A masterclass on the positioning of People Analytics in HR functions today

1. The What, The Why and The How of People Analytics
Dave Millner, Executive Consulting Partner & HR Futurist, Watson Talent & IBM Kenexa
@HRCurator
November 2017

2. 2
Agenda
Context – Future of Work
The What
The Why
The How
Conclusions and The Future

3. 3
The world will never
be this slow
again

4. 4
BUSINESS DISRUPTION
TALENT DISRUPTION
EXPERIENCE DISRUPTION
The Paradox We Face

5. NEW TECHNOLOGIES
“DIGITAL TRANSFORMATION”
NEW ORGANIZATIONAL STRUCTURES
“NEW BUSINESS MODELS”
JOB DE-CONSTRUCTION
“NEW SKILL DEMANDS”
TAILORED EMPLOYEE
EXPERIENCES
“MAKING WORK PERSONAL”
DISRUPTION & CHANGE
“THE NEW NORMAL”
INFORMATION OVERLOAD,
“THE OVERWHELMED EMPLOYEE”
BIG DATA & ANALYTICS
“NEW DECISION MAKING MODELS”
VUCA (R)
WORLD
OF WORK

6. …the use of data and analytic tools
to identify insights on people that
enable faster, more accurate, and
more confident business decision-
making
Sources: 1. Wharton School, People Analytics Coursera online course; 2. IBM Smarter Workforce Institute white paper ‘Starting the Workforce Analytics Journey
What is People Analytics?

7. 7
….But We’re a People Function Not a Numbers Function!
Words and Numbers Create a More Compelling Story!

8. Shift from Reporting to Analytics

9. Four Broad Areas of Analytics
Level 4: Predictive Analytics
• Development of predictive models, scenario planning
• Risk analysis; integration with workforce planning
Level 3: Advanced Analytics
• Segmentation; statistical analysis; development of ‘people models’
• Analysis of dimensions to understand cause, correlation, dimensions
Level 2: Proactive - Advanced Reporting
• Operational reporting for benchmarking and decision-making
• Specialist Metrics developed
• Multi-dimensional analysis and dashboards; data dictionary
Level 1: Reactive - Operational Reporting
• Ad-hoc operational reporting; lots of running around
• Reactive to business demands; data in isolation and difficult to analyze
What can we
do about it?
Why has this
happened?
What has
happened?
Source: Bersin by Deloitte
86%14%

10. 10
Broad Areas of Analytics
What Has Happened in The Past
• Reporting
• Metrics
What Could Happen in the Future?
• Predictive Analytics
• People and Business Data

11. 11
Why People Analytics?

12. 9%of HR Functions are
“Digital Ready”
9xgreater data
collected in last two
years than
previously collected
in all of humanity
90%of organisations
believe their
industries will be
totally disrupted by
digital trends
Sources: (l-r) Bersin by Deloitte, MIT/Deloitte, Korn Ferry
is added to Gross Domestic Product
(GDP) for every US dollar invested in
human capital
$11.39

13. 13
$439m
$1.29b
The Global Market For People Analytics Is Set To
Triple By 2022
2015 2022
Source: Stratistics MRC (http://www.strategymrc.com/report/workforce-analytics-market)

14. 14
Workforce productivity
Performance management and evaluation
Employee engagement and commitment
Sourcing and recruiting
Talent retention
2013 2015
19%
16%
8%
15%
9% 14%
7% 14%
13%13%
Adoption of People Analytics By CHRO’s Is On the Increase
“With predictive analytics, we’ll be able to explore ‘what might happen’
rather than looking at ‘what has happened.”
Lucien Alziari, CHRO, A.P.Moller Maersk, Denmark
Source: IBM CHRO Study

15. Analytics pays back
$13.01 for every
Dollar spent
Source: Nucleus

16. Characteristics of Organizations with Mature People
Analytics Capabilities
higher employee engagement
2x
2x
3x
2.5x
more likely to improve their
recruiting efforts
more likely to realise cost
reductions /efficiency gains
more likely to improve mobility
- right people, right jobs
2x more likely to improve
their leadership pipelines
The share prices of
organisations with
mature people
analytics capability
outpaced the S&P 500
by 30% over a three
year period
Source: Bersin by Deloitte

17. 2008 2009 2010 2011 2012 2013 2014
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
$3,185
$2,210
S&P 500 Best Places to Work
Source: Glassdoor / WSJ.com
Good Place to Work = Good Place to Invest
Value of $1,000 invested in the S&P 500 Index and invested in companies that were rated the “Best
Places to Work” by Glassdoor
Why are Investors Interested in People Analytics?

