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HR Analytics

Frameworks
The “LAMP” Framework
• In HR today, the dominant paradigm remains one of service delivery.
• The HR profession describes itself in terms of its functional services (rewards,
staffing, training, benefits, etc.).
• The dominant framework for working with business leaders and other constituents is
based on determining what HR services they need or want, and their satisfaction with
those services.
• So, most HR measures today focus on how the HR function is using and deploying its
resources, and whether they are used efficiently
• Cost-per-hire, time-to-fill vacancies, cost-per-training-hour, etc. are all examples.
• It is not unusual to see line managers held accountable for these efficiency-based
measures, even when their connection to organization effectiveness is unknown.
• it requires future HR to model itself more closely against decision-based
functions like Finance and Marketing, that are accountable for improving
decisions throughout the organization about their respective resources .
• HR measurement needs to extend its traditional focus on the HR function, and
increase its capability to support key decisions about human capital that drive
organizational effectiveness.
• That requires a framework for connecting those investments to organizational
effectiveness. With such a framework we can begin to identify where the potential
for increased decision support may lie in HR measures.
“LAMP” model.
• The letters in LAMP stand for four critical components of a
measurement system that drives strategic change and
organizational effectiveness. The letters stand for
• L = “Logic,”
• A= “Analysis,”
• M= “Measures” and
• P= “Process”
• HR measurement systems are only as valuable as the decisions they improve and the
organizational effectiveness to which they contribute.
• HR measurement systems create value as a catalyst for strategic change. Let's examine how the
four components of the LAMP framework define a more complete measurement system.
Logic: What Are the Vital Connections?
• Without proper logic, it is impossible to know where to look for insights.
• The logic element of any measurement system provides the "story" behind the
connections between the numbers and the effects and outcomes.
• provide logical models that help to organize the measurements and show how
they inform better decisions.
• . Examples include the connections between health/wellness and employee
turnover, performance, and absenteeism.
• "The High Cost of Employee Separations," on employee turnover, we propose a
logic model that shows how employee turnover is similar to inventory turnover.
This simple analogy shows how to think beyond turnover costs, to consider
performance and quality, and to optimize employee shortages and surpluses, not
just eliminate them
• With well-grounded logic, it is much easier to help leaders outside the HR
profession understand and use the measurement systems to enhance their
decisions.
• In the field of human resources, there are many logical frameworks, including
salary structures, workforce-planning models, and even labor contracts.
• "service-value-profit" framework for the customer-facing process. This
framework calls attention to the connections between HR and management
practices, which, in turn, affect employee attitudes, engagement, and turnover;
which, in turn, affect the experiences of customers. This, in turn, affects
customer-buying behavior, which, in turn, affects sales, which, in turn, affects
profits. Perhaps the most well-known application of this framework , which
showed quantitative relationships among these factors and used them to change
the behavior of store managers.
Measures: Getting the Numbers Right

