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

by Jac FITZ-ENZ

Overview

Using Fitz-enz's proprietary analytic model, you will be equipped to measure and evaluate past and current returns and apply the information to make predictions about the future value of human capital investments.

In his landmark book, The ROI of Human Capital, Jac Fitz-enz presented a system of powerful metrics for quantifying the contributions of individual employees to a company's bottom line. Now, in The New HR Analytics, he reveals how human resources professionals can apply this expense-based knowledge to make the most strategic staffing decisions for their companies.

You'll learn how to:

• evaluate and prioritize the skills needed to sustain performance;
• build an agile workforce through flexible Capability Planning;
• determine how the organization can stimulate and reward behaviors that matter;
• apply a proven succession planning strategy that leverages employee engagement and drives top-line revenue growth;
• and recognize risks and formulate responses that avoid surprises.

Brimming with real-world examples and input from thirty top HR practitioners and thought leaders as well as exclusive analytical tools, The New HR Analytics ushers in a new era in human resources and human capital management.

Product Details

ISBN-13:	9780814438848
Publisher:	AMACOM
Publication date:	05/26/2010
Edition description:	Special
Pages:	368
Product dimensions:	6.00(w) x 8.90(h) x 1.00(d)
Age Range:	18 Years

About the Author

Jac Fitz-enz is acknowledged world-wide 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 who has significantly changed the field. He has authored a dozen books, including the award-winning The ROI of Human Capital.

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

PART ONE: INTRODUCTION TO PREDICTIVE ANALYTICS 1
CHAPTER ONE Disruptive Technology: The Power to Predict 3
CHAPTER TWO Toward Analytics and Prediction 8
Why Analytics Is Important 17
Measuring What Is Important, by Luis Maria Cravino
Strategic Human Capital Measures: Using Leading HCM to Implement Strategy, by Stephen Gates and Pascal Langevin
From Business Analytics to Rational Action, by Kirk Smith

PART TWO: THE HCM:21(r) MODEL 45
CHAPTER THREE Scan the Market, Manage the Risk 47
How to Improve HR Processes 56
The Intersection of People and Profits: The Employee Value Proposition, by Joni Thomas Doolin, Michael Harms, and Shyam Patel
More Than Compensation: Attracting, Motivating, and Retaining Employees, Now and in the Future, by Ryan M. Johnson
''Best in Brazil'': Human Capital and Business Management for Sustainability, by Rugenia Pomi
CHAPTER FOUR
The New Face of Workforce Planning 85
How to Put Capability Planning into Practice 94
Scenario Planning: Preparing for Uncertainty, by James P. Ware
Quality Employee Engagement Measurement: The CEO's Essential Hucametric to Manage the Future, by Kenneth Scarlett
Truly Paying for Performance, by Erik Berggren
The Slippery Staircase: Recognizing the Telltale Signs of Employee Disengagement and Turnover, by F. Leigh Branham
CHAPTER FIVE Collapsing the Silos 141
How They Are Applying It 153
Roberta Versus the Inventory Control System: A Case Study in Human Capital Return on Investment, by Kirk Hallowell
The Treasure Trove You Already Own, by Robert Coon
Waking the Sleeping Giant in Workforce Intelligence, by Lisa Disselkamp
CHAPTER SIX
Turning Data into Business Intelligence 182
How to Interpret the Data 192
Predictive Analytics for Human Capital Management, by Nico Peruzzi
Using Human Capital Data for Performance Management During Economic Uncertainty, by Kent Barnett and Jeffrey Berk
Using HR Metrics to Make a Difference, by Lee Elliott, Daniel Elliott, and Louis R. Forbringer

PART THREE: THE MODEL IN PRACTICE 215
CHAPTER SEVEN Impacting Productivity and the Bottom Line: Ingram Content Group, by Wayne M. Keegan 217
CHAPTER EIGHT Leveraging Human Capital Analytics for Site Selection: Monster and Enterprise Rent-A-Car, by Jesse Harriott, Jeffrey Quinn, and Marie Artim 224
CHAPTER NINE Predictive Management at Descon Engineering, by Umair Majid and Ahmed Tahir 240
CHAPTER TEN Working a Mission-Critical Problem in a Federal Agency, by Jac Fitz-enz 259
CHAPTER ELEVEN UnitedHealth Group Leverages Predictive Analytics for Enhanced Staffing and Retention, by Judy Sweeney 265

PART FOUR: LOOKING FORWARD 271
CHAPTER TWELVE Look What's Coming Tomorrow 273
Views of the Future: Human Capital Analytics 276

APPENDIX: THE HCM:21(r) MODEL: SUMMARY AND SAMPLES 301