Best Practices in Workforce Analytics

Transcription

1 Best Practices in Workforce Analytics Applying benchmarking to mature your organization White Paper Aligning Business and IT To Improve Performance Ventana Research 6150 Stoneridge Mall Road, Suite 350 Pleasanton, CA (925) Copyright Ventana Research 2008 Do Not Redistribute Without Permission

2 Table of Contents The Potential of the Workforce... 3 Best Practices and Maturity... 3 Assessing Your Maturity Level... 4 People... 4 Process... 5 Information... 5 Technology... 6 Next Steps... 6 About Ventana Research... 7 Ventana Research 2008 Page 2

3 The Potential of the Workforce Managing the effectiveness of its workforce is one of the most critical performance management objectives for an organization today and we anticipate it will remain so in the future. Simply put, strategic analysis of information about the workforce can help improve its performance. It is important to understand that this effort is not a narrowly focused task for the human resources department; the organization can maximize the effectiveness of its employees by applying workforce analytics across all functions and organizational groups. Most large organizations are not deriving full value from their human capital because HR, IT and Finance, as well as executive management, do not ensure that they have the ability to understand and optimize workforce performance. This basic step can be applied through the use of workforce analytics as a process to identify and improve workforce performance. Ventana Research has begun to see a surge of interest in workforce analytics, and for good reasons. The competition for talent, pressure to leverage offshore and outsourced workers and the transition of the older workforce to reduced workloads or retirement have significantly complicated the tasks human resources faces. These events and the continuation of the uptick in mergers and acquisitions are giving both HR and the management of the organizations a serious rationale for improvement. At the same time, organizations are adopting a set of new workforce processes that collectively are being called Talent Management to help with the recruitment of employees with needed skills sets. Of course, these workforce processes cannot be managed effectively or optimized without workforce analytics. Understanding the talent in your workforce starts with knowing who comprises it and analyzing their characteristics, interactions and performance. Coupled with business intelligence (BI), workforce analytics can provide new insights and knowledge that can guide decision-making and point to how to get the most from your workforce investment. Best Practices and Maturity Ventana Research has developed a methodology that we use to assess the maturity of organizations various management processes, workforce analytics among them. The Ventana Research Maturity Model ranks maturity in four ascending levels: Tactical, Advanced, Strategic and Innovative. Any organization can use the model to evaluate its maturity in a specific area and compare it with that of companies represented in our benchmark research. In a report of our benchmark research entitled Workforce Analytics, we observed that our analysis showed that the most mature innovative companies use information and analytics to realize the full potential of their workforce. They treat workforce analytics as a key capability that human resources, operations and finance can profitably take advantage of across the organization. Ventana Research 2008 Page 3

4 For these top-performing companies (about 18 percent of the participants in our research), workforce analytics involves a combination of best practices in four business categories: people, process, information and technology. It is an approach that views workforce analytics as a required service to the organization that should be automated and made easily available. Yet our research shows that most companies don t utilize workforce analytics particularly well. In neglecting to use it to its full potential, they fail to seize an important opportunity to improve their overall performance and competitive position. To be sure, there are other factors that can be addressed to improve operational performance, but it isn t hard to recognize that doing more to drive performance improvement in the workforce is worthwhile. Workforce analytics make this feasible. Assessing Your Maturity Level Organizations that don t take advantage of all the benefits of workforce analytics typically fail to reach their potential. The easiest assumption is that there is a piece of software missing, but there also can be people, process and information lacks that companies must address. Let s examine the best and worst practices found by our research to be indicators of maturity in workforce analytics and thus ones that should be considered for your organization. People Our benchmark research indicates that one-third (33%) of companies are at the Innovative level of maturity in how they manage the people aspects of workforce analytics. One-quarter of organizations participating in our research are sufficiently mature to assign people to perform workforce analytic-related activities and provide them with the skills and capabilities they need to be able to provide metrics to management and others in the organization. Assigning a high priority to improving the performance of the workforce is another indicator of high maturity. The best-performing companies have sponsorship at the CxO level and involvement of others from finance and operations management. Most organizations have not taken these steps, and this failure is an obstacle to improving workforce effectiveness. To maximize people s abilities to contribute to workforce analytics, Ventana Research recommends the creation of a crossfunctional team that includes representatives from all areas affected and is responsible to develop, deliver and maintain analytics and metrics about the workforce. In moving to improve your organization s People maturity, we recommend you consider the best practices of top-performing companies. Here are some benchmarking questions that can help you heighten the maturity of people in your workforce analytics project: Who leads your workforce analytics efforts? Who will be the most effective sponsor for the process? Who should attend top-level review meetings? Ventana Research 2008 Page 4

