Building a Business Case for Talent Analytics Karen O Leonard, VP, Analytics & Benchmarking Research Sally-Ann Cooke, Research Analyst, HCM Technology Research
Contents Why companies are investing in talent analytics Structuring a business case for talent analytics Presenting the business case? Q&A 1 Building a Business Case for Talent Analytics
What Drives the Need for Analytics The Push The next great frontier Something everyone needs to do to keep up Critical for cost savings A component of operational life (i.e., dashboards, scorecards, metrics) Something the CFO is pushing Why Now? Widespread adoption of HR management systems and the advent of cloud storage Software is now more affordable and readily available The real catalyst for talent analytics is to improve talent and business outcomes. 2 Building a Business Case for Talent Analytics
Talent Analytics is Getting Investment 33% 31% Hired additional staff for measurement and analytics 33% 31% Invested in a data warehouse 33% 19% Purchased data analysis tools Source: High-Impact Talent Analytics, Bersin by Deloitte, 2013 3 Building a Business Case for Talent Analytics
Talent Analytics Pays Off HR organizations using predictive analytics are: 2X more likely to improve their recruiting efforts Generating 30% higher stock returns than the S&P 500 over the last 3 years 2X more likely to improve their leadership pipelines 3X more likely to realize cost savings and efficiency gains Source: High-Impact Talent Analytics, Bersin by Deloitte, 2013 4 Building a Business Case for Talent Analytics
Structuring the Business Case 5 Building a Business Case for Talent Analytics
Structuring the Business Case 6 Building a Business Case for Talent Analytics
What Keeps Executives Up at Night 7 Building a Business Case for Talent Analytics
Identifying Stakeholders Types of Stakeholders Sponsor or Champion Example Increased Absenteeism Example of Stakeholders Line Managers, COO Decision-Makers High Turnover CEO, CHRO, Line Managers Beneficiaries System Consolidation CIO People or Groups Impacted by Your Solution Critical Skills Gaps High Benefit Costs CEO, CHRO, Line Managers CFO, CHRO Labor Law Changes Legal Counsel Environmental Emergencies Health & Safety, COO 8 Building a Business Case for Talent Analytics
Structuring the Business Case 9 Building a Business Case for Talent Analytics
Define the Solution Know what you have Consider alternatives Detail the solution Account for dependencies Account for risks 10 Building a Business Case for Talent Analytics
Detail the Solution: Considerations Where will the solution be used? In what offices or facilities? In how many countries? Does the solution build upon your current resources and/or infrastructure? How quickly does the solution need to be in place? Will we roll it out over time or all at once? How should we measure the solution s effectiveness? 11 Building a Business Case for Talent Analytics
Alternatives for Technology Implementation Enhancing Existing Systems Can you upgrade or enhance your existing systems to better fit your needs? What are the costs of and resources available for that alternative? Obtain a Less Costly System Is there a less-expensive option, and what are the pros and cons of that choice? Implement a Segment-by- Segment Rollout versus an Enterprisewide Approach What if your proposal is approved, but on a smaller scale? Do Nothing What will be the impact on the organization be if your business case is not funded and you continue in your current state? 12 Building a Business Case for Talent Analytics
Example: Comparison of Options Source: Bersin by Deloitte, 2014. 13 Building a Business Case for Talent Analytics
Example: Comparison of Preferred Choice vs. Do Nothing Option Source: Bersin by Deloitte, 2014. 14 Building a Business Case for Talent Analytics
Structuring the Business Case 15 Building a Business Case for Talent Analytics
Typical Types of Costs Technology/Tools costs Headcount costs Overhead costs Training costs Testing (Sandbox) costs Hiring costs + onboarding Allocated time for current staff New analytic-specific software Upgraded modules of existing software Hardware New or revised facilities 16 Building a Business Case for Talent Analytics
Example of Costs Source: Bersin by Deloitte, 2014. 17 Building a Business Case for Talent Analytics
Provide Assumptions for Costs 18 Building a Business Case for Talent Analytics
Structuring the Business Case Identify the Business Issues and Stakeholders Define the Solution Identify Costs Quantify Impact Present the Business Case Identify issues impacting the business Identify stakeholders and constituents Articulate in ways that engage the key stakeholders Know what you have Consider alternatives Detail the solution Account for dependencies Account for risks Gather costrelated information Engage stakeholders to guide cost calculations Provide assumptions and benchmarks for costs Identify expected benefits Quantify the benefits Identify intangible benefits Know the competing projects Meet with the deciders prior to the business case presentation Be able to tell your story in 15 minutes or less If Benefits > Costs over a given time period, you have a compelling business case! 19 Building a Business Case for Talent Analytics
