Survey of HR Analytics by SupremeLord

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									                           Survey on HR Analytics and HR Transformation




                                             Feedback Report




                                             Alec Levenson
                                             John Boudreau
                                             Edward Lawler


                                              Nora Osganian
                                               Beth Neilson




                                   Center for Effective Organizations
                                     Marshall School of Business
                                   University of Southern California




                                             September 2005




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler
In early 2005, the Center for Effective Organizations (CEO) conducted a survey of HR
professionals on the state of HR analytics and HR transformation.

HR analytics transforms HR data and measures into rigorous and relevant insights (Boudreau
and Ramstad, CEO working paper G04-17). It includes statistics and research design, but it goes
beyond them, to include identifying and articulating meaningful questions, gathering and using
appropriate data from within and outside the HR function, setting the appropriate standards for
rigor and relevance, and enhancing the analytical competencies of HR throughout the
organization.

HR analytics is rapidly emerging, yet we have very little systematic information about where and
how it is created, executed and whether it is effective. CEO conducted this multi-company
survey of HR professionals to better understand:

1. What analytical competencies exist within the HR organization and how they are applied.
2. What systems are used to build, nurture and deploy analytics within the HR function.
3. The HR issues most frequently addressed by HR analytics, and the level of sophistication of
   the analysis.
4. The relationships between HR analytics and the effectiveness of the HR function and the
   organization

Survey details:

•   47 survey responses from 40 different companies.
•   Survey respondents represented two groups:
        o HR Data and Analysis Professionals whose primary responsibility includes HR
           analytics. This included people who are part of a dedicated HR analytics group. [24
           respondents]
        o HR Professionals who are familiar with HR data and analysis in their HR
           organization, but whose work is not primarily dedicated to HR data management and
           analysis. This group included HR professionals who are clients for the work of a
           dedicated analytics group. [23 respondents]
        o In most cases where there were multiple respondents from a company, one person
           completed the survey for Data and Analysis Professionals while the other person
           completed the survey for HR Professionals. For most questions the surveys were the
           same; however, the former contained additional questions regarding the existence and
           characteristics of a dedicated HR analytics group.
        o For the vast majority of questions, the responses from the two different groups were
           not statistically significantly different. Consequently, this report presents results
           aggregated across both groups.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                      -2-
Executive Summary

1. What analytical competencies exist within the HR organization and how they are applied.
   • Statistical skills are most common among those who work most closely with data.
   • There appears to be a gap within the broad group of HR professionals: they tend to have
     low analytic proficiency and yet frequently are called upon to use basic statistics, apply
     root cause analysis, and communicate statistical results to non-statistical audiences.
   • Assessing analytical competencies appears to be more important than assessing HR
     competencies for (a) HR playing a role in strategy formulation, and (b) HR serving as a
     role model for other functions and an employer of choice for HR professionals.

2. What systems are used to build, nurture and deploy analytics within the HR function.
   • HR information systems are common in a majority of the organizations, but are relatively
     new, particularly systems that span the entire organization. HR data warehouses are the
     most common data source for HR analytics among the survey respondents.
   • Despite the demand for HR to show the connection between its activities and effects on
     the business, half of all respondents indicated that HR analytics seldom draws on data
     from other parts of the organization such as production, marketing and sales.

3. The HR issues most frequently addressed by HR analytics.
   • Data analysis applications: Data based analysis is most commonly used for
      compensation, employee attitudes, recruitment, diversity/affirmative action, and benefits.
      It is least used for union / labor relations, career planning, downsizing, change
      management, and management development.
   • Objectives: HR analytics most commonly used to measure routine HR process execution,
      assess and improve HR department operations, support organizational change efforts, and
      measure the cost of providing HR services. HR analytics least commonly used to
      pinpoint HR programs that should be discontinued, assess the feasibility of new business
      strategies, evaluate and track the performance of outsourced HR activities, and assess HR
      programs before they are implemented.
           o In all cases, HR analytics is used to a considerate extent (or more) by less than
               half of companies, so there is large opportunity to expand use of analytics in HR.

4. The relationship between HR analytics, HR effectiveness and organization effectiveness
   • Sophistication of HR analytics is positively correlated with perceived value of HR
      analytics by the business team in: strategic planning, change management, employee
      training / education, benefits (but not compensation), performance management, and
      diversity / affirmative action. Increased analytical sophistication in these areas related to
      greater perceived value by the business leadership team and positive business impacts.
   • There is much stronger correlation between the perceived value of HR analytics and the
      extent to which HR analytics is applied to measure and evaluate HR programs and the
      impact of talent / human capital.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                         -3-
1. What analytical competencies exist within the HR organization and how are they
   applied?

The table below shows the percentage of respondents indicating their or others’ proficiency and
frequency of use of various analytic and nonanalytic skills. Not surprisingly, statistical skills are
most commonly found among those who work most closely with data: members of dedicated HR
analytics groups and those who work closely with them (the survey respondents).

 Table 1: Analytical                                               HR analytics group
 competencies in HR                       Survey respondent          (if applicable)            Others in HR
                                       Proficiency   Frequency   Proficiency   Frequency   Proficiency   Frequency
 Identifying proper data for
                                          93.5         95.7        100.0         100.0        27.9         65.1
 analysis
 Data access/influence skills:
                                          86.9         82.6         78.9         89.5         38.5         64.1
 obtaining data from others
 Ability to embrace multiple
                                          89.1         97.8         95.0         95.0         60.0         86.8
 perspectives
 Root cause analysis (identifying
                                          71.7         76.1         84.2         73.7         30.7         51.3
 causal paths)
 Basic univariate statistics (mean,
                                          73.9         78.3         79.0         79.0         23.7         51.3
 percentiles, etc.)
 Advanced univariate statistics
                                          47.8         37.0         68.4         57.9         10.2         11.1
 (correlation, differences, etc.)
 Basic multivariate statistics
                                          25.0         17.8         42.1         38.9         8.6           8.6
 (ANOVA, regression, etc.)
 Advanced multivariate statistics
                                          11.1          4.4         27.8         11.2         2.9           0.0
 (structural equations, etc.)
 Understanding adult learning
 principles (different ways people        52.2         59.1         44.5         47.1         52.8         82.8
 assimilate information)
 Writing/Communication (make
                                          75.6         80.0         89.5         84.2         18.4         63.2
 statistical results understandable)
 Presentation or Public speaking:
 (effectively present analysis to         77.7         82.2         89.4         79.0         45.9         65.7
 cross-disciplinary audiences)
 Proficiency = percent indicating “intermediate” or “advanced” skills; excluded categories: “none” and “basic”
 Frequency = percent indicating “sometimes” or “frequently” used in work; excluded categories include “never” and
 “rarely”

The survey respondents also paint an interesting picture of the state of analytical “bridging”
skills in the rest of HR: they indicated that others in HR at most have only basic ability to make
the results of statistical analysis understandable without losing meaning (18.4% said
“intermediate” or “advanced”); yet they also indicate that those same people are called upon to
apply such skills on a fairly regular basis (63.2% said “sometimes” or “frequently”). In contrast,
there is both much greater proficiency and frequency of use of analytical bridging skills among

© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                      -4-
dedicated analytics groups and those who work closely with them. The same pattern applies for
root cause analysis and basic univariate statistics: they are much more frequently called upon
than proficient among HR professionals, suggesting a potentially key gap in the HR profession
today.

Assessing Analytical Competencies is Related to HR’s Strategic Role
Only one third (34%) of the survey respondents indicated that their organizations formally assess
analytical competencies to a “moderate” or “considerate” extent. Fully one-quarter (25%) do not
assess analytical competencies at all. The rest (41%) assess analytical competencies “to some
extent.”

When we correlate the extent to which HR and analytical competencies are formally assessed
with HR’s role and reputation, we find that assessing analytical competencies is more strongly
related both to HR playing a role in strategy formulation and to HR being regarded as a role
model for other functions and an employer of choice for HR professionals. This suggests that
companies can raise the profile and importance of the HR function by putting a greater emphasis
on analytic competencies within HR.

        Table 2: Correlations of competency evaluation and HR’s role and reputation
                                               HR competencies           Analytical competencies
                                               formally assessed         formally assessed
   Analytical competencies formally
                                               .61 ***
   assessed
   HR plays role in strategy formulation .18                             .28 *
   HR function is regarded as role
                                               .40 ***                   .58 ***
   model for other functions
   HR function is regarded as employer
                                               .46 ***                   .57 ***
   of choice for HR professionals
   Response options:
     1 = not at all; 2 = some extent; 3 = moderate extent; 4 = considerate extent; 5 = very great extent
   *** = significant at 99% confidence level
   ** = significant at 95% confidence level
   * = significant at 90% confidence level


2. What systems are used to build, nurture and deploy analytics within the HR function?

Table 3 indicates that HR data warehouses are the most common source for HR analytics among
the survey respondents. This indicates a relatively advanced state of technology available to
support HR analytics.

