Workforce Analytics The Missing Link in Business Intelligence

Workforce Analytics The Missing Link in Business Intelligence

Data A Double-edged Sword Today s business leaders face many challenges that require access to and the understanding of analytics throughout the organization. Companies are generating a tremendous amount of data, yet are mostly unable to harness its power. The information is often siloed and many organizations lack the technology and skills to gather it into a usable form. However, robust data provides a valuable opportunity to find insight within existing data, make fact-based decisions and address specific challenges. Business analysts, Human Resources leaders and Finance executives all need the information that analytics can deliver to drive positive change throughout their respective areas. Companies are facing the toughest economic challenges of the past decade. Unemployment rates are at an all-time high, customer demand is weak and credit markets are tight. Organizations must make tough decisions in order to maximize the effectiveness and productivity of their assets from equipment to technology, office space, real estate and financial capital. Employees, or the human capital, are no exception. In fact, these tough economic conditions have accelerated the need and demand for the right business intelligence solution the kind that can provide the analytics to lead to top and bottom-line benefits. Some data sets are so large that they are awkward to work with using spreadsheets and traditional database management tools. Difficulties include capture, storage, search, sharing, analytics and visualizing. What Your Business Intelligence Tool Can t Deliver Traditional business intelligence tools that measure an organization s performance to pre-selected goals in the areas of operations and finance using standard performance indicators have long been in use. What those tools lack is the ability to mine workforce data for trends and insight into human capital performance. Without that capability, HR professionals have a more difficult time defining human capital requirements in the business context and connecting human capital strategy to wider organizational goals. This puts the Human Resources function at a distinct disadvantage. Without the insight necessary to understand their workforce and the return on investment of HR programs and processes, organizations lack the ability to make fact-based decisions related to human capital and talent. Workforce analytics is the missing link it helps define what is to be measured and then uses information and insight derived from those measurements to drive change. There have been many successes in the area of workforce analytics that have come to fruition under the flag of operational improvements or continuous improvement. The difference now is that workforce analytics is drawing on the knowledge base developed in the field of Human Resources and utilizing the data residing in disparate company databases in conjunction with the data residing in company HRIS systems. The goals have not changed the difference is that HR can now deliver the wisdom housed within the data. 2 Workforce Analytics The Missing Link in Business Intelligence

Human Capital Impact on Corporate Strategy What are CEO s top three investment priorities over the next 12 months R&D and innovation Manufacturing capacity Securing raw materials or components Enhancing customer service New M&A / joint ventures / strategic alliances Filling talent gaps Growing your customer base Implementing new technology Improving operational effectiveness Other 0 20 40 60 % of CEOs Highlighted areas represent priorities that are impacted by an organization s workforce. Source: PWC 16th Annual CEO Survey, 2013 The Overlooked Audience for Analytics The audience for workforce analytics is not limited to HR executives. Managers across the organization have specific needs that these reports can address. > > Line or operations managers need to identify skill gaps and have a talent pipeline and succession plan in place. > > A Sales VP needs to understand how to adjust compensation and rewards to keep top performers. > > Finance leaders need to examine costs related to vacancies, overtime and outsourcing, benefits expenses, and real estate, to name a few. Therefore, a part of HR s responsibility is to partner with business and finance managers and executives to define how workforce analytics can play a role in identifying trends and developing strategies that support changing workforce demands and overall organizational strategy. It s important to recognize that workforce analytics the ability to deliver detailed information about various human capital issues such as attrition, critical roles, recruiting, retention and performance benefit the entire organization and not just HR. 3 Workforce Analytics The Missing Link in Business Intelligence

Surge Ahead of Your Competition While HR needs to take the lead when it comes to workforce analytics, collaboration across functional areas is needed to make sure the metrics that matter to your organization s strategy are being measured. Tracking metrics is only part of the equation, however. The real value is in the analytics and understanding what those results mean. Organizations that continuously use workforce analytics to make fact-based decisions will undoubtedly be able to adjust their strategies more quickly than their competition which adds to their competitive advantage. Business Analytics and Competitive Advantage % of respondents who believe that business analytics creates a competitive advantage in their organization MARCH 2013 58% 67% 37% 2010 2011 2012 Source: MIT Sloan Management Review/SAS Institute Take a Top-Down Approach With copious amounts of workforce data available from various automated systems and powerful HRIS solutions, companies need to carefully identify specific metrics and measures that have an impact on the organization s business strategy. Analytics and reporting should focus on those HR metrics that affect a particular business objective of an organization. HR metrics to measure should depend on what s critical to the success of the organization; as such, they need to be derived from each individual organization s strategy and goals. For example, if the company strategy focuses on providing the best customer experience in the industry, then HR metrics would need to measure: > > Customer satisfaction rates > > Quality of hire > > Competency levels/trends > > Development > > Training 4 Workforce Analytics The Missing Link in Business Intelligence