Examples of Benefits 20 Building a Business Case for Talent Analytics
Example Quantifying the Benefits Reducing voluntary attrition among critical roles Cost Savings: Hard Costs Cost Savings: Soft Costs Hard Costs Soft Costs Recruiting and hiring costs per employee $20,000 Time to source / identify new candidate 10 days Training and orientation costs per employee Total hard costs per lost employee $ 8,000 $28,000 Time to recruit new candidate Time to train/develop in year 1 Total 50 days 20 days 80 days 16 wks (80 days) x $2,000/wk $32,000 Time to reach productivity $16,000 Total soft costs per employee $48,000 21 Building a Business Case for Talent Analytics
Example Quantifying the Benefits Reducing voluntary attrition among critical roles Cost Savings: Hard Costs Cost Savings: Soft Costs Hard Costs Soft Costs Recruiting and hiring costs per employee $20,000 Time to source / identify new candidate 10 days Training and orientation costs per employee Total hard costs per lost employee $ 8,000 $28,000 Time to recruit new candidate Time to train/develop in year 1 Total 50 days 20 days 80 days Total Cost of Voluntary Turnover Per Lost Employee Hard Costs $28,000 Economic (Soft) Costs $48,000 Total $76,000 per lost employee 16 wks (80 days) x $2,000/wk $32,000 Time to reach productivity $16,000 Total soft costs per employee $48,000 22 Building a Business Case for Talent Analytics
Example Quantifying the Benefits Reducing voluntary attrition among critical roles Cost Savings: Hard Costs Cost Savings: Soft Costs Hard Costs Soft Costs Recruiting and hiring costs per employee $20,000 Time to source / identify new candidate 10 days Training and orientation costs per employee Total hard costs per lost employee $ 8,000 $28,000 Time to recruit new candidate Time to train/develop in year 1 Total 50 days 20 days 80 days Total Cost of Voluntary Turnover Per Lost Employee Hard Costs $28,000 Economic (Soft) Costs $48,000 Total $76,000 per lost employee 16 wks (80 days) x $2,000/wk $32,000 Time to reach productivity $16,000 Total soft costs per employee $48,000 Cost of Voluntary Turnover to Organization 1% Voluntary Turnover Rate X 30,000 employees X $76,000 cost per employee Total Cost $22.8M This organization stands to save $22.8 million for every 1 point decrease in their voluntary turnover rate 23 Building a Business Case for Talent Analytics
Example: Changing Time Allocation Source: Large Financial Services Institution, 2014. 24 Building a Business Case for Talent Analytics
Structuring the Business Case Identify the Business Issues and Stakeholders Define the Solution Identify Costs Quantify Impact Present the Business Case Identify issues impacting the business Identify stakeholders and constituents Articulate in ways that engage the key stakeholders Know what you have Consider alternatives Detail the solution Account for dependencies Account for risks Gather costrelated information Engage stakeholders to guide cost calculations Provide assumptions and benchmarks for costs Identify expected benefits Quantify the benefits Identify intangible benefits Know the competing projects Meet with the deciders prior to the business case presentation Be able to tell your story in 15 minutes or less 25 Building a Business Case for Talent Analytics
Presenting the Business Case Are your ducks in a row? 1 2 3 State the problem or business opportunity Describe the solution Identify possible risks, dependencies, and assumptions 4 5 6 Quantify the benefits / impact Provide cost details Provide a brief summary 26 Building a Business Case for Talent Analytics
Potential Hazards Not aligned with a corporate goal Solution not clearly defined Lack of a champion or sponsor Benefits not defined in business terms Stakeholders not well informed or supportive Costs not well-defined or validated 27 Building a Business Case for Talent Analytics
Small Steps Build the foundational elements: Know your data, resources & infrastructure Implement a few small, successful projects Identify other stakeholders for a collaborative first project 28 Building a Business Case for Talent Analytics
Resources Available to Members at www.bersin.com Reports Show Me the Money: How to Secure Funding for Your Talent Analytics Business Case High-Impact Talent Analytics Getting Started with Talent Analytics Five-Star Data Quality Tools Business Case Template for Talent Analytics Word and PowerPoint Talent Analytics Maturity Model Talent Analytics Maturity Assessment Talent Analytics Framework Recordings Analytics Driving Action HR Analytics for Driving People Strategies Making Better Decisions: Data, Big Data, and You Driving to World-Class Talent Analytics 29 Building a Business Case for Talent Analytics
Thank You! Karen O Leonard Bersin by Deloitte Deloitte Consulting LLP koleonard@deloitte.com Sally-Ann Cooke Bersin by Deloitte Deloitte Consulting LLP sacooke@deloitte.com
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