HR CONTROLLING AND ANALYTICS - HRM Lecture 14

[Music] so today we come to our last chapter and the entire human resource management lecture which is the most boring one stage all-controlling okay there are 44 leading questions in controlling as you will see we we use indicators and indicator systems indicators that show us where are we with our human resource management or successful are we to be just you need to test something so indicator systems that's a key term here and the second question is how can indicators be defined and implemented an indicator on the first side is just a number right something like turn over right but to use it and to implement this might be more complicated than you might imagine and then we come to a point you ask yourself can we estimate the added value provided by the employees yeah human capital value added is a rather complicated concept with you that you can discuss today and we need this concept of the human capital value added to to estimate the return on investment for large scales last scale in investments in human resource management we talked about employ survey we talked about talent management we talked about employer branding all these things are rather costly and the question always is for every for every euro I spent on employer branding how much do I get back yeah so so this is the leading question there so so you will love it I mean you're a business student soon you will love ok HHR controlling we all know where HR is what is controlling you know better than me what is controlling yeah how would you explain controlling to your grandmother [Music] tracking activities by using one yesterday you have tools figures yeah I mean that the fundamental concept of controlling is at the control loop the controller we have control loops every time in our lives there in the morning when you when you are in the shower you have a target a specific temperature you want to achieve not too cold not too hot so if you have a target and then you check how long is the how long now cold is the water yeah you check some run and now you too cold it's probably because this thing is too far on the left side so you adjust this you corrective action and then you you check again against your target that's a control loop when you try to the car you look at the your speed and you adjust your speed maybe or not so yeah our entire life of full of control loops right so the question here is do we have such kind of control loops also in your resource management of course we have we we want to achieve things you want to achieve a certain attractiveness employer we want to achieve certain level of satisfaction with our employees we want to achieve a certain level of competence with our people we want to achieve a certain internal placement rate when it comes to talent management so there are a lot of things you want to achieve in human resource management and we constantly drag against against these targets where are we and then we probably need to adjust our activities that's a very simple a very simple idea here so a key a key concept here are so-called indicators yeah performance indicators and to give you a little bit of an idea what is there I have a rather packed slide it's nothing you learned by heart it's just that you should have an idea what kind of indicators are there in different pour fields of human resource management so when I asked you give me a typical indicator in recruiting give me a typical indicator and it comes to retention and you should have some ideas this picture just shows you that I mean in all fields in human resource management we have indicators I mean you also can just isn't as a kind of exercise you can walk through the entire lecture from HR blinding employer branding talent acquisition candidate selection - - what have you done in the last last sessions in social media from HR planning it's a strategy to social media everything you find in this lecture can be tracked with certain indicators yes social media yeah but number of facts on your fan page that's an indicator right so just think about this as a kind of exercise so just to pick out some of these these are the outside these are the most commonly used indicators in HR far from being complete look at each or marketing employer branding recruiting candidate selection and so we have something like employer ranking you ask the students in different universities well would you like to work and based on this feedback employer rankings are calculated Germany we have instituted called trend ins and they report on an annual basis the ranking of different employers and companies like BMW S ap are always on top some companies where most people would love to work let's enjoy a ranking show the number of applications how many applications should a company get you know a company with 2,000 employees how many applications should a company with 2,000 employees get in a year that's a rule of thumb saying that in a year you should get as much applications as employees are employed in the company so a company with 2,000 employees should get 2,000 applications in a year that's just a rule of thumb and the number of applications tell us how how attractive I am how how how many people really want to work in my company we're going to talk about just for hire in a minute we're going to talk about time to fill in a minute early turnover how many people leave the company in the very first weeks of employment ah you might think what this number tell us every number should tell us something yeah training development how many days do the people spend on trainings how many high potentials do we have in the company in percentage maybe what is the average time a high-potential spends on a certain hierarchy level I mean high potentials are there to get promoted because high potentials are seen as the future leaders so if high potentials on average stay on a current level for more than six seven years then something goes wrong internal placement rate how many key positions in a company are filled through its through existing employees yeah some companies