The New HR Analytics: Predicting the Economic Value of Your Company's Human Capital Investments

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Overview

"Dr. Jac Fitz-enz...has now defined and shaped predictive analytics that define more clearly how today's metrics can predict and lead to tomorrow's successes."---Dave Ulrich, Professor, Ross School of Business, University of Michigan, and Partner, The RBL Group" "In The New HR Analytics Jac Fitz-enz extends his decades of leadership in human capital measurement. It is a call to action that should inspire leaders to rethink their assumptions and improve their decisions." "---John Boudreau, Professor, Management & Organization, and Research Director, Center for Effective Organizations, University of Southern California" "...a comprehensive Human Capital Management framework and a very practical set of action-oriented recommendations that together enable you to leverage the one thing that makes your organization truly unique: your human talent."---James P. Ware, Executive Producer, Work Design Collaborative LLC" "Predictive analytics is what we've been waiting for because it's the next level of understanding in Dr. Jac's long and evolving journey to empower us with the core tools, terminology, and logic to make a difference."---Ed Kleinert, Administrator, HR Information Technology, Memorial Sloan-Kettering Cancer Center" "Dr. Jac Fitz-enz continues to provide the thought leadership businesses need now more than ever when it comes to human capital management."---Shyam Patel, COO, People Report" "The New HR Analytics is the breakthrough people management playbook... The HCM:21® model introduces leading-edge predictive techniques that maximize return on human capital investments while energizing and engaging employees."---Ken Scarlett, President, Scarlett Surveys International" "Once again, Dr. Jac has led the way with critical research that enables organizations to create sustainable value through people."---Kent Barnett, CEO, KnowledgeAdvisors" "Jac Fitz-enz...is a powerful lighthouse who enlightens the long way from the old human resources department to the new human capital strategic partner....an important milestone in human capital history."---Luis Maria Cravino, Cofounder and Codirector, AO Consulting S.A., Buenos Aires.

Product Details

  • ISBN-13: 9780814416433
  • Publisher: AMACOM
  • Publication date: 5/26/2010
  • Pages: 368
  • Sales rank: 191,676
  • Product dimensions: 6.30 (w) x 9.00 (h) x 1.40 (d)

Meet the Author

JAC FITZ-ENZ (San Jose, CA) is widely acknowledged as the father of human capital strategic analysis and measurement. As founder of Saratoga Institute, he developed the first international HR benchmarks. He was named by HR World as one of the Top 5 HR Management Gurus and cited by HR Magazine as one of 50 people in the last 50 years who have significantly changed the field of HR. He has authored a dozen books including the award-winning The ROI of Human Capital (978-0-8144-1332-6). His column, "Leading Edge", appears monthly in Talent Management magazine.

Read an Excerpt

PREFACE

This book was twenty-five years in the writing. It started in 1984, with the

publication of my How to Measure Human Resources Management; it was

augmented with Human Value Management six years later; and then the

concept was updated ten years ago in The ROI of Human Capital. Those

books chronicle the development of metrics in human resources from its

inception in the 1970s to today. They have passed the test of time with

second and third editions, and two were honored with Book of the Year

Awards from the Society for Human Resource Management.

Now, The New HR Analytics is both the product of these endeavors

and the look into the future. Although this book talks to human resources

managers, it deals with the broader issue of human capital management

processes. Hence, it is as applicable to the work of line managers as to

that of the human resources department. Anyone who manages people

can find value in the model we present here and the case studies that are

offered in support of that model.

HR as an Expense

Having come into HR in 1969 from ten years in line jobs, I could not

understand why any company would create a function that was only an

expense. But then, too, at that time line management itself was not so

sophisticated. Management models of the day were a patchwork quilt of

fads that came and went, sometimes to reappear later. Others flashed

across the sky like a meteor and burned out when they hit the atmosphere

of managerial impatience. During that period, HR was simply a place

where you put people ‘‘who couldn’t do any harm,’’ as a manager in my

company said at the time.

