sap performance benchmarking · sap provides this document as guidance only to illustrate estimated...

6/25/2012

SAP Performance Benchmarking

Company: ABC Company

Human Capital Management Benchmarking Results

© 2012 SAP AG. All rights reserved. 2Confidential

Statement of Confidentiality and Exceptions

The information and analysis contained herein are the confidential and proprietary materials of SAP AG. No part of this publication may be reproducedor transmitted in any form or for any purpose without the express written permission of SAP AG. The information contained herein may be changedwithout prior notice.

The furnishing of this document shall not be construed as an offer or as constituting a binding agreement on the part of SAP AG and/or its affiliatedcompanies (“SAP”) to enter into any relationship. SAP provides this document as guidance only to illustrate estimated comparisons between the subjectCompany and other companies with respect to certain key performance indicators and drivers.

These materials may be based upon information provided by the subject Company, information provided by other companies and assumptions that aresubject to change. These materials present illustrations of potential performance and cost savings, and do not guaranty future results, performance orcost savings. The materials are provided solely for internal review and use by the subject Company. SAP makes no representation or warranties of anykind with respect to these materials, and SAP shall not be liable for errors or omissions with respect to these materials.


Agenda

Study Background

Metrics Comparison and Best Practice Adoption

Case Studies

Study Background


SAP Performance Benchmarking: Designed to Get Actionable Results

Strategic service by SAP Value Engineering, launched end of 2004 as a forum to exchange metrics and best practicesProgram covers 30+ processes, with more than 10,000 participants who leverage the program to:– Build a business case for change– Compare performance to leading companies,

industry peers, and between regions/divisions– Assess value realization, year-over year– Prove success

Human Capital Management


Profile Data – Company and Peer Set

Peer Group Size* Average number of organizations represented in each metric 444

Peer Group Coverage* Percent of metrics for which benchmarks can be calculated 100%

Company Information

Industry Consumer Products

Sub-Industry Consumer Durables and Home Appliances (CD&HA)

Annual Revenue 1000000000

Regions/ Divisions Included North America

Comparative Scope – Selected Peer Group

Industry Industry X

Sub Industry All

Revenue All

Region All

Participant Name ABC

Title Manager

Currency U.S.Dollar

Entire Company or Division Regional Entity Maine Customized Filter

Question/KPI N/A

Question/KPI N/A

Question/KPI N/A

*We do not publish sample sizes as part of the survey validation process so you may receive a value of “0” for Peer Group Size and Peer Group Coverage. Once validation is completed against the overall database, please request a custom peer group for a more accurate comparison.



Overall Database Profile

By Region By Industry Sector

767*Number of Companies in HCM Overall Database:

Note: Several miscellaneous industries have been grouped under “Other”

By Employees

* Data is leveraged from other surveys as well where KPIs overlap


Metrics Comparisonand Best Practice Adoption


Executive Summary

5

10

1416

Top 25% Average Bot 25% Company Value

87.2

67


134102

63

241


558

1172

1633

610


Employee Turnover (in %) Employee Engagement (1-low, 10-high)

Employees per HR FTE HR Cost per Employee



Key Metrics

Metric Company ValuePeer Group

Average Top 25%

Employee Engagement (1-low, 10-high) 7.0 7.2 8.0

Employee Turnover (in %) 16.0 10.0 5.0

Employee Referral Rate (% of external hires) 10.0 16.9 25.0

Employees Trained (in %) 69 71 100

Paycheck Errors (in %) 0.9 0.5 0.0

Manager's Time on Employee Admin. (in %) 10.0 13.1 5.0

Employees per HR FTE 241 102 134

HR Cost per Employee 610 1172 558

HR Staff on Transactional Activities (in %) 50.0 36.8 25.0

Time to Hire (in days) 30 41 25

Cost per Hire 5570 3146 840

Performance Results –Metrics

First QuartileBetween Average and First QuartileBelow Average OutlierRanking:



Headcount Metrics


Average Top 25%

FTEs/1,000 EEs: HR Strategy & Leadership 0.15 0.80 0.33

FTEs/1,000 EEs: Comp. & Benefits Planning 0.31 0.68 0.28

FTEs/1,000 EEs: Recruitment & Staffing 0.42 1.62 0.83

FTEs/1,000 EEs: Training & Development 0.42 1.25 0.52

FTEs/1,000 EEs: Employee/Labor Relations 0.62 1.38 0.53

FTEs/1,000 EEs: Compensation Admin. 0.31 0.57 0.23

FTEs/1,000 EEs: Benefits Admin 0.31 0.63 0.28

FTEs/1,000 EEs: Pension Plan Admin. 0.12 0.32 0.11

FTEs/1,000 EEs: Personnel Data Mgt. 0.54 1.02 0.45

FTEs/1,000 EEs: Payroll Management 0.77 1.14 0.55

FTEs/1,000 EEs: Time & Attendance 0.04 0.66 0.23





Headcount Metrics

134102

63

241


3.36

5.76

7.7

1.92


2.31

4.24

5.72

2.08


Employees per HR FTE HR FTEs per 1000 Employees: Expertise/ Strategic Functions

HR FTEs per 1000 Employees: Transactional Functions



3.9

44.2

51.9

7.8

50.1

42.1

Average Company Value

HR Transactional FTEs (% of TotalFTEs)

HR Expertise FTEs (% of Total FTEs)

HR Strategic FTEs (% of Total FTEs)

HR Staff MixHuman Capital Management


Cost Metrics


Average Top 25%

HR Costs/ EE: HR Strategy & Leadership 16 55 16

HR Costs/ EE: Comp. & Benefits Planning 30 44 14

HR Costs/ EE: Recruitment & Staffing 42 137 48

HR Costs/ EE: Training & Development 55 114 33

HR Costs/ EE: Employee/Labor Relations 55 101 32

HR Costs/ EE: Compensation Admin. 28 47 15

HR Costs/ EE: Benefits Admin. 28 57 18

HR Costs/ EE: Pension Plan Admin. 25 34 10

HR Costs/ EE: Personnel Data Mgt. 48 81 26

HR Costs/ EE: Payroll Management 98 94 34

HR Costs/ EE: Time & Attendance 3 44 16





Cost Metrics

558

1172

1633

610


250

539

744

198


166

356

477

230


HR Cost per Employee HR Cost per Employee: Expertise/ Strategic Functions

HR Cost per Employee: Transactional Functions



61.3

38.7

0.00.0

63.5

20.6

6.1

9.8

Average Company Value

HR Other Costs (% of Total HR Cost)

HR Technology Costs (% of Total HRCost)

HR External Expenditures (% of TotalHR Cost)

HR Headcount Costs (% of Total HRCost)

HR Cost MixHuman Capital Management


Enabling Technology

1

1.3

1 1


2

5.8

8

3


6

38

50

15


Number of ERP Instances Applications In Addition To ERP (In House & Outsourced)

Spreadsheet Applications For Tracking And Reporting



Self Service Usage

49.0%

2.3%

44.7%

4.0%

No Self Service

Employee Self ServiceOnly

Manager Self Service Only

Both (ESS & MSS)

Customer ResponseNo Self Service

Self Service Usage



Transaction Enablers

70

40

10.8 10


90

56.8

22

40


Transactions Via Self Service (in %) Transactions Via EIC (in %)



Transaction Metrics

13.7

8.6

1.5 1.9


2976.2

1907.4

306.8

925.9


12

123

211

120


HR Transactions per Employee Transactions Per HR FTE

HR Cost Per Transaction



Best Practices

1.5

2.0 2.0

1.3

2.0

1.3

3.53.7

2.7

2.0

1.5

3.8

4.3

4.85.0

3.33.0 3.0

5.0

4.3

5.0

4.0

0

1

2

3

4

5

6

HR StrategyAnd

Leadership

CompensationAnd Benefits

Planning

Recruiting AndStaffing

Training AndDevelopment

Employee AndLabor

Relations

CompensationAdministration

BenefitsAdministration

Pension PlanAdministration

PersonnelData

Management

PayrollManagement

Time AndAttendance

TOP 25% Average Company Coverage Company Importance

Company Best Practice Importance Compared to Coverage Contrasted Against Peer Responses