18. The How:
What Do Companies That Excel at People Analytics Do?
They focus on the business

19. Levelofimpact
Ease of implementation
Indirect/Productivity
improvement
Direct/Cost
Reduction
Easier / No change in the
way work gets done
Harder / substantial
workforce transformation
Easy to implement,
delayed returns
Fast Path to Action
Hard to implement,
delayed returns
Long-term Business
Improvement
Easy to implement, fast
returns
Quick Win
Hard to implement, fast
returns once implemented
Long-term Cost
Savings
Source: Starting the Workforce Analytics journey – IBM Smarter Workforce Institute
Focus on the Business

20. 20
Focus on the Business: IBM Story

21. SYSTEMS OF RECORD ERA
COGNITIVE ERA
Re-engineering Big Data &
Analytics
Outsourcing
Cognitive
Cloud
Mobile
Social
Technology is changing the HR landscape at IBM:
• Focusing on a Personalized Employee
Experience
• Employee Services With Data Based
Technology Functionality
• HR Advisory Support
• HR Decision Support Driven by Analytics
• An Evolving Culture Change
Focus on the Business: IBM Story

22. 22
Focus on the Business: IBM Story
Technology Only Works When You Have Reliable Data
Expertise
Manager
CV Wizzard
Checkpoint ACE
Open Badges
Certifications
Think40
Skills and Experience
Feedback
Career Development
Career
Framework
Global Opp.
Marketplace
Personal
Development
Job Role
Learning
YourLearning
CareerSmart
Blue Matching
Tool

23. UNDERSTAND
Receive & process unstructured information
(images, text, language & data)
REASON
Grasp underlying concepts, form hypotheses
& make sense of ideas.
LEARN
Each data point, interaction & outcome,
they develop & sharpen expertise, so
they never stop learning
INTERACTS
Can see, talk and hear; cognitive systems
can interact with humans in a natural way.
Focus on the Business: IBM Story
Tomorrow's Technology Today
Watson Recruitment
Watson Career
Coach
Watson Talent
Development
Watson Virtual HR
Agent
Watson Talent
Insights

24. 24
~200%
ROI
~$270M
Net benefits
OBJECTIVE : Proactively identify Top talent at risk of voluntarily leaving the organisation and
take appropriate action in time to actually affect such employee departures, avoiding financial
and knowledge losses.
~25%
Reduced attrition
Focus on the Business: IBM Story
Predicting Regrettable Attrition
Compensation
Investment
Attrition
Cost
Labour Market

25. They focus on the business
They have a CHRO who is fully
involved
They have an inspirational leader
They have a balanced set of skills
and capabilities
What Do Companies That Excel at People Analytics Do?

26. 26

27. 27
PEOPLE
INSIGHT
CAPABILITIES
COMMERCIAL
AWARENESS
HR PRACTICES
+ PROCEDURES
CONSULTING
SURVEY/
QUESTION-
NAIRE DESIGN
ASSESSMENTS
& PSYCHO-
METRICS
DATA SCIENCE
+ STATISTICS
Shell:
Skills & Capabilities

28. They focus on the business
They have a CHRO who is fully
involved
They have an inspirational leader
They have a balanced set of skills
and capabilities
They leverage resources from
outside HR
What Do Companies That Excel at People Analytics Do?

29. 29
Sales
Revenues
Customer
Experience
Productivity
Product
Innovation
Quality
Safety
Data management, Analytics, IT, Business consulting
Employee
Engagement
Performance
management
Recruiting
Training and
development
Attrition
Leadership
progression
Retention Compensation D&I
PEOPLE DATA BUSINESS DATA EXTERNAL DATA
Supply /
Demand
Published
research
Emerging –
social,
wellness…
DATA
SKILLS
BORROW BUYBLENDBUILD
Leverage Skills and Data From Outside HR

30. They focus on the business
They have a CHRO who is fully
involved
They have an inspirational leader
They have a balanced set of skills
and capabilities
They leverage resources from
outside HR
They have a clearly defined
strategy & vision
They get the basics right
They have a methodology designed on
producing actionable insights
What Do Companies That Excel at People Analytics Do?

31. 31
People Analytics: An 8 Step Methodology

32. They focus on the business
They have a CHRO who is fully
involved
They have an inspirational leader
They have a balanced set of skills
and capabilities
They leverage resources from
outside HR
They have a clearly defined
strategy & vision
They get the basics right
They have a methodology designed on
producing actionable insights
They use stories and visualization
to compel action
What Do Companies That Excel at People Analytics Do?

33. 33
The Power of Storytelling
?What do you want
your audience to
know?
?How do you want
your audience to
feel?
?What do you want
your audience to
do?

