Getting Smart About Your Workforce: Why Analytics MatterDocument Transcript
IBM Global Process ServicesGetting Smart About Your Workforce:Why Analytics Matter
2 IBM Global Process ServicesTable of Contents I. Addressing Strategic Human Capital Challenges in Today’s Environment.......................3 II. Workforce Analytics — More Effectively Managing Human Capital Challenges............6 III. Driving a Strategic HR Organization...............................................................................10 IV. Barriers to Implementing a Successful Workforce Analytics Capability..........................13 V. Actions for Moving Forward.............................................................................................15 1. Define Workforce Challenges................................................................................15 2. Identify Data Requirements and Ensure Consistency in Data Collection...........15 3. Define a Common Workforce Analytics Platform................................................16 4. Make the Platform Easy to Use.............................................................................16 5. Enhance HR Analytic Capacity.............................................................................16 Conclusion...............................................................................................................................16
3Introduction Our findings indicate that HR professionals, just like executivesEmployees continue to bear the brunt of the worst economic in finance and other corporate functions, need a consistentrecession in a generation. In the United States, 2.55 million analytical point of reference to make human capital decisionsjobs have been lost since the recession started in December that impact business results. Along with the necessary resources2007, pushing the unemployment rate to a 16-year high, to transform data into insights, workforce analytics enable HRaccording to the Bureau of Labor Statistics. Most economists professionals to be more engaged in the formulation ofare projecting further job losses as the economy sheds more corporate strategy. The result is better fact-based decision-than a half-million jobs per month and adjusts to tighter credit making capability that is aligned with the long-term businessmarkets and slowing consumer demand. imperatives of their organizations.What is lost in the blaring news headlines, however, is the way We hope you find this research informative and welcome ain which organizations, large and small, are making decisions discussion of its results.about their talent during the current economic crisis. Moreoften than not, companies have only a partial understanding of I. Addressing Strategic Human Capitaltheir current and future workforce needs. Many such Challenges in Today’s Environmentorganizations lack the insights that would enable them to Today’s economic climate is forcing organizations to makeidentify high performers, ensure that the right employees are difficult decisions about how best to maximize the productivityretained, and shift valued resources to other parts of the and effectiveness of various assets. Issues such as access tobusiness in accordance with overall strategy. As a result, financial capital, buildings, equipment, technology, andorganizations are unable to seize opportunities that could employees are being placed on the table for discussion.further differentiate their value in the market. Unfortunately, many organizations have not invested in defining, capturing, and analyzing workforce data to the sameTo this end, we surveyed more than 400 North American extent as in other critical business areas, such as procurementhuman resources (HR) professionals on the use of workforce and finance.analytics and the challenges of applying analytics toorganizational decision making. Particularly in these turbulent Many of these functions have standard performance indicatorstimes, we believe the survey findings require reflection on the that enable organizations to more effectively adjust theirfollowing themes: operations to business cycle fluctuations. HR professionals, however, have had a harder time defining their human capital• In today’s difficult economic environment, workforce requirements in a business performance context. It is here, in analytics play an increasingly important role in addressing this ambiguous epicenter of workforce decision making, that strategic human capital challenges. our white paper begins.• Workforce analytics are a key capability for HR organizations First and foremost, we discerned from our survey that HR seeking a more proactive role in driving business strategy. professionals need analytic signposts from which they can connect human capital performance and strategy to wider• The implementation of workforce analytics continues to be business goals. For many organizations, these markers are hindered by both technical and skill-related issues. absent. As a result, companies are finding themselves with a lack of insight around a number of areas that must be addressed in the current economic environment.
