Calculating Success: A New Approach to Workforce Analytics

HRIQ interviews Tim Ringo, co-author of Calculating Success: How the New Workplace Analytics Will Revitalize Your Organization, based on his experience creating human capital systems at IBM.

Can you explain this new approach to workforce analytics? Why and how does this differ from what already exists?

The new approach to workforce analytics is the “ the intersection of science and business” where it is understood that the value of the contribution of your people can be accurately predicted and quantified to help organizations create better business outcomes. Organizations that can routinely define the return on investment of workforce interventions, as is done for building new manufacturing plants, or opening new offices in far-flung markets, are the ones that thrive in tough market conditions. The key is to create an organization that runs on more than intuition and guess work. The new approach to workforce analytics answers four key questions:

  • Based on the organization’s strategy, what is the work that needs to be done, and are the processes, structures, and roles designed to efficiently and effectively accomplish it?
  • Is the human capital supply chain filling those roles with people capable of doing the work at the quantity, quality, and cost required of the business model?
  • Once in place, is the workforce fully engaged and motivated to meet or exceed performance standards?
  • Finally, since change is ubiquitous, how can we detect the need for change, test innovations in the organization and workforce, and disseminate those throughout the organization?

Answering these questions is the first step to putting in place a robust and sustainable approach to the new workforce analytics. It also describes what is different about the approach: namely that it is not just science (and numbers) for science sake – it is addressing real business problems in a holistic and integrated manner. From strategy to execution, workforce analytics is the “connective tissue” running through the organization.

Can you share some examples to help our readers understand the impact of workforce analytics?

There are some very good examples of late in some top global companies. For example, Qantas Airlines, which used scorecard analytics in a unique way to articulate its strategic goals and drive change, to Luxottica and IBM, where leaders translated the capabilities required for key positions into standards for recruiting, selecting, and deploying workers. Companies like Sprint and CORP revealed a number of important lessons about taking an analytic approach to understanding and improving workforce performance, as did a major Asian airline and a European telecommunications company’s approach to developing, sharing, and measuring the value of knowledge capital to drive innovation and performance. In Biosci, an IT division of a pharmaceutical company we worked with, we saw how both IT and HR managers wanted to move from reacting to problems to anticipating them. In each case, we saw companies take leaps in their performance by developing targeted insights into their people data.

What are the challenges that prevent organizations from investing in the area of metrics and, more importantly, what can be done to rectify this condition?

Typically the key challenges to overcome are:

  • Many executives see employees as a “cost of doing business,” not a driver of competitive advantage
  • Getting access to data is seen as being too difficult and time consuming
  • Organizations lack a model or paradigm, which readily illustrates how analytics can be used to compete
  • The immediacy of business problems mean the analytical process has to be done quickly, often with imperfect data The key to overcoming these challenges is to take a structured approach to solve a specific set of business issues, and leverage the key resources in the organization to address these. For example, the teaming of HR and Finance using a structured model to create the definitive set of people insights is best practice.

What are the steps to building an effective workforce analytics process?

Step 1: Frame the central problem – Interview key players in line management, HR, Finance, Operations and other functions, as indicated, to build perspective – Review existing documents that provide context: organizational structure, central business initiatives, project plans, high level allocations of responsibility

Step 2: Apply a conceptual model to guide the analysis – Identify workforce and business variables that are likely to have associations with the problem outcome – Be alert to idiosyncratic events and additional data that could be relevant

Step 3: Capture relevant data – Pursue appropriate data across all relevant business units: HR, Operations, Finance, Marketing – Reconcile differences in definitions, codes, and time frames – Store valid data in analytical database

Step 4: Apply analytical methods – Employ appropriate formal quantitative techniques, looking for stable patterns over time – Examine results and identify robust explanatory models

Step 5: Present statistical findings to stakeholders – Construct presentation of results that is accessible to business managers without a statistical background – Validate and enrich statistical patterns with stakeholders experience through interviews and focus group discussions

Step 6. Define action steps to implement the solution – Operationalize changes in policies, procedures, and management actions designed to produce desired changes in workforce behavior – Monitor and document changes in management actions and workforce outcomes

How can workforce analytics help in solving ROI-killers, such as high employee turnover?

Very often, the “gut instinct” on what is causing turnover in an organization turns out to be totally wrong. Many times the assumption is that it’s about money, or something simple. Using the six step framework, outlined above, organizations quickly find out that the issues on turnover, are usually very complex and multi-faceted. This is a particular strength of the new workforce analytics approach, in that in can uncover all the nuances in complex people issues.

Finally, how can an organization ensure that their analytics capabilities are sustainable and built for longevity?

Key questions that need to be answered to create a sustainable approach to workforce analytics:

  • Do I have the commitment of top management to pursue analytics within my organization?
  • Have I established a governance process focused on the overall interests and needs of the company?
  • Have I built support by building a compelling business case and road map that demonstrates the benefit of using analytics to drive performance?
  • Is my workforce data clean, consistent and able to be integrated with data from other parts of the organization?
  • Do I have a technology platform that allows me to perform various types of workforce analyses in a timely and accurate manner?
  • Do I have the resources within my organization to build, maintain and support an ongoing workforce analytic capability?

These were answered by Tim Ringo, one of the coauthors on the book, “Calculating Success.” Tim Ringo is a Partner in London-based Mazzim Consulting. Previously, he was Vice President and Global Leader of IBM’s Human Capital Management consulting practice.

Carl Hoffmann is a former Partner and Vice President of IBM’s Global Business Services group. Currently, he runs his own private consulting firm, Human Capital Management and Performance LLC. Eric Lesser is the Research Director for IBM’s Institute for Business Value.

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