A company focusing on innovation and product development would measure different metrics to ensure that employees contributions to successful product launches, idea generation and other improvements are rewarded in performance management and compensation. Measurable analytics might include: > > Number of new product launches > > Satisfaction rating of new products > > Number of new ideas generated per month/quarter/year > > Percentage of those ideas that are implemented Quarterly Productivity in the Non-Farm Business Sector 110 INDEX, 2005=100 100 90 80 70 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 QUARTER NOTE: Labor productivity is output per hour worked Analyze Data There is a second approach to gaining useful information. By analyzing existing data, companies can discover insights that can drive competitive advantage. For example, Lowe s understand the personality traits that result in the best performing staff members and so they screen for people with those traits in their hiring processes. This knowledge comes from comparing the traits of high performers versus average performers. While companies have done this for years, it s been an intuitive approach, basing analysis on experience rather than data. By mining performance data over a period of time, managers can make fact-based decisions, rather than relying on subjective feelings. 5 Workforce Analytics The Missing Link in Business Intelligence

Invest in Productivity Gains In recent years, companies have been increasing their productivity with fewer people in order to remain competitive. U.S. productivity grew through the 1990 s at a healthy 1.48 percent compound annual growth rate. Since 2000, the compound annual growth rate has increased to as much as 2.10 percent. While part of this productivity gain comes from reducing payroll costs, companies are also improving at gaining more productivity from their remaining employees. Workforce analytics is one area companies are turning to in order to advance that drive toward greater productivity. In the global marketplace, a U.S. employee must, in some cases, be twice as productive to compete with overseas labor that can cost as much as fifty percent less. Investment in human capital competes with other investments, such as increased automation and IT. Workforce analytics can help decision makers understand, predict and measure the gains made through investments in any mix of human capital and machines. U.S. productivity grew through the 1990s at a healthy 1.48 percent compound annual growth rate. Since 2000, the compound annual growth rate has increased to as much as 2.10 percent. Drive Talent to Your Door With the barriers to obtaining technology and information becoming lower, human capital holds the best promise for competitive advantage. For example, becoming an employer of choice holds certain marketplace advantages when competing for top talent. Central to becoming an employer of choice is improving (as compared to other employers) the value proposition of the company to current and prospective employees. For years, companies have segmented their customers into groups in order to understand their needs and improve the company value proposition to meet them. Now, companies are applying that same practice to their employees. By segmenting employees into groups based on needs and desires, companies can maximize their own value proposition to their workforce. With this knowledge, they can devise a mix of talent and work solutions that provide the greatest value to employees, while eliminating those that are of little interest to them. Are You Empowering Your Managers? Analytics empowers managers to make effective, fact-based decisions. It provides a consistent method for collecting and analyzing large amounts of data and enables HR professionals to gain insight into various business processes in order to drive better business outcome. As an example, workforce analytics allows HR executives to look at the age composition of the workforce and understand the potential exposure from employees nearing retirement age. This, in turn, will impact workforce planning in terms of staffing levels and succession/leadership strength requirements. 6 Workforce Analytics The Missing Link in Business Intelligence