4 IBM Global Process ServicesThese include: can minimize the impact of layoffs and the subsequent loss of employees’ intellectual capital through reassignment,• Defining the requisite knowledge, skills, and capability retraining, and reallocation of resources to higher priority requirements needed for the execution of business areas. strategy. Organizations must have a firm understanding of what skills and capabilities they have in-house, where gaps • Understanding collaboration and knowledge sharing. exist, and the best ways to fill those gaps through external Now, more than ever, organizations must ensure that critical hires or internal mobility. knowledge is retained, as downsizings and early retirement programs make it difficult to hold onto institutional memory.• Evaluating workforce performance. In turbulent times, organizations need to differentiate high performers from low • Developing career paths and succession plans. Formal performers, compensate and reward these individuals career pathing and succession planning are vital to accordingly, and identify opportunities to close performance accelerating time-to-competency and minimizing gaps. productivity losses due to departures.• Retaining valuable talent. Along with identifying top In this survey, respondents were asked to rate the importance performers, organizations should have retention plans to of these and other human capital challenges as well as their keep these employees highly motivated and engaged. This organizations’ effectiveness at addressing each. Figure 1 lists helps ensure the continuity of operations and enable future the nine human capital challenges that survey respondents growth. were asked to rate and plots the importance and effectiveness scores assigned to each.• Determining strategies for redeployment, retraining, and workforce reductions. It goes without saying that Figure 1: Reported Importance and Effectiveness of tough times mean tough decisions. However, organizations Strategic Human Capital Challenges
5Overall, we see a notable gap between the importance placed find it difficult to make decisions about which resources theyon these human capital issues and how effective organizations need to keep versus which can be more easily added when theare at addressing them. Some of the largest reported gaps economy recovers. Those without succession plans and careerrelate to issues that are at the heart of decision making during paths will find it difficult to reassign individuals and reorganizean economic downturn. These include: when there are fewer people to do the same or a greater amount of work. An inability to collaborate and share knowledge can• Item I—Developing succession plans and career paths (49 result in critical knowledge being lost and productivity being percent); hampered by a loss of social relationships. An inability to evaluate• Item H— Understanding collaboration and knowledge workforce performance may result in higher performers being sharing (48 percent); swept up in downsizing efforts that do not take into consideration• Item A —Defining knowledge, skills, and capability the value these individuals generate for their organizations. In requirements for the execution of business strategy (48 each of these areas, an organization’s ability to make well- percent); and informed decisions will play a key role in how it adjusts to the• Item F—Evaluating workforce performance (46 percent). new economic realities of today’s marketplace.Further, we see that the ability to retain talent (Item E) isranked relatively high in terms of both importance (89 percent)and effectiveness (51 percent); however, there still remains asizable gap (38 percent) between the two. Even more striking isthe relatively low level of importance (57 percent) placed onstrategies associated with reduction in force, redeployment,and retraining (Item G). Given the number of organizationsthat are, or will be, facing difficult decisions related to thistopic, we would have expected firms to place a higher level ofimportance on it. Still, the relatively low level of effectiveness(29 percent) suggests that, as this topic rises in importance,organizations’ ability to address the issue will remain somewhatchallenged. Companies that are hampered by an inabilityFrom these results, we see that many organizations are to translate their current and future businessstruggling to address a host of strategic human capital issues. models into knowledge, skills, and capabilitiesFurther, these issues are being magnified in an economic will find it difficult to make decisions aboutmaelstrom that is forcing companies to make hard choices which resources they need to keep versus whichabout every aspect of their operations. Companies that arehampered by an inability to translate their current and future can be more easily added when the economybusiness models into knowledge, skills, and capabilities will recovers.