• The measures part of the LAMP model has received the greatest
attention in HR.
• Much time and attention is paid to enhancing the quality of HR
measures, based on criteria such as
• TIMELINESS,
• COMPLETENESS,
• RELIABILITY, AND
• CONSISTENCY.
• Consider the measurement of employee turnover. There is much debate
about the appropriate formulas to use in estimating turnover and its
costs, or the precision and frequency with which employee turnover
should be calculated. Today's turnover-reporting systems can calculate
turnover rates for virtually any employee group and business unit.
Armed with such systems, managers "slice and dice" the data in a wide
variety of ways (ethnicity, skills, performance, and so on), each manager
pursuing his or her own pet theory about turnover and why it matters.
Are those theories any good? If not, better measures won't help. That's
why the logic element of the LAMP model must support good
measurement.
Analytics: Finding Answers in the Data
• Even a very rigorous logic with good measures can flounder if the
analysis is incorrect.
• For example, some theories suggest that employees with positive
attitudes convey those attitudes to customers who, in turn, have more
positive experiences and purchase more. Suppose an organization has
data showing that customer attitudes and purchases are higher in
locations with better employee attitudes? Does that mean
that improving employee attitudes will improve customer attitudes?
Many organizations have invested significant resources in programs
to improve frontline-employee attitudes based precisely on this sort of
evidence of association (correlation)
• The problem is that this conclusion may be wrong, and such investments misguided.
A correlation between employee and customer attitudes does not prove that one
causes the other, nor does it prove that improving one will improve the other. Such a
correlation also happens when customer attitudes actually cause employee attitudes.
• This can happen because stores with more loyal and committed customers are more
pleasant places to work. The correlation can also result from a third, unmeasured
factor.
• . Perhaps stores in certain locations attract customers who buy more merchandise or
services and are more passionate.
• Employees in those locations like working with such customers, and are more
satisfied. Store location turns out to cause both store performance and employee
satisfaction.
• The point is that a high correlation between employee attitudes and customer
purchases could be due to any or all of these effects. Sound analytics can reveal
which way the causal arrow actually is pointing.
• Analytics is about drawing the right conclusions from data. It includes statistics
and research design, and then goes beyond them to include
• skill in identifying and articulating key issues,
• gathering and using appropriate data within and outside the HR function,
• setting the appropriate balance between statistical rigor and practical relevance,
and
• building analytical competencies throughout the organization. Analytics
transforms HR logic and measures into rigorous, relevant insights.
Process: Making Insights Motivating and Actionable
• The final element of the LAMP framework is process.
• Measurement affects decisions and behaviors, and those occur within
a complex web of social structures, knowledge frameworks, and
organizational cultural norms.
• Therefore, effective measurement systems must fit within a change-
management process that reflects principles of learning and
knowledge transfer.
• HR measures and the logic that supports them are part of an
influence process.
• The initial step in effective measurement is to get managers to accept that
HR analysis is possible and informative.
• The way to make that happen is not necessarily to present the most
sophisticated analysis. The best approach may be to present relatively
simple measures and analyses that match the mental models that
managers already use.
• process element of the LAMP framework reminds us that often best way
to start a change process may be first to create initial awareness that the
same analytical logic used for financial, technological, and marketing
investments can apply to human resources.
• Education is also a core element of any change process. The
return-on-investment (ROI) formula from finance is actually a
potent tool for educating leaders in the key components of
financial decisions. In the same way, we believe that HR
measurements increasingly will be used to educate constituents
and will become embedded within the organization's learning
and knowledge frameworks.
• so, the LAMP framework help to organize not only the
measures, but also the approach to making those measures
matter.
The HCM:21 Model
• HUMAN CAPITAL MANAGEMENT FOR THE TWENTY-FIRST
CENTURY.
• This breakthrough model was developed over a period of eighteen
months by the Predictive Initiative, a consortium of major
corporations, vendors, and management associations committed to
transforming HR into a strategic function.
• HCM:21 is not a human resources program. It is both a management
model and an operating system
• The model identifies mission-critical organizational issues and entities.
• Then it operationalizes how they align, are interdependent, and need to be
integrated.
• Following are the steps essential to this model:
• A. The Strategic Scan
• B. Capability Planning
• C. Process Optimization
• D. Integrated Delivery
• E. Predictive Measurement
• F. Analytics
A. The Strategic Scan
• Human capital management typically starts with workforce planning.
• Planning compares business plan staffing requirements with internal and external
labor pools.
• The essence of HCM:21, executes a strategic scan of the external forces and internal
factors that can affect the three fundamentals of an organization:
• Human capital is your employees and active contingent workers.
• * Structural capital is essentially things that you own, ranging from facilities and
equipment to intellectual materials, codified processes, patents and copyrights, and
IT software.
• * Relational capital is working knowledge of and relationships with outsiders
including customers, suppliers, competitors, regulators, and communities in which
you do business.
Externally, the forces can include at least the following:
• :
• Globalization demands
• Industry trends
• Customer demands and interests
• Competitors
• Supplier capacity
• Brand reputation
• Materials quality, prices, and
• Technological advancements availability
• Regulations and laws • Labor supply
• Regional, national, and global • Job applicants
economic situation
• Educational institutions
• Stockholders
Internal list includes factors that need to
be reviewed in light of recent market trends
• Vision • Employee brand awareness

