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Making Their Numbers

Making Their Numbers | Human Resource Executive Online Some HR executives are turning to workforce analytics as a way to demonstrate their department's strategic value. For analytics to be meaningful, HR needs to understand not just the 'what," but also the 'why,' say experts.

Thursday, October 2, 2008
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To Lou Manzi, the use of workforce analytics boils down to a fairly simple concept:

"If you aren't keeping score, you're just practicing," says the vice president of global recruitment at GlaxoSmithKline, the global pharmaceutical giant that has its U.S. headquarters in Philadelphia.

Manzi's choice of words may not be original (it's an old saying), but, based on his experience so far, it's a very apt way to characterize how workforce analytics can work within HR. He also believes that, after years of promise, workforce analytics is finally coming of age in the HR arena.

As testament to that, Manzi's staff recently moved from the practice squad to scorekeeping.

"We'd been doing some limited metrics, but we eventually realized we could not get the data quickly enough to meet today's fast-changing recruiting environment," he says. Additionally, the data HR was producing simply didn't add enough business value, while at the same time, users were asking HR for data they should have been able to get on their own. "We were chasing our tails," he says. "We needed to step the process up to a higher level, and drive business results."

According to a 2007 research report from Ventana Research entitled Workforce Analytics & Business Intelligence: Best Practices Education, about 63 percent of respondents from benchmark research conducted by the firm have made improving workforce analytics a priority. However, only half the organizations surveyed have the skills required to do so, and 57 percent are not satisfied with their existing approaches. That's no surprise, considering that 69 percent report using spreadsheets as a way of doing workforce analytics, while only 29 percent use dashboards.

"Spreadsheets and silos of data have ruined the reputation of HR and hampered the business," says Mark Smith, CEO and executive vice president at Ventana, a benchmark research and advisory services firm in Pleasanton, Calif. "Yes, HR is finally getting it. But only in the most mature HR groups."

"Last Bastion of Inefficiency" 

"We've been talking about metrics for a long time, but when you delve into it on a buyer basis, most still have relatively rudimentary analytics they rely on," says Lisa Rowan, program director for HR and talent-management services at IDC in Framingham, Mass.

Some HR leaders have a good handle on quantitative metrics -- time-to-fill a position, for example -- but lack a firm grasp of the qualitative ones, such as quality of hire, she says.

"For analytics to be meaningful, you need both," says Rowan. "It's not just about the 'what,' but also the 'why.' The 'why' is much harder to get at and requires time and patience."

Larry Hutchison, CEO of DoubleStar, a talent-management vendor based in West Chester, Pa., points to an online poll conducted by his company last spring in which 61 percent of the 400 respondents said they're assessing, selecting or implementing workforce analytics software this year, with more than 40 percent citing the need for talent-management data as "critical."

Hutchison adds that he sees a difference when meeting with potential customers these days.

"Today, we're meeting with the senior HR people right away, instead of meeting with the IT folks first, which is what we traditionally did," he says. "I think HR leaders are realizing that it's been hard to get that proverbial seat at the table because they didn't have numbers to bring with them."

He also believes the interest in workforce analytics is occurring partly because more people are coming into HR from more numbers-focused areas such as finance and marketing. Then there are the HR executives who understand that driving business results should be their main objective, he adds.

"It all starts with a basic premise that HR is the last bastion of operating inefficiency out there," Hutchison says. "From a services standpoint, 65 percent of the operating costs for an organization are tied up in people, so you need to optimize your data and correlate performance back to that spend."

Ian Gordon, director of product marketing at IBM Cognos Analytic Applications in Ottawa, Canada, agrees that HR's interest in workforce analytics is on the rise.

"It's safe to say we've seen an uptick in the last six months to a year, as HR continues to try and find ways to be more strategic," Gordon says, adding that for the first time, HR is using data not just in a responsive mode -- as in, for example, when an employer loses five key employees and needs to find out what's going on.

"You have to manage human capital as much as you do cash, so you need some way of understanding and deploying that resource," he says.

Analyzing, Not Just Gathering 

GlaxoSmithKline's Manzi falls within the second group Hutchison mentions -- the HR executive who needs to deliver more strategic clout by driving business results. He's certain workforce analytics can help him do it because it's already happening.

GSK needed a workforce analytics vendor that understood recruiting, and whose technology is "system-agnostic," says Manzi.

"Prior to last year, we were spending much of our time gathering data, but we had the 80-20 thing backwards," he says. "We spent 80 percent of the time gathering, and 20 percent of the time analyzing. That wasn't working."

By implementing workforce analytics via a pilot project (GSK is a DoubleStar customer, using the latter's Workforce Insight On-Demand application), Manzi says HR hopes to learn how it can become a more powerful business partner.

"We could no longer just gather data; we had to analyze it so we could drive what was valued by our line managers," he says. "We said, 'We'll do the heavy lifting. Here's what the data says; here's what you can do with it.' They responded very positively, so the validation is on the right track."

Manzi cites a simple example of how workforce analytics has begun to drive business results. As he explains it, GSK's job-sourcing process delivered a bona fide job candidate within about 32 days, on average. Yet, by analyzing data via workforce analytics, HR discovered it was taking another 60 days to get that person hired and onboarded.

"Somewhere along the line, it was taking too long to finalize a hire," he says. "It wasn't the recruiters, it was the process." Manzi explains that if the delay in hiring is within the sales force, for example, and every day that a sales professional isn't working costs the company $5,000 (a hypothetical number), that delay in landing the candidate is obviously very expensive.

"That situation has direct business-driver impact," he says. "If you fill the job in 20 days versus 50 days, that's $150,000 in real money."