6 IBM Global Process ServicesII. Workforce Analytics — More Effectively significant difference in the level of effectiveness in addressing Managing Human Capital Challenges human capital challenges between organizations that employDespite the promise of greater efficiency and reduced workforce analytic applications and those that do not. Asdepartmental operational costs, the adoption of workforce Figure 2 highlights, these gaps consist of:analytic applications remains elusive. Only 33 percent ofrespondents indicated that they have such a solution in place. • Item D—Developing training strategies (18 percent);Among organizations that have implemented such applications, • Item G—Determining strategies for reduction in force,there was a 50:50 split between those using commercially redeployment, and retraining (13 percent);available, packaged software and those relying on custom-built • Item H— Understanding collaboration and knowledgesolutions. sharing (13 percent); • Item E—Retaining valued talent within the organization (11According to the survey results, companies that have invested percent); andin analytics have the upper hand in addressing workforce • Item F—Evaluating workforce performance (11 percent).challenges. In five human capital areas, we see a statisticallyFigure 2: Level of Effectiveness in Addressing HumanCapital Challenges D. Developing training strategies E. Retaining valued talent within the organization F. Evaluating workforce performance G. Determining strategies for reductions in force, redeployment and retraining H. Understanding collaboration and knowledge sharing Employs a workforce analytics system Does not employ a workforce analytics system
7Notwithstanding the apparent advantages that an analyticscapability can provide, a number of organizations are stillmaking important human capital decisions without workforceanalytics. Thirty-seven percent of those surveyed are not usinga workforce analytics solution for understanding collaborationand knowledge sharing (Item H). In Figure 3, nearly a third ofrespondents are determining strategies for reduction in force,redeployment, and retraining (Item G) without workforceanalytics. And twenty-eight percent indicated that they do notuse workforce analytics for defining knowledge, skills, andcapability requirements for the execution of business strategy(Item A) or for developing succession plans and career paths(Item I).Figure 3: Percentage of Organizations Not UsingWorkforce Analytics to Address Specific Human CapitalIssues A. Defining knowledge, skills and capability requirements for execution of business strategy B. Determining headcount and FTE capacity requirements by job assignments and locations C. Sourcing and recruiting from outside the organization D. Develop training strategies E. Retaining valued talent F. Evaluating workforce performance G. Determining strategies for reduction in force, redeployment and retraining H. Understanding collaboration and knowledge sharing I. Developing succession plans and career paths
8 IBM Global Process ServicesThat said, many organizations indicated that they can obtainbasic workforce data for specific human capital issues. AsFigure 4 illustrates, there is a fairly consistent ability to garnerbasic human capital data, ranging from 39 percent fordetermining strategies for reductions in force, redeployment,and retraining (Item G) to 44 percent for developingsuccession plans and career paths (Item I).Figure 4: Percentage of Organizations Able to ObtainBasic Workforce Data for Specific Human Capital Issues A. Defining knowledge, skills and capability requirements for execution of business strategy B. Determining headcount and FTE capacity requirements by job assignments and locations C. Sourcing and recruiting from outside the organization D. Develop training strategies E. Retaining valued talent F. Evaluating workforce performance G. Determining strategies for reduction in force, redeployment and retraining H. Understanding collaboration and knowledge sharing I. Developing succession plans and career paths
9However, while organizations are able to obtain basic distinct disadvantage in corporate boardrooms. Understandingworkforce data, relatively few are applying more advanced the often shifting requirements of human capital and itsanalytic techniques in their decision-making processes. Figure 5 relationship to long-term business strategy is a senior executivemakes this clear. At most, only 36 percent of companies are conversation and one that should be couched in a rigorous,using workforce analytics to identify historical trends and fact-based analysis of workforce performance. This could wellpatterns (Item F), and 13 percent are developing future-based prove to be challenging for most HR professionals, since only ascenarios based on this data (Item B). In short, applying more small percentage are currently using more sophisticatedadvanced analytic techniques to understand the composition analytics to assess human capital performance.and capabilities of workforces is still very much in its infancy.Overall, the implications are significant. Organizations are Understanding the often shiftingmaking fundamental decisions about their human capital—the requirements of human capital and itsresident knowledge, talent, skills, and intellectual property of relationship to long-term business strategy istheir employees—without the benefit of processes and a senior executive conversationtechnologies that can provide a consistent method forcollecting and analyzing data. This puts HR professionals at a and one that should be couched in a rigorous, factbased analysis of workforce performance.Figure 5: Percentage of Organizations Using MoreAdvanced Analytic ApproachesA. Defining knowledge, skills and capability requirements for execution of business strategy B. Determining headcount and FTE capacity requirements by job assignments and locations C. Sourcing and recruiting from outside the organization D. Develop training strategies E. Retaining valued talent F. Evaluating workforce performance G. Determining strategies for reduction in force, redeployment and retraining H. Understanding collaboration and knowledge sharing I. Developing succession plans and career paths Identify historical trends and patterns Develop scenarios and predict future outcomes
10 IBM Global Process ServicesIII. . Driving a Strategic HR Organization We see from our survey that analytics play a critical role inAs organizations increasingly recognize the importance of enabling HR organizations to take a more proactive approachworkforce and talent management, the HR function itself to corporate strategy. We found that organizations where HRneeds to play a greater role in the development and execution is a “proactive leader in driving corporate strategy” are almostof business strategy. While almost one-half of the more than two times more likely to have a workforce analytics capability400 respondents said they are active participants in developing (Figure 7). Analytics enable HR professionals to analyze,corporate strategy, only 17 percent indicated that HR is a interpret, and make the best possible decisions andproactive leader in the strategy process (Figure 6). recommendations based on workforce data. This ability to inform and optimize workforce decisions can enable HR professionals to develop business cases and assess tradeoffs in much the same way as their colleagues in other functionalFigure 6: HR’s Involvement in Developing Corporate areas.Strategy Figure 7: Current Plans for Developing and Deploying a Workforce Analytics CapabilityOverall, organizations that have analyticscapabilities are not only more likely to useadvanced analytics to generate better qualitydecisions, but are also operating in anenvironment where a wide range of stakeholdersleverage analytics to make decisions.
