Critical Evaluation (HR Metrics)

Question 1

Turnover Rate Analysis (steps)

Answer 1

1. Collect Data. A= employees who have left, B = average # of employees you have.
2. Turnover Rate. (A/B) * 100 = percent turnover rate.
3. Benchmarking. Compare this percent to the industry percentage.
4. Statistical analysis. Using quantifiable data (numbers) to figure out why people are leaving. Trying to correlate to other reasons and data related to employee turnover/morale/training, etc.
5. Regression Analysis. The process of seeing if there’s a pattern or trend between two factors. Gives you the ability to make a prediction based on one factor.
6. Interpret Results.
7. Strategic Implementation.

Question 2

Benchmarking

Answer 2

Benchmarking is like comparing your company’s performance or practices to those of other similar companies.

1. Identify metrics (what do we want to compare?)
2. Gather data (i.e. calculate your turnover rate)
3. Identify benchmarks (who do you want to compare rates with?)
4. Gap analysis (identify the differences, or “gaps,” between your current performance and the performance of the benchmarking partners)
5. Root cause analysis ( Digs deeper to uncover the underlying factors contributing to the identified gaps)
6. Implementation (Put the action plans into practice to improve performance and close the identified gaps.)
7. Re-benchmarking

Question 3

Types of Benchmarking

Answer 3

• Internal - comparing different departments within the company.
• Competitive - direct comparisons with competitors
• Functional - similar functions in dissimilar industries (i.e. customer service in manufacturing vs. hospitality industry)
• Generic - comparison across industries with similar processes.

Question 4

Cost-benefit analysis

Answer 4

1. Identify costs (fees, materials, time, travel, etc.)
2. Identify benefits (quantify expected benefits)
3. Time Horizon (period of analysis to compare)
4. Discount Rate (determine rate to discount future benefits to present value)
5. Calculate Net Present Value (NPV) = (Benefit - Cost) / (1 + r) ^t (where r is the discount rate and t is the time period).
6. Calculate ROI = (Net benefit/total cost) * 100
7. Calculate Payback Period = Initial Investment/ Annual Cash Inflows

Question 5

How do you interpret the results of Net Present Value (NPV)?

Answer 5

A negative result is one indicator to NOT proceed. The project is not expected to generate enough value to cover its costs.

A positive result is a good indication that the project is worthwhile to proceed! The project is likely to generate more value than it costs, and it’s considered financially viable.

Question 6

How do you interpret the results of ROI calculation?

Answer 6

A positive indicator means the investment will yield a positive return.

A negative indicator means you’ll lose money on the investment.

Question 7

How do you interpret the results of Payback Period (PBP) calculation?

Answer 7

The result reflects how quickly the project will recover it’s costs.

A short payback period means the investment is expected to recoup its initial cost relatively quickly. Fast return on investment.

Question 8

SWOT Analysis

Answer 8

Continually updating with real-time data. It can help HR align it’s objectives with the overall business goals.

• recruitment strategies
• workforce planning
• change management
• culture development

Question 9

Attrition

Answer 9

The natural reduction in the number of employees within a company over time due to voluntary resignations, retirements, or other reasons for personnel exits.

Question 10

Common Biases

Answer 10

1. Confirmation Bias (you favor information that confirms your preexisting beliefs or values)
2. Recency Bias (you give more weight to recent events when making decisions or forming opinions.)
3. Survivorship Bias - people focus on the individuals or things that “survived” a process and overlook those that did not because they are not visible or have been eliminated.