MCBASSI & COMPANY

Using Analytics to Create a Bridge Between HR & Finance

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In many companies, the relationship between HR and Finance ranges from uneasy to downright unpleasant. Given Finance’s ability to veto its initiatives, it is easy for HR to come to think of Finance as the arch-enemy.

If you are in HR and this sounds even vaguely familiar, we invite you to a webinar co-presented by McBassi CEO Laurie Bassi later this week.  The webinar (Wednesday, June 15, 2016 at 12:00 noon EDT) is being put on by Financial Executives International (FEI).

Entitled “Balancing Effective People Management and Profitable People Management,” the webinar focuses on how CFOs and HR are partnering to drive a more profitable and strategic business.  Click here for more details and registration information.

Laurie will be discussing how to use analytics to bridge the HR/Finance gap by doing the following:

  • Focusing on measuring the “human drivers” of value creation (not just employee engagement)
  • Linking “people data” to business data
  • Creating the “right” human capital metrics/indices for tracking & reporting
  • Building these metrics into the performance management & compensation systems

There’s a lot of wisdom in the old adage, “If you can’t beat them, join them.”  Analytics is the language of finance.  And increasingly, it is becoming the second language of HR.

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Should Companies Disclose More Human Capital Information?

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CFO Magazine recently hosted an online/print discussion on the long-running debate over whether companies should expand their human capital disclosure.  They invited McBassi CEO Laurie Bassi to participate as one of four debaters.

It will come as little surprise to our loyal readers that Laurie weighed in on the side of more disclosure, arguing that it’s crazy to report a company’s most important assets as nothing more than costs:

“Yes, companies surely should disclose more information about their human capital.

“Looking at the issue from the perspective of major stakeholders – including companies, shareholders, employees, and society as a whole – increased disclosure on human capital is unambiguously a good thing.  It’s a bad thing only for companies that do a lousy job on the ‘people side’ of their business, and human resources executives who would prefer to avoid accountability for human capital performance.”

Read the full article here.

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How to Grow Your HR Analytics Budget

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If you’re like many HR professionals, you share two characteristics:
  • You know you should be making more progress on HR analytics
  • You also don’t know where to get the money to do it

And yet, some organizations – admittedly a minority – report that they have sufficient HR analytics budgets.

So we set out to determine what distinguishes those HR functions that report having an ample budget for analytics.  To answer this question we analyzed McBassi’s HR analytics maturity benchmarking database. (If you would like a free customized benchmarking report on how your company’s current HR analytics maturity stacks up, click here.)

Our analysis showed that the following attributes distinguish HR functions that have a sufficient HR analytics budget from those that don’t:

1.  They have a strategy in place ensuring that their HR analytics initiatives are aligned with the organization’s strategic objectives.

2.  They get the basics right. They have reports/dashboards making it possible to determine whether goals are being met for each of HR’s key responsibilities (recruiting and selection, training and development, compensation and benefits, retention and promotion).

3. They have developed the capacity to link together disparate pieces of information on people and business outcomes to produce actionable, executive-level insights.

Now we know what you may be thinking – “We can’t possibly do these things because we don’t have the budget to get them done.” Classic chicken-and-egg problem. But what we’ve learned is that it doesn’t take a lot of money to make a good, running start at each of these issues. It does take being clever and resourceful – and committed.

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Should You Be Worried About Your Company’s Glassdoor Scores?

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Glassdoor.com has created a high degree of transparency about what it’s like to work in any given organization.  This new reality has spawned a variety of different reactions from individuals and from company representatives.  One fairly common reaction among executives has been to dismiss employees’ Glassdoor ratings as representing just the “whiners” within their firm.

We think it’s important to take a closer look.  For one thing, companies with high Glassdoor scores have consistently outperformed the stock market as a whole (see figure below).  And this means the investment community is beginning to pay more attention to Glassdoor ratings.

And what about the impact of scores on potential job applicants?  They’re the main audience on Glassdoor, and they’re systematically combing through scores and reviews for you and for your competitors.  So if your scores are lower than your competitors, it’s likely you’re going to have a tougher time getting high-quality job applicants.