• Values • General turnover levels

• Culture • Skills and capability levels

• Leadership • Financial capability

• Management wisdom • Ability to enter new markets

• Mission-critical retention rates • Quality, innovation, productivity,


service (QIPS) levels
• Engagement levels
• Facilities and equipment
• Product life cycles
The Strategic Scanner
• (1) a detailed corporate-wide survey and identification of external
and internal factors;
• (2) an equivalent survey and identification performed on a function
or department level and covering both external and internal factors;
• (3) an identification and review of the corporate vision, mission, and
values; and
• (4) an analysis of corporate objectives and initiatives.
1: Corporate analysis and response
Instructions and Comments: External Forces (A-1)
• External Forces are elements outside your company that you believe will have a
present or future effect on your organization. This template sample has a general
starter set of External Forces, and you may delete these and/or add others as you see
fit.
• First, identify issues that will arise as a result of External Forces.
• Describe them in a few key words or phrases and enter onto the spreadsheet
templates provided.
• Consider primarily those significant issues or forces that will demand attention
across the entire organization.
• Second, to give the scan consistent structure, link the issues to your organization’s
three forms of capital: human, structural, and relational
Instructions and Comments: Internal Forces (A-2)
• This corporate-level scan of internal forces follows the same
directions as those for the external scan. It is a general starter
set of forces;
• you may delete some of these and/or add others as fits your
situation.
• When this strategic scan is completed at the corporate level, it
can be recreated at the divisional or department level as
appropriate.
2: Organizational Analysis and Response
Instructions and Comments: External Forces (A-3)
Instructions and Comments: Internal Factors (A-4)
3: Corporate Vision, Mission, and Values
• Review these current vision, mission, and values statements and
amend or modify as needed.
• Determine what current or future actions may be taken at
corporate level to better commit to, communicate, and implant
these positions in the corporate culture.
• When completed, provide copies to the functions or
departments for their individual organizational analyses and
responses.
4 :Corporate Objectives and Initiatives
• Review current corporate objectives and initiatives, and amend or
modify as needed. It is recommended that you limit this to five key
strategic objectives.
• After the form is completed, provide this review of corporate
objectives to the function/department groups to obtain information
that will be used in the delivery planner
B. Capability Planning
• The strategic scan told you who and what you have to
compete with and where your internal process and
structures might need recalibration.
• Now, you can start building capabilities across essential
functions.
Capability Planning Worksheet: Instructions and
Comments (B-1)
• The first step is to divide the workforce into four categories in
terms of their valued capabilities:
• 1. Mission critical—essential to survival
• 2. Unique—market differentiators
• 3. Important—operational necessities
• 4. Movable—outsource or eliminate
• After reviewing the ‘‘Change in’’ entries on the Strategic
Scanner sheets and the ‘‘Needed Response’’ listings on the
Organizational Analysis and Response sheets, list the key
‘‘Capabilities’’ required for organizational success on the
Capability Planning sheet (see B-1).
• Designate the ‘‘Primary Function(s)’’ needing those skills,
abilities, or expertise; or indicate the ‘‘Organizational
Responses’’ to meet such needs.
Succession Planning
• Once the capability planning is completed, follow with advanced succession
planning system. This system is built around five principles:
• 1. Assigning a senior line executive the primary responsibility of managing the
system
• 2. Identifying high potential (Hi-Po) personnel as far down the organization as
possible
• 3. Designing personal growth programs and reviewing and updating the Hi-Po
list at least annually
• 4. Monitoring advancements and their effect on mission accomplishment and
revenue growth
• 5. Ensuring the development plans are aligned with strategic business plan.
C. Process Optimization
• Process Optimizer: Staffing Process Analysis : Instructions and
Comments (C-1)
• Form C-1 helps you consider what may be the most effective recruiting methods
you are currently using to source those key jobs or competencies identified by this
survey.
• Under ‘‘Key Job,’’ list each person hired during the relevant period. (Coded names
and ID numbers may be used for privacy purposes.)
• For each individual, consider his or her primary recruiting source and onboarding
methods.
• The methods listed are suggestive and others may be added to better reflect your
organization’s programs.
• Then evaluate each person’s performance, potential, progress, and
tenure to date.
• For a job group, look for patterns that are most effective, cost-
efficient, and performance consistent in finding suitable candidates
and in retaining higher potential employees.
Process Optimizer: Training Process Analysis
Instructions and Comments (C-2)
• Form C-2 helps you consider what may be the most effective training methods you are currently
using to develop employees in those key jobs or competencies identified by this survey
• Under ‘‘Key Skill,’’ list each person trained in the relevant period. (Coded names or ID numbers
may be used for privacy purposes.)