1 = No Coverage5 = Full Coverage



HR Strategy And Leadership

0

1

2

3

4

5

6

1 2 3 4

TOP 25% AverageCompany Coverage Company Importance

Best Practice Ranking1HR system supports a balanced scorecard framework which is integrated into department and individual performance appraisal documents

2HR system has automated reporting and analysis capabilities to identify which processes need to improve operational efficiencies, data accuracy and timeliness, and costs

3 HR system allows to analyze workforce data, as well as design, implementation and monitoring of strategies to optimize the workforce

4HR system enables accurate planning, monitoring of actual performance to plan and simulation of planning scenarios with analysis of financial impact of headcount changes

Best Practice Listing



Best Practices for HR Strategy and Leadership: Impact on Employee Engagement and Employee TurnoverBest Practice Adoption/ Employee Engagement (1 = Low, 10 = High)HR system allows for a Balanced Scorecard framework which is integrated into department and individual performance appraisal documents and which supports benchmarking and continuous improvement

7.56.9+9%

Low High

Best Practice Adoption/ Employee Turnover (in %)HR system enables HR professionals to develop cost effective resource strategies, by supporting accurate planning process, allowing monitoring of actual performance relative to plan and allowing simulation of multiple planning scenarios with analysis of the financial impact of headcount changes

10.4%15.9%-34%

Low High


Compensation And Benefits Planning

0

1

2

3

4

5

6

1 2 3 4 5 6 7


Best Practice Ranking1Compensation system supports a variety of job-pricing activities, incl. performing salary surveys, importing job/ salary data from survey providers, and defining market-based standards

2Compensation planning system has automated analysis and reporting capabilities to model the impact of compensation plan changes on the overall business model

3Compensation planning system supports standardized job evaluation criteria to enable rapid classification of new positions for compensation purposes

4Compensation planning system integrates information from sales-processing, financial systems, CRM etc. to identify and reward performance that is important to the business

5 Benefits planning system leverages general plan information across plan; No re-keying of plan information necessity

6 Benefits planning system integrates with HR/ payroll system

7Benefits planning system has automated analysis and reporting capabilities to model the impact of plan changes on the overall business, and to benchmark overall healthcare cost




Best Practices for Compensation and Benefits Planning: Impact on Process Efficiencies

Best Practice Adoption/ Compensation and Benefits Planning Cost Per Employee ($)

Compensation planning system supports standardized job evaluation criteria to enable rapid classification of new positions for compensation purposes

45.975.1-39%

Low High


Recruiting And Staffing

0

1

2

3

4

5

6

1 2 3 4


Best Practice Ranking1 External and internal applicants are able to place themselves in a talent pipeline according to their own interests or goals

2Hiring managers have comprehensive recruiting self-service, incl. the ability to submit job requirement profiles; use of approval workflows; view of candidate short lists and data

3Recruiting system automates candidate administration, with interview, rejection, offer letters generated automatically based on templates and online interview assessments

4 Recruiting system has automated analysis and reporting capabilities to analyze the talent pool and to measure source effectiveness




Best Practices for Recruitment and Staffing: Impact on Time to Hire and Process Efficiency Best Practice Adoption (Retail Companies)/ Time to Hire (Days)External and internal applicants are able to place themselves in a talent pipeline according to their own interests or goals 26.133.3

-21%Low High

Best Practice Adoption (Oil & Gas Companies)/ Time to Hire (Days)

External and internal applicants are able to place themselves in a talent pipeline according to their own interests or goals 33.841.0

-18%Low High

Best Practice Adoption (High Tech Companies)/ Recruitment and Staffing HR FTEs per 1,000 EmployeesHiring managers have comprehensive recruiting self-service, including the ability to create and submit job requirement profiles for approval; use approval workflows for requirements profiles; view candidate short lists and profile and application data; and respond to questionnaires about candidates

