DrivingStrategy

ThroughWorkforceAnalytics

Dr.MarkHuselid
Director,CenterforWorkforceAnalytics
DAmoreMcKim SchoolofBusiness
NortheasternUniversity
Boston,MA

October12,2016

AboutMarkHuselid

Dr.MarkHuselid theisDistinguishedProfessorofWorkforceAnalyticsandtheDirectoroftheCenterforWorkforce
AnalyticsattheDAmoreMcKim SchoolofBusinessatNortheasternUniversity.HeholdsaPh.D.inHumanResource
Management,anM.B.A.,anM.A.inIndustrialandOrganizationalPsychology,andaB.A.inPsychology.Markjoined
theDAmoreMcKim facultyin2014;hewasonthefacultyofRutgersSchoolofManagementandLaborRelations
from1992to2014.AtDAmoreMcKim teachescoursesinthedesignandimplementationofworkforce
measurementsystems,workforceanalytics,andHRandworkforcestrategy.

MarkscurrentacademicresearchandconsultingactivitiesfocusonthelinkagesbetweenHRmanagementsystems,
corporatestrategy,andfirmperformance.Inaddition,healsohasanactiveresearchandconsultingprogram
focusedonthedevelopmentofworkforceanalyticstoreflectthecontributionoftheworkforce,workforce
managementsystems,andtheHRmanagementfunctiontostrategyexecutionandbusinesssuccess.

Markisafrequentspeakertoprofessionalandacademicaudiences,havingdeliveredmorethan600presentations
throughouttheU.S.,Europe,Africa,andAsia.Inaddition,hehasconsultedonthetopicsofHRmeasurementandHR
strategywithmanyFortune500companies.MarkwastheEditoroftheHumanResourceManagementJournalfrom
20002004,andisacurrentorformermemberofmanyacademicandprofessionalboards.Heisamongthemost
frequentlycitedscholarsinthesocialsciences.

Markhasbeentherecipientofnumerousgrants,awardsandhonors,andhis2001internationalbestseller,TheHR
Scorecard:LinkingPeople,Strategy&Performance(withBrianBeckerandDaveUlrich),hasbeentranslatedintoten
languages.Thefollowuppublication(alsonowintenlanguages),TheWorkforceScorecard:ManagingHuman
CapitaltoExecuteStrategy(withBrianBeckerandDickBeatty),waspublishedtosimilaracclaimbytheHarvard
BusinessPressin2005.Hislatestbook(alsowithBrianBeckerandDickBeatty),TheDifferentiatedWorkforce:
TranslatingTalentintoStrategicImpactwaspublishedinearly2009bytheHarvardBusinessPress.Huselids new
bookDisruptingWorkforceCompetitioniscurrentlyindevelopment.
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 NewWorkforceRealities

Oldsourcesofcompetitiveadvantagenolonger
differentiatefirmsintheglobalmarketplace.

Effectivelyrespondingtoglobalizationrequires
flexibility,speedandinnovation..andtalent.

Marketfortalentbecomingmuchmoreefficient.

Intensefocuswithinfirmsonworkforcestrategy,
differentiation,andexecution.

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3

TheDigitalDisruption...
HasAlreadyHappened!

Theworldslargesttaxicompanyownsnotaxis(Uber)
Thelargestaccommodationproviderownsnorealestate(Airbnb)
Thelargestphonecompaniesownnotelcoinfrastructure(Skype)
Themostvaluableretailerhasnoinventory(Alibaba)
Themostpopularmediaownercreatesnocontent(Facebook)
Thefastestgrowingbankshavenoactualmoney(SocietyOne)
Thelargestmoviehouseownsnocinemas(Netflix)
Thelargestsoftwarevendordoesntwriteitsownapps(Apple)

Source:www.ibmforentrepreneurs.com(2015) 4

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ChallengedIndustries StrategicShifts

Issues/Innovations ChallengedFirms
Internet Postalsystems/USPostalSystem
Cloudcomputing Routers,servers/Cisco,Dell,HP
IPADs,Dumbterminals Personal computers/HP,Dell,Lenovo
Ecommerce Travel,retail/WalMart,Tesco,Carrefour,Amex
Electronic readers Bookstores,publishers/Barnes&Noble,BooksaMillion

Workingathome Officefurniture/Steelcase,Herman Miller

Digitalization Photographicfilm/Kodak,Fuji
Newmaterialsciences Steel,Metal Fabrication/USSteel,Alcoa
Mobilephones Creditcards, traditionaltelecoms/Nokia,Ericsson, Motorola

Newsprint Newspapers/Garnett, NewYorkTimes

Funeral/Crematories Caskets/Batesville,Astral,Mathews,Chinese,WalMart,
Costco
Yourfirm? What is the Magnitude of
Shift in Your Industry? 5
5

NewDevelopmentsinTalent
ManagementandAnalytics

Segmentation Customer,supplier,workforce
WorkforceDifferentiation AplayersinA
positionsforAcustomers
ZeroBasedWorkBudgeting Designingwork
fromthecustomerback
LineManagerAccountabilityforTalent
BigDataandWorkforceAnalytics
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What Do We Mean by
Workforce Analytics?