34. They focus on the business
They have a CHRO who is fully
involved
They have an inspirational leader
They have a balanced set of skills
and capabilities
They leverage resources from
outside HR
They have a clearly defined
strategy & vision
They get the basics right
They have a methodology designed on
producing actionable insights
They use stories and visualization
to compel action
They know analytics is a long-term
investment
They put the employee at the centre
They make analytics part of the DNA
What Do Companies That Excel at People Analytics Do?

35. 2014 2015 2016 2017
Source: LinkedIn (https://www.linkedin.com/pulse/roi-talent-analytics-lorenzo-canlas?trk=prof-post
5X
Cost of team Impact on Operating Margin
7X
10X
The ROI of People Analytics: Making It Part of the DNA
Investment vs. Return of People Analytics Team in LinkedIn

36. COST
BUSINESS IMPACT
Reject Wish list
Avoid Prioritise
“To support Chevron’s business
strategies with better, faster workforce
decisions informed by data”
COMMUNITY
OF PRACTICE
3 STAGE ANALYTICS
TRAINING
300 20 18
PEOPLE BUSINESS
UNITS
COUNTRIES
Institutionalizing People Analytics: Making It Part of the DNA
Source: Bersin by Deloitte: Scaling People Analytics Globally: Chevron Takes a Multipronged Approach to Build Organizationwide Analytics (CASE STUDY)
Capabilities

37. 37
Shell People Analytics Journey: Making It Part of the DNA
Data Management Maturity
BusinessValue
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Report Spreadsheets
Basic Reporting
Standardization
Advanced Analytics
Cross Functional MI/Analytics
 Data Clean Up
 HR Information for Leadership
 Merging Analytic
Assessments
 Centralized Offshore Reporting Team
 Self Service HR Reporting Tool
 HR Data and Analytics Team Created
 Data Scientists in HR Analytics

38. What Do Companies That Excel at People Analytics Do?
They focus on the business
They have a CHRO who is fully
involved
They have an inspirational leader
They have a balanced set of skills
and capabilities
They leverage resources from
outside HR
They have a clearly defined
strategy & vision
They get the basics right
They have a methodology designed on
producing actionable insights
They use stories and visualization
to compel action
They know analytics is a long-term
investment
They put the employee at the centre
They make analytics part of the DNA
They communicate their successes
They seek to continually learn and
aren’t afraid to fail
They keep one eye on the future

39. £
£
£
n=2876 teams
Keeping an Eye on the Future
CAT: Linking Engagement and Business Data
KEY BUSINESS QUESTIONS:
• What drives our business critical
success metrics?
• What impact can engagement
make on our business
performance?
• What is the difference between
Highly Engaged and OK units in
Retail Business?
DIFFERENCE BETWEEN HIGH
& OK PERFORMING UNITS:
• Voluntary Turnover 71% Lower
• Customer Loyalty 5.3% Higher
• Technician Productivity 4.5%
Higher
• Re-work 60% Lower
• 3 Times Less Accidents
• Exceed Quarterly Financial Targets
40% More Often Than Units With
Lower Engagement Levels

40. 40
Keeping an Eye on the Future
Professional Services: Talent Strategy and Engagement/Business Data
KEY OUTCOMES:
Most Engaged Teams are:
• Highest Performing Teams
• Have Higher Retention Rates
• Have Higher Revenue Growth
• Have Higher Gross Margins
KEY OUTCOMES:
Retention & Engagement Data:
• Can Save c£70m p.a. by Reducing
Turnover of Key Client Facing
Employees by 1%!
KEY OUTCOMES:
Best In Class Engaged Employees:
• Produce c£100k p.a. More Than
Below Norm Performing Employee

41. 41
Keeping an Eye on the Future
AMC: Outlier Study Focusing on High/Average Perfomers in Business Critical Role
KEY BUSINESS QUESTIONS:
• What drives our business critical
success metrics?
• What impact does a business
critical role have on those metrics?
• What is the difference between Top
10% and OK Performers
DIFFERENCE BETWEEN
TOP 10% & OK PERFORMERS:
• Hourly Turnover 43% Lower
• Theft 17 Times Lower
• Profit Per Customer 1.2%
• Unit Profit (+ High Engagement)
21% Higher
• Guest Satisfaction (+ High
Engagement) 29% Higher