Despite the demand for HR to show the connection between its activities and effects on the
business, half of all respondents indicated that HR analytics seldom draws on data from other

© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                     -5-
parts of the organization such as production, marketing and sales: 29.5% indicated this happens
only “to some extent,” while 18.2% indicated this happens “not at all.”

Table 3: Data sources for HR Analytics
                                                                                Consider-       Very
                                              Not At    Some         Moderate                             Don’t
                                                                                  ate          Great              Average
                                               All      Extent        Extent                              Know
                                                                                 Extent        Extent

 Collected specifically for that analysis
                                                  2.1   17.0          25.5           27.7      27.7        0       3.62
 on an ad hoc basis.
 Drawn from an HR data warehouse,
                                                  8.5    8.5          17.0           19.1      46.8        0       3.87
 using standard queries
 Drawn from an HR data warehouse
                                                  8.5   10.6          17.0           17.0      46.8        0       3.83
 using customized queries
 Drawn from both HR data bases and
 data bases from other organization
                                              18.2      29.5          22.7           13.6      15.9       4.3      2.80
 functions (such as production,
 marketing, sales, etc.).
 Drawn from data bases outside the
 organization (benchmarks, economic           19.1      29.8          23.4           19.1       8.5        0       2.68
 reports, commissioned studies)


Table 4 provides details on the HR information systems (HRIS) of the survey respondents.

Two thirds of the organizations that responded to the survey have HRIS that are in key business
units, span the major regions of their business, and or span the entire organization, indicating
fairly widespread adoption. When such systems come on-line they often provide valuable
insights into human capital issues that previously could not be examined using rigorous data
analysis. This probably helps to explain why a relatively large fraction of organizations use HR
data warehouses as data sources for HR analytics (Table 3).

Table 4: HRIS – how long in place
                                    Don’t have / in       1 year or           2-3            4-5         6-9       10+
                                  process of building       less             years          years       years     years

 HRIS in key business units                 37%                7%            10%            17%         17%       13%

 HRIS that spans the major
                                            30%                7%            17%            20%         13%       13%
 regions
 HRIS that spans the entire
                                            29%                13%           19%            19%         13%        6%
 organization


Among the survey respondents with these systems, about half with HRIS in key business units
have had the systems in place for more than five years (34% of the total vs. 30%). But for the
systems that span the organization’s major regions and/or the entire organization, those systems
are much newer: only 26% have had in place HRIS that spans the major regions for more than

© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                               -6-
five years (versus 44% with such systems in place for five years or less). The organization-wide
systems are even newer: only 19% have had such systems in place for more than five years,
versus 51% with systems that were installed within the last five year. This probably helps to
explain why HR data warehouses appear to be used more than data from other sources (Table 3):
organizations that are still at the early stages of analyzing the data in their HR data warehouses
might place initial emphasis on understanding that data before looking to other data sources.


3. The HR issues most frequently addressed by HR analytics, and the level of
   sophistication of the analysis.

According to the survey, most organizations do some kind of data-based analysis for the most
common types of HR activities (Table 5). Exceptions are union/labor relations, career planning,
and downsizing, followed by change management and management development.

                                      Data-based        Level of sophistication of data     Results used in
  Table 5:                             analysis                    analysis:                   reports,
  Data analysis applications          conducted                                             dashboards or
                                                       Basic     Intermediate Advanced        scorecards
  a. Compensation                        97.8           4.7          51.2          44.2          76.7
  b. Employee attitude surveys           93.5          11.9          45.2          42.9          83.7
  c. Recruitment                         91.3          31.7          48.8          19.5          82.9
  d. Diversity/affirmative action        86.7          20.5          46.2          33.3          89.7
  e. Benefits                            86.4           8.3          47.2          44.4          67.6
  f. Selection                           82.6          44.1          35.3          20.6          71.4
  g. HR planning                         82.6          24.3          56.8          18.9          71.1
  h. Succession planning /
                                         81.0          45.2          38.7          16.1          53.1
     leadership supply
  i. Workforce planning                  80.4          44.1          41.2          14.7          62.9
  j. Organization development            80.4          31.3          46.9          21.9          48.6
  k. Strategic planning                  80.0          20.0          51.4          28.6          69.4
  l. Employee training / education       80.0          52.9          23.5          23.5          66.7
  m. Performance management              79.5          31.4          51.4          17.1          77.1
  n. Promotions                          69.8          30.0          43.3          26.7          76.7
  o. Organization design                 69.6          29.6          48.1          22.2          44.8
  p. Competency / talent
                                         68.2          42.9          32.1          25.0          58.6
     assessment
  q. Management development              63.6          50.0          28.6          21.4          67.9
  r. Change management                   60.9          32.0          40.0          28.0          34.6
  s. Downsizing layoffs                  54.5          37.5          33.3          29.2          72.0
  t. Career planning                     52.2          45.5          36.4          18.2          43.5
  u. Union/labor relations               27.9          80.0           0            20.0          45.5

Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.

Even in cases where data-based analysis is conducted, most of the time the analysis is not
advanced. The exceptions are employee attitude surveys, compensation, and benefits. This,
however, is not a barrier to the analysis results appearing in reports, dashboard and/or scorecards:

© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                    -7-
   with the exceptions of change management, career planning, organization design and
   development, and union/labor relations, a majority of the organizations use the analysis results as
   part of regular reporting through reports, dashboards or scorecards.

   Aside from whether and how the analysis is conducted, a highly related issue is the extent to
   which analytics is used for decision making in HR (Table 6).

Table 6: Please indicate the extent                                                            Very
                                                   Not At   Some     Moderate   Considerate            Don’t
                                                                                              Great            Average
                                                    All     Extent    Extent      Extent               Know
to which HR analytics is used to:                                                             Extent

a. Measure routine HR process execution
                                                    8.7     23.9       26.1       21.7        19.6     2.1         3.20
    (payroll, benefits, communication, etc.)
b. Assess and improve the HR department
                                                   10.9     19.6       32.6       15.2        21.7     2.1         3.17
    operations
c. Support organizational change efforts           10.9     21.7       23.9       26.1        17.4     2.1         3.17
d. Measure the cost of providing HR
                                                   10.9     26.1       23.9       17.4        21.7     2.1         3.13
    services?
e. Make decisions and recommendations that
    reflect your company’s competitive             13.6     22.7       27.3       22.7        13.6     6.4         3.00
    situation
f. Evaluate the effectiveness of HR programs
                                                    6.8     36.4       27.3       15.9        13.6     4.3         2.93
    and practices
g. Contribute to decisions about business
                                                   15.2     30.4       13.0       28.3        13.0     2.1         2.93
    strategy and human capital management
h. Measure the effects of HR programs on the
    workforce in terms of competence,              17.4     26.1       23.9       13.0        19.6     2.1         2.91
    motivation, attitudes, behaviors, etc.?
i. Measure the business impact of HR
                                                   17.4     26.1       21.7       17.4        17.4     2.1         2.91
    programs and processes?
j. Assess and improve the human capital
                                                   15.9     31.8       13.6       22.7        15.9     6.4         2.91
    strategy of the company
k. Identify where talent has the greatest
                                                   20.5     18.2       31.8       18.2        11.4     6.4         2.82
    potential for strategic impact
l. Connect human capital practices to
                                                   25.0     25.0       18.2       25.0         6.8     6.4         2.64
    organizational performance?
m. Conduct cost-benefit analyses (also called
                                                   27.3     25.0       25.0        9.1        13.6     6.4         2.57
    utility analyses) of HR programs?
n. Assess HR programs before they are
    implemented – not just after they are          25.0     36.4       18.2       13.6         6.8     6.4         2.41
    operational
o. Evaluate and track the performance of
                                                   26.7     40.0       13.3       13.3         6.7     4.3         2.33
    outsourced HR activities?
p. Assess the feasibility of new business
                                                   39.5     27.9       11.6        4.7        16.3     6.4         2.30
    strategies
q. Pinpoint HR programs that should be
                                                   37.0     28.3       21.7        8.7         4.3     2.1         2.15
    discontinued

   Around 40% of respondents indicated that analytics are used to measure the cost of providing
   HR services and to measure routine HR process execution to a “considerate” or “very great”
   extent. A comparable amount of attention is paid to assessing and improving the human capital

   © 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                    -8-
      strategy of the company and to contribute to decisions about business strategy and human capital
      management. However, only about half as many (23%) conducted cost-benefit analyses of HR
      programs, though a larger fraction (35%) measure the business impact of HR programs and
      processes. Even smaller fractions, though, use analytics to assess HR programs before they are
      operational (20%) and to pinpoint HR programs that should be discontinued (13%). In no case,
      however, do a majority of organizations use HR analytics to a “considerate” or “very great”
      extent in any of the areas indicated above. Thus there appears to be considerable scope to expand
      the use of analytics within HR.