2.83.5-19%

Low High


Training And Development

0

1

2

3

4

5

6

1 2 3 4


Best Practice Ranking1Simple content authoring processes are in place; Learning system allows separate views for subject matter experts and instructional designers

2Learning system has automated reports available to assess training effectiveness by correlating corporate KPIs with training results (e.g. technical training with machine down time)

3Regular evaluation of employee development needs performed as part of performance appraisal; system pushes course offerings to employees based on performance gaps

4Learning system allows for streamlined processing of follow up activities, such as participation confirmation, competency/ proficiency results, digital validation




Best Practices for Training and Development: Impact on Employee Engagement

Best Practice Adoption/ Employee Engagement (1 = Low, 10 = High)Learning system has automated reports available to assess training effectiveness by correlating corporate KPIs with training results (e.g., sales increases with successful sales training completion, technical training with machine down time/ workers comp)

7.67.0+9%

Low High

Best Practice Adoption/ Employee Engagement (1 = Low, 10 = High)Regular evaluation of employee development and training needs performed as part of performance appraisal process; system automatically pushes course offerings to employees based on their job requirements or performance gaps; automatic update of employee

7.36.8+8%

Low High


Employee And Labor Relations

0

1

2

3

4

5

6

1 2 3 4


Best Practice Ranking1HR system supports organization structure, enables HR professionals to simulate proposed organizational changes, and allows mass changes across positions or organizations

2The 'Employee Interaction Center' system provides for monitoring of key performance metrics such as cycle times, errors by process and monitoring of self-service usage

3 HR system allows monitoring and tracking of grievances and arbitrations

4Line managers have online access to bargaining updates and policies/ procedures, and receive a prompt if significant changes arise which may impact their day to day business




Best Practices for Employee and Labor Relations: Impact on Cost Per Employee and Process Efficiencies

Best Practice Adoption/ Employee and Labor Relations Cost Per Employee ($)

The Employee Service Center system provides for monitoring of key performance metrics such as average process execution cycle times, percentage of specialists in execution time, errors by process and monitoring of self-service usage

69.4103.4-33%

Low High

Best Practice Adoption/ Employee and Labor Relations HR FTEs per 1,000 Employees

HR system allows to monitor and track grievances and arbitrations1.51.9

-20%

Low High


Compensation Administration

0

1

2

3

4

5

6

1 2 3


Best Practice Ranking1 Direct link between job description preparation and job evaluations are available online

2 Standardized job descriptions and job evaluations are available online

3

Compensation system provides comprehensive manager self service for displaying and editing employee compensation-related data, activating planned/ approved compensation adjustments, and transmitting the information to payroll




Best Practices for Compensation Administration: Impact on Process Efficiencies

Best Practice Adoption/ Compensation Administration HR FTEs per 1,000 Employees

Standardized job descriptions and job evaluations are available online 0.60.8-22%

Low High


Benefits Administration

0

1

2

3

4

5

6

1 2 3 4


Best Practice Ranking1Benefits system enables employees to enroll online, to modify details of the benefits plan and to update information regarding dependents and beneficiaries, including tests for eligibility

2 Single point-of-contact established for all benefits related questions

3 Benefits system enables employees to check current enrollment in benefits plans, and print confirmation statements and forms online

4 Benefits system allows employees to model different benefits elections and their effect on net pay




Best Practices for Benefits Administration: Impact on Process Efficiencies

Best Practice Adoption/ Benefits Administration HR FTEs per 1,000 Employees

Single point-of-contact established for all benefits related questions 0.800.84-5%

Low High


Pension Plan Administration

0

1

2

3

4

5

6

1 2 3


Best Practice Ranking1 Data exchange with third-party administrators fully automated, with access to key data via shared databases