1. CalculatingtheROIofindividualpractices(e.g.,training,selection,etc.)?

2. ReportingactivitymetricswithintheHRfunction(e.g.,costperhire,
daystofill)?

3. DevelopinganHRScorecardorWorkforceScorecardasatooltohelp
implementstrategymorequickly&effectively?

4. Externalreporting(toshareholders)ofhumancapitalinvestments?

5. Developingpredictivetalentanalyticstohelpexecuteourstrategy?
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Two Primary Uses of

People Measurement Systems

1. Measuring Levels: How can we identify and

reliably track the performance of our key human
capital indicators?, and

2. Measuring Relationships: How can we begin to

understand how much an improvement in these
human capital indicators will affect the bottom
line?

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 Howdowedecidewhatweneedtomeasure?
Measuresprovideanswerstoquestions!

Howdoweknowwhatquestionstoask?
Weneedtoletourstrategydictatethemetricswe
adopt
Wevegottofocusonthedataweneed,notthedata
wehave.

AFocusontheDesign,Implementation,
andMeasurementofWorkforceStrategy

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25Companiesin36Months:
TheWorkforceDisruptionProject

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OurNewBook:

DisruptingWorkforceCompetition:
HowStrategicWork,Workforce
Differentiation,andBigDataareChanging
theWaythatyouWork andWin

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TheThreeDisruptionsof
WorkforceStrategy

StrategicWork

Identifyingthestrategic
workthatistrulynecessary
toexecuteyourstrategy
(worknotjobs)

BusinessStrategy: WorkforceDifferentiation
HowGrow?
WherePlay? Investingindifferentiated
HowWin? managementsystems that
supportthatwork(strategic
focusnotbestpractices)

WorkforceAnalytics

Designingandimplementing
targetedmeasurement
systems thathelptohold
linemanagersaccountable
forstrategictalent

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WorkforceManagement
Disruption1:
StrategicWork

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TheQuestforCompetitiveAdvantage

Restructuringthe ReengineeringProcesses ReinventingIndustries

Portfolioand andContinuous andRegenerating
Downsizing Headcount Improvement Strategies

Smaller Better Different

Unfair
Fights

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UnderstandingtheImpact
ofWorkQuality
Low
High High
V

FIX KEEP P
StrategicValue

ELIMINATE!
Low Low 16

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StrategicWorkforcePlanning:A
ProcessOverview

Strategic Capability
Business Strategy Strategic Capabilities Strategic Work
Gaps
HowGrow? Atwhatmustwebe Howgooddowe Whatworkmustbe
Whereplay? great? needtobe?vs.How donetoachieveour
Howwin? goodarewe? strategiccapability
targets?
Bundlesoftechnology,
information,andpeople Destination Desired Whatworkis
OperationalExcellence uniquelyarrayedto Target essentialtoclose
ProductLeadership createorextenda Desired
G ourcapability
A
CustomerIntimacy competitiveadvantage P gaps?
G
A
V =Impactscustomers P
Present
perceptionof ProgressMetric
ValueCreation value Whatworkhasstrategic
Customer P =Enablescharging Present value? WorkQuality
Low

Economic
High

ourdesiredprice

StrategicValue
C =Enablesproducing
atourdesiredcost
Low

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WorkforceManagement
Disruption2:
WorkforceDifferentiation

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WhereDoWegoFromHere?:
TheGrowthStrategyMatrix

NEW Newproductcreation: Newmarket

Innovative creation:
Disruptive

Capabilityexamples :
Capabilityexamples:
R&D Licensing
Consumerinsight R&D
Consumerinsight Alliances/joint
Speed Jointventures&
Offerings

Marketing ventures
M&A acquisitions
excellence

Commoditization Geographicexpansion

Capabilityexamples :
Process Supplychain Capabilityexamples :
improvement management Realestate Logistics/
Manufacturing Purchasing Supplychain/ distribution
excellence channel Information
NOW management systems

NOW Markets NEW

19 19

DidWeSayTalentMatters?

