The hidden sources of people data

The hidden sources of people data

People create business value and shape business outcomes – thus,

organisations need to collect data on their employees to understand and improve company performance

Sometimes, this data collection stops at a basic level of information, but these days more often than not, it reaches far beyond education levels and salary brackets. This process, coupled with analysing metrics relevant for each business, is what we call people analytics. Data, data everywhere

With HR departments’ shift from a more traditional, “service-provider” role within an organisation and the arrival of digital society emerged brand new sources and types of data employers can store on their employees. This data can, among others, come from 

  • applicant tracking systems (ATS)
  • careers sites 
  • onboarding software
  • exit interviews 
  • Human Resources Information System (HRIS) 
  • surveys and other measurement techniques 
  • business data.  

Some of the above round-up more the hard facts – from recruiting and demographic data, performance ratings and learning management to compensation and benefits. Other channels, like surveys, capture the more abstract notions that could affect employee sentiment, for instance, wellbeing, absence reasons or engagement. And business data provides, well, business data: from sales to other financials.  

But this does not stop here – there are even more, less obvious, data sources available! Think: 

  • social media comments
  • LinkedIn reports 
  • Glassdoor reviews. 

While surveys are a good way of measuring sentiment, employees tend to be more honest on their socials, so HR professionals started incorporating information from social media outlets and feedback sites. In addition to better insight into a fast-changing talent pool, looking at the interactions on social media can also help with making more informed hiring decisions and attracting the right people.  

 With technology becoming an integral part of the work environment, it has not just increased productivity and made the life of employees more comfortable but opened Pandora’s box with some organisations tracking 

  • keyboard actions 
  • network connections 
  • or collecting biometric information. 

There are, of course, “less intrusive” ways of collecting people data as well. For example, a project management software helps not only with overseeing project efficiency but can also provide insight into employee achievements.  

 The list could go on and on, but one thing is sure: HR departments accumulated a vast amount of data on employees. Businesses now need to be transparent with what kind of data they collect on their people, why, how and for how long they intend to use it.  

Collecting an increasing amount of HR data or how business performance can benefit from people analytics

What do HR departments do with all the data? Does it actually benefit the employees, or is it just a way for businesses to spy on their staff? Do HR professionals even have the skills to make anything out of all this information? The answer is not so black and white. 

Data is necessary for people analytics, and people analytics is crucial for identifying what is working and what could improve in the future when it comes to HR practices. It is how HR strategy and business goals come together. It also shows employees how their performance aligns with business objectives. So, what we see is that there is an unlimited amount of data available from an endless supply of sources that can help businesses remain competitive. People analytics help make sense of all this data, and taking advantage of its potential affects business performance and can have a significant financial impact. 

Book an introduction meeting HERE or reach out to Vilte Szekely at vilte@nordconn.com

ELTV – the limit does exist

ELTV – the limit does exist

Although ELTV is not perfect, we demonstrated in our last article that it does provide valuable insight when making decisions around resources. In this one, we will keep our promise and explore the possible limitations of ELTV and see if there is anything to be done to get a more accurate result.

Up close and personal – Why lifetime value calculations need tailoring?

To get a relatively objective result of ELTV, we first need to look at the variables that make ELTV up subjectively, as there is no one size fits all when it comes to ELTV formulas. Lifetime value models need to be constantly monitored and tailored to business situations, and more importantly, organisations should fully comprehend the intended application of the analysis. Last time, we mentioned employee experience: to measure ELTV as accurately as possible, we need to factor in, among others, the unique relationship between each employee and employer, differences in performance, and even salary increases over time. Segmentation could help with getting a clearer picture – in fact, Mike West deems multiplying the Human Capital ROI (HCROI) by the segment estimated annual cost and by the segment lifetime tenure the simplest method of calculating ELTV.