have a target their thing we want to have 70% of our leaders for leadership positions being filled by employees and not through external internal placement rate trainee rates how many trainees do we have a percentage yeah retention but I mean we we talked about retention an entire session and other we talked about some some figures here what is the average range how many how many female employees do we have how many women in leadership positions do we have in percentage the span of control what is the span of control does anybody know I've talked about this a couple of months ago the average number of employees reporting to a manager directly reporting to a managers span of control big that many people report to one single manager yeah how many temporary contracts do we have their compensation benefits labor cost divided by total costs labor costs divided by employees what are the labor costs per employee so to speak compensation structure performance productivity what is the revenue per employee and then we have some figures which F which you never have heard of human capital value and what the hell is this human capital ROI we're gonna talk about this today because these are really these are really key yeah the Bradford factor I love this properly most of the age all the records out there don't know what that is well this is a nice idea of Bradford factor s time s time D once s s is that times how many times was an employee sick yeah and D stands for how many days in total now just calculate there are two employees employee a was 10 times in a year was 10 times sick 10 times and in total 10 days so it was always forward once in a day right 10 times 10 times 10 but is another employee employee be he was she was one time sick go away but 10 days 1 times 1 times Tim the result of the first employee was a thousand the second towards to 10 what is the difference what is the difference of people who who are many times sick but not so many days compared to people which are sick but one time no longer period wasted what is difference it's about commitment commitment people who always are sick on Monday right Friday afternoon is anything like this well that's a little bit cynical I cannot assume that every person who is always one to one day sick is because of motivational reasons but a certain extent there is this kind of assumption the treatment yes this this factor always applies but always ballad so to speak absolutely it's just a nice idea Jay I want you to share with you so this is one thing what I want you to take home is for every field in HR there are some some indicators yeah and they are much more and and again as an exercise for you take any kind of feeling HR anything I know what kind of indicators might be useful yeah and these are the probably the most typical one so this is one thing which I want you to take home to see what is there another thing I want you to take home is it's not so easy as it looks like number of applications easy to measure on I simply look at my recruiting system and I usually can track how many applications did I get in a year but what's an application what is an application I mean you all know what an application is but there is an employee or there's a candidate sorry there's a candidate applying just sending in an email hello I'm John please find attached my CV regards John is that an application yes you are a fan on the company's fan page on Facebook and you write a message hello I'm John oh I consider working in your company please respond to regards is there an application now he sends this application every week every month how many of you what sounds it simple in practicing when you work in a project that is about let's track the number of applications all of these questions will come up yeah it's not always so clear what an application is okay or let's look at Casa hire what is close behind in its easy or how much does once on average how much does one single higher cost yeah we have the apps we have all the costs related to the selection methods for you is like Assessment Center using tests and all these kind of things so what would you guess for for a professional 3 years working experience for a position like this how much is pasta higher how much does it cost to hire one single employee just an average let's just put a number out of the air what would you get [Music] now can we include the human resource stuff the cost for the human resource stuff much is it 200 is it 1,000 in relation to the salary 80% so if total talk annual salary would be 60,000 and then plussed Ohio would be around you think it's it's more costly than we initially animated so that's a professional cost per hire might be around five thousand eight thousand something like this yeah if you use executive search company to fill a leadership position how much does it cost there we know it exactly it's one third it's one third of the total target annual salary one third so it can be it can be significant but the question is what counts and and I I have a list of different types of costs which might come into play here might advertising cost reports can they travel across the executive search retainer contingency fee is I just have explained the assessment center costs the costs related to test usage may be the salary of those employees and managers which were involved in the recruiting process yeah we have costs related to the facilities of the recruiting organization we have a recruiting team they get celery they have offices they have computers they have erecruiting system here also I mentioned the cost of the recruiting infrastructure we have an e recruiting system which might be costly the referral bonus employee referral bonus whenever we turn on on an HR marketing event costly sign-on bonus yeah there might be a candidate who really requires a certain amount of monies that he will ultimately sign the contract that's a sign-on bonus I mean again this is nothing to learn by heart the message on this slide is that the number is such is easy to understand yeah but the company is really differ in in what type of costs