Case of H&H Pneumatics Data for Human Capital Development
Using Data for Human Capital Development: The Case of H&H Pneumatics
I. Company Background
H&H Pneumatics (HHP) produces both standard and custom pneumatic control devices for light and heavy industrial earth moving and excavation equipment, particularly those used in mining operations. The company has been in business for over 50 years and has established itself in the industry for both its product and service quality. The company currently has 350 employees, and has corporate offices in Scottsdale, AZ and Lehigh, PA with 10 satellite offices distributed throughout the U.S. including Alaska.
As global demand for mined products has increased, total yields from established operations, some of which have been in operation for more than 50 years, has been on a steady decline and has necessitated mining companies to look towards more remote locations for continued extraction. Many of these locations present geological challenges that have necessitated the increased development of more flexible and durable equipment designs in order to increase ore extraction and decrease maintenance and supply costs. This market expansion has created opportunities for relatively newer companies who are able to focus their resources to target these logistical and supply demands more rapidly.
II. Strategic Goals
While HHP continues to experience stable domestic sales, it would like to increase its presence and competitiveness in the rapidly expanding market. A major component of its competitive strategy relies on the effectiveness of its sales force for servicing existing accounts as well as booking new ones.
HHP has realized that in order to increase their market position, they will need to assign their top salespeople to booking new accounts; however, top salespeople will also be needed to maintain the key accounts they already have. Like in many other industries, high performing salespeople must have an extensive knowledge of the product and industry, as well as being able to establish and maintain personal relationships with customers. Historically, salespeople that generate the most sales are assigned to key accounts and serve as mentors regardless of seniority status.
III. Sales Force Characteristics
Newly hired salespeople receive a base salary which then increases 20% after they complete a 90-day probationary period. During the probationary period they must receive above average scores on several assessments related to areas such as product knowledge, invoicing, and customer support. Salespeople receive bonuses for new client bookings in addition to the company’s profit-sharing program.
The company maintains a salesforce of 80 people, with an average turnover rate of about 35%. The salesforce is currently 64% male and 36% female with an average age of 33 years of age. All the salespeople are college graduates, and of those 23% have an advanced degree.
The current success rate of new hires is 81% (i.e. those meeting their developmental goals within 10 months), while the others require an additional 4 months of supplemental training. Those who are not successful are terminated from the company. On average, the end-oftraining attrition rate is 14%.
To be successful at HHP, salespeople must continuously meet all the company’s revenue goals and client relation performance standards, and each salesperson receives a quarterly performance evaluation. There is a 3-month probation period for those that do not meet performance standards, and those not meeting the standards upon the next review are immediately terminated.
IV. HR’s Task
To achieve its strategic goals, HHP senior leadership has tasked its HR department with increasing by 10% the number of new hires who successfully meet their key performance goals within the 10 month window, and to reduce the supplemental training of current salespeople to 1 month with no more than 5% attrition.
V. HR’s Information Approach
The approach HR took was to first examine the data it had typically held in its HRIS system to see which variables might be significantly related to sales success. Also, during this discovery process they realized that they had no assessment data on the characteristics and traits of their salespeople.
As such they decided to initiate a pilot study, and the HR staff conducted interviews and jobshadowing observations with 3 of the current top salespeople in order to better understand the various task and relational aspects of the job. From these interviews and observations, the HR managers were able to identify trait and attitude variables that might be the key drivers of sales success.
Based on the information gathered in the pilot study, trait and attitude surveys were combined with existing HRIS and performance data to create a ‘profile’ of variables that might predict sales success. The assessment of these variables would then be used by HR to make data-based decisions when developing a sales performance and retention improvement plan. A random sample (N = 50) of current salespeople was then selected to provide the assessment data.
Using the raw data, conduct the appropriate analyses and then complete the following:
- Create a brief summary report to senior management that communicates your key findings and outline a general plan for achieving a new sales hire success rate of 91% and reducing the supplemental training time to 1 month without exceeding 5% attrition.
- In a separate report, identify a) the specific Human Resource OKRs for the sales force improvement and retention plan, b) the projected requirements and challenges of implementing the plan, c) what objections to the plan you anticipate from senior management, and d) how you would overcome those objections.