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People Analytics8

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29 views29 pages

People Analytics8

Uploaded by

Chandan Verma
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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People Analytics

What is People Analytics


• A data-driven approach to managing people at
work.
• Analytics, applied to “people issues” – hiring,
performance management, compensation,
retention, etc.
• A more rigorous approach to a traditionally
“soft” function.
• A quickly growing field.
• Touches all people-related issues in
organizations
• Hiring/Assessment – Retention
• Performance evaluation
• Learning and development
• Team composition
Etc.
Why is People Analytics emerging now
• Technical progress – data availability,
processing power, analytical tools, etc.
• Growing recognition of behavioral biases.
• Increasingly, a firm’s greatest assets are its
people.
Section 1
STAFFING
• Hiring
• Internal Mobility and Career development
• Attrition
Staffing : A Question
• Which of the following methods of evaluating job
candidates is most effective at predicting subsequent
performance?
• Which is least effective?
1. Job knowledge tests (.48)
2. Cognitive ability tests (.51)
3. Personality tests(.31)
4. Reference checks (.26)
5. Structured interviews (.51)
6. Unstructured interviews (.41)
7. Work samples (.54)
8. Integrity tests (.41)
For the sample Job Identified following
results are obtained

Correlation between Job Performance and Selection criteria

Work Samples .54 (Best Strategy for Selection)


Cognitive Ability Tests .51
Structured Interviews .51
Job Knowledge Tests .48
Integrity Tests .41
Unstructured interviews .41
Personality test .31

Reference Check .26 (least dependent option)


Fine tuning your selection
Performance Predictors
Performance evaluation Background /experience
Objective performance matrix Test scores
Sales Interview performance
Productivity Specific questions
Customer satisfaction Specific interviewers

attrition
Rate of promotion
Predicting New Hire Performance: Hints, Tips, Issues

• When you are deriving correlations between Selections and Job


Performance REMEMBER Comparing Apples with Apples ie
– The work
– The location
– The manager / unit
– The level
– Time in the Job
• Disentangling Influences
– Beware spurious correlations (Logic Is important)
– Apply common-sense / understand the mechanism
• Accounting for Selection
– Who got hired
– Who stayed
How can we predict Hire performance
Best Use multivariate regression to separate out influences of different
characteristics
Apply selection correction to account for who was hired and
attrition from sample

Good Use multivariate regression to separate out influences of different


characteristics

Better Compare characteristics of best and worst performers within same


cohort and job

Okay Compare characteristics of best and worst performers


Test for statistical significance
How Does Data Analysis Compare to Human Judgment?

In spite of various calculations lots of Managers ignore


algorithms

Worse is that following the calculations do not guarantee


right judgment

Combination of various tests and selection methods


leaves much of performance unexplained

However its still a good idea to rely on calculations


because ultimately they reduce turnover
Section 2
Internal Mobility and Career
development

• Important questions are ?


– Which route lead to better performance
– What is the effect on cost
The Peter Principle
• “In time, every post is occupied by an employee
who is incompetent to carry out its duties”

Peter and Hull, 1969


OR:
• How well does success in the current job predict
performance in a higher level job?
OR:
• How to predict success in higher level jobs?
Analyzing Promotability
Question is How do you Promote an Individual

Requirements Potential
Multiple dimensional performance Which dimensions of lower level
indicators performance best predict performance in
- Output measures the higher level job?
- Competence
- Assessments
A Practical Example
Personnel data from large investment Focus on effect of how workers entered
banking division their current job (hired versus promoted)

Wide variety of functions Use very detailed job controls to compare


workers entering similar jobs by different
routes

Annual snapshots of employees from Study only jobs that


2003-2009 – Can be entered by promotion
– Performance Evaluations – I observe being filled
– Compensation
– Job itself
Does it matter how people enter jobs?

Performance Pay

Hires performed substantially worse than New hires receive 18% more
similar promotes compensation than promotes
75% less likely to get top rating
270% more likely to get lowest rating

Takes 3 years to acquire similar Pay gap only closes very slowly (up to 7
performance to those promoted into the years)
job
Comparing Hiring Inside Firms
Internal Pos8ng sponsorship
Social network
Internal market

Manager posts job & Manager identifies candidates through her


invites interested candidates to apply personal network
Vs Appoints preferred candidate to the job
•Creates competition for jobs within the
firm
Advantage
1. Creates unconventional career
paths
2. Leads to higher performance
ratings
3. large pool of candidates
4. Disciplined decision making
5. Associated with higher salaries
(3%-6%)
Why we care about Analytics
• How do we hire
• How do we promote
• How do we link it with performance at
different levels and positions
• Should we send people for training
• How do we select for training and thus link
with career mobility
Why We Care About Causality
• People who enter jobs improvements
through formal posting • Should we avoid posting?
perform worse
• People who have been in • Should we move people
the job longest have around more?
lower performance
• People who have taken a
• Should we send more
training program
people to training?
perform better
• People who have taken a
training program show • Should we send more
greater performance people to training?
There are two types of causality problems

Omitted Causality
Whether we fill post when it is difficult to
find

Reverse causality
It is a phenomenon that describes the association
of two variables differently than you would
expect. Instead of X causing Y, as is the case for
traditional causation, Y causes X.
Section 3
Understanding and Managing Attrition

Problems Levers
• Hiring Costs • Inform hiring strategy
• Training Costs • Target interventions –
• Loss of Critical Knowledge Improve conditions
• Impact on Customer • Address unmet needs –
Relationships Train managers
– Focus retention
efforts
Understanding Attrition – A Simple View
People leave their jobs because there is something else that they would rather be doing

Attractiveness of outside
opportunities Planned career growth

Demand for Satisfaction with current


skills – job situation

Industry / regional Perception of future


Growth opportunities/trajectory
in organizations
Process Perspectives on Turnover

Comparison
Direct contact from
between existing job Dissatisfaction with
recruiter
and viable job

alternative

Plan to
Decision to search
move at
Decision to for a job
certain age/
quit Awareness of
experience attractive

alternatives

Dissatisfaction with

job
Turnover as a Search Process
• Assumptions: • Implications:
1. We will enjoy and be better 1. Probability of turnover
at jobs that are a better fit with decreases the longer
our abilities and preferences people have spent in the
2. We can only assess fit job
Have learned whether it is a good
once we are actually in the job fit or not
3. If we turn out to be a poor 2. Rate of turnover falls as
fit, we will quit workers get older
More likely to know what fits and
what doesn’t
Some Common Predictors of Turnover

Manager
• Pre-hire background
• Type of work / project / function
• Performance evaluations
• Geography
• Social network behavior...
Approaches to Predicting Attrition

Best:

• Use of survival / hazard rate models to test which factors accelerate risk

of exit

Good

Use multivariate regression to predict who reaches each milestone

Better:

• Comparison of % leaving before specific milestones

- 3 months - 6 months

Okay:

• Comparisons of % attrition across time and across units

• Test for statistical significance

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