11Similarly organizations, where HR makes a more proactivecontribution to strategy are more likely to apply advancedanalytics to key human capital challenges (Figure 8). Advancedanalytics capabilities allow organizations to identify historicaltrends and patterns and to develop scenarios and predict futureoutcomes, leading HR and its business partners to make betterstrategic decisions about key workforce challenges.Figure 8: Proactive Organizations Are Using MoreAdvanced Analytic TechniquesA. Defining knowledge, skills and capability requirements for execution of business strategy B. Determining headcount and FTE capacity requirements by job assignments and locationsC. Sourcing and recruiting from outside the organization D. Develop training strategies E. Retaining valued talent F. Evaluating workforce performance G. Determining strategies for reduction in force, redeployment and retraining H. Understanding collaboration and knowledge sharing I. Developing succession plans and career paths HR proactively contributes to strategy All other organizations
12 IBM Global Process ServicesSurvey data also shows that workforce analytics are primarily Based on this data, workforce analytics play an important rolebeing used by executives and staff within the HR community. in migrating HR from a more administrative to a moreHowever, it is interesting to note that, in organizations where strategic discipline. Workforce analytics enable both HRHR contributes more proactively to overall organizational organizations and the line executives who are the “owners” ofstrategy, both HR and non-HR staff are more likely to access various workforce segments to make more informed, fact-and apply workforce analytics to their decision-making based decisions about the composition of their workforces andprocesses (Figure 9). Overall, organizations that have analytics the performance of their employees. Without these insights,capabilities are not only more likely to use advanced analytics the HR function finds itself subject not only to further scrutiny,to generate better quality decisions, but are also operating in but also to criticism for failing to adhere to the decision-an environment where a wide range of stakeholders leverage making standards practiced by other functional areas.analytics to make decisions.Figure 9: Stakeholder Groups Applying WorkforceAnalytics
13IV. Barriers to Implementing a Successful Workforce Analytics CapabilityThere was strong consensus among survey respondentsregarding the important role analytics play in more effectivelymanaging workforce performance and talent management. InFigure 10, 76 percent of respondents said that its greatestpotential benefit was a better capacity to manage theirworkforce, while 69 percent cited improved levels ofproductivity. Sixty-seven percent, meanwhile, consideredworkforce analytics important in driving a better return oninvestment for talent management.Figure 10: Potential Benefits of Workforce Analytics Better capacity to manage the workforce Improved levels of workforce productivity Greater return on investments in talent management Greater return on investments in talent management Greater ability to justify human capital investments Higher level of compliance
14 IBM Global Process Services respondents reported having limited experience in analyzingWhat’s required is an integrated approach data and developing insights. Fifty-seven percent had limitedthat combines technology and skilled people to resources to integrate different human capital systems, while 56 percent reported that human capital metrics were notassess, deploy and implement a workforce consistent across their organization.analytics solution. Without data consistency and integration as a key part of an analytics deployment strategy, organizations will struggle toYet, despite the promise of greater efficiencies and returns, gain comprehensive insight into the performance of theirworkforce analytics continue to be mired in both technical and workforce using an analytics solution. What’s required is anskill-related issues associated with its implementation. We integrated approach that combines technology and skilledexamined these issues across four areas: data consistency, people to assess, deploy and implement a workforce analyticssystems integration, information accessibility and analytic solution.capabilities of end users. As Figure 11 illustrates, 58 percent ofFigure 11: Primary Barriers to Implementing a SuccessfulWorkforce Analytics Capability
15V. Actions for Moving Forward • Does my organization have a sufficient number ofBased on our findings, we see three overarching themes: individuals with the right skills to support a new product launch?1. In today’s difficult economic environment, workforce analytics play an increasingly important role in addressing • What training interventions would be most useful to strategic human capital challenges. increase the productivity of my offshore contact center?2. Workforce analytics enable HR organizations to take a more • Which recruiting channels are providing me with the most proactive role in driving business strategy. effective sales leaders after three years at the organization?3. The implementation of workforce analytics continues to be • What are the factors that differentiate higher-performing hindered by both technical and skill-related issues. managers in my most productive branches?The survey data indicates that, of those organizations that do • What percentage of my engineering workforce is eligible fornot currently have workforce analytics applications in place, 60 retirement in the next three years, and what is the propensitypercent plan to develop and deploy such capabilities within the of eligible engineers to actually retire?next one to five years. This is a testament to the perceivedvalue of workforce analytics in helping HR manage and Without clearly identifying problems that have a direct impactleverage employee data for decision support as well as on business performance, organizations run the risk ofanalytics’ potential to provide strategic benefit to the investing time and energy in areas that are not a priority.enterprise. 