The bottom line? If your Glassdoor scores are lower than your competition, yes, you should indeed be worried.  Your next step should be some “analytics sleuthing” to figure out what you can do about it.  (By the way, we can help you with that!)

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How to Improve the Evaluation of Learning

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We hope this finds you well, your new year off to a good start, and your resolve to make improvements and have a positive impact at work intact!

Maybe one of your New Year’s resolutions was to make improvements in the impact that your firm’s investments in learning have on its business results? Or maybe to improve your ability to evaluate those impacts? Perhaps even to elevate the strategic importance of learning? If so, we have a (belated) holiday gift for you!  Our (significantly expanded) ATD paper entitled “7 Steps to Using Analytics to Improve the Evaluation of Learning” can be downloaded here.

We hope this stimulates some fresh thinking and helps you to make progress on a problem that has long vexed our profession. Drop us a line and let us know!

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Reflections – and a Look Ahead

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With 2015 drawing to a close, we’re looking back and pausing to be thankful for our clients and colleagues. It is our good fortune to work with business people who are both smart and good.  They work to help their organizations operate in what we at McBassi think of as “the sweet spot” – the intersection of profitable and enlightened management of employees.  This, in turn, builds the foundation for creating sustainably profitable relationships with customers – thereby generating win-win-win outcomes.

As we look forward to 2016, we expect that our clients’ commitment to finding and creating these all-win solutions will become even more profitable in the future than it already has been in recent years.

The challenges we face – as individuals, families, communities, and societies – are daunting and well-known to all of us.  More and more, savvy business people across the globe realize that business must increasingly become a part of the solution (while simultaneously being a source of the problem less frequently) – and that doing so can actually be quite profitable.

So as we wrap up the year, we’d like to leave you with a thought we hope you can use to make 2016 both a good and profitable year.  In these times of extraordinary uncertainty, there is money to be made by creating more certainty and less risk.  In thinking about your business, are there changes that could be made at little or no cost to reduce uncertainty for your employees?  How might you tweak your hiring, onboarding, development, scheduling, performance review, or compensation/benefits policies to reduce unnecessary uncertainty for employees (or prospective employees)?

The mere act of asking questions like this can be powerful.  And finding the answers?  That can set the stage for what we hope will be a satisfying and profitable new year for you!

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Applying HR Analytics to Leadership Development

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HR analytics has wide applicability to a broad spectrum of people-related issues within organizations.  Within the HR universe, analytic methods are most typically applied to identifying factors that drive employee engagement or employee turnover.

There are many other applications as well that are far less commonly used.  This month we’ll explore the use of analytics in leadership development, a common (and often quite expensive) investment organizations regularly make in key employees.  Nonetheless, we’ve found that most organizations know very little about the impact or effectiveness of those investments.

We have four key lessons about how to apply analytics to better understand – and improve – an organization’s return on its leadership development:

  1. Make sure the leadership competencies in which you’re investing are, in fact, the ones that will drive better organizational performance.  Rather than investing in generic, one-size-fits-all competencies from external vendors, consider creating your own competencies, so you can develop leaders with the characteristics to be successful in your organization.
  2. Tap the wisdom of your workforce to determine what leadership development has actually occurred.  Ask the people who see your leaders in action every day: your employees!  How?  Ensure that detailed leadership questions are included in your employee surveys and/or 180-degree (or 360-degree) feedback assessments.  This will make it possible to properly evaluate and improve your leadership development initiatives.
  3. Link together key (and disparate) pieces of data to yield actionable insights for improving the return on your leadership development investment.  Look at the relationship between various leadership characteristics and competencies and your organization’s outcomes.  See which ones are most closely associated with more successful outcomes, and focus on those in the future.
  4. We’ve said it before, but don’t let the perfect be the enemy of the good!  You won’t accomplish all of the above right away – it will take some time and some hard work.  But that’s not a reason not to get started.  Even the most basic early insights can be powerful catalysts for change – and your insights will only improve with more time (and more data).