      A larger point is that there is a difference between using data to describe the results of HR
      programs, or to evaluate HR programs, and using data to make proactive decisions about strategy
      and HR investments. The Table above for the most part addresses only description and
      evaluation of HR programs, not proactive decision making. However, given that describing and
      evaluating HR programs typically is the first step in decision making, it is fairly certain that data
      are used even less frequently to either enhance or enable proactive decision making about
      strategy and HR investments.


      4. HR analytics and the effectiveness of the HR function and the organization

      Table 7 shows the correlations of the survey respondents’ self-reports regarding the perceived
      value of analytics conducted within versus outside of HR, and the perceived effectiveness of the
      organization at achieving financial and strategic objectives.

                                          Table 7: Correlation – HR and non-HR Analytics & Organization Effectiveness
                                                     HR                           non-HR
                                                 Analytics:          HR         Analytics:       non-HR
                                                 Are highly       Analytics:    Are highly     Analytics:
                                                  valued by     Have positive    valued by    Have positive Effectiveness: Effectiveness: Effectiveness:
                                                  business        impact on      business       impact on         Meeting    Sustaining      Achieving
                                                 leadership        business     leadership       business         financial  competitive    internal org
                                                    team          outcomes         team         outcomes         objectives  advantage       objectives
HR Analytics: Are highly valued by
business leadership team
HR Analytics: Have positive impact on             .756***
business outcomes
non-HR Analytics: Are highly valued by            .508***            .422**
business leadership team
non-HR Analytics: Have positive impact            .501***           .619***           .732***
on business outcomes
Effectiveness: Meeting financial objectives        -.170             -.132             -.210             .019
Effectiveness: Sustaining competitive               .131              .037             .087              .231             .752***
advantage
Effectiveness: Achieving internal org              -.099             -.097             -.116             .130             .691***           .628***
objectives
Effectiveness: Attracting and retaining             .000             -.077             -.024             .198             .560***           .648***    .837***
critical talent
* Correlation is significant at the .05 level. ** Correlation is significant at the .01 level. *** Correlation is significant at the .001 level.




      © 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                                          -9-
On the positive side, there is a strong positive correlation between the perceived value of HR
analytics and analytics conducted outside of HR. This suggests that organizations that put a
greater emphasis on analytics in general will do so both in HR as well as outside of HR. This
can be a boon to HR professionals seeking to further the use of analytics within HR if the
organizational culture is consistent with an analytical mindset. However, it suggests barriers for
their peers who are in organizations where analytics in general are less highly valued.

On the negative side, none of the measures of perceived value of analytics, either in HR or
outside of HR, are positively correlated with perceived organizational effectiveness. If this is the
“real” relationship, the implication is that general analytic effectiveness may help the business at
the margin, but that analytics alone do not drive either financial or strategic results. This may
not be surprising given the importance of strategy formulation and execution in determining
business and strategic success. There are obviously many factors beyond HR analytics that drive
organization success. Nonetheless, it is important to keep this limitation in mind when
considering or arguing for the importance of analytics from a business perspective. It would
appear to be a stretch to argue that effective analytics are a primary driver of organization
effectiveness.

Having said this, however, it is worth noting that there is a technical issue related to the
organizational effectiveness measures that may limit their usefulness: many of the responses are
clustered at the top of the effectiveness range (75-100% effectiveness). In such cases it is not
uncommon for the range-restricted measures to be uncorrelated with other variables of interest.
Consequently we cannot know for sure whether the lack of statistically significant relationships
in Table 7 is the “truth” or whether it is an artifact of the way that effectiveness has been
measured.

Table 8 show the correlations of the two analytic impact measures and the four organizational
effectiveness measures with the perceived sophistication of analytics in various HR and
organizational processes. Consistent with results in Table 7, none of the analytical sophistication
measures are (statistically significantly) positively correlated with the organizational
effectiveness measures.

There are certain areas where analytical sophistication does seem positively correlated with the
perceived value of HR analytics by the business team. These are strategic planning, change
management, employee training / education, benefits (but not compensation), performance
management, and diversity / affirmative action. Increased analytical sophistication in each of
these areas related to greater perceived value by the business leadership team and greater positive
business impacts. The pattern suggests that business leadership values a relatively traditional set
of analytics, closely related to the accounting framework of the organization, or related to
compliance (e.g., diversity). It may be that the value of analytics applied to HR areas less clearly
related to traditional cost or compliance outcomes has simply not yet been articulated effectively
to business leaders.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                        - 10 -
                          Table 8: Correlation – HR Analytics, Organization Effectiveness, and Sophistication of HR Processes
                                                           HR Analytics:
                                        HR Analytics:       Have positive                        Effectiveness:                                     Effectiveness:
                                      Are highly valued      impact on        Effectiveness:       Sustaining        Effectiveness:                  Attracting and
                                         by business          business       Meeting financial     competitive      Achieving internal              retaining critical
                                       leadership team       outcomes            objectives        advantage         org objectives                       talent
Sophistication: HR planning                  .224               .307               -.224              -.126               -.227                           -.189
Sophistication: Strategic planning             .409*                .475**                .161                 .121                  .045                 .021
Sophistication: Org development                 .322                 .202                 -.090                .108                 -.098                 -.148
Sophistication: Org design                      .188                 .047                 .007                 .147                  .081                 -.006
Sophistication: Change
                                               .406*                 .208                 -.158                .319                  .005                 .150
management
Sophistication: Employee attitude
                                                .274                 .279                 -.070                .047                  .002                 -.010
surveys
Sophistication: Recruitment                     .164                 .166                -.340*                -.293                -.232                 -.101
Sophistication: Selection                       .282                 .254                 -.234                .038                 -.073                 .120
Sophistication: Career Planning                 .028                 .096                 .091                 -.012                 .096                 .070
Sophistication: Workforce planning              .133                 .166                 .006                 .182                  .216                 .170
Sophistication: Employee training/
                                                .263                .341*                 .235                 .311                  .260                 .178
education
Sophistication: Management
                                               -.033                 .213                 -.047                -.134                -.354                 -.321
development
Sophistication: Compensation                    .293                 .280                 .176                 .229                  .119                 .088
Sophistication: Benefits                       .490**              .596***                .280                 .226                  .189                 .096
Sophistication: Performance
                                               .408*               .547***                .119                 .183                  .049                 .169
management
Sophistication: Competency/ talent
                                                .050                 .284                 .187                 .219                  .171                 .138
assessment
Sophistication: Promotions                      .264                 .260                 -.340                -.049                -.216                 .010
Sophistication: Succession
                                                .071                 .151                 .070                 .001                  .077                 .131
planning/ Lead. Supply
Sophistication: Union/ labor
                                                .318                 .053                 .022                 .237                  .130                 -.171
relations
Sophistication: Diversity/ affirmative
                                               .467**               .429**                -.106                .105                 -.161                 -.001
action
Sophistication: Downsizing layoffs              .330                 .352                 -.391                -.308                 -.366               -.579**
 * Correlation is significant at the .05 level. ** Correlation is significant at the .01 level. *** Correlation is significant at the .001 level.


     Table 9 repeats the correlations with the same six outcome measures in the previous table, this
     time correlating them with the extent to which analytics is used as a contribution to decision
     making in various areas. Again, none of the usage measures is positively correlated with the
     organizational effectiveness outcome measures. Unlike the analytic sophistication measures in
     Table 8, however, every single usage measure is positively correlated with the perceived value of
     HR analytics both by the business leadership team and vis-à-vis positive impacts on business
     outcomes. Moreover, in many cases the correlation with positive business impacts is greater
     than with perceived value by the business leadership team, implying that, if true, HR analytics
     often has impacts in ways that may not be apparent to the business leadership team, suggesting
     an avenue for improved communication (assuming the impacts can be documented). It appears

     © 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                                            - 11 -
      that when respondents thought specifically about the value and impact of HR analytics, their
      perceptions of the degree to which they are used in all ways were positively related. However,
      when they judged the effectiveness of their organization, separately from a focus on analytics,
      their responses were not correlated with use.

