Fine Tuning Your Workforce with Analytics

Monday Feb 13th 2012 by Ann All
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As part of the red-hot human capital management market, workforce analytics is gaining attention from executives looking to derive competitive advantage from their workforces.

Workforce analytics is part of the red-hot human capital management market. In the past three months, SAP, Oracle and Salesforce.com have all acquired HCM specialists. Enterprise Apps Today’s Ann All recently spoke with Dr. Carl C. Hoffmann, CEO of Human Capital Management and Performance and one of the three authors of “Calculating Success: How the New Workplace Analytics Will Revitalize Your Organization” (Harvard Business Press, 2012).

As Hoffman explained, the market for workforce analytics has strengthened both because executives are beginning to understand the need to use their workforce as a competitive advantage, and because technology now exists to quickly distribute and support acting on that knowledge. The availability of a distribution system is critical, he said.

“Workforce analytics can be used to define highly effective work groups -- the division of labor and the capabilities and experiences that are required. But unless the managers have ready access to the information that describes the team configuration, the characteristics of successful team members, and access to an inventory of available and interested workers, that analysis is of little use,” he said. “Modern tools that help extract, validate and transform data into information and distribute that information to the managers when it is needed in a form that is easily understood are critical to reinforcing the demand for that analytical product.”

In the first of a two-part interview, below, Hoffmann discusses some common misconceptions about workforce analytics as well as challenges associated with starting a workforce analytics initiative.  In part two, Hoffmann will discuss using workforce analytics to promote knowledge sharing, and he will share his six key steps for introducing workforce analytics to an organization.

You can read an excerpt from the book on sister site IT Business Edge. And Hoffman can be reached at carl@hcmandp.com .

All: Are there still some common misconceptions about workforce analytics?

Hoffmann: There are many common misconceptions about what constitutes effective workforce analytics. Six of the major ones are:

1)   Analytics is not a piece of software or a product you can buy off the shelf.  Too often data warehouses, dashboards and scorecards are thought of as synonymous with workforce analytics.  Those systems are important components in the process of turning data from source systems into information managers can use to achieve their objectives, but they don’t achieve results in isolation. Workforce analytics is the process of defining the content that is critical to decision making and then determining the best use of those support systems to make that information available.

2)   Analytics is not a set of prepackaged metrics that you can buy, plug in and play. While there is a correct way to calculate turnover, what it means, whether it is problematic, how to use the information to better manage your business depends greatly on what you are trying to achieve with your workforce.  Nordstrom would have a very different view of turnover than Walmart.

3)   Analytics is not focused on human resource administrative operations.  Analytics is focused on helping the CEO and managers understand what actions to take to better connect their workforce actions to their business goals.

4)   Analytics is not just about building a talent supply chain or building a talent inventory. An organization can hire great people and yet fail by incurring out-of-line labor costs, by asking them to accomplish work that is poorly designed, or by frustrating them with poor management or inadequate rewards and tools. Workforce analytics needs to be broadly focused on the totality of the factors that enable success.

5)   Analytics is not, as one critic called it, merely “a way to exploit people by scientifically raising the number of bushels the sharecroppers have to produce.”  Workforce analytics is focused on understanding both sides of the employer and employee equation. When business goals and the needs of the workforce are aligned, everyone in the company benefits.

6)   Analytics is not an IT systems implementation project.  It uses a framework based in established social science and business management practices to understand what a company is asking of its workforce, how it needs to organize that work, and how to find and allocate workers who are qualified, interested and willing to do that work. Once those workers are in place, the company must know what is needed to support workers’ engagement and commitment to the goals of the company: the right leadership culture, and appropriate development and training, performance metrics, tools, working conditions and rewards.

Only at the point that this complex of interrelationships is well understood do systems come into play to support the fact-based transformation of how the company operates.  At this point the company can start to build the data warehouses, decision support tools, and distribution systems that are required to manage their workforce more effectively.

All: What are some of the biggest challenges associated with workforce analytics?

Hoffmann: There are four important challenges that “Calculating Success” is devoted to overcoming:

1)   There is still a view that competitive advantage is found in market differentiation, pricing, the use of technology and rapid adaptation to the changing competitive marketplace. The workforce is too often viewed as a cost or burden common to all competitors rather than a source of competitive advantage.

2)   At the same time, there is a view that the use of data in managing human resources is inhumane -- that using mathematical models to manage people indicates that managers see people merely as widgets in their inventory.  

3)   Many managers have been rewarded for their intuition and believe they “know their people.” Even though this intuitive approach can miss critical dimensions of worker performance, breaking that pattern of decision-making is difficult. It also relies too much on a small set of very gifted executives. Without a systematic and reproducible approach to competitive challenges, it can inhibit the passage of knowledge to successors.

Most executives also feel the pressure to move quickly and worry about “analysis paralysis” and “boiling the ocean” with unmanageable reams of data. They often avoid bringing in “academics” whom they feel will not quickly understand the complexity of their business and who often speak in a language they don’t understand.  

4)   There are many challenges associated with getting access to information across systems throughout the organization, and the perception of these challenges often prevents the inception of workforce analytics projects. The technical complexity of getting access to data from a variety of different administrative systems is a reality, but the territorial aspects of overcoming organizational boundaries is often more difficult.

Determining who owns the systems, whose budget pays for the data integration, and how priorities are set often requires great diplomatic skill. Building a foundation for finance, operations, marketing and sales to share data cooperatively requires a compelling business case with demonstrable benefits, a budget and recognized and controllable risks.    

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