5 Which areas of the organization actively use metrics and information about the workforce? Which functions use workforce analytics as a source for decision-making? Process Our benchmark research shows that operating workforce analytics processes effectively improves the likelihood of performance gains and is an indicator of maturity. At the least mature Tactical level, organizations do get no support or prioritization from IT to begin or improve workforce analytics. In addition organizations at this lowest level take three or more weeks to generate and deliver metrics, while Innovative organizations accomplish it within one day. Ventana Research recommends that companies mature their management processes by using workforce analytics to generate high-quality metrics that support the needs of executives and managers. These metrics can span from performance achievement, which is a measurement of goal attainment, to competency, which is a measurement of the match of skills to role. Of course, the cooperation of IT will be required to ensure that data flowing from multiple disparate sources is integrated and is processed through data quality and master data reference checks. In addressing your process maturity, consider these sample benchmark questions: What processes are used for generating and delivering workforce analytics? Does your IT organization support your workforce analytics efforts? Does that support include applying data quality and master data management techniques? How quickly can you generate and deliver metrics? How often do you examine methods to improve your processes? Information Our benchmark research finds that the best-performing companies include information and metrics in their workforce-related decision-making. The most important element of this is ensuring that the metrics are generated from the proper measures of workforce-related data. Many organizations are hampered by their inability to use information from disparate sets of data across technologies such as spreadsheets and presentations. Ventana Research believes information should be properly integrated into workforce performance management processes to facilitate the alignment of people and processes to strategies and overall goals. A functional system of workforce analytics requires metrics that will satisfy the needs of a range of people from HR to finance and operations metrics on compensation, the aging of the workforce and pay for performance, for example. In addition, having available a range of metrics across workforce-related activities such as budgeting, benefits, incentives, competencies, recruitment and succession will help HR professionals to do their work more effectively. Establishing methods to Ventana Research 2008 Page 5

6 provide these metrics and information is a critical step forward in information maturity. As you look into information maturity, consider these sample benchmark questions: Is easy access to information part of your workforce investment? How satisfied are various groups with currently available analytics and metrics? What types of metrics do you use to judge performance of workforce activities? Can people access metrics easily and deliver them to others? Technology Our benchmark research found that 56 percent of companies rely on spreadsheets, and reports to track employee and workforce performance; two-thirds do not use business intelligence technology to help create and deliver workforce analytics. We also found that many organizations are using custom technology built in-house by IT or consultants. Technology maturity is a timely topic because business and information technology to support workforce analytics has improved dramatically in recent years. Product choices are expanding, and vendors now offer stable software with many capabilities and are adding depth to prebuilt workforce metrics and libraries of specific content that can decrease the time it takes to get the metrics and analytics that organizations need. In search of mature technology, consider these sample benchmark questions: Does workforce analytics and BI software operate across the enterprise? Does it allow monitoring and tracking of workforce performance? Are you using to communicate metrics? Are you using spreadsheet technology to manage data and metrics? Does your technology have capabilities for modeling and measuring workforce performance? Next Steps We recommend that you ask whether your company s workforce analytics is as good as it can be. If you do not have immediate access to workforce metrics and can t apply analytics to do workforce planning and align your workforce with the organization s strategy, you are falling behind competitively. Our research shows that the top-performing companies are already able to generate workforce metrics, use them as needed and update them on a daily basis. We also recommend that you build evaluation of the effectiveness of the workforce analytics into the process itself. Key workforce metrics that span compensation, recruitment, incentives and workforce aging are can help an effective HR organization be a business partner with finance and operations. Ventana Research 2008 Page 6

7 When workforce analytics is done right and the appropriate enabling technology is deployed, it will help optimize the managing and monitoring of the workforce. But before you change your processes or adopt new technology, we recommend that you evaluate the current people, process, information, and technology elements of your organization by benchmarking it against the rest of its industry to determine whether you are ahead of or behind the curve in adoption of best practices. By performing a set of simple steps you can create a comprehensive strategy to improve the maturity of your organization and its utilization of workforce analytics: Profile your business stakeholders based on their role, level and process ownership (or business activity) within the organization to identify their requirements. Assess the challenges and desired improvements in current activities as they relate to alignment of strategy, goals, objectives and workforce performance planning improvement initiatives. Evaluate your current and planned technology investments. Acquire guidance on emerging technologies and options. About Ventana Research Ventana Research is the leading benchmark research and advisory services firm. We provide expert guidance to help organizations manage and optimize performance to become not only more efficient but more effective. Our unparalleled insights and best practices guidance are based on our rigorous research-based benchmarking of people, processes, information and technology across business and IT functions worldwide. The combination we offer of benchmark research, rigorous market coverage and in-depth knowledge of hundreds of technology providers means we can deliver business and technology education and expertise to our clients where and when needed. Ventana Research provides the most comprehensive analyst coverage in the industry; more than 2.5 million business and IT professionals around the world benefit from Ventana Research s insights. To learn how our benchmark research and assessment and advisory services can improve your organization s performance, visit Ventana Research 2008 Page 7