Those trends were projected forward through another series of algorithms, at which time Hilbert added numbers for the anticipated workforce for future capital projects, new systems, and services. "For the first time, talent pipelines can now be developed years in advance to meet specific future talent needs," he says. Training programs and succession plans can also be developed in advance. "It's pretty revolutionary stuff," Hilbert adds.

Talent Scout
CoreStar Financial Group, a mortgage banking company with 190 employees based in Timonium, Maryland, wasn't worried about its future talent needs, but it did want to improve the skills of the workers it already had. So CFO Tom Monteleone addressed a productivity problem with his sales-intensive employee base using metrics to help guide the decision-making process.

Monteleone collected data on the productivity of each customer-facing employee and crossed it with the "pull-through rate," an industry KPI that measures how many customers who start the buying process actually complete it. He found that some workers were doing far better than others with their individual pull-through rates. Monteleone weighed several potential solutions, including changes to incentives, hiring, and training practices.

He worked closely with CoreStar's vice president of retail sales, Kevin Ferguson, to gather data and simulate outcomes to determine which fixes would have the best business impact. "It's about capturing as much data as you can and organizing it so it makes sense," he says. "Something is going to stick, and you're going to understand a new metric." One option they considered, replacing the poor performers, was determined to be a dead end. Monteleone calculated that the company would lose about four weeks of productivity per person trying to replace a subpar performer and bring a new hire up to speed.

In the end, CoreStar opted to invest in new IT infrastructure around call-flow management that not only monitors the pull-through rate better, but also better disperses the calls so that high performers field more promising calls and managers have more time to work with subpar employees to raise their performance level. As a result of the investment, Monteleone found that the sales team could take on more call volume at a lower cost to the company. "We were able to increase sales year over year by about 45 percent, but we only had to increase our sales force by 10 percent," he says.

The shift from HR metrics to human-capital metrics owes much of its anticipated momentum to technology advances. Companies are increasingly relying on databases to gather and organize volumes of information about employees throughout their job life cycles. Online tools allow for prescreening and testing for competency and behavioral targets set by the company. Decision-makers use dashboards to select specific metrics from the database for analysis.

Trial and Error
They also rely on some good old-fashioned experimentation. Mike Bokina, a senior consultant for Saratoga, a PricewaterhouseCoopers's Human Resource Service offering, says companies need to closely track the results of decisions in order to develop solid metrics in the future. Though the original decisions might be based on business realities or even hunches, measuring the outcomes and readjusting as you go along can lead to correlations between human-capital decisions and strategic results, and metrics to track those correlations. "If I push my training budget, does that have an impact on revenue per employee?" he asks. "If I pay people less, are they as satisfied or committed?"

Sysco Corp., a $32 billion wholesale food distributor based in Houston, found that its compensation system for drivers — paying them by hours worked — didn't provide as much value to the organization as it could. "The model didn't necessarily provide better customer satisfaction or profitability," says Ken Carrig, executive vice president of administration and head of HR. Instead, Sysco changed to a reward structure it calls activity-based compensation. Drivers earn a base pay that's supplemented with incentives for more deliveries, fewer mistakes, and good safety records.

To be on the safe side, Sysco didn't roll out the program nationwide. It tested it in certain pilot markets first, and then tracked the results of the operating company. Four metrics were targeted: satisfaction level, retention, efficiency (delivering more cases in less time), and delivery expense. Under the new compensation structure, Sysco found that drivers were not only more efficient, they were also more satisfied. The company's retention rates for drivers improved by 8 percent, and expenses as a percent of sales went down. After quantifiable results showed the benefit of the change, Sysco rolled out the program nationwide.

With 161 subsidiary companies, Sysco was also frustrated by the gap in HR performance at the operational entities. The executive team constructed a scorecard of a handful of metrics in customer, operational, financial, and human-capital areas, and then aggregated the data to show how subsidiaries were performing better in each measure. From there, Sysco developed a best-practices portal on the company intranet to share the results and build a healthy competitiveness. "If we had trouble with driver retention or shrink of inventory, managers would benchmark their results [internally]," says Carrig. As a result of implementing these practices, whether in human capital or elsewhere, a number of Sysco's companies moved from the lower 25 percentile to the upper 25 percentile.

• « previous
• 1
• 2
• 3
• next »