Thetopsoftwaredevelopersaremoreproductivethanaverage
softwaredevelopersnotbyafactorof10Xor100X,oreven1,000X,
but

10,000X. NathanMyhrvold,formerChiefScientist,Microsoft

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ThereareSubstantialDifferences
inEconomicReturnsAcrossJobs

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PerformanceVariabilityIs
CriticalforaPositiontoBeStrategic

Thiscompany,highlyregardedforits ImpactonCustomerAttitudeScores
customerservice,surveyedabout Total7reps +100%
THEBEST

45,000customerstogaugethe Top1% +88%

impactofits4,583servicereps.It Top5% +77%
discoveredthatthetop10%hada Top10% +71%
positiveeffectoncustomerattitudes
with71%ofthecustomersthey TopQuartile +61%
talkedto;thetop7repscreateda 2ndQuartile +40%
positiveeffectwitheverycustomer. 3rdQuartile +27%
Insharpcontrast,thebottom10%
LowestQuartile 2%
hadanetnegativeimpactof14%on
customerattitudescores,whilethe 14%
Bottom10%
THEWORST

bottom3employeesalienatedevery 31% Bottom5%

customertheyspokewith. 63% Bottom1%
100% Bottom3reps

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Source:Gallup,Inc.

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 WorkforceManagement
Disruption3:
WorkforceAnalytics

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NewDevelopmentsinBigData
andBusinessAnalytics

Academicandpractitioner
interestissubstantial:
Firmsarespendingbillions
ondataandinfrastructure
acrossallfunctionalareas
Hundredsofbooksand
thousandsofarticleshave
beenwrittenonthistopic,
andthepaceseemstobe
accelerating
BigDataareeverywhere!

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ButBigDataRequire
BiggerTheory!

Ironically,moredataisntnecessarilyalwaysagoodthing..

Movingfromdatatoactionableinformationrequiresthatwe
understandbehavioralsciencetheoryandasktheright
questionsabouthowtheworkforcecontributestoyour
success.

Datacollectionandinfrastructureisnotyourbiggestproblem
knowingwhattomeasureandhowtomeasureitis!

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Implicationsfor
WorkforceAnalytics

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Three Issues:

Asking the Right Questions

Conducting the Right Analyses

Influencing the Right Decisions

Workforce analytics as derived demand: If

talent doesnt matter, analytics wont either

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Asking the Right Questions

Too often the focus is on the technical issues

associated with data, often at the expense of clearly
operationalizing the questions that we are trying to
answer

Analytics doesnt always just mean statistics key

emphasis should be on developing a cause-effect a
conceptual understanding of what you are trying to
measure, before you begin to think about data,
measures, or inferential statistics

Dont start with the data: Start with the question

Must begin with a review of prior research and the

development of plausible hypotheses!
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MeasuresProvideAnswers
toQuestions!

Howdoweidentifyandquantifythestrategic
capabilities bundlesofinformation,technology,
andpeople thatdriveourstrategicsuccess?

Whatarethekeystrategicpositionsinourfirmand
howshouldtheybemanaged?

Howdoweidentifyandquantifythestrategicwork
thathasamajorimpactonvaluecreationinour
firm?
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Questions(Cont)

Howwellisourstrategicworkcurrentlybeing
performed?Whatworkneedstobeaddedordeleted?

Howdowedevelopstrategictalentinventoriesthathelp
usidentify1)thetalentwehave,2)thetalentweneed,
and3)whatactionswillclosethisgap?

Howdowedesignandimplementmeasurement
systems(HRandWorkforceScorecards)thatensure
managerialaccountabilityforfirmsmostexpensive
resource,theworkforce?
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 The Role of Theory

Nothing so practical as a good

theory Kurt Lewin

Every good regulator of that system

must be a model of that system
(Conant & Ashby, 1970)

Every good solution must be a model

of the problem that it solves.
(Scholten, 2010)
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An Example of a Strategy
Map at Advertising Inc.

Goal: Be revered as the hothouse for world changing creative ideas that
transform our clients businesses, brands and reputations
Financial

Double EPS Build Advertisings

Brand Equity
Grow Revenues
Reduce Costs
Client

Create PICS -- Permanently Infatuated Clients

Excel at Focus Identify and Win Global

Product &
Process

Financial Work Smarter Account Business Implement Fame for

Discipline Across the Management & Development Appropriate Our Idea
Source: Kaplan & Norton

(Eliminate Network Create Great (New clients & Communication Leadership

Inefficiencies)
Ads assignments) Services
People &
Culture

One Team: One Dream: create a rewarding, stimulating

environment where nothing is impossible

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 More Detail at Advertising, Inc.