they really consider average terms of what types of cost they don't consider and the more types of costs you consider the more complicated that gets I mean to track all these things might be rather complicated I mean that's that's accounting yeah I don't have anything about accounting very kind of a mirror but you can imagine that it can get complicated yeah another idea is the time to fill it's really a classic in and in recruiting the time to fill how fast are we in filling a position I mean speed matters in the ball foretelling speed really matters so time to fill might be a relevant indicator mm-hmm how fast are we in our entire recruiting process and again the question is when we track this when we track time to fill its I mean it's it's a time span and every time spin has a beginning and an end and where do we start and where do we end I have indicated two options here one is we start tracking the time from the moment where the workforce demand appears oh we need we need three people okay the workforce demand okay then the vacancy might must be approved maybe by by management when we started our marketing posting an air search for candidate run the selection process was the silent shop offer and then the first day of work and after two three four weeks the end of onboarding and then maybe the end of the probation period I mean what is reasonable can we say time to fill should be tracked from workforce time until end of probation period or maybe from when the vacancies really improved to where we have selected the right candidate there is no there is no correct answer yeah there's no correct answer the point is in the textbook in an HR textbook you will find the definition of our time to fill time to fill it's a time a company needs to fill a position full stuff if you learn this by heart but in practice that's really complicated when in my career where we shared figure it's about time to fill with other companies just to to have kind of benchmarking we immediately realize that we cannot compare time to fill between companies because we all have totally different definitions yeah okay so that's the next thing which puts you to take home yeah take any kind of indicator and think a level deeper how do you really measure an indicator that sounds very simple by nature yeah and you will immediately feel that can be complicated okay I want you to get this idea yeah that's the next thing I want to take off there's a third thing which is probably the most thing which I want you to take really let's get back to this picture ah we can we can pick every every indicator we like and ask herself is that relevant in the last exam in the last exam there was a question in the last exam there was a question and the question was is time to fill a relevant indicator question mark that was the question just to guess 50% of the students in there yes of course I mean speed matters it's a relevant indicator and you have to be wrong answer what's the right answer what do you want to measure with the indicator first second why do you indicator only matters is only relevant relevant what is the opposite of relevant they're 11 you know you are in my lecture you know that in my view the opposite of relevant is what interesting many things all these things are interesting but probably only if you are relevant so what is relevant relevant is something when it is related to an objective of somebody okay stop question women in leadership position let's take our hot topic the women in leadership position is that number relevant you say what you'd say no not at all someone say yes it would be by nature that is relevant and those who would say no it's not relevant at all II hesitate to say this easy no the question is really what when is this figure relevant you have to do it there are legal restrictions yeah if you have legal restrictions then you have an objective you have a target who has objectives the company know the people objectives are always related to people some somebody has an objective okay somebody the executive board eh our director may be the head of recruiting so we always have now I come to this important notion then and when we talk about indicators the question is which indicator will be used to what is the indicator what is the indicator all about okay women in leadership position and the most important thing now is why why do we need this indicator to which objective does the indicator relate if and I'm taking fixed if if a company does not have any target the company does not have any objective that regards to women and leadership position then this indicator does not mean a thing okay if there is no objective behind off somebody for whom yeah then the indicator is only interesting and mozzarella yeah we got this point that's really important and I can tell from practice that I mean I've seen so many HR management meetings where we seen a lot of figures and managers used to look at figures saying oh I'm twisting but oh interesting okay but there are some figures which are not only interesting whichever irrelevant because they relate to the objective of people okay so there is a probably property you have heard about a concept called the balanced scorecard home of you has ever heard this yeah that was pork on okay I mean that's a fundamental concept in controlling so in your controlling lecture you have heard about this hopefully and this really reflects what I just have said to certain extent limits in controlling in the early days we used figures we used indicators yeah this indicator that indicator and then Kaplan and Norton came up with a legendary books for teaching learning in the balanced scorecard saying I mean it's nice you have a lot of indicators out there but but the important point is number one in your controlling system whatever you do controlling please consider four different fields it's not only about financials yeah you should have a balanced scorecard you should cover different fields not only one eye only two so it's not only about financials it's about your processes maybe yeah it's about your customers things