Going a step further, Manzi says, there's no reason why workforce analytics can't dramatically reduce critical processes such as time-to-hire. In his view, if it takes four months to fill a certain job, the data can show how to anticipate that need and greatly shorten that cycle -- to the point where candidates are already lined up when certain jobs open up.

"We used to rely on gut feelings, to some extent, but now we rely on data," he says. "The tough part is that when you're ready to collect and truly analyze data, you must be prepared to see something you didn't want to see and hear something that you didn't want to hear."

Manzi says workforce analytics outcomes are improving all the time. While they may not be a strategic best practice within GSK quite yet, the results from recruiting are starting to pull in the non-believers.

"When they see it doesn't need to take 90 days to fill a job, that it can be done in 30, that shows HR is contributing to the bottom line," he says.

Turning Up the Heat 

Pamela Wilfong, vice president of HR operations and compliance at Arthur J. Gallagher & Co., the large insurance brokerage firm based in Itasca, Ill., agrees with Manzi that HR's use of analytics should drive business results. Like any fast-growing global company, Gallagher places a very high priority on driving top-line results, she says, adding that HR's focus is on helping the company do just that while reducing expenses to improve operating margins.

One way to get there, says Wilfong, is to give managers ready access to strategic information and professional-development tools that will support growth throughout the organization.

"We must step up and provide [our managers] with the tools, data and analytical capabilities they need to identify trends early on and make informed decisions," she says. "This type of analysis requires robust employee data and analytical tools."

Gallagher's workforce-analytics application, from IBM Cognos, will go live during the firm's third or fourth quarter this year, she says.

When it comes to the vendor selection process and other pre-implementation processes, Wilfong says, the key is to clearly define goals and requirements for the tool and related processes up front, in "painstaking" detail.

"That will give you much more confidence when you ultimately propose a solution," she says. "It's imperative to seek multiple perspectives and feedback in establishing your precise requirements before you begin looking at tools."

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Wilfong adds that HR's definition of a requirement may not match those of an organization's CFO, CTO or line managers. For example, the finance department might seek to interface certain employment data with its own financial-planning systems, or marry specific employment data with cost analytics from its own applications. 

Once the requirements are defined, she says, the next step is to research the best-in-class tools. This includes asking a lot of questions and seeking demonstrations from the top contenders. If possible, it's especially beneficial to have a select group of employees test drive the proposed tool to see how well it responds to their specific needs, she says.

"We want our professionals to remain focused on producing new business and servicing existing customers, so our objective is to minimize the amount of time they spend navigating complex tools and processes or engaging in redundant or repetitive activities," she says. "Therefore, our top requirement is efficiency and ease of use. We also look for systems that are quick, easy to maintain and expand, and cost-effective."

She adds that the expense and time necessary for building a robust global data warehouse from scratch meant "turning up the heat" on HR itself in finding a solution that would provide more existing capabilities up front.

As for determining the end-user population, Wilfong says, giving everyone access to a reporting tool without educating them as to what they are using or what the data means is worse than not sharing information at all.

"There is too much potential for a casual user to use the wrong data or draw incorrect conclusions," she says.

Wilfong predicts that corporate and field HR staff; other corporate departments, such as finance; and line and executive managers will use the application once it's fully implemented. Gallagher HR also intends to provide managers or other more casual users with several established reports incorporating meaningful analytics, dashboards and core data that they can access and refresh easily, as needed.

"We will be providing some of those reports up front and will expand that suite or capabilities as needs change," she says, adding that for more extensive or ad-hoc reporting requests or analysis needs, HR will designate a smaller team of subject-matter experts within the function to help satisfy those requests with accuracy and speed.

"A-ha" Moments 

When it comes to the data itself, Wilfong outlines what she believes to be the most effective steps HR can go through to provide data that actually matters to other executives and line managers.

First, she says, it's critical to define needs up front by aligning your objectives with the company's business goals, a fairly standard approach for most HR technology implementations. Next, it's a good idea to seek multiple cross-functional perspectives as to what defines success or constitutes a "red flag" in a particular area. Then, discuss the formulas or data elements you might use to define success or identify problems, and any rationale as to why specific data elements are more relevant than others. Finally, provide reports that are driven by those data elements.

"This may sound a little simplistic, but the process and reports need to be simple to be successful and repeatable," she says.

IBM Cognos' Gordon says the most common experience he's seen for new customers is that workforce analytics provide them with insight they couldn't get before. For example, with IBM Cognos 8 Workforce Performance, an average HR person could -- in just minutes -- investigate the demographic workforce distribution (to understand the age of the workforce at a company, location and department level) without involving IT or requiring an analyst to use a bunch of text-based reports from the HRMS and then build a model in Excel using the data from the reports -- not once but three times.

After that, if they wanted to see how they have been doing at recruiting into the company, by age range, and again, by department or location, the information is available quickly without requiring an analyst and IT to spend a whole bunch of time working in Excel. Finally, they can present the information in easy-to-read, simple reports.

"The biggest 'a-ha' moment for customers is when they see the breadth of data they can get right out of the box," he says. "They say, 'I can now know what's going on in the way I want to see it.' "

DoubleStar's Hutchison says the major objective with the company's workforce analytics applications also was to make it simpler and highly configurable.

"Our application offers 17 dashboards from eight to 12 different views," he says. "When you add it up, there are 150 metrics we've defined, and within that, the customer can drag and drop, access a number of views, etc."

GSK's Manzi is confident that workforce analytics will get increasing traction now that vendors are delivering easy-to-use, robust applications. "When the CEO says to me, 'What's the No. 1 challenge in recruitment?' I now have the data to back up what I say," Manzi says. "With these tools, you can actually get to the performance data that can directly lead to how you can change behavior in positive ways."

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