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About Mercer
Mercer is a global leader in human resource consulting and related services. The firm works
with clients to solve their most complex human capital issues by designing and helping
manage health, retirement and other benefits. Mercers 20,000 employees are based
in more than 40 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan
Companies (NYSE: MMC), a global team of professional services companies offering
clients advice and solutions in the areas of risk, strategy and human capital. For more
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Table of Figures
Table 1: Frequency of analytics used within the compensation function ............................................................ 8
Figure 1: Impact on compensation decisions ..................................................................................................... 8
Table 2: Who is requesting workforce analytics ................................................................................................. 9
Table 3: Organizations hold an adequate level of skill within the compensation function to perform the following
analytics..................................................................................................................................................... 9
Figure 2: HR analysis performed by organizations............................................................................................. 9
Figure 3: Number of FTEs required for HR-related analytics ........................................................................... 10
Table 4: Organizations with an agreed-upon and single source definition of headcount .................................. 10
Table 5: Raw data and tools exist to perform the following .............................................................................. 11
Figure 4: Raw data and/or tools exist for the following types of data ................................................................ 12
Table 6: Usable and/or reliable data types ....................................................................................................... 13
Figure 5: Usable and/or reliable data types...................................................................................................... 14
Table 7: Perceptions of data within the organization ........................................................................................ 14
Figure 6: Future of analytics ............................................................................................................................ 15
Figure 7: Total number of employees .............................................................................................................. 15
Table 8: Industry .............................................................................................................................................. 16
Table 9: Organization type ............................................................................................................................... 16
Figure 8: Voluntary turnover ............................................................................................................................ 17
Figure 9: Country of residency ......................................................................................................................... 17
The 2012 Metrics and Analytics: Patterns of Use and Value Survey, conducted February 2012
by WorldatWork and Mercer, asked compensation leaders at more than 560 North American
organizations how metrics and analytics are used in their decision making.
Within the compensation function, organizations are more likely to use ongoing reports and
benchmarking among internal and external peer groups to guide their decisions, as opposed to
more sophisticated analytical techniques such as projections, simulations and predictive
modeling. Furthermore, there is a higher degree of faith that these less sophisticated analytics
make for better decision making.
Respondents, primarily compensation practitioners, say they lack access to and confidence in
data regarding education, competencies/capabilities and training investments data that are
often at the heart of modern workforce analytics.
In the survey of more than 500 organizations, 95% say they use analytics to externally benchmark
(and 78% of them use it often), yet only 43% use it for predictive modeling (and 12% of them use it
often). In fact, use of advanced tools trails off significantly as they become more sophisticated, as
outlined in Exhibit 1. Whichever type of analytics is used, its use leads to better decisions, albeit at
varying degrees, according to respondents.
Compensation professionals may be falling behind their peers in other HR functional areas in the use
of increasingly sophisticated analytics methodologies.
Exhibit 1
Types of analytics used
today within the
compensation function
Range of
analytical
strength
Less
powerful
More
powerful
perceived by
participants to lead to
better compensation
decisions
(Participants who did not use
the specified analytic were
excluded from this figure.)
Ongoing reporting
87%
75%
External benchmarks
95%
94%
Internal benchmarks
89%
87%
Projections
80%
71%
Simulations
64%
61%
Predictive modeling
43%
52%
Source: WorldatWork and Mercer 2012 Metrics and Analytics: Patterns of Use and Value Survey
Limited availability and poor quality of data? Very likely according to respondents who
indicate that some data are simply not available. See Exhibit 2. Moreover, 75% of respondents say
they are undergoing developments to improve the consistency of their global data. And, 52% say its
unclear who has responsibility for data integrity.
Frankly, we have reason to be skeptical; unavailable data may signal more of a lack of interest in the
data than an ability to access it. While such data elements are often less complete or accurate than pay
data, it is noteworthy that those in other parts of human resources, such as talent management and
workforce planning, routinely rely on such data to determine their policies and practices.
In a true total rewards environment, key variables reflecting workforce capability for example,
education levels, competencies, and training and development investments should be available to
track outcomes. However, there is a sharp dropoff relating to existence of key total rewards-related
data and tools. This may signal a continued preoccupation of the rewards community with the
behavioral or motivational side of rewards, as in assessments of the pay-performance relationship,
and neglect of the asset side of the equation, that is, the effect of rewards on the ability of the
organization to secure the right kinds of people. If they are not asking questions about the latter, it is
no wonder they would not be insisting on acquiring these kinds of data.