                                     Table 9: Correlation – HR Analytics, Organization Effectiveness, & Use of HR Analytics
                                          HR Analytics:
                                             Are highly     HR Analytics:
                                             valued by       Have positive                         Effectiveness:                                  Effectiveness:
                                              business        impact on       Effectiveness:         Sustaining        Effectiveness:               Attracting and
                                            leadership         business      Meeting financial       competitive     Achieving internal            retaining critical
                                                team          outcomes          objectives           advantage         org objectives                    talent
Use: Measure business impact of HR
                                               .373*            .604***              -.171                  -.100                  -.174                 -.182
programs & processes
Use: Measure cost of providing HR
                                              .393**            .573***               .186                  .277                   .079                  .052
services
Use: Conduct cost-benefit analyses
                                              .514***           .658***              -.053                  .133                   .190                  .178
of HR programs
Use: Measure effects of HR
                                              .425**            .582***              -.083                  .104                   .031                  -.019
programs on workforce
Use: Evaluate & track performance of
                                               .299*            .391**               -.041                  .053                   .068                  .173
outsourced HR
Use: Connect human capital
                                              .577***           .594***              -.046                  .172                   .020                  -.046
practices to org performance
Use: Make decisions &
recommendations that reflect                  .420**            .529***              -.220                  -.053                  -.103                 -.102
company’s competitive situation
Use: Identify where talent has
                                              .557***           .542***              -.114                  -.041                  -.040                 -.141
greatest potential for strategic impact
Use: Assess HR programs before
                                              .627***           .592***              -.209                  -.031                  -.170                 -.082
they are implemented
Use: Pinpoint HR programs that
                                              .478***           .576***              -.150                  .024                   -.139                 -.152
should be discontinued
Use: Assess feasibility of new
                                              .489***           .484***              -.079                  .042                   -.139                 -.042
business strategies
Use: Evaluate effectiveness of HR
                                              .724***           .723***              -.145                  -.014                  -.047                 .012
programs & practices
Use: Measure routine HR process
                                              .543***           .573***               .067                  .122                   -.068                 -.017
execution
Use: Support organizational change
                                              .652***           .758***              -.253                  -.006                  -.140                 -.107
efforts
Use: Assess & improve HR
                                              .493***           .667***              -.031                  .119                   -.072                 -.084
department operations
Use: Assess & improve human
                                              .470***           .582***              -.155                  -.045                  -.015                 -.127
capital strategy of company
Use: Contribute to decisions about
business strategy & human capital             .537***           .613***              -.160                  -.059                  -.105                 -.207
mgmt
* Correlation is significant at the .05 level. ** Correlation is significant at the .01 level. *** Correlation is significant at the .001 level.


      It should be noted, however, that most respondents rated their organizations very highly on each
      of the effectiveness measures: over half of the responses were in the 75-100% range for all four
      measures. This high degree of clustering at the top of the range decreases the ability of those

      © 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                                          - 12 -
measures to differentiate among responses on other parts of the survey, including the analytic
sophistication and usage measures in Tables 8 and 9. This means that different measures of
organizational effectiveness might yet prove to be positively correlated with HR analytic
sophistication and/or usage.

Another potential concern is bias among the survey respondents with respect to the perceived
impact of HR analytics. The organizations that make much greater use of HR analytics may do
so because that yields more effective outcomes than not using HR analytics. But it also likely is
the case that the organizations that make greater use of HR analytics also believe that doing so
yields more effective outcomes, even if their beliefs have not been validated by measuring the
actual impacts of conducting HR analytics. This means that at least some of the positive
correlation between extent of use of HR analytics and the perceived value of HR analytics in
Table 9 likely is due to bias among the survey respondents.


Conclusion

This survey has provided one of the first comprehensive views of the state of HR analytics and
HR transformation in organizations today. Some of the key insights include:
    •   Assessing analytical competencies appears to be more important than assessing HR
        competencies for (a) HR playing a role in strategy formulation, and (b) HR serving as a
        role model for other functions and an employer of choice for HR professionals.
    •   There appears to be a gap within the broad group of HR professionals: they tend to have
        low analytic proficiency and yet frequently are called upon to use basic statistics, apply
        root cause analysis, and communicate statistical results to non-statistical audiences.
    •   Despite the demand for HR to show the connection between its activities and effects on
        the business, in many organizations HR analytics seldom draws on data from other parts
        of the organization such as production, marketing and sales.
    •   HR analytics are most commonly used to measure routine HR process execution, assess
        and improve HR department operations, support organizational change efforts, and
        measure the cost of providing HR services. HR analytics least commonly are used to
        pinpoint HR programs that should be discontinued, assess the feasibility of new business
        strategies, evaluate and track the performance of outsourced HR activities, and assess HR
        programs before they are implemented.
    •   HR analytics is used to a considerate extent only by a minority of companies.
    •   There appears to be a link between the extent of usage of HR analytics and HR’s impact
        on the business, at least as perceived by the organization’s leadership.
Thus there appears to be great potential for more extensive use of HR analytics, with benefits to
be reaped both by the HR function and the organization more broadly.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                        - 13 -
 SURVEY ON HR ANALYTICS AND HR TRANSFORMATION (COMBINED RESULTS FOR
     HR DATA & ANALYSIS PROFESSIONALS AND HR PROFESSIONALS N=47)

1. Please answer the following questions:
    a. Name (optional): _________________________________________________________
    b. If you would like a copy of the results of the survey, please indicate
       your e-mail address: _______________________________________________________
    c. Title: ___________________________________________________________________
    d. Company: _______________________________________________________________
    e. Years of experience working in HR in your current organization ................ 7.04                                years
    f. Years of experience working in HR in other organizations .......................... 6.64                            years
    g. Please indicate your role:
        19.1%     1.   HR supporting a line business unit
         4.3%     2.   HR supporting a staff unit (IT, legal, etc.)
        48.9%     3.   HR specialist in metrics and analytics (survey research, etc.)
        12.8%     4.   HR functional specialist (compensation, staffing, etc)
        14.9%     5.   Other: 1. “Advisory services, staffing strategy”; 2. “Corporate Governance”; 3. ‘HR Special
                       Projects”; 4. “HR supporting Enterprise HCM”; 5. “HR supporting R&D and staff units”;
                       6. “Internal consultant plus some functional responsibilities”; 7. “Supporting the HR organization”
    h. Do you have a degree in the HR field? ............................................................. 29.8% Yes 70.2% No
    i. Do you have a certificate in the HR field (PHR, SPHR, GPHR, CCP, etc.)? .. 25.5% Yes 74.5% No
    j. Years of experience working in line/operations roles in your current organization . 4.26 years
    k. Years of experience working in line/operations roles in other organizations ........... 4.86 years
    l. Years of P&L experience........................................................................................... 5.64 years
2. Please indicate your job level:
       4.3% 1. Executive/Senior Vice President                                14.9% 4. Manager
       8.5% 2. Vice President                                                 31.9% 5. Analyst/Technical expert
      40.4% 3. Director                                                          0% 6. Other: ____________________
3. How many levels below the CEO is your job? ........................ 3.48 levels
4. How many levels below the top HR officer is your job? ........ 2.17 levels
5. Please indicate whether any of the following are primary responsibilities of your role:
   (Note: #5a-#5g Asked only on Analytics survey)
     a. Define the approach for conducting data analysis ................................91.7% Yes                   8.3% No
     b. Conduct data analysis ...........................................................................91.7% Yes   8.3% No
     c. Interpret data analysis ...........................................................................91.7% Yes 8.3% No
     d. Communicate analysis results to stakeholders in the organization.......91.7% Yes                             8.3% No
      e. Work with stakeholders to make decisions using analysis results........87.5% Yes                                   12.5% No
      f. Data quality assurance ..........................................................................87.5% Yes         12.5% No
      g. Data reporting .......................................................................................79.2% Yes    20.8% No
Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.
© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                             - 14 -
HR ANALYTICS GROUP
(Note: #1-#4 Asked only on Analytics survey)
1. Number of full-time equivalent employees in the HR analytics group, including
   support staff and professional staff:.............................................................................. 4.52
2. How many levels below the CEO is the highest position in the group?....................... 3.67
3. How many levels below the top HR officer is the highest position in the group? ....... 2.17
4. Please choose the response that best describes organizational location of the group:
     8.3%        a.   Corporate or headquarters, but outside the HR organization
    70.8%        b.   Corporate or headquarters, and inside the HR organization
     4.2%        c.   Within one or more business units, but outside the HR organization
    16.7%        d.   Within one or more business units, and inside the HR organization
       0%        e.   Other: ____________________________________________________________