I quickly discovered the problem behind the perception. It had two

parts. One part was that HR people actually believed and accepted the

idea that they were an expense center and nothing more. To be sure, there

were a few who fought that perception, but they were overwhelmed by

the accounting-driven belief system of the time. The second part of the

problem was that HR didn’t know, and never talked about, the value they

were generating because they couldn’t—they had no language for it. All

their terms were qualitative, subjective, and equivocal. Anecdotes were

their only way of responding when management asked for evidence of

the value added by HR’s services.

‘‘How is employee morale?’’

‘‘It’s good!’’

‘‘How good?’’

‘‘Very good.’’

Could you run any other function with such performance indicators?

It is enough to make one despair.

The Introduction of Metrics

The solution was obvious. We in HR needed to learn to speak in quantitative,

objective terms, using numbers to express our activity and value

added. Business uses numbers to explain itself. Sales, operating expenses,

time cycles, and production volumes are principal indices that express

business activity. In the 1970s, productivity was the key issue. In the

1980s, the quality movement emphasized process quality as a competitive

advantage. Both relied on numbers to express degrees of change.

At the time, I asked the HR director of a major corporation if he

was involved in these initiatives. He answered that they were not human

resources management issues. Here were the major initiatives of the day,

and he could not see what they had to do with people. Is it any wonder

that people write about nuking the HR function?

During the 1970s, we in HR began to experiment with simple cost,

time, and quantity metrics to show that HR was at least managing

expense and generating something of value. In the beginning it was

largely a defensive maneuver. But by the 1980s, we were able to show

that we were indeed adding measureable value. In 1984, I wrote the first

book mentioned earlier. In 1985, at my consulting company, the Saratoga

Institute, we published the first national benchmarks, and this led to publi-

cation of Human Value Management, which was a marketing model

applied to the HR function. By 2000, we had advanced the methodology

to a point where we were talking about return on investment. Basically,

we shifted the paradigm from that of running the HR department to that

of managing human capital in the organization. At that point we were

still using primarily standard arithmetic functions. Later in the decade

we began to apply simple statistical tools, and this opened up the era of

human capital analytics—which brings us to today.

The Era of Analytics

We are on the threshold of the most exciting and promising phase of the

evolution of human resources and human capital management. We’ve

gone from the horse and buggy to the automobile to the airplane. Now

it’s time to mount the rocket and head for the stratosphere.

Like arithmetic, statistics are bias free and are applicable over a vast

range of opportunities. They can be used in studies of single, localized

problems or for supporting organization-wide makeovers. The secret

sauce of statistics is just like the source code of computer programs—a

buried logic that can go step-by-step or leap ahead, using macros to speed

to the solution.

Today, we shift our attention to predictability. This book is about

predictive management. We think of it as ‘‘managing today, tomorrow.’’

Predictive management, or HCM:21, is the outcome of our eighteen-

month study called the Predictive Initiative. It is the first holistic, predictive

management model and operating system for the human resources

function. We launched it in the last quarter of 2008 and it has been suc-

cessfully applied in industry and government, in the United States and

overseas.

HCM:21 is a four-phase process that starts with scanning the marketplace

and ends with an integrated measurement system. In the middle, it

addresses workforce and succession planning in a new way and shows

how to optimize and synchronize the delivery of HR services. It is

detailed in the chapters that follow.

Table of Contents

Preface

HR as an Expense

The Introduction of Metrics

The Era of Analytics

The Organization of This Book

Acknowledgments

Contributors

PART ONE : INTRODUCTION TO PREDICTIVE ANALYTICS 1

Chapter One Disruptive Technology: The Power to Predict 3

What Is Analytics?

