In challenging economic times, organizations are frequently struggling with tough decisions about their workforce. What will the future hold? Should they reduce staff or prepare to get an early jump on the competition?
To answer these and other important questions, a growing number of firms are turning from a reliance on workforce metrics that focus primarily on what has happened in the past to workforce metrics developed specifically to analyze what lies ahead. These predictive analytics can help HR departments move away from using only data like head counts and turnover rates to figure out the best hiring, retention and, if necessary, staff reduction strategies that will be needed down the road.
Thanks to novel software tools and expert statisticians, 21st-century advanced metrics are beginning to offer organizations the ability to actually peer into the future with more precision. However, so far the number of companies using predictive workforce analytics remains small. According to Jac Fitz-enz, Ph.D., author of The New HR Analytics: Predicting the Economic Value of Your Company’s Human Capital Investments (AMACOM) and the widely acknowledged father of human-capital strategic analysis, only 20% – 25% of companies currently have a meaningful predictive workforce metrics system in place.
But there are a number of success stories among those companies who have embraced the concept. A case in point: Alliant Techsystems Inc. (ATK), which produces aerospace, defense and commercial ammunition products, has been utilizing predictive metrics since 2008. The company created a “flight-risk model” that calculates the probability of attrition for every employee and this workforce analysis tool has been credited with correctly projecting an unusually high turnover in a plant maintenance group vital to the company.
When firms have better predictions of expected attrition among key members of their workforce, they can proactively work on preventing or preparing for the losses. For example, HR and management can create targeted recognition programs to try to retain employees or they can prepare for expected departures by improving training and recruitment campaigns.
Overcoming Obstacles to Advanced Metrics Usage
With these kinds of advantages, why have many organizations been slow to adopt predictive workforce data analysis? “There is too often a disconnect between the departments responsible for hiring, training, developing and tracking the workforce, and the real corporate missions and objectives of the company. This results in jerky, stop, start workforce growth initiatives. It leads to reactionary ‘right sizing’. And this messes up everything from productivity to engagement to employer brand,” Lois Melbourne, CEO of Aquire Inc., a software firm in Irving, Texas, that sells tools for workforce analysis and planning, tells Client Community.
“When you analyze the corporate initiatives you often hear about product growth, market penetration or geographic expansion. Then you go into the HR departments and they are planning downsizing or flat growth of the organization through attrition. These two initiatives do not support each other, they are disparate. The workforce plan needs to be aligned with the organization’s plan. This means you need to be able to study the past to predict the future,” she adds.
And that is what the latest advanced metrics are designed to do. But, according to Melbourne, specific obstacles have kept more companies from using workforce data analysis – including the fact that important employee data is often almost inaccessible, buried deep within enterprise resource planning (ERP) integrated computer-based systems that are used to manage internal and external resources and talent management systems.
“General business intelligence solutions are not geared for assessing workforce trends so companies have been left to cobble together spreadsheets which often require very specifically trained individuals to interrupt and maintain. There is also often a lack of vision connecting previously tactical human resources to the strategic mission. HR departments often don’t have qualified staff to do workforce planning or analysis. When they have the skill set within the department, the focus is too often only on HR efficiencies and measuring what HR does, not the entire workforce, “ Melbourne tells Client Community.
“Demand planning for the workforce is a key element of strategic workforce planning. This requires specific data, the right tools, great analysis and workforce planners that understand the business, the workforce and the art and science of analysis. These are not skills laying around within most human resource departments, thus consults are often a necessary member of the workforce planning team.”
Bringing HR into the Future with Advanced Metrics
Workforce planning and analysis tools must be prepared specifically to assist with the unique elements of a business. “Analytic tools need to be able to aggregate information from all over the company so that you focus on what is most important, not just what data you have at your fingertips. You have to make the data available at your fingertips,” Melbourne emphasizes.
Using advanced metric tools to plan for the growth and adaptation of the future workforce is especially important in today’s complex work environment. “Planning ahead for what type of workers will be needed to execute the corporate strategy and where those workers will be needed is critical. The planning process needs to be sustainable, very repeatable and reliable. Those requirements are not possible to meet with a spreadsheet method of doing analysis alone. Systems are required that can securely distribute the appropriate information when the management needs them and in a usable methodology,” she says.
Will HR leaders increasingly embrace the new predictive workforce data analysis systems? “I see HR leaders pursuing the goals that data analysis will help them achieve. I don’t think all of them realize that fact-based decision making will require more than stacks of numeric reports. There has to be true analysis processed for the decision makers. As soon as they see the results of faster and better decisions based on real data, they jump on board right away. The barrier to the best analysis is often the shortage of the right team members and the right technology,” Melbourne answers.
“It is a focus that HR needs to put more effort into. They need to learn about the needs and the benefits of strong workforce analysis and planning. Done wrong, or not done at all, it can become a money pit of bad workforce decisions. Done right, there are great rewards for the company, the HR department and the people involved.”