Another potentially limiting element of ELTV is its sole focus on tenure. It assumes that an employee’s value only stretches as far as their time with an organisation, without considering knowledge transfer or projects started by them that continue generating revenue. Not to mention reputation and word of mouth in our connected age: a former employee can very much influence how an organisation is perceived long after they have left.

Flipping the equation – The connection between Customer and Employee Lifetime Value

Previously we also said that a high ELTV was not just about a well-performing employee – it requires a great deal of input from organisations. To better understand this, we need to take a closer look at the origins of ELTV. Businesses put a lot of emphasis on customer satisfaction and spend a ton of resources on attracting and retaining customers to stay competitive. They measure Customer Lifetime Value (CLV), which is the long-term profitability of customers against the cost of customer acquisition and retention. So, it is straightforward: cultivating a healthy, long-term relationship with customers is crucial for a higher CLV. Now, since ELTV rests on the same theoretical concept as CLV, should fostering employee satisfaction not also come as second nature to businesses? (It should.) Where employers focus on improving the corporate culture and boosting employee experience with learning programmes, regular feedback, or even up-to-date technology (and this is a non-exhaustive list!), there is higher ELTV. Another way to look at it is through Employee Value Proposition (EVP), or everything employees gain from working for an organisation. Tackling the most prominent EVP elements as an employer (compensation, work-life balance, stability, location, and respect) will result in a more committed and trusting workforce. Ultimately, it all trickles down to fair treatment and promoting a sense of belonging.

Hit-and-miss

It is a vicious circle in a way: without first knowing which areas, initiatives, learning programmes are worth the investment, how can businesses go on about improving the employee experience? Plus, while with CLV, every dollar spent represents value, employers are still required to spend money, regardless of whether the employee brings value or not. Well, ELTV is more about testing probabilities and continuously improving models, and in industries or job roles, where ELTV is difficult to grasp, looking at potential contributions. And still, being a good employer never hurts.

 

Book an introduction meeting HERE or reach out to Vilte Szekely at vilte@nordconn.com

References
Billy O’Riordan (2021). Why Transformations Fail And How They Can Succeed With People Power
Duncan Cheatle (2020). Employee Lifetime Value: The Critical Metric You’re Probably Not Measuring
Mike West (2020). Estimating Employee Lifetime Value
Performance Improvement Council: Employee Lifetime Value: “The People Impact on Financial Success
AIHR. (2020). The Employee Value Proposition in a Nutshell

The truth about ELTV

The truth about ELTV

It is the people within an organisation that create real value. We all know that. We also know that it is difficult to quantify such value. Even so, measuring employee contribution and performance is vital to business growth.

Multiple variables affect this measurement:

motivation, attitude, expertise

However, it is not all on the employee. Businesses can also do plenty to affect this number: from improving the new hire experience through engaging with employees to rewarding them. So how do we get to this number? By calculating Employee Lifetime Value.   

Defining Employee Lifetime Value

Employee Lifetime Value (ELTV) represents the total net value an employee brings to an organisation over time. While quantifying people’s impact on an organisation could get challenging, especially when compared to more straightforward indicators, such as market share, revenue or profit, organisations must measure the value of investing in their people and understand this value over extended periods. That is so they can make informed decisions around allocating resources, workforce planning and ultimately, marry people strategy with business strategy. 

How is ELTV calculated – this is how you start:  

There are a few ways to calculate ELTV, but generally, a dollar return to an organisation is attributable to an employee. It assumes that investments in a workforce will result in future cash inflows (without taking into account discount rates and the like – but this is a topic for another time). We can either start by taking the pretax profit for each dollar invested in employee pay and calculate the

  1. (Revenue-(Total Cost-(Regular Compensation Cost+Total Benefit Costs)))+(Regular Compensation Cost+Total Benefit Cost)
  2. (Profit+Average Number of Employees)+(Employee Cost+Average Number of Employees).

Or we compare operating profit to total compensation dollars required to produce profits.

