The New HR Analytics: Predicting the Economic Value of Your Company's Human Capital Investments PDF
Preview The New HR Analytics: Predicting the Economic Value of Your Company's Human Capital Investments
AdvancePraiseforTheNewHRAnalytics ‘‘Dr.JacFitz-enzandhisassociateshavedoneitagain!Asthearchitectofthehuman capital movement, he has now defined and shaped predictive analytics that define moreclearlyhowtoday’smetricscanpredictandleadtotomorrow’ssuccesses.The book both synthesizes and extends the measurement movement with outstanding essayswhereideasareturnedintoaction.HCM:21willbethestandardforhowto goaboutscanning,planning,producing,andpredictingorganizationprocessesina predictive and rigorous way. Those of us who care about the HR profession are gratefulthatpeoplelikeFitz-enzcontinuetoapplytheirknowledgetoproblemswe careabout.’’ —DaveUlrich,Professor,RossSchoolofBusiness,UniversityofMichigan, andPartner,TheRBLGroup ‘‘Dr.JacFitz-enzisalwaysoutontheleadingedgeofHRthoughtleaders.He’sdone itagainwithTheNewHRAnalytics.AnybodywhoaspirestoadvanceanHRortotal rewardscareerinthenextdecadeshouldreadthisbook!’’ —AnneRuddy,CCP,CPCU,President,WorldatWork ‘‘Theconceptofmanagingpeopleasanassethasbeenaroundfordecades,butuntil nownoonehasbeenabletotranslatethatcompellingideaintoreal-worldpractice. BothHRprofessionalsandlinemanagersstruggleallthetimewith‘peoplemanage- ment’issues.Balancingtherealitiesofgettingtoday’sworkdonewiththeveryreal needtoanticipatefutureneedshaseludedmanagerssincethebeginningoftime. ‘‘Thisbookchangesallthat.Dr.JacFitz-enzandanimpressivegroupofprac- titioners and thought leaders have pulled together both a comprehensive Human CapitalManagementframeworkandaverypracticalsetofaction-orientedrecom- mendationsthattogetherenableyoutoleveragetheonethingthatmakesyourorga- nization truly unique: your human talent. HCM:21 is by far the most effective approachtostrategichumanresourcemanagementandhumancapitalplanningI’ve seenanywhere.’’ —JamesP.Ware,ExecutiveProducer,WorkDesignCollaborativeLLC ‘‘Inaworldwherebusinessintelligenceasappliedtohumancapitalisontheverge of becoming as oxymoronic as ‘militaryintelligence,’ Dr. Jac Fitz-enz continues to providethethoughtleadershipbusinessesneednowmorethaneverwhenitcomes tohumancapitalmanagement.Toomanybusinessestodayconfusecorrelationwith causation, and Dr. Jac’s four-phase human capital management system is a true antidote and the injection of innovation that businesses need to apply. As Dr. Jac succinctly puts it, there is nothing more powerful for a business than ‘managing tomorrow,today’byproperlyapplyinganalyticstoitshumancapital.’’ —ShyamPatel,COO,PeopleReport ‘‘Onceagain,Dr.Jachasledthewaywithcriticalresearchthatenablesorganizations tocreatesustainablevaluethroughpeople.’’ —KentBarnett,CEO,KnowledgeAdvisors ‘‘Onceagain,JacFitz-enz,akaDr.Jac,hasbroughtenlightenmenttotheenlightened. He’sevolvedhisbodyofworkandtheenormityofunderstandingoftranslatingdata, toinformation,toknowledge,tosuccess. ‘‘Jac’slatestendeavorhasplacedthequestionsquarelybeforealldecisionmak- ers,‘Howdoweknowwhatweknowbeforeweknowit?’ ‘‘It’spartanalytics,it’spartexperience,it’spartintuition,it’spartgoodluck,and it’sallcommitment.Commitmenttodemonstratingtodecisionmakersthroughout the organization that a thoughtful process, not usually linear in nature, always dynamicatthecore,andentirelylogical,canempowerallofustoanswertheques- tions, with insight and meaning, in a language that can be understood. Jac’s life’s passionhasbeentotranslatethesimplebutimminentlyeleganttoolsintoalanguage notonlythatwecanunderstand,butalsothatwecanexecutefrom. ‘‘Predictiveanalyticsiswhatwe’vebeenwaitingforbecauseit’sthenextlevelof understandingin Dr.Jac’slong andevolvingjourneytoempoweruswiththecore tools,terminology,andlogictomakeadifference.Thejourneyliveson!’’ —EdKleinert,Administrator,HRInformationTechnology,MemorialSloan- KetteringCancerCenter ‘‘InTheNewHRAnalytics,JacFitz-enzextendshisdecadesofleadershipinhuman capitalmeasurement.Itisacalltoactionthatshouldinspireleaderstorethinktheir assumptionsandimprovetheirdecisions.’’ —JohnBoudreau,Professor,Management&Organization,andResearch Director,CenterforEffectiveOrganizations,UniversityofSouthern California ‘‘TheNewHRAnalyticsisthebreakthroughpeoplemanagementplaybookthatwill transformhowCEOsmanagetheirhumancapitalandtheirhumanresourcefunc- tion going forward. The HCM:21 model introduces leading-edge predictive tech- niques that maximize return on human capital investments while energizing and engagingemployees.OrganizationsthatignoreTheNewHRAnalyticsandDr.Jac’s HCM:21systemforpredictiveHRmanagementaredoomedtofailintheresurging economy.Hucametricshasreachedthetippingpoint.’’ —KenScarlett,President,ScarlettSurveysInternational ‘‘EverybodyknowsthatJacFitz-enzisacknowledgedasthefatherofhumancapital strategicanalysisandhumanperformancebenchmarking.Formeheisalsomuch more. He is a powerful lighthouse who lights the long way from the old human resourcesdepartmenttothenewhumancapitalstrategicpartner.AbookbyDr.Jac isalwaysanimportantmilestoneinhumancapitalhistory.’’ —LuisMar´ıaCravino,CofounderandCodirector,AOConsultingS.A., BuenosAires ‘‘Dr. Jac is the pinnacle of vision and leadership in human capital analytics. This bookpavesthewayforthenextwaveinthefield.’’ —KirkSmith,Founder,W.KirkSmith&Associates ‘‘Dr. Jac’s landmark book contains leading-edge human capital thinking and tools thatwill enable organizations tomaximizeoperationalimpact byoptimizingtheir investmentinhumancapital.’’ —JohnMatone,VicePresident,AlignMark T H E N E W HR ANALYTICS Predicting the Economic Value of Your Company’s Human Capital Investments Jac Fitz-enz American Management Association New York • Atlanta • Brussels • Chicago • Mexico City • San Francisco Shanghai • Tokyo • Toronto • Washington, D.C. Bulkdiscountsavailable.Fordetailsvisit: www.amacombooks.org/go/specialsales Orcontactspecialsales: Phone:800-250-5308 E-mail:[email protected] ViewalltheAMACOMtitlesat:www.amacombooks.org Thispublicationisdesignedtoprovideaccurateand authoritativeinformationinregardtothesubjectmatter covered.Itissoldwiththeunderstandingthatthepublisheris notengagedinrenderinglegal,accounting,orother professionalservice.Iflegaladviceorotherexpertassistanceis required,theservicesofacompetentprofessionalperson shouldbesought. LibraryofCongressCataloging-in-PublicationData Fitz-enz,Jac. ThenewHRanalytics:predictingtheeconomicvalueofyourcompany’s humancapitalinvestments/JacFitz-enz. p. cm. Includesindex. ISBN-13:978-0-8144-1643-3(hbk.) ISBN-10:0-8144-1643-8(hbk.) 1.Personnelmanagement. 2.Humancapital—Management. 3.Human capital—Costeffectiveness. I.Title. HF5549.F557 2010 658.3—dc22 2009053581 (cid:1)2010JacFitz-enz Allrightsreserved. PrintedintheUnitedStatesofAmerica. Thispublicationmaynotbereproduced,storedinaretrievalsystem,or transmittedinwholeorinpart,inanyformorbyanymeans,electronic, mechanical,photocopying,recording,orotherwise,withoutthepriorwritten permissionofAMACOM,adivisionofAmericanManagementAssociation,1601 Broadway,NewYork,NY10019. AboutAMA AmericanManagementAssociation(www.amanet.org)isaworldleaderintalent development,advancingtheskillsofindividualstodrivebusinesssuccess.Our missionistosupportthegoalsofindividualsandorganizationsthrougha