Introductions

1
Introductions

• Paul Rains IPP
• HR SYSTEMS PROJECT MANAGER

2

• RAC People PL - A Human Measurement Case Study

A roadmap to effective Human Capital Management
(HCM)
3
RAC People PL Topics

• Background
• Key Drivers
• Solutions considered
• Positive Outcomes
• Lessons Learnt

4
RAC Company History

• Leading Motoring Services company in the UK,
  established in 1897
• Services more than 7 million motorists, attending
  2.76 million breakdowns last year
• Headcount 11,646, FTE 11,182.03
• Profit before tax
• 2004 - 88.6m Up 24.39 since 2002
• Profit per FTE
• 2004 - 8,051.42 Up 43.93 since 2002

5
Route to Current B.I. Solution
6
Key Influencing Factors

• Archie Norman of Asda fame joins plc board as an
  advisor after sale to Wallmart. Plc Board aspire
  to Asdas achievement of the top UK company to
  work for.
• C.E.O. 3 balls concept People focused
• Happy people happy customers happy
  shareholders
• HR Director invited to join accounting for
  people taskforce set up by the government
• Employee satisfaction survey introduced
• Plc Board ask for monthly report on People data
  as well as the usual financial information.
• RAC Key People values introduced and linked to
  colleagues appraisals, PDPs and Recruitment
  criteria.

7
A Significant Culture Change

• HR elevated to highest profile in group
• HR Director appointed to the Plc Board
• Group HR System seen as strategic system as
  opposed to a business support system
• HR given more responsibility to support the
  businesses at operational level
• Additional HR resources recruited Headcount
  trebled!
• New HR structure to reflect new responsibilities

8
HR Structure
Plc Board
HR Board
PLC Strategic HR
LVL Local HR
RAC Local HR
BSM Local HR
Lex Multipart Local HR
9
The Very First People PL

• Conceived in 2001
• First Group-wide HR Balanced Scorecard
• HR measures package supporting
• Turnover
• Stability
• Absence
• Retention
• Colleague Satisfaction
• Strategic High Level KPI monitoring
• Delivered using a series of Cognos Impromptu
  Reports

10
Initial Operational Issues

• Manual Process
• 300 org units 10 reports potential 3000
  reports every month
• Huge workload
• Slow to collate
• Labour intensive
• Lacked flexibility
• Lacked credibility, distrust of data
• Affected HR System performance
• Lack of consistency in the data

11
Potential Solutions

• Automate existing processes
• Evaluate B.I. alternatives
• Report directly from HR system
• Data warehouse approach
• Benchmark using other external company

12
Automate Existing Process

• Positives
• Cheap option

• Negatives
• Still meant a large volume of reports to produced
  and printed / distributed
• No-online access for managers
• Still impact on HR system performance

13
Reporting from HR System

• Positives
• Cheap option
• Produces high level reports
• A limited form of analysis

• Negatives
• Lacks depth and flexibility
• Resource hungry
• Personnel, IT HR System
• No single version of the truth
• Single source data
• Limited form of analysis
• Scorecarding
• Trending
• Predictive analysis

14
External Benchmarking

• Positives
• Provides Peer comparison
• Can assist company's identify broad issues

• Negatives
• Lacks Depth
• Doesn't identify where issues exist at the
  coalface

15
Data Warehousing

• Positives
• Greater depth and breadth
• Easier identification of impacting and impacted
  measures
• A measurement and management toolset
• Encourages employee engagement
• Multiple data sources
• Single version of the truth
• Information at the touch of a button

• Negatives
• Cost
• Complex Structure
• Additional hardware / support costs

16
The Chosen Solution Strata HR Analyser

• Out of box Kimball-based Datamart solution
• Cost effective
• Ideal fit to RAC HCM principles
• Dimensionally rich
• Broad range of measures
• Accounting for People ready
• Web based allows easy access for Line Managers to
  view reports / metrics

17
Implementation Timescales
Aug 04
Nov 04
Jan 05
Feb 05
Board Approval
Install
Pilot
Live
18
Solution Functionality

• Data mart delivered a broad range of Dimensions
  and Facts
• Track values across time
• Provided baseline for all analysis
• Low level of granularity
• Basis for predictive analysis
• HR and absence analysis studio
• Easy and advanced reporting studios
• Scheduled, stored, secured audited reports
• Scorecards
• 3rd Party Data Source capability
• Extract Transform and Load (ETL) refresh

19
Key HR Metrics Measured in automated PL

• Employee Satisfaction
• Employee Turnover
• Voluntary
• Both Voluntary and Non Voluntary
• New Employee Retention
• Internal Appointments
• Absence
• Key HR Metrics reviewed annually by HR Board