 

ELTV is just a number:

The above calculation does not factor in all that makes the employee experience from pay increases to job categories. Different industries, business environments, employee situations require different ELTV formulas. It is hard to get an accurate ELTV because we are trying to measure the sometimes intangible. Nevertheless, it is okay and recommended to tweak some of the variables of an ELTV calculation based on the business situation, for example. Also, the purpose of ELTV is to aid business decisions rather than identifying the one “true” value.

 So, while ELTV is essential for a fair people strategy, it has its limitations. Our next article will examine and offer solutions to these limitations, watch this space!

For the ELTV calculations, we used Mike West’s 2019 book, as a reference.

Bring your projects to successful closure. At Nordconn Sweden, we are project managers, business analysts, HRTech enthusiasts eager to share our expertise with you. Nordconn is providing interim services for startups, scale-ups and enterprise – our professionals will help you to deliver your internal/external projects, so you can focus on growing your business.

Book an introduction meeting HERE or reach out to Vilte Szekely at vilte@nordconn.com

 

HR Digitalization: You have to be in it to win it – When do we have to involve an external expert?

HR Digitalization: You have to be in it to win it – When do we have to involve an external expert?

  • Why is it so expensive? I can hit with a hammer too…
  • But I know exactly where to hit.

 – says the old joke. However, it is not a pun, but reality itself.

Based on a true story

In business, the scale is broad: on one end of the line, companies boldly step into the field of action, engaging an outside expert, thus accelerating the influx of market expertise and expanding their capacity. On the other end, they solve their projects independently, building up internal knowledge and training expertise.

When do we need to start involving an external expert, and what can be solved in-house?

Nowadays, 70% of digitalization projects fail, and that rate is far beyond significant. It is huge.

But what are common pitfalls? How can an external expert help to make HR digitization more successful?

Instead of an introduction

I represent both sides at the same time. On the one hand, the company I work for relies partly on outsourcing external HR digitization experts. On the other, we also have external participants to bring in more expertise “from outside” simultaneously. Nonetheless, the purpose of my writing is not to justify total outsourcing but to point out that it is essential to be aware of our goals in similar situations. Nowadays, we have three paths in the case of HR digitization projects:

1. we solve the project from our capacity and expertise,

2. involve an outsider part-time or for all of the project,

3. we do not solve it.

In the following, I would like to analyze some of the counter-arguments I heard in the HR field.

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“It costs an arm and a leg.”

The general belief is that engaging an outside expert is a costly operation; however, it is always important to look at the other side of the coin. Suppose that our company has reached the point where we need to keep our HR records in order and we decide to introduce an HR software for this reason. Relevant professional experience is required to prepare this project as it is not part of the internal expertise. So we need to ask the following questions ourselves: Is it worth replenishing the knowledge within the house, or is it better when we get it ready? Is it worthwhile to train our existing staff further, take the risk, waiting for their success? Is it worth recruiting for these vacancies and reorganizing them? Or is it better to get ready-made software implementation knowledge that is more expensive than an in-house employee? A lot on your plate, so these are all worth considering.

“The answer is at our hand.”

Competency will not solve anything if there is no free capacity. By involving an external expert and expertise, we can solve the lack of internal capabilities and the impossibility of allocating them to the project; with money, we can replace the missing internal energies and staff for a transition period.

“Money is tight.”

We only use external experts’ work for specific projects, and it only costs money as long as the project itself lasts. After outsiders, we do not have to pay employee contributions; we can save on training and development costs and other expenditures. Also, let’s not forget that companies cannot let go of an employee just because a project has ended..

Therefore, the comparison is not on the outsider vs insiders level; we need to examine and analyze this on the outer vs “no expertise available” projection. The joy over the cheaper solution fades quickly because the quality of the product will be objectionable.

“There is no budget for this” is also often said as an argument. However, I share the view that there is no budget only for what we do not want, and for what we need, we can set aside the right amount.

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“Losing internal knowledge-capital.”

