Will HR projects ever be financially measurable?

It’s impossible to measure the financial value of all HR focused projects.

While there may be exceptions like reducing annual leave liability or reducing insurance premiums, overall HR projects fail to have a real dollar benefit associated to them. Often this means that the HR projects are approved because decision makers intuitively feel that there will be benefits but they do not believe in actual business case.

Instead of using intuition to approve HR projects you can you Value Driver Modelling (VDM) to assess the real financial benefit of a project. Using a VDM-based tool, like the  Value-Driver Psychological Assessment Tool (VD-PAT), you can specifically assess which parts of the project are going to affect which areas of the organisation and so in turn make an assessment as to the financial improvement possible from the project. Not only does this allow you to assess the value of the project by its self, but you can also assess the value across a whole portfolio of interrelated projects

The diagram below provides an overview of how information flows into and through the VD-PAT:

Value-Driver Psychological Assessment Tool VD-PAT

Organisational inputs provide the information required to understand how an organisation currently operates.

Inputs are collected from surveys, interviews, observations and enterprise data. The inputs may be for a single point in time or could be collected regularly over a period of time to track changes. Inputs may be collected for a specific team or unit within the organisation. Inputs may also be collected for certain aspect of an organisation, for example, job characteristics only.

Organisational Improvements are the improvements made to specific psychological factors within the organisation as part of a HR project.

An improvement may impact one or more psychological factors. It’s then possible to follow the impact that these changes have on organisation through empirically proven correlations and relationships.

There are two external inputs that provide information to the tool.

  1. Peer organisational data is used to compare organisational performance as well as provide information for further research.
  2. Research from peer-reviewed, empirical studies is used to find the inter-relationships between different organisational psychological factors. This informs the development of the Value Driver Model, which in turn drives the formation of the Value Driver Engine.

Within the tool there are three main modules of processes that take inputs and transform them into valuable outputs

  1. Consolidation is the module that takes raw data and transforms it into information that can be feed into the Value Driver Engine. This ensures that the outputs are meaningful and accurate.
  2. The Value Driver Model is the framework of causal relationships and correlations that determine how organisations actually function.
  3. The Value Driver Engine is the powerhouse of the tool that combines the input information with the Value Driver Model to produce valuable outputs.

There are 5 valuable outputs from the VD-PAT.

1. Insight

Insight is the culmination of the value available through all the outputs of the tool. Specifically, insight takes the current state of the organisation and identifies a portfolio of improvements and strategies that match the organisation’s need. Additionally, it also produces a thorough business case based on the costs of implementation and the resulting benefits expected from the change.

2. Benchmarks

The engine can benchmark the relative performance of the organisation against peers in the same sector or geography, or compare them against the entire population of data available to the tool.

3. Diagnostics

Results can be used to define the nature of the organisation allowing decision-makers to understand the main factors currently contributing or detracting from the organisation’s performance. Results can also be used to compare different organisational units to understand what contextual or psychological factors are impacting their relative performance. Lastly, results can be used to reinforce or dismiss anecdotal theories describing what is affecting the organisation’s performance.

4. Benefits Tracking

When a change has occurred in an organisation to improve its performance, the resulting change can be compared to baseline figures as well as tracked overtime. This can provide evidence as to the success of the improvement, or act as an early warning that additional intervention is required to ensure that the improvement meets its expected improvement goals.

5. Value

Ultimately, the purpose of the tool is to equip decision-makers with the information and insight they require to improve how the organisation performs.

Try it yourself

I’ve built a very limited prototype of the VD-PAT based on Job Characteristic Model (JCM) theory. You can download a copy of the prototype here in Excel.

The first spreadsheet (1. Research) provides you with an overview of the Job Characteristics Model (JCM), which sets the structure for the second spreadsheet (2. Model). The model transforms the JCM into a VDM. The third spreadsheet (3. Survey) provides some external input data for our model while the fourth spreadsheet (4. Consolidation) takes the results and make them readable to the 5. Engine. This engine calculates the results from the survey so we can see how satisfaction, growth satisfaction, and motivation are affected. The spreadsheet ‘7. Benchmark’ combines the peer organisation data from ‘6. Peer Organisation Data’ to allow you to benchmark your own performance.

To follow the process from start to finish, start with Research spreadsheet. Note that the collective relationships are carried across to the Model spreadsheet. Next the Survey collects key information from the participant (this can be aggregated to be more than one person). Next the survey data is combined into a structure that can be read by the VD-PAT on spreadsheet Consolidation (this is generally a more important step for when you’re not using excel). Then Engine combines the survey results with the framework of the JBC theory to tell us what benefits we’d expect to receive. This information can then either be benchmarked against other organisations or can be used to value, in terms of dollars, the likely benefit (Intervention).