2 Single point-of-contact established for all pension and savings plan related questions

3 All plan participants, including retirees and former employees, have online access to the plan




Best Practices for Pension or Superannuation Plan Administration: Impact on Process EfficienciesBest Practice Adoption/ Pension Plan Administration HR FTEs per 1,000 Employees

All plan participants, including retirees and former employees, have online access to the plan 0.40.6-21%

Low High

Best Practice Adoption/ Pension Plan Administration HR FTEs per 1,000 Employees

Single point-of-contact established for all pension and savings plan related questions 0.40.5-24%

Low High


Personnel Data Management

0

1

2

3

4

5

6

1 2 3 4 5 6


Best Practice Ranking1One integrated data repository used for all employee information (demographic, dependent, beneficiary, payroll) which is shared between Human Resources and Payroll

2HR system is integrated with ERP and other key non HR system to allow for end to end processes (e.g., asset management system, financial systems, CRM system)

3 Online employee self-services are provided in a consistent and easily navigated manner

4 Data validated for accuracy and completeness at the time of data entry

5Majority of HR services, such as creation of requisitions, new hire entry, change of salary request, request for separation can be initiated by managers online in a simple format

6Self-services for managers are organized, with key performance metrics pushed out, alerts for issues notification, work triggers, reminders and notification of unexpected events




Best Practices for Personnel Data Management: Impact on Cost Per Employee and Process EfficienciesBest Practice Adoption/ Cost Per Employee ($)Majority of HR services, such as creation of requisitions, new hire entry, change of salary request, request for separation can be initiated by managers online and entered in a simple format 1,0551,490

-29%Low High

Best Practice Adoption/ HR FTEs Per 1,000 Employees

Self-services for managers are organized, with key performance metrics pushed out, alerts for issues notification, work triggers, reminders and notification of unexpected events 12.813.9

-7%Low High


Payroll Management

0

1

2

3

4

5

6

1 2 3 4


Best Practice Ranking1 Online access to direct deposit advices and pay-slip

2Payroll system supports legal regulations for a large number of countries, ensuring compliance with regulatory requirements for reporting purposes

3 Payroll system supports multiple currencies, multiple languages, collective agreements, and reporting

4 Single point-of-contact established for all payroll related questions




Best Practices for Payroll Management: Impact on Process EfficienciesBest Practice Adoption/ Payroll Administration HR FTEs Per 1,000 Employees

Payroll system supports multiple currencies, multiple languages, collective agreements, and reporting 1.01.4

-24%

Low High

Best Practice Adoption/ Payroll Administration HR FTEs Per 1,000 Employees

Single point-of-contact established for all payroll related questions 1.11.3-9%

Low High


Time And Attendance

0

1

2

3

4

5

6

1 2 3 4


Best Practice Ranking1 Web enabled time administrator tool is in place

2 Time worked routed automatically to project accounting/ resource planning systems

3Time and attendance system has automated analysis and reporting capabilities to analyze KPIs such as lost time, productivity, cost of absence, overtime or illness

4 Online and offline time entry is available




Best Practices for Time and Attendance: Impact on Cost Per Employee and Process EfficienciesBest Practice Adoption/ Time and Attendance Cost Per Employee ($)

Web enabled time administrator tool in place 38.773.1-47%

Low High

Best Practice Adoption/ Time and Attendance HR FTEs Per 1,000 Employees

Time worked routed automatically to project accounting/ resource planning systems 0.51.1-50%

Low High


Recommended Improvement Strategies

Strategies to focus: below average performance for supporting best practices, KPIs

Between average and top 25% performance for supporting best practices and KPIs

Top 25% performance for supporting best practices and KPIs

Organize for scale and leverage

Leverage Shared Services for routine HR transactions and compliance functions (e.g. payroll) Employees per HR FTE

Leverage analytics to identify performance improvement opportunities HR Cost per Employee

Develop a high performing organization

Align incentives with performance objectives with corporate goals Employee Engagement (1-low, 10-high)

Drive performance management framework into organization Employee Turnover (in %)

Implement training programs that develop the workforce in line with organizational objectives