2. Identify Data Requirements and Ensure Consistency inFor organizations looking to maximize their human capital Data Collection investments and increase the strategic value of their HR Once an organization understands what key workforce-relatedfunctions through the use of workforce analytics, we have challenges it needs to solve, it must identify the relevant dataidentified five important areas of focus: requirements and develop consistent methods for collecting that data across organizational units, geographies, and systems. For1. Define Workforce Challenges example, definitions of basic data items such as “Who is a full- time employee?” and “Where is the employee located?” canThe first thing an organization must do is determine what differ from system to system, making it extremely difficult toworkforce-related problems it needs to solve and how develop “apples to apples” comparisons. Without agreementaddressing those workforce challenges will impact around fundamental metrics definitions and standards, analysisorganizational effectiveness. During this phase, organizations will be inaccurate and lead to incorrect conclusions.should ask questions such as:
16 IBM Global Process Services3. Define a Common Workforce Analytics Platform 5. Enhance HR Analytic CapacityNext, an organization should define a consistent workforce Lastly, organizations need to enhance the analytic capabilities ofanalytics platform for integrating and analyzing data from their HR professionals and line managers. Although training ismultiple sources. This platform should be able to integrate data one way of helping to develop analytic capability, it is not thefrom different HR, enterprise resource planning (ERP), learning only one. A broader strategy might include recruiting peoplemanagement, finance, and sales systems into a common data into HR who have analytic backgrounds, rotating employeeswarehouse where both standard and custom queries can be into HR from functions such as finance and customer service,conducted. Although some organizations have purchased best- incorporating analytics into professional goals andof-breed point solutions, which highlight metrics within a responsibilities, and providing a support system to make surespecific human capital area, they do not provide a employees can ask questions and try out new practices in a safecomprehensive picture of overall performance. This requires a environment.single platform from which HR professionals and executivemanagement can access and analyze data to make fact-based With a strong analytic foundation, HR departments and theirperformance and strategic decisions. personnel can more effectively manage workforce data and establish greater business context for human capital decisions.4. Make the Platform Easy to Use This helps HR professionals not only justify their decisions using rigorous analysis, but also contribute more effectively toOnce the organization has defined a place to bring the data the creation of business strategy.together and perform the analysis, it needs to ensure thatindividuals both within and outside HR are able to conduct Conclusionanalyses and display results. For some user groups, packaged In today’s difficult economic climate, organizations must rely onreports that rely on leading performance indicators and offer a combination of experience and data to make decisions that willaccess to dynamic dashboards showing data about critical jobs affect their performance for years to come. Unfortunately, atmay be sufficient, whereas other user groups may require the many companies, the ability to transform data about theability to drill down using trend analysis and cross tabs to workforce into meaningful insight has been neglected comparedsegment data and diagnose underlying workforce issues. In many to other areas. From our study, we see that workforce analyticscases, organizations need both. What is important, however, is can play an important rolethat workforce analytics address the needs of multiple audiences in addressing many of the human capital challenges facingand be intuitive so that non-technical stakeholders can harness organizations today, as well as in enabling the HR function toits capabilities. This can be achieved through, for example, self- play a larger role in influencing corporate strategy and direction.serve reporting or point-and-click report generation. While we recognize the barriers that companies must overcomeIn addition, an easy-to-use platform should be capable of to truly build an analytic capability, these obstacles areadapting to changing human capital and business requirements. surmountable with the proper level of focus and investment.This flexibility must allow the platform to scale and meet the What will be less easy to fix are the human capital decisions thatfuture needs of the organization while minimizing the technical many organizations are making in the absence of fact-basedcosts associated with reporting modifications. analyses needed for effective decision making.