(Note: #5-#8 Asked only on Analytics survey)
For the following questions, please respond from the perspective of the entire HR analytics group:

5. Range of analytical skills:                                                                                                Average
             1               2                           3                  4                    5
            0%             4.2%                        37.5%              50.0%                8.3%                            3.63
            Very Narrow                                                                     Very Broad

6. Statistical skills:
               1                     2                   3                  4                   5
             4.2%                  12.5%               45.8%              20.8%               16.7%                            3.33
             Very Basic                        Moderately Advanced                       Highly Advanced

7. HR expertise:
            1                        2                   3                  4                   5
           0%                      12.5%               25.0%              45.8%               16.7%                            3.67
             Very Little                              Moderate                               Very High

8. Non-HR Business experience and expertise:
           1              2             3                                   4                    5
          0%           4.2%          45.8%                                45.8%                4.2%                            3.50
             Very Little                              Moderate                               Very High

Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                           - 15 -
      9. If you would like to elaborate or provide additional information about the composition or
         roles of the HR analytics group, please do so here: (Note: #9 Asked only on Analytics survey)
         ____________________________________________________________________________
         ____________________________________________________________________________
         ____________________________________________________________________________

10. To what extent does HR analysis and
                                                                           Some           Moderate        Considerate       Very Great       Don’t
    reporting in your organization draw on                 Not at All
                                                                           Extent          Extent           Extent            Extent         Know
                                                                                                                                                         Average
    each of the following analysis disciplines:
    a. Economics/Business/Finance                            17.0           25.5             19.1              25.5             12.8           0           2.91
    b. Psychology                                            32.6           18.6             25.6               7.0             16.3          6.4          2.56
    c. Sociology                                             27.9           25.6             25.6              16.3              4.7          6.4          2.44
    d. Organization behavior theory                          17.4           15.2             26.1              23.9             17.4           0           3.09
    e. Other scientific perspectives:                        69.2            7.7             15.4                0               7.7          8.5          1.69
        ____1. “Statistics”



11.     In this section, please rate proficiency and frequency of use, for each analytical skill and
        organizational group. Please provide an answer in every column, using the following scales:

                                                                             HR ANALYTICS GROUP
                                                                            (Note: ‘HR Analytics Group’
                                                    YOU                                                                                OTHERS IN HR
                                                                               column asked only on
                                                                                 Analytics survey)
                                                                                                    Frequency It is
                                                       Frequency It is     Proficiency:             Used in Work:                                   Frequency It is
                                 Proficiency:          Used in Work:        1 = None                 1 = Never              Proficiency:            Used in Work:
                                 1 = None              1 = Never            2 = Basic                2 = Rarely             1 = None                1 = Never
                                 2 = Basic             2 = Rarely           3 = Intermediate         3 = Sometimes          2 = Basic               2 = Rarely
                                 3 = Intermediate      3 = Sometimes        4 = Advanced             4 = Frequently         3 = Intermediate        3 = Sometimes
                                 4 = Advanced          4 = Frequently          5 = Not Applicable      5 = Not Applicable   4 = Advanced            4 = Frequently
                                                                                  6 = Don’t know          6 = Don’t know          5 = Don’t know         5 = Don’t know
a. Identifying proper data                                                 None: 0%                 Never: 0%
                                                                                                                            None: 0%               Never: 0%
                                 None: 0%              Never: 0%           Basic: 0%                Rarely: 0%
   for analysis                                                                                                             Basic: 72.1%           Rarely: 34.9%
                                 Basic: 6.5%           Rarely: 4.3%        Intermediate: 52.4%      Sometimes: 28.6%
                                                                                                                            Intermediate: 25.6%    Sometimes: 55.8%
                                 Intermediate: 37.0%   Sometimes: 34.8%    Advanced: 47.6%          Frequently: 71.4%
                                                                                                                            Advanced: 2.3%         Frequently: 9.3%
                                 Advanced: 56.5%       Frequently: 60.9%               N/A: 2.1%               N/A: 2.1%
                                                                                                                               Don’t know: 6.4%       Don’t know: 6.4%
                                 Average: 3.50         Average: 3.57          Don’t know: 2.1%         Don’t know: 2.1%
                                                                                                                            Average: 2.30          Average: 2.74
                                                                           Average: 3.48            Average: 3.71
b. Data access/influence                                                   None: 5.3%               Never: 10.5%
                                                                                                                            None: 5.1%             Never: 0%
                                 None: 0%              Never: 0%           Basic: 15.8%             Rarely: 0%
   skills: obtaining data                                                                                                   Basic: 56.4%           Rarely: 35.9%
                                 Basic: 13.0%          Rarely: 17.4%       Intermediate: 42.1%      Sometimes: 57.9%
                                                                                                                            Intermediate: 35.9%    Sometimes: 46.2%
   from outside your group       Intermediate: 39.1%   Sometimes: 43.5%    Advanced: 36.8%          Frequently: 31.6%
                                                                                                                            Advanced: 2.6%         Frequently: 17.9%
                                 Advanced: 47.8%       Frequently: 39.1%               N/A: 2.1%               N/A: 2.1%
   or specialty                  Average: 3.35         Average: 3.22          Don’t know: 6.4%         Don’t know: 6.4%
                                                                                                                              Don’t know: 14.9%      Don’t know: 12.8%
                                                                                                                            Average: 2.36          Average: 2.82
                                                                           Average: 3.11            Average: 3.11
c. Ability to embrace                                                      None: 5.0%               Never: 0%
                                                                                                                            None: 5.0%             Never: 2.6%
                                 None: 0%              Never: 0%           Basic: 0%                Rarely: 5.0%
   multiple perspectives                                                                                                    Basic: 35.0%           Rarely: 10.5%
                                 Basic: 10.9%          Rarely: 2.2%        Intermediate: 50.0%      Sometimes: 45.0%
                                                                                                                            Intermediate: 50.0%    Sometimes: 52.6%
                                 Intermediate: 32.6%   Sometimes: 30.4%    Advanced: 45.0%          Frequently: 50.0%
                                                                                                                            Advanced: 10.0%        Frequently: 34.2%
                                 Advanced: 56.5%       Frequently: 67.4%               N/A: 2.1%               N/A: 2.1%
                                                                                                                              Don’t know: 12.8%      Don’t know: 17.0%
                                 Average: 3.46         Average: 3.65          Don’t know: 4.3%         Don’t know: 4.3%
                                                                                                                            Average: 2.65          Average: 3.18
                                                                           Average: 3.35            Average: 3.45
d. Root cause analysis                                                     None: 10.5%              Never: 5.3%
                                                                                                                            None: 12.8%            Never: 13.5%
                                 None: 10.9%           Never: 10.9%        Basic: 5.3%              Rarely: 21.1%
   (identifying causal paths)                                                                                               Basic: 56.4%           Rarely: 35.1%
                                 Basic: 17.4%          Rarely: 13.0%       Intermediate: 42.1%      Sometimes: 31.6%
                                                                                                                            Intermediate: 25.6%    Sometimes: 40.5%
                                 Intermediate: 41.3%   Sometimes: 47.8%    Advanced: 42.1%          Frequently: 42.1%
                                                                                                                            Advanced: 5.1%         Frequently: 10.8%
                                 Advanced: 30.4%       Frequently: 28.3%               N/A: 2.1%               N/A: 2.1%
                                                                                                                              Don’t know: 14.9%      Don’t know: 19.1%
                                 Average: 2.91         Average: 2.93          Don’t know: 6.4%         Don’t know: 6.4%
                                                                                                                            Average: 2.23          Average: 2.49
                                                                           Average: 3.16            Average: 3.11
e. Basic univariate statistics                                             None: 5.3%               Never: 10.5%
                                                                                                                            None: 5.3%             Never: 10.8%
                                 None: 4.3%            Never: 8.7%         Basic: 15.8%             Rarely: 10.5%
   (mean, median, mode,                                                                                                     Basic: 71.1%           Rarely: 37.8%
                                 Basic: 21.7%          Rarely: 13.0%       Intermediate: 15.8%      Sometimes: 31.6%
                                                                                                                            Intermediate: 18.4%    Sometimes: 43.2%
   percentiles, standard         Intermediate: 32.6%   Sometimes: 50.0%    Advanced: 63.2%          Frequently: 47.4%
                                                                                                                            Advanced: 5.3%         Frequently: 8.1%
                                 Advanced: 41.3%       Frequently: 28.3%               N/A: 2.1%               N/A: 2.1%
   deviation, etc.)              Average: 3.11         Average: 2.98          Don’t know: 6.4%         Don’t know: 6.4%
                                                                                                                              Don’t know: 17.0%      Don’t know: 19.1%
                                                                                                                            Average: 2.24          Average: 2.49
                                                                           Average: 3.37            Average: 3.16