42. 42
Keeping an Eye on the Future
Retail Drinks & Convenience Stores: Business Case to Change Recruitment Methods
BUSINESS SCENARIO:
• Turnover for Business Critical Role
32% p.a.
• Growth and Sales Key Business
Challenge
• Out of Date Recruiting Process
cost £500k p.a. to implement
• To Change the Recruitment
Process – will cost £600k p.a. to
implement; needed a robust
predictive business case to obtain
CEO “Sign Off”
THE OUTCOME:
• Finance & HR: Difference Between
High and OK Performer was 400%
Sales and 190% Profitability
• Finance Cash Flow Projections:
“What If” We Recruited High
Performers Not OK Performers?
• Predicted:
- Year 1 Increases £100k
- Year 2 Increases £250k
- Year 3 Increases £275k
• Actual:
- Year 1 Increased by £95k
- Year 2 Increased by £263k
- Year 3 Increased by £278k

43. What Do Companies That Excel at People Analytics Do?
They focus on the business
They have a CHRO who is fully
involved
They have an inspirational leader
They have a balanced set of skills
and capabilities
They leverage resources from
outside HR
They have a clearly defined
strategy & vision
They get the basics right
They have a methodology designed on
producing actionable insights
They use stories and visualization
to compel action
They know analytics is a long-term
investment
They put the employee at the centre
They make analytics part of the DNA
They communicate their successes
They seek to continually learn and
aren’t afraid to fail
They keep one eye on the future
They don’t forget the ‘H’ in HR

44. 44
CREATE EXPERIENCES
Employee experiences are as
important as customer experiences
Use analytics to understand
employees insights better
Focus on touchpoints where
employee experience drives
productivity etc.
ENABLE THE WORKFORCE
Constant rhythm of feedback/
insights to drive engagement
Game changing approaches to
employee input
Personalized just in time learning
Create an empowered workplace
VALUE BASED HR
HR has to shift from being a “cost
centre” to being a “profit centre”
Show real time insights/trends
through talent & business based
analytics
Drive fact-based decisions for
tangible value to the business.
Tomorrow’s HR Challenges
All Requiring Data and Analytics

45. ALIGNED PEOPLE &
DIGITAL TECHNOLOGY
PRACTICES
HR CAPABILITY SHIFT
BUSINESS & HR THOUGHT
LEADERSHIP
PERFORMANCE &
PRODUCTIVITY FOCUS
EMPLOYEE & CUSTOMER
CONNECTED
COMMERCIALLY DRIVEN
PEOPLE ANALYTICS
“FUTURE
PROOFED”
CRITICAL
HR
FOCUS
Conclusions: Tomorrow’s HR Function

46. 46
CONSUMERIZATION OF
HR
WORKFORCE
ANALYTICS
THE FUTURE
ORGANIZATION
NETWORKED
NEW CAPABILITIES
RELENTLESS
COLLABORATIVE
LEADERSHIP
DESCRIPTIVE
ANALYTICS
WORKFORCE
PLANNING
PREDICTIVE
ANALYTICS
NETWORK ANALYSIS
“VALUE ADD” HR
FUNCTION
BETTER PEOPLE
DECISIONS
MORE AGILE
ORGANIZATION
Data, Analytics & HR: At the Centre of the Digital Agenda
PERSONALIZED
EMPLOYEE
EXPERIENCE
DIGITAL LEARNING
TECH AS AN ENABLER
HR AS A PROFIT
CENTRE

47. 47
Europe’s HR Functions Need to Get “Fit For Purpose”

48. 48
THE SHIFT
HR MINDSET
SHIFT
(Commercial and
Talent Based)
DECISION
MAKING SHIFT
(Data Driven Not
Judgement Based –
Across the
Organization))
CULTURAL
SHIFT
(Collaboration, Ways
of Working)
CHANGE SHIFT
(Change program)
Analytics Requires a Cultural Shift in Organizations

49. ADVANCED USERS
PROGRESSING
STARTING OFF/
”EARLY DAYS”
49
Future of People Analytics
• “It Really Is a Journey”
• More Mid-Size/Smaller Organizations Focusing on
the Value of Analytics
• Every Organization Is Different; Culture Change
• “No One Size Fits All”
• Organizational Network Analysis (ONA)
• Organizational Design & Data Analytics
• Change & Data Analytics
• People Index – value of people
WITHOUT DATA, AUTOMATION, AI, ETC. WON’T HAPPEN!

50. 50
“CEOs are looking for more digital and
people analytics from their HR
departments; we must not disappoint.”
Laszlo Bock
Advisor, author, and former SVP of People Operations at
Google/Alphabet

51. 51

52. Dave Millner,
Executive Consulting Partner &
HR Futurist,
Watson Talent, IBM Kenexa
dave.millner@uk.ibm.com
Mobile: +44 (0) 7779 802830
Twitter: @HRCurator
Sage People: Top 10 Global Influencer 2017
@Nodexl: No 1 Most Influential Person on Twitter, People Analytics, HR Analytics and Future of Work 2017
Onalytica No 1 Twitter Brand: Future of Work 2017