17Further Information Survey Methodology and DemographicsTo find out more about this study or to speak to an HCM leader, Sponsored by Cognos Software in late 2008, this APQC andplease send an email to one of the contacts listed or to global. IBM’s Institute of Business Value survey targeted executive- email@example.com, or visit ibm.com/bcs/humancapital. managerial-level professionals responsible for HR, humanContact Robert Rupar at 877-462-7905 or firstname.lastname@example.org. resources information technology, and human resourcescom, Rishi Agarwal at 678-496-4521 or email@example.com. information systems at more than 400 organizations spanning acom, or Eric Lesser at 617-693-6418 or firstname.lastname@example.org. wide range of sizes and industries. The goal of the survey was to understand how workforce analytics is helping managersFor information on Cognos Software and IBM Cognos 8 improve the quality of their business decisions and increase HR’sWorkforce Performance, please contact us at 1-866-601-1934 or standing as a strategic business partner within organizations.visit www.ibm.com/cognos/contactus. A Cognos Softwarerepresentative will respond to your inquiry within two business APQC’s award-winning four-phased benchmarkingdays. methodology was used to develop the key findings outlined in this white paper and companion presentation.
18 IBM Global Process ServicesAppendix AThe following charts provide an overview of survey respondents’demographics: Primary Industries Organizational Level of Respondents Total Annual Revenues Number of Employees
19About IBM Cognos BI and Performance About APQCManagement Founded in 1977, APQC is a member-based nonprofit servingIBM Cognos business intelligence (BI) and performance approximately 500 organizations worldwide in all industries.management solutions deliver world-leading enterprise An internationally recognized resource for process andplanning, consolidation and BI software, support and services performance improvement, APQC helps organizations adaptto help companies plan, understand and manage financial and to rapidly changing environments, build new and better waysoperational performance. IBM Cognos solutions bring to work, and succeed in a competitive marketplace. APQCtogether technology, analytical applications, best practices, anda broad network of partners to give customers an open, focuses on benchmarking and metrics, best practices,adaptive and complete performance solution. Over 23,000 knowledge management, performance improvement, andcustomers in more than 135 countries around the world choose professionaldevelopment.IBM Cognos solutions.About IBM Human Capital ManagementIBM is recognized as one of the world’s most respectedcompanies with one of the most technologically savvy humanresources organizations. We leverage our mature globaldelivery operations and extensive experience in humanresources to offer innovative solutions that deliver value. Withmore than 2,000 human capital management professionals inalmost 40 countries, we can provide the right combination ofskills, competencies, knowledge sharing and experience to helpyou meet—and exceed— your business objectives. On its wayto achieving leadership in human capital management, IBMhas invested heavily in research and thought leadership,including the IBM Institute for Business Value to performbusinessoriented research on human capital topics and theIBM Research Division to apply technology to human capital-specific issues. With its deep understanding of recent majorhuman capital issues, you can count on IBM to deliver thesolutions of tomorrow—today.