Analytics can be used as a diagnostic tool to see where the problems are, or conversely, where the company nurtures excellence. Just the process of measuring a company s performance in key areas across its various regions will offer clues about what is working and where help is needed. The simple act of bringing together a high performing manager with a manager that needs help can lift the performance of the company as a whole Sixty-seven percent of organizations are applying analytics to create a competitive advantage within their markets or industries, up from thirtyseven percent in 2010. What s the Hold-up? Organizations are finally realizing that the softer side of the business can also be measured and that it can be a key factor in achieving success and a competitive advantage. Analytics tools similar to those that have been around for finance and CRM are now readily available to transform HR data into actionable knowledge. But, like any initiative, the adoption of a workforce analytics solution takes time. HR pros are integrating analytics tools into their formal processes for the traditional HR functions like hiring and performance reviews; however, few have formalized more advanced, strategic processes even as the role of HR itself becomes more strategic. Adoption has been slow mainly because of a lack of commitment to communicate and measure the true value of a workforce analytics solution. The priorities of HR have mainly focused on transactional processes such as payroll and benefits, and while those remain very important and necessary functions, the real value comes from what s within the data the story that it tells. The ability to link these numbers to business outcomes such as attrition, profitability and customer satisfaction to show cause-and-effect relationships between metric results and strategy is where the real business value lies. Big Data in HR - Uneven at Best Today, a majority of human resources professionals report using formal, data-backed processes for hiring, performance reviews and onboarding, but a minority use them for workforce planning, engagement or retention. 4% 2% 5% 5% 9% 5% 7% 3% 7% 2% 26% 68% 27% 63% 29% 59% 36% 54% 41% 50% 31% 30% External hiring, including recruiting Performance management Onboarding Internal hiring, including promotions Training Restructuring 25% 15% 31% 29% 22% 23% 35% 14% 21% 46% 24% 17% 45% 26% 13% 16% 45% 25% 14% 16% 45% Outplacement Succession planning Leadership development Workforce planning/ talent analytics Engagement/ retention Career development NOTE: Numbers might not add to 100 percent because of rounding 7 Workforce Analytics The Missing Link in Business Intelligence

The Future of Human Capital Analytics As the C-suite gets more and more demanding in their need for fact-based decision making, strategicthinking organizations are starting to focus on predictive workforce analytics the kind of intelligence about the workforce that allows executives to confidently anticipate the result of a particular strategy in advance. In addition to being able to forecast staffing levels to accurately plan headcount and skills for any area in the organization, companies are increasingly going to move from traditional analytics to predictive analytics. Traditional workforce analytics examines only historical and current data, and while it remains important to analyze past and present trends, businesses increasingly want to see the predictable future so they seek to optimize it, taking necessary corrective actions today that will change the outcome of tomorrow. Predictive analytics reveal future trends and allow for proactive workforce planning. Change in Working Population (Aged 20 64) over 2005 2025 30 27.8% 25 22.08% 20 15 10 9.5% 10.3% 12.29% 5 3.89% 0-5 -10-5.32% -1.87% -15-14.2% -12.59% -20 Japan Russia Germany France UK Canada China USA India Brazil Source: Deloitte Research, based on population division of the Department of Economics Social Affairs of the United Nations Scretariat (2006). World population prospects: The 2004 revision, New York: United Nations The linkage between organization goals and human capital goals is critical for the field of Human Resources. The advantage of understanding the goal is that companies can measure progress toward that objective and ultimately attain that goal. 8 Workforce Analytics The Missing Link in Business Intelligence

InSight TM The Workforce Analytics Solution You Need With InSight, the workforce planning and analytics division of Peoplefluent delivers a 100 percent hierarchybased workforce analytics solution to deliver metrics that are easily understood and actionable. InSight combines the power of technology and consultative services to present workforce trends and analysis within the context of the organizational hierarchy. Empowered by boardroom-ready data, business leaders can isolate and act on specific information within any area of the organization, and leaders across the business can capture and share this wisdom to improve overall profitability and performance. About Peoplefluent Peoplefluent is the leading provider of talent management solutions designed to support the entire workforce. We provide the mobile enablement, social collaboration, information visualization and the domain expertise required to empower strategic decision making and true employee engagement. Our talent management software enables organizations to unlock each individual s potential by removing the boundaries that limit the performance and productivity of your workforce. With the most comprehensive talent suite in the industry including solutions for talent management, workforce compliance and diversity, contingent workforce management, analytics and workforce planning, Peoplefluent offers a solution to optimize every step of the talent lifecycle. Our solutions have helped over 5,100 organizations in 214 countries and territories successfully achieve their talent aspirations. Today, 80% of the Fortune 100 relies on Peoplefluent solutions as part of their talent management delivery strategy. Raleigh, North Carolina 434 Fayetteville Street, 9th Floor Raleigh, NC 27601 USA Toll-Free: (877) 820-4400 Tel: +1-919-645-2800 Waltham, Massachusetts 300 Fifth Avenue Waltham, MA 02451 USA Toll-Free: (877) 422-1114 Tel: +1-781-530-2000 London, United Kingdom 15 Fetter Lane London EC4A 1BW United Kingdom Tel: +44 (0) 20 7832 3440 www.peoplefluent.com