Lecture 1 Why Performance Matters

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From the course by Moscow Institute of Physics and Technology

Introduction to People Analytics

69 ratings

Moscow Institute of Physics and Technology

Introduction to People Analytics

69 ratings

This course is designed to provide you with an understanding of the role of data and technology in human capital management. Every topic in the course will be covered in the most practical way so that learners get hands-on experience. In the course we use the 4Ts principle: Task, Theory, Technique and Technology so that there is always a connection to organizational performance objectives, an overview of underlying theories and principles, and specific tools which help achieve business objectives. You will learn ● what combination of data, technologies, and tools can be used in people management processes to improve organization’s performance ● how to use some of these tools and how to select the ones that suit your objectives and budget ● to design individual and team development plans and measure its ROI for the organization ● how to figure out the qualities that lead employees to their best performance so you know what to encourage in current and look for in new employees ● how to identify the right channels to recruit your employees or team members ● what combination of monetary and non-monetary motivation tools work best for your organization ● how to predict what people will leave in the near future and how to make sure some of them stay ● how to measure engagement and make a strong organizational culture improve performance

From the lesson

Performance

In this module, we talk about measuring performance, setting KPIs, organizing performance evaluation and touch upon the issue of biases. In your first peer-reviewed assignment you will get to apply your knowledge as a manager of a sports club. You can get in the right mood by watching (or rewatching) Moneyball.

Lecture 1 Why Performance Matters4:20

Lecture 2 Setting Objectives and Measuring Performance3:57

Lecture 3 Data Presentation3:09

Meet the Instructors

Ilya Breyman
Adjunct Professor
Center of Innovative Educational Technologies
Alexey Dolinskiy
Adjunct Professor
Center of Innovative Educational Technologies

Welcome to the second module of People Analytics.

It is devoted to employee performance.

Employee performance is the most significant metric that exists in

human resources management.

In a great number of organizations,

a lot of HR statistical data deals with human resources department's activities.

While it is indeed important to keep track of many things, from average time to hire

to employee satisfaction,

the key thing every CO is worried about is the organization's performance.

By managing performance of individuals and

teams, one can manage performance of an organization.

And you cannot manage what you cannot measure.

Therefore, for HR to play a more important role in the organization, it is crucially

important to identify talent management related factors that impact performance,

and use other data to find out what HR management instruments can further improve

performance.

That is the reason we start this class with a module devoted to

proper identification of top performance in organizations.

Identifying factors that contribute to performance is the first step

in using data to improve other HR processes,

as it allows us to calculate return on investment in HR management by connecting

business results and HR processes.

For example, Time Warner Cable uses connection to performance to evaluate

the business value of talent acquisition.

Talent acquisition data are evaluated against key employee performance metrics,

such as number of sales or percentage of issues resolved in one call.

For example, Time Warner's talent analytics

showed an average customer service agent who scores in the top

quartile on the pre-hire assessment of sales focus [INAUDIBLE] as much as

70% more sales revenue than the average agent who scores in the bottom quartile.

High scores on customer focus also prevent 90%

more costly technician visits to customers by resolving more issues over the phone.

This leads to lower costs, higher margins, and better customer experience.

Although performance evaluation may sound simple, it is not.

So, what exactly do we have to measure?

Measurement of employee productivity and effectiveness can be traced back to

the days of scientific management of the late 19th century,

when the wide spread of industrial manufacturing raised the question

of getting better outcomes from employees working in similar conditions

yet producing different results.

Quantitative analysis and

its use in decision making were first developed during the 1940s.

Common HR metrics in existence today were first developed during the 1970s.

In the 1990s, key performance indicators were united in balanced scorecards.

This is essentially a dashboard of financial and

non-financial measures of a company's performance.

Its key is to connect strategic and operational goals of an organization.

The next stage is to connect operational goals to individual performance.

So step one in performance measurement is to define what a proper performance metric

for every individual means.

When doing that, one needs to remember several things.

First, measuring performance also directs it.

Performance goals will create incentives to change behaviors,

even if they are not directly connected to compensation.

Second, you need to actually measure something aligned with business goals.

One of the keys to setting up proper performance metrics is to

think how each and every individual in his own function

can best contribute to achieving the organization's overall goals.

Moreover, if your KPI is not appropriate,

the resulting behaviors may be counter-productive.

For example, using the same goal of providing superior customer service,

the first KPI that often comes to mind is number of customer complaints received.

One may think you may feel that the fewer complaints you receive,

the higher the customer service you're offering.

That is not necessarily true.

You may be getting fewer complaints because you have fewer customers or

because customers are not able to access your support services.

In another example, an international industrial company has set a KPI for

its supply function leader to cut costs as much as possible.

Although the intention to keep production as lean as possible is reasonable,

a KPI set this way creates incentives to make sub-optimal managerial decisions.

For example, if a manager needs to make a decision whether to purchase materials or

equipment either in time but at a higher price,

or with a delay that will eventually cost the company more but

will make the procurement technically cheaper,

the manager is likely to make the sub-optimal decision that is in

the end not in the interests of his company.

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