      © 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                                              - 16 -
                                                                            HR ANALYTICS GROUP
                                                                           (Note: ‘HR Analytics Group’
                                                   YOU                                                                              OTHERS IN HR
                                                                              column asked only on
                                                                                Analytics survey)
                                                                                                   Frequency It is
                                                      Frequency It is     Proficiency:             Used in Work:                                  Frequency It is
                                Proficiency:          Used in Work:        1 = None                 1 = Never              Proficiency:           Used in Work:
                                1 = None              1 = Never            2 = Basic                2 = Rarely             1 = None               1 = Never
                                2 = Basic             2 = Rarely           3 = Intermediate         3 = Sometimes          2 = Basic              2 = Rarely
                                3 = Intermediate      3 = Sometimes        4 = Advanced             4 = Frequently         3 = Intermediate       3 = Sometimes
                                4 = Advanced          4 = Frequently          5 = Not Applicable      5 = Not Applicable   4 = Advanced           4 = Frequently
                                                                                 6 = Don’t know          6 = Don’t know          5 = Don’t know        5 = Don’t know
f. Advanced univariate                                                    None: 10.5%              Never: 21.1%
                                                                                                                           None: 46.2%            Never: 41.7%
                                None: 23.9%           Never: 23.9%        Basic: 21.1%             Rarely: 21.1%
   statistics (correlation,     Basic: 28.3%          Rarely: 39.1%       Intermediate: 26.3%      Sometimes: 31.6%
                                                                                                                           Basic: 43.6%           Rarely: 47.2%
                                                                                                                           Intermediate: 5.1%     Sometimes: 11.1%
   skewness, differences in     Intermediate: 30.4%   Sometimes: 28.3%    Advanced: 42.1%          Frequently: 26.3%
                                                                                                                           Advanced: 5.1%         Frequently: 0%
                                Advanced: 17.4%       Frequently: 8.7%                N/A: 2.1%               N/A: 2.1%
   means, distribution of a     Average: 2.41         Average: 2.22          Don’t know: 6.4%         Don’t know: 6.4%
                                                                                                                             Don’t know: 14.9%      Don’t know: 21.3%
                                                                                                                           Average: 1.69          Average: 1.69
   variable, etc.)                                                        Average: 3.00            Average: 2.63
g. Basic multivariate                                                     None: 21.1%              Never: 33.3%
                                                                                                                           None: 62.9%            Never: 62.9%
   statistics (ANOVA,           None: 40.9%           Never: 48.9%        Basic: 36.8%             Rarely: 27.8%
                                                                                                                           Basic: 28.6%           Rarely: 28.6%
   factor analysis,             Basic: 34.1%          Rarely: 33.3%       Intermediate: 15.8%      Sometimes: 16.7%
                                                                                                                           Intermediate: 2.9%     Sometimes: 8.6%
                                Intermediate: 18.2%   Sometimes: 8.9%     Advanced: 26.3%          Frequently: 22.2%
   regression, logit/probit,                                                                                               Advanced: 5.7%         Frequently: 0%
                                Advanced: 6.8%        Frequently: 8.9%              N/A: 2.1%                N/A: 2.1%
                                                                                                                             Don’t know: 21.3%      Don’t know: 21.3%
   survival/hazard analysis,    Average: 1.91         Average: 1.78          Don’t know: 6.4%         Don’t know: 8.5%
                                                                                                                           Average: 1.51          Average: 1.46
                                                                          Average: 2.47            Average: 2.28
   etc.)
h. Advanced multivariate                                                  None: 38.9%              Never: 55.6%
                                                                                                                           None: 88.2%            Never: 88.6%
                                None: 68.9%           Never: 82.2%        Basic: 33.3%             Rarely: 33.3%
   statistics (structural       Basic: 20.0%          Rarely: 13.3%       Intermediate: 11.1%      Sometimes: 5.6%
                                                                                                                           Basic: 8.8%            Rarely: 11.4%
                                                                                                                           Intermediate: 0%       Sometimes: 0%
   equations, fixed-effects     Intermediate: 8.9%    Sometimes: 4.4%     Advanced: 16.7%          Frequently: 5.6%
                                                                                                                           Advanced: 2.9%         Frequently: 0%
                                Advanced: 2.2%        Frequently: 0%                N/A: 2.1%                 N/A: 2.1%
   models, maximum              Average: 1.44         Average: 1.22          Don’t know: 8.5%         Don’t know: 8.5%
                                                                                                                             Don’t know: 23.4%      Don’t know: 21.3%
                                                                                                                           Average: 1.18          Average: 1.11
   likelihood models, etc.)                                               Average: 2.06            Average: 1.61
i. Understanding adult                                                    None: 11.1%              Never: 23.5%
                                                                                                                           None: 2.8%             Never: 0%
                                None: 9.1%            Never: 15.9%        Basic: 44.4%             Rarely: 29.4%
   learning principles          Basic: 38.6%          Rarely: 25.0%       Intermediate: 27.8%      Sometimes: 41.2%
                                                                                                                           Basic: 44.4%           Rarely: 17.1%
                                                                                                                           Intermediate: 41.7%    Sometimes: 65.7%
   (different ways people       Intermediate: 38.6%   Sometimes: 45.5%    Advanced: 16.7%          Frequently: 5.9%
                                                                                                                           Advanced: 11.1%        Frequently: 17.1%
                                Advanced: 13.6%       Frequently: 13.6%             N/A: 2.1%                 N/A: 2.1%
   assimilate new               Average: 2.57         Average: 2.57          Don’t know: 6.4%         Don’t know: 8.5%
                                                                                                                             Don’t know: 17.0%      Don’t know: 19.1%
                                                                                                                           Average: 2.61          Average: 3.00
   information)                                                           Average: 2.50            Average: 2.29
j. Writing/Communication                                                  None: 5.3%               Never: 10.5%
                                                                                                                           None: 7.9%             Never: 7.9%
                                None: 0%              Never: 2.2%         Basic: 5.3%              Rarely: 5.3%
   (make statistical results                                                                                               Basic: 73.7%           Rarely: 28.9%
                                Basic: 24.4%          Rarely: 17.8%       Intermediate: 42.1%      Sometimes: 36.8%
                                                                                                                           Intermediate: 10.5%    Sometimes: 50.0%
   understandable without       Intermediate: 35.6%   Sometimes: 26.7%    Advanced: 47.4%          Frequently: 47.4%
                                                                                                                           Advanced: 7.9%         Frequently: 13.2%
                                Advanced: 40.0%       Frequently: 53.3%             N/A: 2.1%                 N/A: 2.1%
   losing meaning)              Average: 3.16         Average: 3.31          Don’t know: 6.4%         Don’t know: 6.4%
                                                                                                                             Don’t know: 14.9%      Don’t know: 14.9%
                                                                                                                           Average: 2.18          Average: 2.68
                                                                          Average: 3.32            Average: 3.21
k. Presentation or Public                                                 None: 5.3%               Never: 5.3%
                                                                                                                           None: 8.1%             Never: 8.6%
   speaking: (effectively       None: 4.4%            Never: 4.4%         Basic: 5.3%              Rarely: 15.8%
                                                                                                                           Basic: 45.9%           Rarely: 25.7%
   present analysis to          Basic: 17.8%          Rarely: 13.3%       Intermediate: 52.6%      Sometimes: 31.6%
                                                                                                                           Intermediate: 35.1%    Sometimes: 51.4%
                                Intermediate: 44.4%   Sometimes: 40.0%    Advanced: 36.8%          Frequently: 47.4%
   audiences from all                                                                                                      Advanced: 10.8%        Frequently: 14.3%
                                Advanced: 33.3%       Frequently: 42.2%             N/A: 2.1%                N/A: 2.1%
                                                                                                                             Don’t know: 17.0%      Don’t know: 21.3%
   functions and business       Average: 3.07         Average: 3.20          Don’t know: 6.4%         Don’t know: 6.4%
                                                                                                                           Average: 2.49          Average: 2.71
                                                                          Average: 3.21            Average: 3.21
   units)
l. Other: ______
   1. “Influence/Selling                                                  None: 0%                 Never: 0%
                                                                                                                           None: 0%               Never: 0%
   Skills- selling the value    None: 0%              Never: 0%           Basic: 0%                Rarely: 0%
                                                                                                                           Basic: 0%              Rarely: 0%
   of analytical insights and   Basic: 0%             Rarely: 0%          Intermediate: 100%       Sometimes: 100%
                                                                                                                           Intermediate: 0%       Sometimes: 0%
                                Intermediate: 0%      Sometimes: 0%       Advanced: 0%             Frequently: 0%
   generating                                                                                                              Advanced: 0%           Frequently: 0%
                                Advanced: 100%        Frequently: 100%                N/A: 0%                  N/A: 0%
                                                                                                                              Don’t know: 2.1%       Don’t know: 2.1%
   expectations”;               Average: 4.00         Average: 4.00            Don’t know: 0%          Don’t know: 0%
                                                                                                                           Average: n/a           Average: n/a
                                                                          Average: 3.00            Average: 3.00
   2. “Use of professionals
   outside the company”

    Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.




