peter howes, vp success factors - the need for workforce analytics and planning to enable business...

1SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved.SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved.

The Need for Workforce Analytics and Planning to Enable Business Execution in the Financial Sector.

International SAP Conference for Banking 2012London, 19th June 2012Peter Howes, Vice President SuccessFactors

2SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved.

Source: 2009 Top 3 Strategy Consulting firm survey of CxO’s at more than 500 Successfactors Customers

17%Increase in people

getting the right training

Strategic Alignment

5.5%increase in

time spent on strategic priorities

1 – 8+ weeksFaster

communication

of strategy

Cost Savings

(13.8)%Decrease in

low performers

15.2%Decrease in

turnover

13.7%Increase in

internal job fill rate

Business Results

1% Revenue

added back to profit

Productivity

14%Increase in

project completion

5.4%High-end

increase in productivity

4.9%Increase in

high performers

Why We Should Create A Business Execution Culture


Personal Reflections on Workforce Planning Over Three Decades

• WFP is a risk mitigation process

• Time Frame• Scenarios• Frameworks• Forecasting numbers and

competencies• “Mind the Gap” • Strategic versus Tactical

staffing

• WFP best managed as a CoE

• Develop a team with the right skills

• Technology is critical (build or buy)

• Planning must lead to action

• Only done for critical job roles


A commitment to future decisions Something that is done once and forgotten about – “a box to tick” A report to go on a shelf Something done just by HR The way to fill vacancies today – staffing or budgeting Analysis of every role and workforce issue across the organisation A perfect prediction of future workforce needs (especially numbers)

Staffing/Budgeting

1 year 3 years 5+ years

Workforce Planning

Time

What Workforce Planning is Not


Workforce Planning is a Critical Tool in Overall Talent Management

• Career Management - Sleeper in Workforce Planning

− 50-60% of employees will never be promoted

− 80-85% of employees will have a maximum of two promotions in the rest of their career

• Less than 5% of the workforce (deep specialists) should be in the same job for more than 5 years

• Career = Positions + Projects + Placements• New career paths build future competencies• Emerging goal for many companies: career paths with four transfers

for every promotion

− Career Path Ratio = 0.25

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Findings: A recent SuccessFactors survey and best practice in strategic workforce planning


Findings

1. Implementing workforce planning leads to the improvement of a number of human capital and financial metrics.

2. Despite (or perhaps because of) difficult economic conditions, investments in workforce planning are expected to increase in the next 12 months.

3. Leading organisations are far more likely to adjust their workforce plans in response to changing economic conditions.

4. Leading organisations are far more strategic in their approach to recruitment, retention, and other key talent management initiatives.


Findings

5. Leading organisations primarily invest in workforce planning as a tool to support specific business strategies – not as a tool to address workforce-related issues.

6. Leading organisations are much more likely than their peers to incorporate multiple future scenarios into their workforce planning efforts.

7. Leading organisations are far more likely to implement specific talent management initiatives as a result of their workforce planning efforts.


Findings

8. Leading organisations are far more likely to use advanced technologies in support of their workforce planning efforts.

9. Leading organisations prioritise a different, more business relevant, set of competencies needed for those involved in workforce planning.

10. Leading organisations continually push to improve the business relevance of workforce planning – even to the point of managing the process outside of HR.


Humaqn Capital Analytics: Case studies


Do we reward Managers who are net exporters of talent?


Do we reward Managers who are net exporters of talent?

• Transferred or promoted individuals OUT by Performance Rating

• Transferred or promoted individuals IN by Performance Rating

Performance Rating

Number of People

1-3 25

4 116

5 36

Performance Rating

Number of People

1-3 16

4 64

5 21

Top 10% of Managers who:

• Average salary increase of top exporters of talent (6%)• Average salary increase of top importers of talent (9%)


Conclusions

• We do not adequately reward managers who export their top talent to the rest of the organisation.

• We over reward managers who are net importers of talent from the rest of the organisation.


Average Revenue per Sales Rep

0 1 2 3 4 5 Average$0

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

Average Revenue per Sales Rep

Performance Rating

Break even is in the third year of employment


For our Sales Reps how does voluntary labour turnover vary by performance rating and position tenure?