like customer satisfaction maybe yeah and it's about the people and weights about the people and it's very close to HR so that's message number one that's not the most important message here but the most important message in my eyes with a balanced scorecard is that caponata said that whenever you use indicators the KPI key performance indicator whenever you use key performance indicators in whatever field they should somehow relate to the vision and strategy of the company if they don't then they might be useless and that's exactly the point which i wanted to pray across when the preacher the previous life so the vision of a company is crows okay strategy growth grow then the question is you think you can use any other example if it's grow then the question is what does this mean for financials what if this mean for customer what does the different processes what does this mean for the people in the company ah growth means we should have some sales capabilities probably the people should be strong in sales they should have a strong commitment to the products which we sell do the people believe in the product especially the salespeople and that might be a target saying we want the sales workforce that believes in our product otherwise we will not reach our strategic goal of growth and how do we measure whether or not the Saints people believe in the product yes you use an employ survey or a pulse check you remember a pulse check asking where to buy our product if you would not work here and then we have a target saying in our sales force we want to have at least 95 percent of people saying to the loud yes okay now you see there's a linkage between the overall strategy what it means to the people very concrete target yes say it's for us believing in the product and we have an indicator and KB high telling us where we are so this is a fundamental idea it sounds simple ain't black ties so hard to achieve sometimes okay so you know what indicators are there you know that sometimes complicated in practice third they must be relevant another fourth the fourth idea now let's have a very concrete example saying okay let's talk about turning turn a company has is a a high turnover rate okay is that okay we want you we want to have a kind of turnover early warning system we want to tell how many people will leave the company in the next 12 months early warning system and now we want to implement some indicators now when we think about this particular case to implement an indicator to predict future turnover that's a rather complicated case if you want to implement an indicator like this you see that this is a project this is a project it's not easily be done this is syndication what what different phases in the project might be relevant in a first face maybe you define a scope whatever what do I want to achieve with this indicator okay I want to have indicators that predict future turnover okay for who all people only key functions high potentials managers okay what exactly do you want to achieve this is always the case in every project at the beginning you define the scope in the car kick off and so you make you make the kind of a kickoff workshop and you start with an analysis maybe an analysis might analyze systematic we systematically analyze the turnover courses you talk to the people why do you leave you try to understand possible early indicators and you develop a kind of model that explain and predict turnover behavior the circle statistic multiple regression analysis maybe we've talked about this he'll be complicated you have to deal with a lot a lot of data yeah then you consolidate the data you define the method which might be used in the future to predict Channel now you are there got the indicators now you must use it you you implemented you communicate to those who must use this indicator who is using this indicator managers directors executives HR yeah and then you you run it you operational phase starts you use the syndicate you test the indicator and at the end as always in any project you have an evaluation does it really work sir again it's nothing to learn by heart but think of an indicator in the textbook as describe detect was just an indicator time to vous now just imagine you you would have the task to implement time to fill indicator in any kind of company maybe in a mid-sized company so that in the future you always have this indicator time fulfilled which you can track on a quarterly basis so the objective is at the end you have this indicator telling you on a quality basis what time to fill is if you have to do you want to have these at the end how would you do this how would you start on Monday to project even though it's just an indicator easily defined to have this at the end usable reliable it's a product okay so this is all about indicators as I said many many activities many measures in human resource management relate to significant costs whenever HR director lady must defend an investment in front of the executive poor they must op you that for any euro they spend in HR in whatever they want to do you get a certain amount back which is higher than the amount that you've spent okay so my message here is that I mean naturally in HR we think the HR it's about people and wake up to people we can't measure things you cannot express things in terms of Europe let some might think in that way and that's wrong we sometimes underestimate our opportunities to express things in terms of euros and sometimes we overestimate the opportunities in other areas like logistics purchase the opportunities to express things in Europe well who of you has ever worked in a controlling department or in purchase or logistic memory yeah okay all the numbers which you use they're always so real so you always have to guess you have two things are not so easy so the sales in HR so there is a concept which I'll show you here which can lead us to the the calculation of the return on investment from the problem over the cost to solution solution cost improves arrive this can be better understood we will look at a very concrete example