    © 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                                              - 17 -
      ANALYTICAL SOPHISTICATION OF HR PROCESSES:
12.   For each HR process below, please check whether analysis is conducted. Then, only for those checked “yes,”
      please answer the questions in the right-hand columns:
                             Does your
                             organizatio
                             n conduct                          If YES, then please answer the questions in these columns.
                              any data-                                    If NO, then skip to the next HR process.
                               based
                              analysis?
                                                                                                 Level of sophistication:             Results used in
                                                                                                         1 = basic;                      reports,
                                                 Who conducts the analysis?
                                                                                                     2 = intermediate;                dashboards or
                                                                                                       3 = advanced                    scorecards?
                                                                           Analytics
                             Yes    No                                       only:
                                                        Only
                                                                          % selected
                                                       others
                                           HR only               Both       ‘You’ or     Basic    Intermediate Advanced     Average    Yes        No
                                                       not in
                                                                         ‘Others in HR
                                                        HR
                                                                           Analytics
 HR Processes                                                                Group’

 v. HR planning              82.6   17.4    76.3         0       23.7       66.7         24.3        56.8         18.9      1.95      71.1        28.9
 w. Strategic planning       80.0   20.0    36.1        5.6      58.3       62.5         20.0        51.4         28.6      2.09      69.4        30.6
 x. Organization
                             80.4   19.6    71.4         0       28.6       41.7         31.3        46.9         21.9      1.91      48.6        51.4
     development
 y. Organization design      69.6   30.4    63.3         0       36.7       37.5         29.6        48.1         22.2      1.93      44.8        55.2
 z. Change management        60.9   39.1    53.8         0       46.2       45.8         32.0        40.0         28.0      1.96      34.6        65.4
 aa. Employee attitude
                             93.5   6.5     64.3        2.4      33.3       66.7         11.9        45.2         42.9      2.31      83.7        16.3
     surveys
 bb. Recruitment             91.3   8.7     90.2         0        9.8       50.0         31.7        48.8         19.5      1.88      82.9        17.1
 cc. Selection               82.6   17.4    81.1         0       18.9       37.5         44.1        35.3         20.6      1.76      71.4        28.6
 dd. Career planning         52.2   47.8    52.2        8.7      39.1       16.7         45.5        36.4         18.2      1.73      43.5        56.5
 ee. Workforce planning      80.4   19.6    52.8        8.3      38.9       41.7         44.1        41.2         14.7      1.71      62.9        37.1
 ff. Employee
                             80.0   20.0    63.9        2.8      33.3       16.7         52.9        23.5         23.5      1.71      66.7        33.3
     training/education
 gg. Management
                             63.6   36.4    60.7         0       39.3       25.0         50.0        28.6         21.4      1.71      67.9        32.1
     development
 hh. Compensation            97.8   2.2     79.5         0       20.5       37.5         4.7         51.2         44.2      2.40      76.7        23.3
 ii. Benefits                86.4   13.6    81.6         0       18.4        4.2         8.3         47.2         44.4      2.36      67.6        32.4
 jj. Performance
                             79.5   20.5    82.9         0       17.1       37.5         31.4        51.4         17.1      1.86      77.1        22.9
     management
 kk. Competency/talent
                             68.2   31.8    65.5        3.4      31.0       33.3         42.9        32.1         25.0      1.82      58.6        41.4
     assessment
 ll. Promotions              69.8   30.2    73.3        3.3      23.3       41.7         30.0        43.3         26.7      1.97      76.7        23.3
 mm. Succession
     planning/Leadership     81.0   19.0    63.6         0       36.4       25.0         45.2        38.7         16.1      1.71      53.1        46.9
     supply
 nn. Union/labor
                             27.9   72.1    81.8         0       18.2        8.3         80.0          0          20.0      1.40      45.5        54.5
     relations
 oo. Diversity/affirmative
                             86.7   13.3    72.5         0       27.5       58.3         20.5        46.2         33.3      2.13      89.7        10.3
     action
 pp. Downsizing layoffs      54.5   45.5    58.3         0       41.7       29.2         37.5        33.3         29.2      1.92      72.0        28.0
 qq. Other (please
     specify):                0     100      0           0         0          0           0            0            0        n/a        0         100


      Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.


      © 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                             - 18 -
      DATA BASES SUPPORTING HR ANALYTICS
13.   To what extent does HR Analytics rely on data from each source?
                                                       Not At     Some         Moderate   Considerate   Very Great   Don’t
                                                                                                                              Average
                                                        All       Extent        Extent      Extent        Extent     Know

 a. Collected specifically for that analysis on
                                                        2.1        17.0         25.5        27.7          27.7        0        3.62
    an ad hoc basis.
 b. Drawn from an HR data warehouse, using
                                                        8.5        8.5          17.0        19.1          46.8        0        3.87
    standard queries
 c. Drawn from an HR data warehouse using
                                                        8.5        10.6         17.0        17.0          46.8        0        3.83
    customized queries
 d. Drawn from both HR data bases and data
    bases from other organization functions            18.2        29.5         22.7        13.6          15.9       4.3       2.80
    (such as production, marketing, sales, etc.).
 e. Drawn from data bases outside the
    organization (benchmarks, economic                 19.1        29.8         23.4        19.1           8.5        0        2.68
    reports, commissioned studies)



      USE OF HR ANALYTICS FOR DECISION-MAKING
14.   Please indicate the extent to which HR analytics is used to:
                                                       Not At     Some         Moderate   Considerate   Very Great   Don’t
                                                                                                                              Average
                                                        All       Extent        Extent      Extent        Extent     Know

      a. Measure the business impact of HR
                                                       17.4        26.1         21.7        17.4          17.4       2.1       2.91
         programs and processes?
      b. Measure the cost of providing HR
                                                       10.9        26.1         23.9        17.4          21.7       2.1       3.13
         services?
      c. Conduct cost-benefit analyses (also
                                                       27.3        25.0         25.0         9.1          13.6       6.4       2.57
         called utility analyses) of HR programs?
      d. Measure the effects of HR programs on
         the workforce in terms of competence,         17.4        26.1         23.9        13.0          19.6       2.1       2.91
         motivation, attitudes, behaviors, etc.?
      e. Evaluate and track the performance of
                                                       26.7        40.0         13.3        13.3           6.7       4.3       2.33
         outsourced HR activities?
      f. Connect human capital practices to
                                                       25.0        25.0         18.2        25.0           6.8       6.4       2.64
         organizational performance?
      g. Make decisions and recommendations
         that reflect your company’s competitive       13.6        22.7         27.3        22.7          13.6       6.4       3.00
         situation
      h. Identify where talent has the greatest
                                                       20.5        18.2         31.8        18.2          11.4       6.4       2.82
         potential for strategic impact
      i. Assess HR programs before they are
         implemented – not just after they are         25.0        36.4         18.2        13.6           6.8       6.4       2.41
         operational
      j. Pinpoint HR programs that should be
                                                       37.0        28.3         21.7         8.7           4.3       2.1       2.15
         discontinued
      k. Assess the feasibility of new business
                                                       39.5        27.9         11.6         4.7          16.3       6.4       2.30
         strategies
      l. Evaluate the effectiveness of HR
                                                        6.8        36.4         27.3        15.9          13.6       4.3       2.93
         programs and practices
      © 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                 - 19 -
                                                      Not At           Some          Moderate       Considerate      Very Great        Don’t
                                                                                                                                                  Average
                                                       All             Extent         Extent          Extent           Extent          Know

m. Measure routine HR process execution
                                                       8.7             23.9             26.1            21.7            19.6           2.1         3.20
   (payroll, benefits, communication, etc.)
n. Support organizational change efforts              10.9             21.7             23.9            26.1            17.4           2.1         3.17
o. Assess and improve the HR department
                                                      10.9             19.6             32.6            15.2            21.7           2.1         3.17
   operations
p. Assess and improve the human capital
                                                      15.9             31.8             13.6            22.7            15.9           6.4         2.91
   strategy of the company
q. Contribute to decisions about business
                                                      15.2             30.4             13.0            28.3            13.0           2.1         2.93
   strategy and human capital management