Align workforce with business needs

Create enterprise wide visibility into workforce availability and gaps Employee Engagement (1-low, 10-high)

Establish accurate closed loop workforce planning process Employee Turnover (in %)

Strengthen recruiting and talent relationship management processes

Improvement Strategies Sub Strategies Impacted KPI’s



Recommended Improvement Strategies

Strategies to focus: below average performance for supporting best practices, KPIs

Between average and top 25% performance for supporting best practices and KPIs

Top 25% performance for supporting best practices and KPIs

Streamline, automate and integrate HR processes

Standardize processes across all BU's/ globally Employees per HR FTE

Reduce manual entries with simplification and automation HR Cost per Employee

Integrate processes within HCM as well as outside

Reduce HR transactional work by driving self service to maximum adoption

Improvement Strategies Sub Strategies Impacted KPI’s



Benchmarking Results and Value Potential

KPI Benchmark Performance Potential Benefit (in millions)

Employee Engagement (1-low, 10-high)Driving Business Value

Employee Turnover (in %)

Employees per HR FTETop25%

HR Cost per Employee Better than Average

Benefit of Closing Gap to Top 25% Benefit of Closing Gap to Average

6.0 7.2 8.0

7.0

14.0 10.0 5.0

16.0

63 102 134

241

1633 1172 558

610

Performance of Primary KPIs and Potential Benefits (in millions of selected currency)

35.364.4

1



Human Capital Management Adoption Maturity Model

No Adoption Low Adoption Intermediate Adoption High Adoption Full Adoption

All parts have a formal, partially standardized performance management framework Employee development and training linked to KPIs but not fully standardized at the organizational level

Formal performance management framework is not available for the organizationEmployee development and training is not linked to KPIs

Some parts of the organization have a formal performance framework but it is not standardized for the organizationEmployee development and training are partly linked to some KPIs

Most parts have a formal performance management framework but it is not standardized for the organizationEmployee development and training are linked to some KPIs

Develop a High Performing Organization

There is a formal, standardized and integrated approach towards performance management across the organizationEmployee development and training are linked to KPIs and standardized at the organizational level

No visibility into workforce availability and gapsRecruiting systems lack visibility into talent pool/ pipeline; self service is not available to applicants or hiring managers

Some BUs have visibility into workforce availability and gapsRecruiting systems have limited visibility into talent pool/ pipeline; self service is not available to applicants or hiring managers

Align Workforce with Business Needs

Visibility into workforce availability and gaps is available at the enterprise levelRecruiting systems have visibility into talent pool/ pipeline; self service is available to applicants and hiring managers

All BUs have visibility into workforce availability and gaps but information does not flow to the enterprise level Recruiting systems have visibility into talent pool/ pipeline; self service is available to hiring managers

Most BUs have visibility into workforce availability and gapsRecruiting systems have limited visibility into talent pool/ pipeline; self service is available to hiring managers for some transactions

Most HR processes are standardized and automated across the enterprise

HR processes are not standardized across the enterprise; key processes are manual (e.g., reporting)

Some HR processes are standardized acrossthe enterprise; key processes

are manual (e.g., reporting)

All HR processes are standardized across the enterprise but are not integrated with outside functions

All HR processes are standardized across the enterprise and integrated with outside functions as well

Streamline, Automate & Integrate HR Processes

Shared services are not being leveragedKPIs are not tracked for performance improvement

Shared services are being leveraged by few BUs for few HR transactionsFew KPIs are tracked at BU level for performance improvement

Shared services are being leveraged by most BUs for most HR transactionsMost KPIs are tracked at BU level for performance improvement

Shared services are being leveraged by most BUs for all routine HR transactions; HR centers of excellence in place for all applicable expert processesAll KPIs are tracked for enterprise level performance improvement

Shared services are being leveraged by most BUs for all routine HR transactions; HR centers of excellence in place for some expert processesAll KPIs are tracked at BU level for performance improvement

Organize for Scale & Leverage

Adoption of best practices varies at each stage of maturity


Case Studies


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