• Total voluntary labour turnover (8%)• Total voluntary labour turnover Sales Reps (14%)

Voluntary Turnover By Performance RatingPerformance Rating Voluntary Turnover

Not Rated 16%

1 38%

2 19%

3 12%

4 16%

5 18%

Average 14%


Voluntary Labour Turnover

Voluntary Turnover of Sales Reps by Performance Rating by Position Tenure

Position Tenure

Performance Rating

<1 Yr 1-2 Yrs 3-5 Yrs 5+ Yrs Total

Not Rated 22% - - - 16%

1 - 32% 55% 25% 38%

2 - 26% 24% 16% 19%

3 - 17% 12% 68% 12%

4 - 14% 36% 20% 18%

5 - 12% 42% - 20%

Total 16% 16% 18% 9% 14%


Quantifying the ROI of Training

1 2 3 4 5 6$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$58,261$110,284

$147,523$202,654 $222,455 $250,005

$121,125

$153,101

$170,197

$200,641

$259,077

$351,304

$141,559

$196,954

$249,250

$307,271

$406,988

$529,841

$179,386

$263,385

$317,719

$403,295

$481,531

$601,309

Annual Difference Between All and No Courses No Courses Some Courses All Courses

Employee Tenure

Aver

age

Ann

ual S

ales

Vol

ume

Sales reps with more training dramatically outperform reps with less – at all levels of ten-ure

Modules Modules Modules Modules


Example: Employee–Customer Profit Chain

Operating Margin

Source: The Employee-Customer-Profit Chain at Sears in ‘Harvard Business Review’, Jan-Feb 1998

A Compelling Place to Work A Compelling Place to Shop A Compelling Place to Invest

Attitude About the Company

CustomerRecommendationsAttitude

About the Job

Employee Behavior

EmployeeRetention

CustomerImpression

CustomerRetention

5 Unit Increase in Employee Attitude

1.3 Unit Increase in Customer Impression

0.5% Increase in Revenue

Growth

Service

Helpfulness

Merchandise

Value

Returnon Assets

RevenueGrowth

Drives Drives


Example: Engagement Drives Performance Through Two Paths

EmployeeEngagement

DiscretionaryEffort

Intent to Stay

Performance

Retention

Branch Profitability

Engagement……drives effortand intent tostay…

…which drivebranch performance.

…resulting inimproved performanceand retention…


Example: Model Tested: ABC Retail Bank

EmployeeEngagement(Gallup 2009)

DiscretionaryEffort

Intent to Stay

Performance(CustomerSatisfaction 2010)

Retention(2010 BranchVoluntaryTermination Rates)

BranchProfitability(2010 Profitper FTE)

Engagement dataIntegrated with…

…Customer survey scores andHuman capital metrics to…

…predict Branch financial performance


Example: Linking Engagement/Human Capital To Financial Performance

Low Employee Engagement High

Profi

t pe

r FT

E


Example: Prioritizing HR Initiatives At ABC Retail Bank

1. Employee engagement is a strong driver of customer satisfaction through greater discretionary effort.

2. Engagement is critical for customer satisfaction, but matters most in stores with low manager tenure.

3. Experienced managers provided clear expectations and guidelines for employees reducing importance of discretionary effort.

4. HR efforts now focused on retention of managers and identifying and transferring best practices.

5. HR interventions should be focused on stores with low managerial tenure and low employee engagement. These interventions should aim to raise engagement and increase the skills of the managers with less experience as you can't readily increase their tenure.

Interaction of Manager Tenure and Employee Engagement on Customer Satisfaction

Low

High

A

B

C

Low EmployeeEngagement

High EmployeeEngagement

Cust

omer

Sati

sfac

tion

Low Manager Tenure High Manager Tenure


Example: Result ABC Retail Bank

Employee-Customer-Value chain:• Identify areas of focus to improve store performance• Help prioritise people investment decisions

Quantify Impact of Engagement:• A 10% increase in engagement drives • 2 unit increase in customer satisfaction drives• 7.5% increase in Profit per FTE

This equates to a total increase in profit across the sampled branches of approximately, $45,000,000. Across total company the increase in profit would be $86,000,000.

24SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved.SuccessFactors Proprietary and Confidential © 2011 SuccessFactors, Inc. All rights reserved.

Thank You

Peter Howes, Vice President SuccessFactors+44 (0)79 7469 [email protected]

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