Measuring HR Systems. Results of 2010 KPMG HR Benchmarking Survey Alevtina Borisova Partner, KPMG TAX Human Resources Transformation PEOPLE SERVICES Since middle of 1990 - HR is no longer seen as administrators, but as people to be involved in high-level strategic discussions, which means: Technically Per se • Appreciation of the value of human assets 1. Shared Service Centers 2. Centers of Expertise 3. HR Business partners (HR generalists) 4. Advisor of Management 5. Center of Communication • Strategic thinking • Orientation to business needs and certain targets • Making HR function more efficient How to set up closer connection between business and HR? © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 2 Russian Practice Subordination of HR Head 82.93% Evaluating HR Effectiveness 81,58% of 2009 HR Benchmarking participants evaluate HR Function effectiveness: • Turnover rate Deputy General Director • Budget targets General Director 12.20% • Employee satisfaction surveys results • Headcount of support functions How to involve HR Head in strategy developing process? What metrics to use for evaluating HR Function effectiveness? How to define target values for these metrics? © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 3 Approaches to Measure HR Effectiveness* Approaches Measurement focus Value of Information HR Case Studies Qualitative Description with Data Low HR Auditing Efficiency/Existence of Practices Low Program/Function Low HR Cost Monitoring HR Management by Objectives Goal Setting for HR Performance Measures Surveys HR Key Indicators ROI HR Benchmarking Attitudes/Perceptions Moderate Moderate Program/Function Performance Measures High Benefits vs. Costs High Performance Measures/Practices High *Jack J. Phillips – The Human Resources Scorecard: Measuring the Return on investment © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 4 What is HR Benchmarking HR Benchmarking is the comparison of the numerical and qualitative indicators of a company’s HR management system to the same indicators of other companies. KPMG HR Benchmarking covers over 100 benchmarks in the following areas: • Financial and Statistical Data • Headcount and Responsibilities of the Support • • • • Functions (HR and Finance) Compensation and Benefits Recruitment and Onboarding Training and Development Company Image and Corporate Culture Assessing the efficiency of HR management processes Collecting measurable data characterizing HR management system • • • • • • • • • Revenue per employee Personnel costs as % of revenue Personnel costs per employee Payroll as % of total personnel costs Personnel Turnover HR Function FTE Ratio Costs of various benefits per employee Percentage of vacancies filled Training costs per employee Headcount planning and the budgeting of HR costs Assessing HR ROI © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 5 Headcount and personnel costs Personnel costs as a percent of revenue (median) Headcount by employee category (% of total headcount, median) 1.58% 11.68% 27.29% 68.41% 35.51% Top Managers Top Management Middle MiddleManagers Management Specialists Specialists Production Blue collars workers Sales employees Sales Specialists Support Supportemployees Staff 23,5% 12,8% 11,6% 7,9% 3.60% 0% 20% 40% 60% 80% 0% Banking Finance Banks andand finance companies Industrial Products Production and automotive Headquarters FMCG FMCG and Farmacy Pharmaceuticals 20% 40% © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 6 Salary Dynamics Prognosis for 2010-2011 January-April 2010 No changes 38% April 34% January 11% M arch 9% February 6% Tw ice and more 2% 0% 5% 10% 15% 20% 25% 30% 35% 40% 2010 salary changes, by employee category Median Total 25th Percentile 75th Percentile Average 10% 10% 8% 12% Top Managem ent 10% 11% 9% 11% Middle Managem ent 10% 12% 8% 12% Specialists 10% 11% 8% 12% Production Workers 11% 11% 9% 12% Sales Specialists Support Staff 10% 10% 11% 10% 9% 8% 13% 12% © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 7 Changes to Bonus Plans in 2009-2010 2009 Dynamics Changes to Bonus Plans in 2009 Change of terms Reduction of plans Increase of plans No Changes Managem ent 15% 15% 6% 67% Sales Departm ents Other Em ployees 20% 11% 9% 13% 9% 2% 63% 74% 2010 Dynamics Changes to Bonus Plans in 2010 Managem ent Sales Departm ents Other Em ployees Change of terms Reduction of plans Increase of plans No Changes 8% - 6% 86% 19% 6% - 6% 4% 75% 89% © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 8 Benefits The most widespread benefits 95% Mobile phone compensation 90% Health insurance 71% Welfare assistance 63% Corporate cars 61% Life insurance 51% Sick leave compensation 46% Maternity leave compensation 44% Meals 41% Per diem above statutory norms 32% Corporate discounts for certain services 27% Sickness without medical certificate 24% Company products at a discount 0% 20% 40% 60% 80% 100% % of all participants © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 9 Changes to Benefits in 2009-2010 Changes to Benefits in 2009 (% of all replies) No 82% Reduction of plans 9% Increase of plans 5% Change of terms 5% 0% 20% 40% 60% 80% 100% Changes to Benefits in 2010 (% of all replies) No 76% Increase of plans 13% Change of terms 7% Reduction of plans 4% 0% 20% 40% 60% 80% © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 10 Personnel Turnover Turnover Causes Rank Unappropritae Compensationsalary level Career and professional growth and Lack of opportunity for professional career growth Personalreasons reasons Personal Working Workingconditions conditions Personnel Turnover 21% 12% 9% 5,6% Banking and Finance Banks and Financial Pharmaceuticals companies FMCG FMCGand Farmacy Production Industrial Products 11,3% companies AllAllcompanies © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 11 Recruiting Percentage of vacancies filled 96.08% The number of vacancies filled by recruitment agencies 18.03% The number of vacancies filled by internal candidates 16.67% The number of vacancies filled by internal candidates (median) Banking and Finance 10.00% Industrial Products 25.75% Pharmaceuticals FMCG 16.61% 17.57% 0% 5% 10% 15% 20% 25% 30% © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 12 Training Number of trained employees 58.78% Number of employees trained by external providers 21.05% Training hours per 1 employee 7 Methods of evaluating the effectiveness of training Методы оценки эффективности обучения Employees' satisfaction with learning 82.86% Measuring employees' knowledge and skills change 65.71% Evaluation of employees behaviour change after learning 34.29% HC ROI measurement 2.86% 0% 20% 40% 60% 80% 100% © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 13 Talent and Succession Pools Succession Pool Talent Pool Number of employees (as % of average headcount) 3.17% 2.15% Number of filled vacancies 3.17% 2.15% Turnover 1% 3.33% © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 14 Motivation and Company Image 90% of all participants Non-financial motivation programs / recognition programs • Professionalism rewards • Loyalty rewards • Rewards to anniversaries, holidays 67% of all participants Regular employee satisfaction surveys • Employee satisfaction surveys on annual basis 81% of all participants Building image among employees External image programs • Corporate events • Internal communications (corporate media, etc.) • Sponsorship / charity (71%) • Employer brand programs (54%) © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 15 The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. Presentor’ detailes: Alevtina Borisova Partner Tax and legal ABorisova@kpmg.ru +7 (495) 937 4477 ZAO KPMG www.kpmg.ru © 2010 ZAO KPMG, a company incorporated under the Laws of the Russian Federation, a subsidiary of KPMG Europe LLP, and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. Printed in Russia. 16