preparing example a silly example but an easy example instead that you understand it whenever we do something in HR not only nature but when we do something it must relate to a problem that's a very important starting point really when I ask some rates are directors why do you do an employee survey and tell me because we always did this know what is the problem which problem do you want to solve with the employees of it if the employ surveys the solutions what is the problem very often we do things without knowing which problem we want to solve it I mean that's already a very significant message here for everything we do in HR there must be the problem it could be a typical example questionnaire if employer branding is the solution what is the problem yeah if change management is the solution what is the problem because we threw the entire lecture always talked about solutions yeah the problem here is that 10 high potentials which are 20% of all habitants leave the company every year voluntarily that's the turnover rate of behind potentials and the average annual salary is 120,000 you can recalculate the costs of turnover yes we can yes we can we did it in our retention session we calculated and we said that we can calculate the costs related to any turnover as a percentage of the annual target celery and we estimate that the turnover costs are 200% of two times the annual salary now if you lose 10 high potentials in a year then it's 20% times 10 times 120 faster which is 2,400,000 euro these are the costs related to turnover okay so when we say a problem is a problem and leads to certain costs this is the idea to express a problem in terms of Europe okay now the solution is okay if you want to retain the high potentials let's give them a company car yeah easy ok that's the solution a silly solution by the way how much does the solution cost all employee all hype attempts to get a company car these are 50 people 50 people the company car costs 10000 euro in a year so the cost of this solution is 500 thousand euro now we track whether we have achieved any improvements with a turnover and you thought wow we could reduce the turnover rate by 25 percent yeah okay so we have reduced turnover costs of six hundred thousand euro okay so one fourth of the total turnover cost six hundred thousand euro now we can calculate the ROI as you have learned it yeah six hundred thousand minus the cost I mean that's the benefit yeah minus the cost five hundred thousand divided by the cost times one percent we have twenty percent for every euro we spend in these company cars we get back how much one euro and twenty cent so it pays off at least in this example okay very simple example and in in practice things have to be that way they have to be simple if you present something like this to an Executive Board they will understand it if you have a very complicated analysis which nobody understands it might be more reliable more precise more valid but nobody been understanding yes that's that's really a good idea how to do good things here now I'd like to go a step further okay how much is this shirt worth now how much is this worth fifteen fifty in general yeah so you learned as business you did that how much is something worth as much as somebody is willing to pay for it yeah if you have a bottle of water at a bottle of water how much is a bottle of water worth as much as the person is willing to pay for it so in the desert you starving yeah you would pay thousands of euro for this bottle of water we cannot say how much something is good we can't say this it depends on how much people are willing to pay for it okay so that's the first starting point now let's have a very simple example a bouquet plumage toss this is a bouquet people are willing to pay 50 euro for this okay so that's the worth of this bouquet now this book it did not fall from the sky there isn't some input material how much material it's about 20% of the entire app okay that's 20 or 40 40 40 % that's how florists calculate 20 euros the florist used also some infrastructure the desk the knife whatever the infrastructure and the infrastructure and I come to this later yeah all the infrastructure of the material things all the material things make up another 10 euro so you put material infrastructure of 30 euro into a bouquet here but the bouquet is 50 euro worth it's much more than just the material and the infrastructure of it where does the remaining 20 euro come from then you take Beauty ten roses they cost 20 euro you put them together and now after you've put them together they are 30 euro worth where does this additional worth come from the creativity and where did the creativity deliver the florist so he there is the material infrastructure and there is the human if we subtract all the material all the all the all the infrastructure costs from the total world of a product the remaining part must relate to humans that's the idea okay Joseph to put it more general when you look at a company you have inputs and you have output and the worth of the output the world of the entire output of a company in a year in my naive understanding I'm not a lot of businesses do not hire I'm a dump psychologist I don't really know but in my naive understanding I guess I'm not too wrong the world of the total output of a company in a year is equal its revenue okay that's the outfit that's the words of the album the product whatever they are and there is an input non non human capital material infrastructure the machines all these kinds of things you have this input material input non-human capitals and you have the human capital people their creativity their performance their knowledge their competence you put these two things into the value creation process and then in this company something happens and the outcome is something will okay then the simple idea again is from the entire birth began at the end we subtract all non human capital aspects all non human capital part and what remains then must relate to the human capital if you calculate this this way then we have what we named a human