People Analytics - Financial Impact of HRM Activities

Chapter 3: People Analytics - The Financial Impact of HRM Activities

Introduction to People Analytics

• Understanding the financial implications of Human Resource Management (HRM).

• Role of analytics in making more informed talent-related decisions.

Questions Addressed in This Chapter

• Improving talent-related decisions using HR metrics.

• Calculating the financial impact of employee turnover.

• Relationship between employee attitudes, engagement, customer satisfaction, and retention.

• Business case for implementing work-life programs.

Key Concepts in Talent Management

• Talent: Defined as the potential and realized capacities of individuals and groups within and outside an organization.

  • HR Talent Management Model:

  • Acquisition: Attracting talent (e.g., employer branding).

  • Retention: Keeping talent engaged and satisfied.

  • Activation: Adding value to talent through candidate experience and onboarding.

  • Revenue: Maximizing the value from talent through learning and performance management.

  • Referral: Using existing talent to attract new candidates.

Big Data in HR

• Big Data: Involves the collection and analysis of extensive data on behaviors, aptitudes, and competencies.

  • Characteristics: Volume, velocity, and variety.

  • Insights derived from big data provide competitive advantages.

  • Types of Data:

  • Unstructured: Text documents, images, with no specific format.

  • Semi-Structured: Clickstream data, textual data with some patterns.

  • Structured: Data with defined formats like databases.

Aptitudes, Behaviors, and Competencies

• Aptitude: Innate potential and ability in specific skills, influenced by genetics and environment.

  • Examples include mathematical and musical aptitude.

• Four Work Behaviors:

  • Job performance: Speed and accuracy of task completion.

  • Organizational Citizenship: Going beyond job roles to help teammates.

  • Absenteeism: Unscheduled absences impacting productivity.

  • Turnover: Permanent departure of employees, with controllable and uncontrollable types.

Understanding Employee Turnover

• Turnover: Rate determined by number of departure incidents divided by average workforce size.

  • Cost Components:

  1. Separation Costs: Exit interviews, administrative tasks, and severance pay.

  2. Replacement Costs: Job availability communication, onboarding, and training expenses.

  3. Costs of Lost Productivity: Overtime, temporary help, and impacts on remaining employee morale.

• Turnover-Reduction Strategies:

  • Anticipate departures, provide job previews, and conduct employee surveys to improve retention.

Work-Life Programs

• Work-life Program: Employer-sponsored benefits aimed at helping employees manage work-life balance.

  • Includes flexible work arrangements, dependent-care assistance, and paid leave policies.

• Impact: Implementation linked to enhanced perceptions of organizational support, improved job attitudes, and performance.

Attitudes in the Workplace

• Attitudes: Internal states directed towards particular objects, influencing behaviors and productivity.

• Job Satisfaction: Results from fulfilling personal job values; connected to elements like pay, promotions, coworkers, supervisory relationships, and job roles.

• Employee Engagement: Describes a fulfilling state characterized by enthusiasm and commitment to the organization’s success.

Behavior Costing

• Behavior Costing: Measures how attitudes predict employee behaviors and resultant economic impacts on organizations.

• Statistics: High engagement is linked to increased performance, while disengagement results in significant productivity losses and higher absenteeism costs.

Conclusion

• Sysco’s 5-STAR Model: HR practices shaping positive employee experiences and organizational outcomes.

• Addressing Absenteeism: Understanding costs associated with employee absence and developing reduction strategies is crucial for maintaining productivity.

Key Terms

• Talent, Big Data, Competitive Strategy, HR Strategy, LAMP Model, People Analytics, Organizational Commitment, Turnover, Work-Life Program, ROI, among others.