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How To Get More Value Out Of Your Employee Engagement Survey: Part 3

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Insightful Reporting

A well-designed and cleverly analyzed survey is an essential foundation for any organization serious about using HR analytics to create actionable business intelligence.  [See our August newsletter and September newsletter for “how-to” check-lists.]

But the survey isn’t enough!  You also need to work to make it easy for busy leaders and managers to understand the results – especially the specific actions your survey indicates will drive both improved employee engagement and better business results.  Make sure leaders don’t have to sort through piles of data and graphics to figure it out (or worse yet, to guess).

We’ve identified 5 principles to help ensure the reporting of your survey results will serve as a positive catalyst for change in your organization.

1.  Focus on quality of insight, rather than quantity of data.  This is the “art” of analytics that makes the “science” understandable, compelling, and actionable.

2.  Avoid focusing too much attention on rankings of highest- and lowest-scoring survey items.  Instead, report findings from the statistical analysis that links employee survey questions to both business outcomes and employee engagement.

3.  Create highly visual, analytics-enhanced, mass-customized reports for managers pointing them to the most important actions they need to take, based on the specific results for their group.

4.  Put detailed data tabulations in a well-organized appendix (avoid indecipherable data dumps).

5.  Use a succinct, well-written narrative to “tell the story.”

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How To Get More Value Out Of Your Employee Engagement Survey: Part 2

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Cleverly Analyzing Your Survey Data

Any employee engagement survey should help your organization drive better business results through more effective management of its employees.  When done properly, an engagement survey helps your organization operate in “the sweet spot” – the intersection of enlightened and sustainably profitable management of people.

Employee engagement surveys often fall far short of this potential because data from surveys is not properly analyzed, and the resultant report therefore has little impact.

There are three steps you must take to ensure that your employee engagement survey has maximum positive impact:

Part 1 – Ask the right questions (see our August newsletter)
Part 2 – Analyze the data cleverly (see the guiding principles outlined below)
Part 3 – Create insightful reports (coming up in next month’s newsletter)

The five principles that should guide your analysis of employee survey data are listed below.

1.  Design your analysis to identify statistically the most important drivers of your organization’s employee engagement and ability to achieve its business goals.  The analysis needs to go far beyond benchmarking and measuring high and low scores.

2.  Use correlation analysis as a primary tool for identifying the drivers of each of the outcomes questions separately.  (Click here for a discussion of diagnostic vs. outcome questions.)

3.  Systematically combine the findings from the correlation analyses with measures of organizational strength and weakness on each of your survey’s diagnostic questions to create a rank ordering of areas of opportunity.

4.  Simultaneously examine the rank ordering of areas of opportunity for each business outcome to create a “short list” of the most important areas of opportunity.

5.  Use that short list to create fact-based, directional recommendations.

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How To Get More Value Out Of Your Employee Engagement Survey: Part 1

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Ask The Right Questions!

Employee engagement surveys are a potentially enormously valuable source of actionable insights about how to improve employee engagement and business results. This potential, however, too often goes unrealized, because many HR departments are stuck in out-of-date ways of thinking about what engagement surveys can and should do for their organization.

In the end, getting more value out of engagement surveys also requires clever analysis of your survey results and compelling reporting on the findings (topics we will cover in subsequent newsletters).

But first, you’ve got to start by asking the right questions!

There are four points to keep front and center in the design of your employee survey:

  1. Your survey “real estate” is a valuable commodity – so use it wisely. You’ll get more responses and more accurate answers when you keep your surveys fairly short.
  1. You should ask questions that fall into two different broad categories: outcomes and diagnostic items.
  1. The outcomes questions should be carefully chosen, small in number, and focused on your organization’s key business goals. These include, but should also go beyond, employee engagement.
  1. The vast majority of your survey real estate should be devoted to diagnostic questions, because that is where the actionable insights will be found. Diagnostic items are designed to get employees’ assessments on a wide range of workplace elements that might be helping to drive (or impede) key outcomes.

And how do you find out which diagnostic items are the ones driving the outcomes?  Stay tuned – that’s a topic for next month’s newsletter!

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