capital value edit was not invented by myself it's invented by Shakti since there was this explained in it the ROI of human capital of fundamental idea to put it to another concrete example to two companies very simple two companies what is it Turner shot in earlier days I used to be one FTE however you decide revenue in both companies is to 120,000 Remo okay so the work of the output in both companies is the same in the Turner shop and in the designers okay now let's look at the capital and the nonhuman capital costs and you find in the journal shop the nonhuman capital is the shop the flash thinks the meat there all these things you need to do to build eternal 160,000 in a year while in the design of you just have an expensive computer infrastructure structure that's all 20,000 euro profit in both companies is the same because where's the profit revenue minus total costs total costs are 200,000 and both companies so what we can see from this example that revenue per employee is the same profit per employee is the same in only days we use these indicators revenue per employee in revenue per employee profit per employee but these numbers don't tell us anything as this example shows us most companies the design office and the kernel shop revenue per employee and profit per employee are the same when we look at the human capital value added now we see the difference the human capital value added in the donor shop is sixteen thousand and the design of this 200 thousand now that's a very important figure for every company you know I've calculated this figure a couple of years ago for different companies we just simply collected the annual reports of these companies and we calculate we had to look at the revenue total cost labor cost all these things that we calculated the human capital value added as ap 163,000 euro as a piece very knowledge intense company all the revenue comes from the people not from material right metal 26,000 0 i'll yet 136 thousand euros Daimler near to 100,000 euro what we can say in general is more or less the more knowledge intense the more people intense the business is in a company the higher is the human capital value and I mean when you calculate the human capital value for a company like McKinsey you get numbers like two hundred and fifty thousand [Music] because the revenue in total is very high but non non human capital costs are very low material I mean McKenzie they don't have material yeah the entire worth which they generate comes from the people and not from material while in a cap in a car manufacturing you much material much infrastructure and everything and only a minor part comes from the people like you can see with the folks very much more in Daimler interesting very interesting people real estate it was close to bankruptcy really amazing a couple of millions of profit per employee to me it's very hard to interpret this number yeah we only know that I mean this this bang ran into total trouble afterwards it's blown up absolutely yeah it's 2007 closed before we drive to fall the crisis I mean if you look at this note these numbers really calculate it's multiple times what is wrong with this copy copy that one single employee I mean this is human capital value and it per employee yet this one single employee generating a worth of half a million let me show me this employee yeah sorry it's something wrong I can tell what's wrong here I have a closer look at I'm not too familiar with business figures but this indicates it there is something wrong interesting now let's have a an example I'd like to take this human capital value I didn't work with Italy I'd like to show you what you can do with it here is an example a company revenue is two hundred thousand thousand euro zone's two hundred million revenue mm full-time equivalents the total cost is 180 million labour cost one in 40 million work days in the year two hundred twenty four months figure some performance indicators the revenue per employee here is one hundred thousand euro could be a car our automotive company in the automotive supplier industry for instance profit per every reasonable ten thousand euro now we calculate the human capital value which is simple yeah which is in total one hundred and sixty million if you divide this by the number of employees we have eighty thousand euro per employee that's reasonable that's 80,000 or that's the value an employee is adding to the value creation process every year on average okay very simple now I want you to understand this number with this example maybe why do we calculate the human capital value it as we do it and what does this number tell us okay it's number one number two is as you can see this is uh this is an overall estimation yeah human capital value added per employee and we when I go back to two to these numbers as IP at that time was more than 30,000 employees and this is an average of all 30,000 employees when we look at the company like Forks wild I mean this is some average or all employees we have but we know we have employees in production but you also have employees in R&D and we can imagine them the people in R&D might add more value than somebody in production maybe yeah and the CEO maybe delivers more added value than a forklift tribal hopefully I could be wrong but yeah so whenever we have this overall average we feel that wow this is very chewy we must differentiate okay we must differentiate let's do this and what you see on this picture is a way how we can differentiate that's important then I can say this is just an estimation I can say in key functions you'll learn what a key function is purchase in discounters R&D very help in the pharmaceutical industry or in the on the automotive industry yeah in a key function the added value is two times as high as in non key front this is just an estimation which you can tell by the number one point five two one top in Kieffer's the end value is always twice as high as in other functions these numbers are there only to show the relative differences yeah so with these factors I just try to indicate the relation between these