Be revered as the hothouse for world changing creative ideas that

transform our clients businesses, brands and reputations.
Financial

Maximize Profit

Reduce Cost Grow Revenue

Client

Create PICS -- Permanently Infatuated Clients

Product &

Excel at Account Management & Create Great Ads

Process

Identify Create Big

Work Smarter Appropriate Fabulous Ideas
Financial
Across the Communicati
Discipline

Source: Kaplan & Norton

Network on Services Generate
Ideas Sell Ideas
People &
Culture

One Team: One Dream: Create a Rewarding, Stimulating Environment Where Nothing is Impossible

Develop skills Create stimulating

and competencies Drive Motivation work environment

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Third-Order Strategy Map

at Advertising, Inc.
Theme: Excel at Account Management & Create Great Ads
Objective: Big Fabulous Idea (BFI) Objective

Internal Create Big Fabulous

Perspective Ideas (BFI)

Generate Idea Sell ideas

Challenge meeting Build relationship

Build Benefit Case
brief process with client

Get physical Organize Leaders with Success with

State Deliverable Advertising, Inc.
marketing a point of view
Source: Kaplan & Norton

engagement
of right people
Knowledge of business
Select type of (company, product, market, etc.)
Generate account working on
interest

Develop position Anticipate client issues Tell clients

accountability what they have not thought of yet

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 WhatDoYouWanttoKnow
AboutYourWorkforce?
OldFocus NewFocus
Question Question
Asked Asked
Communication Isourworkforcesatisfied/ Isourtoptalentinstrategicpositions
happy? thrilledwithourfirm?
WorkDesign Howdowedoourwork? Arewefocusingonvaluecreationin
everyjob?
Selection Arewefairinourselection Howwelldoesourtoptalentin
process? strategicrolescomparetothelabor
supply?
Training/ Howdidourparticipantsfeel Howcanweacceleratetheskillsof
Development
aboutourtraining? ouremergingtalentinstrategicroles?

Performance Areperformanceappraisals Isourperformancemanagement

Management
completedandontime? systematooltohelpexecuteour
businessstrategy?
Rewards Isourprogramfair? Areweadequatelyrewardingour
valuecreatorsfortheirsuccess?
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BasicHR/Workforce
MetricsQuestions

WorkforceFocus WorkforcePractitioner
Workforce HRFunction
Whatdo wewantour HoweffectiveareourHR
Organization workforcetounderstand practices indeliveringthe
Wide aboutourcompany? workforcetowininthemarkets
wechoosetocompetein?
Focus

Strategic Talent Leaders/LineManagers

Whatisourlevelof toptalent Howeffectiveareourleadersin
instrategicpositions? deliveringHRpoliciesand
practicesinmanagingtheir
Individual workforcestoleverageour
firmscompetitiveadvantage?

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 WhatHaveWeLearned?

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Conclusions

Therearemany,manyrolesthatcandestroywealth
inorganizations.Butonlyaveryfewrolesthatcan
actuallycreategreatwealth.

Incontrasttotheconventionalwisdom,you
probablydontneed andtrulycantafford world
classtalentinallpositions.

All(oratleastmost)jobsareimportant,butonlya
fewjobsaretrulystrategic.
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Conclusions(Cont)

Aorstrategicpositionsarethosewhichimpact
strategyandexhibithighvariabilityinemployee
performance.

Strategiccapabilitiesprovidethecontext for
improvement:Variabilityinemployeeperformance
providestheopportunity forimprovement.

Strategicpositionscanappearatanylevelinthe
firm.
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Conclusions(Cont)

Greatfirmsmanagetheirworkforceslikeaportfolio
andleverageitsreturn investingdisproportionatelyin
thehighestreturnstrategicworkandstrategic
positions.

But..Mostorganizationsinvestintalentby
hierarchicallevel,notbystrategicimpact.

Asaresult,overtimefirmstendtounderinvestin
strategicworkandoverinvestinnonstrategicwork.
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Conclusions(Cont)

Whatdoesthismean?Thegreatestpotential
opportunitytoimpactfirmperformanceislikelytobe
locatedin(some,veryspecific)strategicpositions.

Butwellneverknowunlesswebuildananalytical
frameworkandcollectthedataweneedtohelpus
understandhowtalentmakesadifference.

Andthenactontheseinsights!
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KeyStepsinSuccessful
AnalyticsInitiatives

Readtheresearchandbuildatheoryormodelthatshows
whatcauseswhatinyourorganization
Firstdeterminewhattomeasure thencollectreliableand
validdata
Useanalyticaltoolstoestimatetheimpactoftalentonthe
organizationaloutcomesyoucareabout:
Regression
Networkanalysis
Swarmanalysis
Focusondatafordecisionmaking,andholdmanagers
accountableforenactingevidencedbasedmanagement
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Influencing the
Right Decisions

Criticalcausalthinking

Principlesofgoodmeasurement

Estimatingcausalrelationships

CommunicatingHRstrategicperformance
resultstoseniorlinemanagers

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