Introducing HCM:21®

The Value of Insight

The Plan

Chapter Two Toward Analytics and Prediction 8

The Language of Metrics and Analytics

Ascending the Value Ladder

The Power of Analytics

The Model for Predictive Management

Why Analytics Is Important 17

Measuring What Is Important

Luis Maria Cravino

Strategic Human Capital Measures: Using Leading HCM to Implement Strategy

Stephen Gates and Pascal Langevin

From Business Analytics to Rational Action Kirk Smith Smith, Kirk

PART TWO : THE HCM:21® MODEL 45

Chapter Three Scan the Market, Manage the Risk 47

The Big Picture

The Value of Statistical Analysis

The Importance of Risk Assessment

The Data Speak for Predictive Management

Ready, Aim, Begin

How to Improve HR Processes 56

The Intersection of People and Profits: The Employee Value Proposition Shyam Patel Patel, Shyam

More Than Compensation: Attracting, Motivating, and Retaining Employees, Now and in the Future Ryan M. Johnson Johnson, Ryan M.

"Best in Brazil": Human Capital and Business Management for Sustainability Rugenia Pomi Pomi, Rugenia

Chapter Four The New Face of Workforce Planning 85

Human Resources Versus Human Capital Planning

Jumping Ahead of the Competition

How to Put Capability Planning into Practice 94

Scenario Planning: Preparing for Uncertainty James P. Ware Ware, James P.

Quality Employee Engagement Measurement: The Ceo's Essential Hucametric to Manage the Future Kenneth Scarlett Scarlett, Kenneth

Truly Paying for Performance Erik Berggren Berggren, Erik

The Slippery Staircase: Recognizing the Telltale Signs of Employee Disengagement and Turnover F. Leigh Branham Branham, F. Leigh

Chapter Five Collapsing the Silos 141

Any Process: Input, Output, Throughput

Process Analysis for Human Resources

A Broader Future View

The Integration of HR Services

How They Are Applying It 153

Roberta Versus the Inventory Control System: A Case Study in Human Capital Return on Investment Kirk Hallowell Hallowell, Kirk

The Treasure Trove You Already Own Robert Coon Coon, Robert

Waking the Sleeping Giant in Workforce Intelligence Lisa Disselkamp Disselkamp, Lisa

Chapter Six Turning Data into Business Intelligence 182

Just What Are Metrics?

Avoiding Common Metrics Mistakes

Second-Generation Metrics: Benchmarking

Third-Generation Metrics: Predictive Analytics That Yield Business Intelligence

Business Intelligence: The Ultimate Goal

At the End of the Day

How to Interpret the Data 192

Predictive Analytics for Human Capital Management Nico Peruzzi Peruzzi, Nico

Using Human Capital Data for Performance Management During Economic Uncertainty Jeffrey Berk Berk, Jeffrey

Using HR Metrics to Make a Difference Louis R. Forbringer Forbringer, Louis R.

PART THREE : THE MODEL IN PRACTICE 215

Chapter Seven Impacting Productivity and the Bottom Line: Ingram Content Group Wayne M. Keegan Keegan, Wayne M. 217

Chapter Eight Leveraging Human Capital Analytics for Site Selection: Monster and Enterprise Rent-A-Car Marie Artim Artim, Marie 224

Chapter Nine Predictive Management at Descon Engineering Ahmed Tahir Tahir, Ahmed 240

Chapter Ten Working a Mission-Critical Problem in a Federal Agency Jac Fitzenz Fitzenz, Jac 259

Chapter Eleven UnitedHealth Group Leverages Predictive Analytics for Enhanced Staffing and Retention Judy Sweeney Sweeney, Judy 265

PART FOUR : LOOKING FORWARD 271

Chapter Twelve Look What's Coming Tomorrow 273

What We Know About Tomorrow

What Analytics Can Deliver for Your Organization

Thought Drives Action

Still Evolving

Views of the Future: Human Capital Analytics Libby Sartain Sartain, Libby 276

Appendix: The HCM:21® Model: Summary And Samples 301

Index 332

About The Author 342

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