Exhibit 2
Raw data exists within the organization
Tools exist to generate reports with this data
Headcount, FTE, staffing ratios
Contingent and contract employees
Job function, families, roles
Manager flag, supervisor ID
Termination
Retirement eligibility
Internal promotions and transfers
Performance ratings
Grade/band
Salaries, incentives, benefits
Reporting structure
Employees educational attainment
Employees prior work experience
Employee competencies
Training and development investments
Employee utilization of learning opportunities
0%
20%
40%
60%
80%
100%
Given all of the above, it is not surprising that the wish list of tasks compensation professionals would
like to better explore includes at the top the following two choices (57% of respondents indicated one
or both of the following):
Whether our rewards strategy effectively motivates and engages our bestperforming employees
Which elements of our rewards strategy (e.g., compensation, benefits, work-life,
careers) effectively motivate our best-performing employees.
Rebuilding a culture of analytics by examining a broader set of data and utilizing more
sophisticated analytical processes for critical decision making.
Living up to the total rewards philosophy by tracking career velocity and movement, and
accounting for important elements, such as training, education, developmental moves within
an organization and lateral transfers.
Never
(4)
Seldom
(3)
Sometimes
(2)
Often
(1)
1.51
4%
9%
21%
66%
1.27
1%
4%
17%
78%
1.47
3%
8%
23%
67%
1.85
4%
17%
41%
39%
2.21
9%
26%
40%
24%
2.67
22%
35%
31%
12%
Neutral
6% 19%
75%
1%
94%
4%
C. Internal benchmarking (n=476) 3%
87%
10%
D. Projections (n=441)
E. Simulations (n=408)
F. Predictive modeling (n=338)
5%
7%
10%
0%
Strongly agree/agree
24%
71%
33%
61%
39%
20%
52%
40%
60%
80%
100%
Neutral
Strongly
agree/agree
13%
11%
76%
16%
16%
68%
35%
31%
34%
13%
11%
77%
Table 3: Organizations hold an adequate level of skill within the compensation function to perform the
following analytics
Within the compensation function, we have an adequate level of skill to conduct ...
Strongly
disagree/disagree
Neutral
Strongly
agree/agree
3%
1%
96%
17%
16%
67%
47%
39%
5%
9%
Dont know
0%
20%
40%
60%
13%
0 FTEs
47%
1-2 FTEs
19%
3-5 FTEs
5%
6-10 FTEs
4%
11%
Dont know
0%
10%
20%
30%
40%
50%
Strongly
disagree/disagree
Neutral
Strongly
agree/agree
26%
10%
64%
Yes
99%
88%
93%
94%
98%
88%
91%
95%
94%
98%
93%
Responses
463
417
460
440
466
371
455
459
448
468
467
Yes
93%
71%
81%
90%
92%
80%
77%
86%
89%
91%
85%
Responses
459
395
450
438
459
365
446
455
445
458
453
65%
434
51%
414
50%
45%
62%
427
422
412
32%
39%
53%
408
401
398
59%
394
53%
387
20%
40%
60%
80%
100%
Yes
91%
70%
84%
86%
89%
85%
77%
89%
92%
95%
83%
Responses
463
387
440
428
460
354
441
429
440
459
446
Yes
97%
76%
84%
84%
88%
78%
82%
90%
91%
96%
90%
Responses
447
357
424
395
426
332
407
430
426
454
428
49%
349
56%
332
45%
42%
54%
312
310
321
52%
51%
54%
318
308
313
54%
320
52%
302
0%
20%
40%
60%
80%
100%
Strongly
disagree/disagree
Neutral
Strongly
agree/agree
7%
20%
74%
17%
15%
69%
9%
17%
75%
26%
22%
52%
44%
30%
26%
57%
57%
46%
40%
Whether our current sources of talent will fulfill our future business
needs
34%
32%
22%
1%
Other
0%
20%
40%
60%
19%
20%
18%
15% 16%
16%
14%
14%
12%
9%
10%
8%
6%
4%
2%
0%
4%
2%
5%
9%
6%
1%
Construction
1%
Other
15%
Percent
20%
38%
29%
14%
26%
0-5%
39%
6-10%
18%
11-15%
9%
16-20%
4%
21-26%
2%
27-40%
2%
41% or more
0%
10%
20%
30%
40%
80%
73%
70%
60%
50%
40%
30%
16%
20%
10%
0%
2%
2%
1%
1%