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How to optimise your casual workforce through Tableau visualizations

The use of casual employees in Australia has been stable at about 20% of the workforce for the last two decades. These employees provide an affordable means for businesses, both small and large, to employ a contingent workforce. In turn, it provides employment opportunities to a range of people who would not be able to work otherwise, such as teenagers getting their first jobs through to stay at home parents wanting to supplement their household income. Casual employment is generally associated with a higher hourly rate (compared to their permanently employed peers), no provision for annual or sick leave (long service leave is an exception), and no notice for termination. While casual employment has a lot of benefits, there’s a hidden cost and risk if the nature of a casual employee’s work resembles a permanent job.

If a casual employee is working regular, ‘systematic’ hours, the law may construe their employment as permanent, making the employer liable for additional costs. One of these costs could be the financial liability for annual and sick leave (despite the fact that employee was paid a higher rate) as well as damages for unfair dismissal.

If you really need some of your casual employees to work like a permanent employee you can investigate alternative employment options like part-time arrangements. There are new types of part-time employment available these days like flexible part-time (e.g your ordinary hours of work may be averaged over a period of one to four weeks) and partial part-time (e.g work full time for 9 months and have the other 3 months off). In combination with traditional part-time arrangements, this provides employers with plenty of options to balance their resourcing requirements and the availability and desired flexibility of their staff.

While part-time arrangements provide a way to mitigate the hidden cost of a casual workforce, it helps to know which employees are in danger of working regular hours. One useful tool is a casual hours dashboard designed to 1) categorise the risk of employees based on their pattern of work, 2) allow you to drill down to the day to day details of their work and 3) then respond by changing their work shifts or employment arrangements accordingly.

The image below shows the landing page for a casual hours dashboard. Across the top are the count of casual employees that fall into the three risk categories for ‘regular’ employment. The meaing of ‘regular employment’ can change from organisation to organisation so the definition is included below each category. Below the definitions are the filters so that leaders from different areas of the business can confine the report to their relevant casual employees. Along the lower right is a spark line for each employee showing, at a high level, the pattern of their hours for each fortnight. This provides a way to assess how regular they are working and for how long.

reuben kearney - casual hours dashboard - first page
Click to zoom

From this landing page it’s possible to ‘zoom’ into the daily work hours for each employee. By clicking on an employee’s name you can move to the drill down page pictured below. This page provides a lot more detail as to how many hours an employee works, across which days and over what duration. It’s possible to load this drill down for all the employees that work for a certain manager or belong to a certain risk category.

reuben kearney - casual hours dashboard - employee drill down page
Click to zoom

The final page in this dashboard is a fortnightly summary of hours for all casual employees belonging to a certain teams. While dashboards are built to be interactive, it’s not always possible to work with your clients in front of a screen. This final page allows your to print out results from a page optimised for A3 printing.

Click to zoom
Click to zoom

If you seen another way to visualise this issue please let me know, also let me know if you have any questions about how you might be able to implement a similar solution for your organisation.

How you can benefit from workforce analytics

Many startups and small-to-medium sized businesses operate without workforce analytics, essentially sticking with traditional human resource strategies to run that side of the business. While technically there’s nothing wrong with this, the use of workforce analytics has a profound impact on the businesses that use them.

Workforce analytics refers to the data aggregated by a combination of methodologies and software to apply statistics to employee data. The real benefit here is that business management professionals can use this information to optimise human resource management, creating a more efficient, cohesive organisation.

HR metrics promote value driven initiatives that grow businesses. Not only are businesses able to see illustrated statistics for current trends, but human resource professionals can simulate “what if” situations. When businesses can move past simple HR numbers, they can see how the company is doing as a whole. A key benefit of workforce analytics is the ability to see exactly what is and isn’t working and make changes within the organisation to augment success.

An evolving business is a thriving business, and the use of workforce analytics in human resources is a key to the success of the organisations who use them. When a workforce’s effectiveness can be measured, investigated, and defined, a company can change policies, procedures, and roles as needed.

For example, human resource professionals can investigate the effectiveness of new employees as opposed to those who are nearing retirement. The results of this data will give the company an idea of the scope of job functions, training, pay, and more.

Companies who use workforce analytics for their human resources operations enjoy higher efficiency as a whole. From the ground up, these statistics can be used to shape and define an organisation’s mission, direction, and future success.

The top 5 ways to analyse diversity in your organisation

Being diverse and inclusive is essential for any modern organisation. Without a reputation and strategy for accepting employees from a range of backgrounds your organisation will fail to fill vacant, critical roles. Without those roles you will struggle to build innovative products and services, deliver complex strategies in an unpredictable market and forge resiliency into your workforce. Despite these clear benefits only one-third of Australian organisations believe that being diverse and inclusive would support their market growth and customer satisfaction (see Diversity Council Australia).

The following 5 techniques provide a way for an organisation to thrive by fostering a diverse and inclusive workforce. Read more