August 22, 2012
Human Capital Metrics—A Powerful Tool in Changing Times
By Pamela Williams
In cable, as in other industries, concrete workforce data plays an ever-increasing role in guiding companies’ hiring, talent management and retention strategies. Since 2006, CTHRA has regularly compiled data from cable and telecommunications employers to establish and monitor industry-specific benchmarks via CTHRA’s Human Capital Metrics Survey.
“CTHRA is on the forefront of collecting and providing useful and meaningful benchmarking information allowing organizations to both better understand their current situation and determine where their energies might best be focused as they grow and evolve,” said Rebecca Toman, principal account manager at Pearl Meyer & Partners, the independent firm that conducted the survey on CTHRA’s behalf.
Earlier this year, 18 companies submitted survey responses based on 2011 data in five key areas: workforce productivity, cost management, employee engagement, diversity and human resources (HR) department productivity. Each participant received a confidential 80-page analysis of the findings detailing their performance against their peers, with results separated into two participant categories: multiple system operators (MSOs) and programmers (cable and broadcast networks).
Survey participants especially appreciate the fact that the findings apply only to the cable industry. Bill Strahan, executive vice president (EVP) of HR for Comcast Cable said, “Unlike a lot of HR surveys, CTHRA specifically reports on our MSO peers, thus making this survey the most credible source of these data. We use CTHRA’s metrics survey as a tool to understand whether or not our efforts are effective and efficient. We can gauge our performance in the critical context of how our results compare to other MSOs that face the same operational, customer and competitive challenges that we do.”
In fact, Strahan said he finds the benchmarks so useful that, “every year when CTHRA releases its Human Capital Metrics Survey results, I feel like I did when I was a kid waiting for Sports Illustrated to arrive in the mail.”
CTHRA’s 2012 survey shows that productivity measures differ greatly between programmers and MSOs. For the Revenue Per Employee metric, programmers reported an average of $1,149,600 with MSOs significantly lower at $605,078. In terms of percentage change from the 2010 survey, results were mixed. Some programmers showed improved productivity and some experienced a decline. Among MSOs, more firms experienced a modest productivity gain.
The Net Income Per Employee metric also showed similar results. Programmers reported an average of $450,610 net income per employee compared to $170,305 for MSOs. Percentages changes from the 2010 survey again were mixed, with some companies improving and some declining.
In terms of the Salary and Bonus as a Percent of Revenue metric, year-over-year changes generally show costs declining. Programmers reported an average of 16.1 percent and MSOs 12.8 percent for this metric. This decline is not surprising given the current economic conditions, although it may be partially due to a change in survey methodology (i.e. paid time off (PTO) was included in the computation of CTHRA’s 2010 Survey, but not in the 2012 results).
Average salary and bonus cost per employee is substantially higher for programmers, reflecting the different workforce mix and lower prevalence of field service and customer service employees than at MSOs. For the Salary and Bonus Cost Per Employee metric, programmers reported an average of $113,534, while MSOs reported an average cost of $55,125. Other than one firm, which saw a small increase, year-over-year average costs have declined by 5 percent to more than 25 percent among those firms reporting data in both years. While the reduction is partially due to a change in survey methodology, it is likely that cost containment efforts have had an impact.
Benefit Costs Per Employee are similar across programmers and MSOs, with programmers reporting average costs of $14,925 and MSOs $15,348. These costs also declined from the 2010 survey, although a portion of the decrease is likely due to a change in methodology. Throughout the industry, employers realize that offering competitive benefits will enable them to both attract and retain top talent — an item that’s at the top of the “must” list even in a slow economy.
Employee Engagement & Retention
The Average Employee Tenure metric for programmers and MSOs is nearly identical, although rates among MSOs are a bit more variable likely due to higher turnover rates in field service and customer service jobs. Programmers report average employee tenure of 6.68 years, while MSOs report an average of 6.69 years. About three quarters of 2010 participants saw increased tenure levels in this year’s survey, some by nearly 20 percent. This increase is most likely due to lower turnover because of current economic conditions coupled with layoffs that often have a bigger impact on lower tenured employees.
Pearl Meyer & Partners’ Toman added, “Survey results confirmed that retaining top talent is a critical mission for cable and telecommunications firms. The median voluntary turnover rate dropped to 8.7 percent in 2011. This figure is well below historical levels (15.7 percent in 2008, 12.5 percent in 2009). As job options continue to open up, employers will need to pay special attention to employee retention efforts in order to keep the best and brightest within their ranks.”
HR Department Productivity
The HR departments within MSOs support more employees than their programmer counterparts, as the Employee to HR Ratio is 59.2 for programmers and 82.4 for MSOs. Most firms that also participated in the 2010 survey reported declines in this ratio for 2012, which suggests they are investing more in their HR departments.
HR Expense Per Employee is also on the rise for survey participants. Average cost per full-time equivalent (FTE) is higher among programmers at $3,660, while MSOs average $1,571 per employee. Most firms that also reported data in 2010 have increased their HR spending per FTE.
(Pamela Williams, CAE, is Executive Director of the Cable and Telecommunications Human Resources Association (CTHRA))