two different bits between these different conditions so you see that one is always two times this one 2 is 2 times 1 3 is 2 times 1.5 so this is the first assumption the add value and key function is at least twice as higher than in other functions then we know that we have people which are low performers we have the average performers we have the high performers that's all so differentiation chemists can wear when I look at an average they have an average but maybe it makes sense aside while a high performer adds much more value than an average performer and this idea is indicated here so an eight-player high performer that's 50% more added value than a low performer that's only 50% added value compared to an average performer so it does not matter whether there is a 1 2 3 0.5 11.5 or whether there is a 100 to 200 350 so it's just the relation between these numbers which indicate how we can differentiate here does that make sense when I work with a company with a real company and do this sometimes you make this kind of estimations also I asked the the Executive Board look at your key functions what are the key functions why would you guess how much more added value do they deliver compared to non key function and thank you for number saying we don't really know what let's say two times three times there is a quote by the former head of science at Microsoft Nathan Myhrvold who said the performance the productivity of the top develop on the top developer is 10,000 the times of the performance of its average developer 10,000 here I have a factor of two okay now let's stick to two and now it's getting a little bit complicated yeah when we take these numbers now we take this assumption it can late through this let me explain one single box and you drop the rest okay I explain one single box and you get the rest in the other part of the key functions the lower part all the others functions and then now I just know in this particular company 10% of the employees working the key functions 90 percent in non key functions okay let's simply I assume that we have 10% low performance 70 percent average performance 20% high performance that's a typical ratio right if this is true then I find the actual after a full-time equivalent on top of each box 21 and 40 40 and so on these numbers 21 40 4180 they add some of these you end up with 2,000 simple calculation now I take the factors which I've just indicated in the previous slide one two three four five one and now I take my initial human capital value-added calculation and look at how is the human capital value added per employee when I take into consideration the factor I mean this is a little bit math Binet don't need to be able to calculate this if you are going to learn more about this there's a chair I'm about to do puffiness as Microsoft recently very explain this in more detail also in my book challenge relationship management you can find the formulas and everything about this way we apply this key function for no performance assist why for any players in key functions that you would capital value and it's 200 the first kit is here is human capital value edit of the low performer in a non key thump is 35 so it easily this is T the the try to differentiate the overall human capital value headed which we have here yeah out here per employee we differentiate it and look at how does this look like and these six different conditions [Applause] so now we look at the labor cost and we can see the benefit the benefit is simply the end value minus the cost of the employees the yeren captive alan should be higher than the labor cost the added value I get from a person should be higher than what I pay for the person that's it simple so here it does not pay off here it does not pay off so when we have this this can help us to understand a lot of different very simple business cases here it's just some examples to hire an eight-player and a key function one day faster than before with 220 days in the year we have a benefit of 536 euro a day yeah to hire an a player because we have an employer brain we have a talent relationship management to hire an a player instead of a B player into a key function adds value of 49 thousand euro a year okay that's significant so maybe I really should invest in talent relationship management employer branding when through an employer brain I can achieve that I get more B players at more a place than only people when I increase the productivity of all B players in non key functions by only one percentage only one percent through training through better infrastructure I can achieve an increase in ad value overall of nearly a million yeah if I can convert a low performer AC player into a big player through training activities through moving this empal into a different position that better fits his or her talent I do this in a non key function being added value is 15,000 qou and all these calculations are based on this I know that in this particular moment don't cut this yeah in this moment what you take home is that there is the human capital value added and to a certain extent I'm from a stupid that tells us that's only overall measure we have to differentiate between key functions monkey functions and between a B and C players if you do this we get this and then when that once I have this I can calculate certain isn't a state as a preparation for the synth try to think this through try to understand mister certain instant okay so these were the major major terms which we have used you know session about HR controlling having said that we are done to the entire lecture thank you for your attention yeah was fun

Channel: Armin Trost

Views: 36,708

Rating: 4.9430199 out of 5

Keywords: Control Loop, HR Controlling, Employer Ranking, Time-to-fill, Cost-per-Hire, Early Turnover, Trainee Rate, Span of Control, Bradford Factor, Indicator Dimensions, Balanced Scorecard, Return on Investment, ROI, Human Capital Value Added, Human Capital ROI, Human Resource Management (Literature Subject)

Id: DGxn_EVbENI

Length: 70min 36sec (4236 seconds)

Published: Fri Oct 11 2013