.
To begin measuring productivity, the financial
impact of human capital, and to see the connection
to business measures of human capital, three core
metrics are essential:
Return on Human Capital Investment: The
ratio of profit compared to total workforce
costs.
Revenue per Full-Time Equivalent (FTE): The
average revenue per full-time employee.
Profit per FTE: The average operating profit a
company generates per full-time employee.
Employers might also consider measuring productivity
on both an annual and a quarterly basis, and comparing
these figures to the national averages that are published
by the U.S. Bureau of Labor Statistics, or other benchmark statistics. Productivity for the nonfarm business
sector, for example, decreased at a 0.5 percent annual
rate in 2012, while it increased 0.5 percent when
comparing the first quarter of 2011 to the first quarter of
2012. Knowing how an organization compares to these
national productivity statistics can provide the necessary
context to understand your organizations overall
performance.
4. Compensation and
Pay Equity
With compensation contributing to the largest share
of the total cost of a workforce, it is imperative that
HR leaders give considerable focus to make certain
their incentive programs are competitive and aligned
with business goals. Traditionally, compensation
strategy and budgets have been defined centrally, but
allocations and decisions are distributed throughout
the organization. This can create a disconnect
between strategy and execution, as it is difficult to
obtain visibility into how distributed compensations
decisions align to corporate goals. Are top performers
differentiated? Are compensation targets being
adhered to? Is compensation allowing an organization
to be competitive in the labor market? Clearly, HR
leaders need to know the answers to all of these
questions, and be able to relate performance, roles and
compensation to understand how it properly rewards
and creates incentive for the organization. Specific
metrics recommended for every organization include:
Performance-Based Pay Differential:
The ratio of direct compensation for
high performers compared to the direct
compensation of the non-high performing
employees.
Median Performance and Pay Level: The
mid-point, or median, of all performance
ratings and pay levels, or grades. It is critical
that these can be compared for different
employee populations, and their distribution
can be visualized.
Direct Compensation and Direct
Compensation Increases: Total direct
compensation (salary, bonus, incentives,
and allowances) and the average increase in
direct compensation. It is critical that these
can be compared to performance ratings for
different roles and locations.
AN INTERESTING FINDING
Only about 20 percent of organizations use
HR metrics that measure the actual impact of
training on performance.
Source: The Hackett Group
5. Performance Management
According to McKinsey research, companies that
scored in the top third of its talent management
capabilities survey averaged 39 percent more profit
per employee than companies in the bottom third.
Performance management is a core pillar of talent
managementbut organizations cannot hope to
manage and improve performance, if they do not
possess the analytics to understand performance in
their organization. Are performance reviews being
completed? Are performance ratings consistent and
properly distributed? Who are the top talent and critical
employees? How is performance related to turnover
and compensation? Indeed, performance can be one
of the most important measures of the workforce, but
its true value comes when it can be compared to other
critical measures and the connections are understood.
To begin seeing those connections, organizations
should focus on the following critical performance
metrics:
53% Workforce
planning
43% Standardizing
HR dashboards/
reports
38% Delivering
workforce
analytics to
executives
37% Delivering
workforce
analytics to Line
Managers/
business leaders
26% Predictive
analysis
50% Standardizing
HR metrics
About Visier
Workforce Analytics
Visier Workforce Analytics is a cloud-based,
comprehensive analytics application designed for
managers and HR professionals to easily obtain insights
into their organizations performance and improve
the return on their most important investmenttheir
human capital.
Visier is designed to help managers to reduce costs,
improve productivity, attract and retain top talent
and implement a workforce strategy that supports
their business objectives. Visier Workforce Analytics
is an intuitive, predictive and interactive solution that
uncovers key links between people and business
outcomes. By answering the most critical and
fundamental business questions, Visier leads the
managers and HR professionals through a best-practice
analysis that helps to predict and plan for their future
needs.
For more information, please visit www.visier.com