completerangeofproductsandservices,includingclassroomandvirtual seminars,webcasts,webinars,podcasts,conferences,corporateandgovernment solutions,businessbooks,andresearch.AMA’sapproachtoimproving performancecombinesexperientiallearning—learningthroughdoing—with opportunitiesforongoingprofessionalgrowthateverystepofone’scareerjourney. Printingnumber 10 9 8 7 6 5 4 3 2 1 To the two Lauras, my wife and my mother-in-law, who take such very good care of me. This page intentionally left blank Contents PREFACE xi HRasanExpense—TheIntroductionofMetrics—TheEraof Analytics—TheOrganizationofThisBook—Acknowledgments CONTRIBUTORS xvii PART ONE: INTRODUCTION TO PREDICTIVE ANALYTICS 1 CHAPTER ONE Disruptive Technology: The Power to Predict 3 WhatIsAnalytics?—IntroducingHCM:21(cid:2)—TheValueof Insight—ThePlan CHAPTER TWO Toward Analytics and Prediction 8 TheLanguageofMetricsandAnalytics—AscendingtheValue Ladder—ThePowerofAnalytics—TheModelforPredictive Management WhyAnalyticsIsImportant 17 MeasuringWhatIsImportant,byLuisMariaCravino StrategicHumanCapitalMeasures:UsingLeadingHCMto ImplementStrategy,byStephenGatesandPascal Langevin FromBusinessAnalyticstoRationalAction,byKirkSmith vii viii CONTENTS PART TWO: THE HCM:21(cid:2) MODEL 45 CHAPTER THREE Scan the Market, Manage the Risk 47 TheBigPicture—TheValueofStatisticalAnalysis—The ImportanceofRiskAssessment—TheDataSpeakforPredictive Management—Ready,Aim,Begin HowtoImproveHRProcesses 56 TheIntersectionofPeopleandProfits:TheEmployeeValue Proposition,byJoniThomasDoolin,MichaelHarms,and ShyamPatel MoreThanCompensation:Attracting,Motivating,and RetainingEmployees,NowandintheFuture,byRyanM. Johnson ‘‘BestinBrazil’’:HumanCapitalandBusinessManagement forSustainability,byRugeniaPomi CHAPTER FOUR The New Face of Workforce Planning 85 HumanResourcesVersusHumanCapitalPlanning—Jumping AheadoftheCompetition HowtoPutCapabilityPlanningintoPractice 94 ScenarioPlanning:PreparingforUncertainty,byJamesP. Ware QualityEmployeeEngagementMeasurement:TheCEO’s EssentialHucametrictoManagetheFuture,byKenneth Scarlett TrulyPayingforPerformance,byErikBerggren TheSlipperyStaircase:RecognizingtheTelltaleSignsof EmployeeDisengagementandTurnover,byF.Leigh Branham CHAPTER FIVE Collapsing the Silos 141 AnyProcess:Input,Output,Throughput—ProcessAnalysisfor HumanResources—ABroaderFutureView—TheIntegrationof HRServices HowTheyAreApplyingIt 153 RobertaVersustheInventoryControlSystem:ACaseStudy inHumanCapitalReturnonInvestment,byKirkHallowell CONTENTS ix TheTreasureTroveYouAlreadyOwn,byRobertCoon WakingtheSleepingGiantinWorkforceIntelligence,byLisa Disselkamp CHAPTER SIX Turning Data into Business Intelligence 182 JustWhatAreMetrics?—AvoidingCommonMetrics Mistakes—Second-GenerationMetrics:Benchmarking—Third- GenerationMetrics:PredictiveAnalyticsThatYieldBusiness Intelligence—BusinessIntelligence:TheUltimateGoal—Atthe EndoftheDay HowtoInterprettheData 192 PredictiveAnalyticsforHumanCapitalManagement,by NicoPeruzzi UsingHumanCapitalDataforPerformanceManagement DuringEconomicUncertainty,byKentBarnettandJeffrey Berk UsingHRMetricstoMakeaDifference,byLeeElliott,Daniel Elliott,andLouisR.Forbringer PART THREE: THE MODEL IN PRACTICE 215 CHAPTER SEVEN Impacting Productivity and the Bottom Line: Ingram Content Group Wayne M. Keegan 217 CHAPTER EIGHT Leveraging Human Capital Analytics for Site Selection: Monster and Enterprise Rent-A-Car Jesse Harriott, Jeffrey Quinn, and Marie Artim 224 CHAPTER NINE Predictive Management at Descon Engineering Umair Majid and Ahmed Tahir 240 CHAPTER TEN Working a Mission-Critical Problem in a Federal Agency Jac Fitz-enz 259
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