20
Your Voice
Colleague satisfaction is reported at PLC,
division and department levels (where available).
These statistics are sourced directly from the
outcome of the latest Your Voice Colleagues
Satisfaction Survey, which takes place annually
during Q4. Therefore, this figure will only
change once per year.  
21
Turnover
This measures the degree to which colleagues are
leaving the organisation. NB From 2005 the
headcount figure used to calculate turnover is an
average of the last 12 months, not actual
headcount as at the present point in time (as
previously calculated).   Formula Actual Number
of Leavers in last 12 months 100 x
Average of Total Headcount over last 12
months
22
Turnover FAQs
23
Voluntary Turnover
An additional measure of voluntary turnover
introduced to measure the degree to which
colleagues have made a conscious decision to
leave (as opposed to company enforced e.g.
redundancy, restructure, dismissal).   Other
turnover (i.e. non voluntary turnover) is defined
as   Forced Redundancy Dismissal Compromise
Agreement Retirement (but not early
retirement) Divested / Sold Business
24
New Colleague Retention 
This measure replaced the previous measure of
Stability and is a more accurate way of
measuring how many colleagues we are retaining
within their first year of service. This measure
differs from Stability as it captures all
colleagues leaving with percentage of purely new starters, as opposed to
a measure of the number of colleagues who left
with a percentage of the full headcount
figure.Formula-   Number of colleagues
within the Retention Cohort 100 x Number
of Leavers within the Retention Cohort with year service   Retention Cohort This is the
number of new starters who joined the
organisation within the last 12-24 months.
Therefore, for January 2005 the retention cohort
will capture all new starters who joined between
February 2003 January 2004 and out of these
colleagues, we will then assess how many of them
left with 25
New Colleague Retention FAQs
26
Internal Appointments
Previously, the only measure for internal
appointments captured movement within the
Leadership Group. From 2005 onwards, a new
measure of Internal Appointments has been
created to measure the degree to which talent is
moving throughout the organisation (sideways as
well as upwards).Internal move categories that
are included are-   Job Change Inter Company
Transfer Promotion Secondment made
Permanent Transfer Promotion   Formula Internal
moves___________ 100 x Internal moves
New Joiners  
27
Sickness Absence
Absence is reported and entered into the HR
system one month in arrears. Therefore, as there
is no absence information entered for the most
recent PL month at the point the report is run,
the absence rolling year period will look back an
additional month.   Sickness Rate Formula
(Average days, per person, per year) Total
number of days sickness over last 12 months x
days Average Headcount over last 12
months   Daily Compensation Rate (Gross Pay
Employers Ni Employers Pension) / 260 Average
Headcount over last 12 months   Total Cost of
Sickness Daily Compensation Rate Average
Headcount over last 12 months
28
Sickness Absence FAQs
29
Example People PL Report
30
People PL Part 2
Production of a supporting document which gives
basic monthly information by org unit which forms
the basis of the People PL. This document
contains the following   Actual headcount
(Colleagues) Number of new starters
(Joiners) Number of leavers (Leavers) Number of
transfers in Number of transfers out Total number
of sickness days (Sickness Days)
31
People PL - Benefit Business Cycle
Implement Actions Until this happens there are
no major business benefits HR in control of
accounting for people as an asset, driving
benefits from managing colleagues, contributing
to profit margin/bottom line
Automated Report Production Distribution of
reports to the line can be automated, but quality
of data must be protected in order to protect
credibility
Produce and distribute reports
Review and Analyse
Take action
HR Line managers review PL values. HR provide
analysis to seek reasons for PL issues
highlighted. Improvement actions determined.
Affects of previous improvement actions reviewed
32
Financial Benefits

• Immediate
• Automation of PL (50k savings)
• Targeted first year benefits
• Reduce absenteeism by 1 day per person
• Reduce voluntary turnover by 2
• Generated 1m in savings in first year

33
Operational Benefits

• PL Reports available at all Organisational
  levels within the business
• Speed of delivery
• One consistent version of the truth.
• Improved the dynamics between HR and the Line.
• System enables better review and improvement of
  HR business processes.
• Increased ability to measure management
  performance.
• Improves organisational effectiveness
  efficiency.
• Empowers local HR administrators to record
  accurate data.

34
Link to Performance / Pay

• Key HR metrics linked to individual line
  managers key objectives for the year through
  appraisal process.
• HR metrics reviewed annually by HR board with a
  view to eventually being in the upper quartile
  compared to other UK based businesses.
• People PL bonus targets for Senior Management
  Group (SMG) introduced
• If members of the SMG did not carry out
  Appraisals for their reports and 360 degree
  feedback from their manager no annual pay review
  was awarded
• Plans to attach bonus to all line managers
  performance were shelved after Aviva takeover

35
Other Perceived Benefits

• Elevation of status of HR in the business.
• Adding value
• Providing Insight
• Making the business more effective
• Closer links between HR Operational units
  established to support Line management
• Greater Education and support for the business
• Greater Management accountability
• Regular Director reviews
• PL actuals regularly reported throughout the
  organisation
• Greater confidence in the data

36
Essential Requirements for success

• High level stake holder buy in
• Active engagement by HR community
• Must be Strategy led
• All levels of management need to buy in
• Clean Data
• Simple, effective B.I. tool
• Suitably qualified and trained dedicated HR staff
  to analyse / interrogate the reports

37
HR Director - PLC Board
HuRBi helps us deliver a comprehensive
understanding of HR performance through the use
of metrics and benchmarking. Debbie Hewitt,
now MD, RAC
38
Lessons Learnt

• Minimise the customisation of your solution
• Ensure data is cleansed initially
• Ensure effective and efficient processes are in
  place to keep data clean
• We had the Right tool, but the wrong people
• Need for a Core strategic Analytics Team

39
Questions
?
Or Contact paul.rains_at_transacthr.co.uk www.transac
thr.com