BUSINESS IMPACT
15.    Please indicate the extent to which you agree with each of the following statements about HR
       analytics generally in your organization:
                                                               Strongly                                                        Strongly
                                                                                Disagree        Neither         Agree                          Average
                                                               Disagree                                                         Agree

  a. Are highly valued by the business leadership
                                                                 6.4             17.0            19.1           40.4            17.0            3.45
     team
  b. Have a positive impact on business outcomes                 4.3             10.6            25.5           40.4            19.1            3.60


16.    Please indicate the extent to which you agree with the following statements about analytics related to
       non-HR functions or resources in your organization (finance, engineering, etc.):
                                                               Strongly                                                        Strongly
                                                                                Disagree        Neither         Agree                          Average
                                                               Disagree                                                         Agree

  a. Are highly valued by the business leadership
                                                                   0              8.5             8.5           44.7            38.3            4.13
     team
  b. Have a positive impact on business outcomes                   0              6.4            23.4           46.8            23.4            3.87


YOUR PERSONAL EFFECTIVENESS
17.    Please indicate the extent of your own personal effectiveness in each of the following roles:
                                                               Not at all       Slightly       Moderately                       Highly
                                                                                                               Effective                       Average
                                                               Effective        Effective       Effective                      Effective


  a.   As an HR analyst                                            0             12.8            25.5           38.3            23.4            3.72

  b.   As an analyst or scientist generally                      4.2              8.3            37.5           20.8            29.2            3.63
        (Note: #17b Asked only on Analytics survey)

  c.   As an HR professional                                       0              2.1            34.0           31.9            31.9            3.94

  d.   As a business leader                                      2.2             21.7            26.1           30.4            19.6            3.43


Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                                          - 20 -
INFORMATION ABOUT YOUR ORGANIZATION
For the following questions, please respond with respect to the end of 2004.

1.     How many employees are in your company?.............................................................. 2,267,235 (Average)
2.     What are your company’s annual sales?........................................... $ 14.3 B (Min: $500,000- Max: $70 B)
3.     What percentage of your company’s revenue comes from outside the
       United States? (if your response is 0%, skip to next question).................................... 30.3%
4.     What percentage of your company’s employees is located outside of the
       United States? ............................................................................................................. 31.3%

5.     Which of the following best describes your company? (please check one response):
        22.2% 1. Single integrated business
        44.4% 2. Multiple related businesses with corporate functions providing some integrative support
        31.1% 3. Several sectors or groups of business units with some corporate functions and support
          2.2% 4. Multiple unrelated businesses managed independently in a "holding company" fashion
             0% 5. Other (please specify): ___________________________________________________


                                                                          Not At         Some          Moderate      Considerate     Very Great
                                                                                                                                                  Average
                                                                           All           Extent         Extent         Extent          Extent


 6.    To what extent does your company rely on
                                                                           7.0            14.0           11.6           18.6           48.8        3.88
       R&D to sustain competitive advantage?
 7.    To what extent does your company rely on
       intellectual or human capital to sustain                             0              4.7            4.7           37.2           53.5        4.40
       competitive advantage?

8.    To what extent is each of the following disciplines in your organization regarded in your industry as
      using advanced data and analysis?
                                                          Not At         Some          Moderate      Considerate     Very Great        Don’t
                                                                                                                                                  Average
                                                           All           Extent         Extent         Extent          Extent          Know


       a. Marketing                                        2.8            11.1           13.9            25.0           47.2           12.8        4.03
       b. Finance                                           0              5.1           12.8            28.2           53.8           10.6        4.31
       c. Engineering / R&D                                5.9             2.9           11.8            17.6           61.8           19.1        4.26
       d. Operations                                        0             10.0           17.5            30.0           42.5            8.5        4.05
       e. Sales                                            5.7            17.1           20.0            28.6           28.6           14.9        3.57
       f. Other: ____1. “Real Estate”                       0               0              0               0            100             6.4        5.00


Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                                             - 21 -
HR ORGANIZATION CHARACTERISTICS
  1. How many full-time-equivalent employees (FTE’s, exempt and non-exempt)
     are part of the HR function? (this number should include both centralized
     and decentralized staff)...............................................................................................   462       (Average)

  2. Of the professional/managerial employees in HR, what percentage
     are in roles that directly support a business unit (e.g., generalists)? ........................... 51.5%

  3. What is the background of the current head of HR? (please check one response):
         76.7% 1. Human Resource Management,
         23.3% 2. Other Function(s), which one(s)?: _____[1. “Economics”; 2. “Engineering-Manufacturing”;
                           3. “Facility Engineering”; 4. “Finance”; 5. “Finance, Legal”; 6. “Lawyer”; 7. “Legal”;
                           8. “Manufacturing”; 9. “multiple roles”]
  4. Does the VP of HR report to the CEO? ................................................................ 76.1% Yes                      23.9% No
  5. Does the VP of HR sit on the executive committee?............................................ 87.0% Yes                              13.0% No
 6.    Please indicate the extent to which the                               Not At        Some         Moderate     Considerate     Very Great
                                                                                                                                                  Average
                                                                              All          Extent        Extent        Extent          Extent
       following are true:
       a. HR plays a role in strategy formulation                             2.2          17.8           24.4          31.1           24.4        3.58
       b. The HR function is regarded as a role
                                                                             11.4          22.7           36.4          20.5            9.1        2.93
           model for other functions
       c. The HR function is regarded as an
                                                                              4.7          25.6           34.9          20.9           14.0        3.14
           employer of choice for HR professionals
 7.    Please indicate the extent to which the
                                                                             Not At        Some         Moderate     Considerate     Very Great
       following competencies are formally                                    All          Extent        Extent        Extent          Extent
                                                                                                                                                  Average

       assessed:
       a. HR competencies                                                    18.2          20.5           15.9          36.4            9.1        2.98
       b. Analytical competencies                                            25.0          40.9           18.2          15.9             0         2.25


HRIT INFRASTRUCTURE AND SCORECARDS
Please indicate how long your organization has had the following in place (if not in place or in the
process of building, please use 0):
1. HRIT in key business units: ................................................................. 6.27 years (Min:0 – Max:40)
2. HRIT that spans the major regions: ..................................................... 5.48 years (Min:0 – Max:40)
3. HRIT that spans the entire organization: ............................................. 4.87 years (Min:0 – Max:40)
4. HR function-specific scorecards or dashboards:.................................. 3.13 years (Min:0 – Max:40)
5. Organization-wide HR scorecards or dashboards:............................... 2.99 years (Min:0 – Max:40)
6. HR portals for manager or employee self-service, etc.:....................... 3.23 years (Min:0 – Max:10)

Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                                             - 22 -
ORGANIZATIONAL EFFECTIVENESS
Based on your own knowledge, and your impressions of the opinions of top management,
shareholders or financial institutions, please indicate on a scale from 0 to 100 the percentage
effectiveness of your organization on the following dimensions. We realize this will not be a precise
estimate, but we are interested in your own judgment.
1. Meeting financial objectives ........................................................................................... 75.1 %

2. Sustaining competitive advantage................................................................................... 74.0 %

3. Achieving internal organization objectives..................................................................... 67.1 %

4. Attracting and retaining critical talent ............................................................................ 67.2 %




(Note: Asked only on Analytics survey)
Please forward a copy of the following survey link to someone who is familiar with HR data and
analysis in your HR organization, but whose work is not primarily dedicated to HR data
management and analysis. The parallel survey is appropriate for those in HR who are clients of
yours or the dedicated analytics group:
http://www-marshall2.usc.edu/ceo/survey/ma3hrprf/ma3hrprf.pdf



ANALYTICS GROUP (Note: Asked only on HR Professional survey)

1. Does your organization have an individual or group primarily dedicated to analyzing HR and
   human capital data?

     45.0% Yes – Please forward a copy of the following survey link to the appropriate person:
              http://www-marshall2.usc.edu/ceo/survey/ma3anlyt/ma3anlyt.pdf

     55.0% No – THANK YOU FOR YOUR TIME!


Note: Percentages and Averages are computed with Not Applicable and Don’t Know responses coded missing.




© 2005 Center for Effective Organizations: Levenson, Boudreau & Lawler                                                               - 23 -

								
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