We must exploit the external expert’s market knowledge and project experience during the joint work. External consultants have certainly gained practice in several similar projects and are familiar with pitfalls, so they can also help us avoid costly dead ends. Staying with the initial example, they enable us to avoid the extra cost, time, and stress of poorly a selected HR software. It is worth involving an outsider only for a certain period but the knowledge brought in during the work together gives irreplaceable value to our company.

“Only paying the bills.”

Never judge a book by its cover; they fill the bill. The goal of the external experts is a sustainable and continuous assignment; they will receive more and more jobs if they do not unnecessarily “burn” the customer’s money. At the same time, they also have a kind of contradiction: they want to invoice as much of their daily allowance as possible, but they cannot miss agreed deadlines. During the agreement, we must set targets, deadlines, and the acceptance of the conditions for the external expert, so that the issue of paying for causeless time does not arise. Unfortunately, the customers often do not clarify what they expect from the outsider. In this case, the expert has to define the whole task and bill the customer.

Principles and experiences

The “gig economy” process is widespread worldwide; many freelancers contract for one-time assignments and projects mainly through digital platforms. However, longer-term (even simultaneous, multi-project) collaborations are also prevalent. The principle should be that

we only involve an outsider when we need unique knowledge and capacity building.

If we plan for long-term cooperation, we must ensure that the external expertise can always bring new knowledge and that and that sharing market experience is a regular part of the job.

Of course, we should consider business confidentiality when sharing information.

This article was published in Munkajog in December 2021. 

The reason why project managers should focus more on collaboration

The reason why project managers should focus more on collaboration

A good project manager plans ahead, delegates properly, emphasizes risks, keeps the stakeholders well-informed and satisfied. 

A great project manager orders pizza and pulls an all-nighter with the team in time of crisis. 

Maybe not an all-nighter, because they don’t want to mess with work-life balance, but a great project manager is someone you can rely on when things get hard. Not to boss around, but to take fair share of the heavy work.

As a project manager being available for your team is not as convenient as it sounds. Probably you are juggling with several teams at the same time, all of them desiring your undivided attention. You will receive the news about the new feature deployment failure on Project A and the budget cut on Project B on the same day and you will have to confidently explain to your business owner why the failure was unpredictable, also rewriting your scope to use less resources but still achieve the same level of business outcome.

Ease the pressure with better collaboration

Research shows that interpersonal connections have added value to work effectiveness.

People who feel connected, find something in common are more agreeable and initiate conversation with each other more frequently. This is exactly what you need – connection boost for better project results.

You can be a more effective project manager with a team of people who share information and take each other’s goals into consideration.  

This is how you do it:

  1. Be a connector instead of a resolver

Do not use your valuable time to roleplay the mailman. Encouraging in-depth discussions will free up your time to do your own work. Establish a platform and set some ground rules where all the invited parties can speak their mind respectfully and listen to each other.

  1. Celebrate publicly

Acing an important presentation at the board is a big achievement for a team member. Make sure you share the win with the whole team and explain why this result is important to the project and also to them personally.  A legal personnel and an IT developer not necessarily will understand the importance of the actions one or the other does, but a lot can be done by opening windows on each other’s achievements.

  1. Objectives and Key Results (OKR)

OKRs are not only for setting company goals. They can be well used in any project from small to large. Your goal is to make sure there are overlapping key results between people, so even if they are doing totally different activities, they still need to communicate to get those results aligned.

  1. Build friendships

It is easy to get swamped up in work and give social connections a low priority. People who have some common interests are genuinely more invested into connecting with the other person – this means more collaboration within your project. No need to get to intimate – take some time to find and share nice, small things about your people.

Bring your projects to successful closure. At Nordconn Sweden, we are project managers, business analysts, HRTech enthusiasts eager to share our expertise with you. Nordconn is providing interim services for startups, scale-ups and enterprise – our professionals will help you to deliver your internal/external projects, so you can focus on growing your business.

Book an introduction meeting HERE or reach out to Vilte Szekely at vilte@nordconn.com