E-MailBUSINESS INTELLIGENCE FOR MANAGING THE WORKFORCE
by Curt Hall, Senior Consultant, Cutter Consortium
The application of business intelligence (BI) to human resources (HR) has not received the same degree of attention as other domains. This is because companies tend to focus their BI efforts where they expect the greatest ROI (e.g., customer analytics, financial analysis, supply chain analysis). In fact, it was only a few years ago that I remember sitting in a conference session in which the speaker said that there was no real payoff to be gained from applying BI to HR operations.
This trend, however, is changing, and companies are now applying BI analytics to better monitor and manage their workforces. Reasons for this are many. For one, companies must now comply with a growing number of workforce regulations. For another, the need to better service a company's employee base just makes sense if one is to remain competitive in its industry. The growing use of balanced scorecard and other business performance management (BPM) methodologies has also served to help illuminate the need to better manage HR and workforce operations. (A November 2004 Cutter Consortium survey of 110 end-user organizations' BPM practices found that HR ranked fifth among areas in which organizations apply BI analytics for BPM.) And finally, vendors of all types -- from pure-play BI players to leading enterprise software companies -- now offer HR-tailored products designed for use with their BI tools and packaged applications.
The goals sought from applying BI to HR are twofold. One seeks to provide HR professionals -- administrators, executives, managers, division leaders, and so on -- with ready-to-run reports that analyze and report on data maintained in various HR management systems (e.g., payroll, benefits programs, and time entry). The goal is to enable HR professionals to conduct workforce management trends analysis. As a result, these HR analytics typically feature a "workforce scorecard" based on a digital dashboard that allows executives and management to quickly assess the impact of the workforce on overall operations. In addition to prebuilt reports and canned analyses, reporting features typically include functionality that allows more advanced users (HR analysts, etc.) to drill down from high-level to detailed information. Capabilities for performing more advanced statistical analysis and for providing automated alerting and event notification are also appearing in more innovative applications.
The second goal is to enable employees -- of all rank and file -- to view and manage their personal information such as time-off requests, benefits selection, address/contact information, and so on.
WHERE ARE COMPANIES APPLYING BI TO HR?
Organizations are applying BI analytics to several HR areas and activities, including those outlined below.
Workforce and Attrition
Workforce and attrition analytics provide insight into employee trends and profiles as well as attrition and retention. One popular usage is for analyzing workforce diversity (i.e., evaluating employee diversity by ethnicity, Equal Employment Opportunity law categorization, and other criteria). Another is for analyzing employee turnover by seniority, longevity, and manager, or by gender and ethnicity.
Workforce Planning
Workforce planning analytics are designed for aligning workforce competencies with organizational goals; for example, how are labor costs distributed across job functions, departments, and salary grades? Where are our salaries increasing most quickly, and why?
Compensation
Compensation analytics provide general and detailed information on compensation costs. The goals are to analyze average compensation levels by organization or longevity, to monitor significant deviations from industry standards, and to align compensation costs with individual performance.
Payroll trends analysis for analyzing such issues as overtime costs by cost center or assessing overtime on an hourly basis or by dollar amount is sometimes included in this category.
Recruitment
Recruitment analysis seeks to determine the effectiveness of recruitment sources or the time required to successfully fill job openings; for example, how well (or how poorly) does the company acquire and retain employees?
Performance
Performance analytics allow for understanding trends in performance ratings by manager, organization level, longevity, or other variables; for example, are expanding or shrinking manager-to-employee ratios affecting project or individual performance?
Employee Performance
Employee performance focuses on assessing individual employee abilities to meet individual and strategic goals. The goal is to enable organizations to align salary increases and bonus payments with goal attainment and to better plan compensation and retention initiatives.
Employee Qualification
Employee qualification analysis seeks to identify employees by their qualified skills and to assist organizations with aligning required project skills with employee qualifications.
Benefits
Benefits analysis focuses on analyzing and improving the management of costs associated with providing non-cash benefits to employees. This includes reviewing participation trends by geography or benefit plan and for measuring employer costs, employee costs, and total costs.
Employee Satisfaction
Employee satisfaction analysis utilizes various metrics to enable organizations to analyze the results of corporate employee satisfaction surveys.
Training/Education
Training/education analytics are designed for evaluating trainer and/or course productivity or attendance levels; for example, how do sales training courses affect cost of sales?
HR ANALYTICS AT ABN AMRO
ABN AMRO Bank N.V. implemented a workforce analytics application (using Business Objects tools) to better manage the hidden costs of HR policies. The goals were to develop a better understanding of its impact on recruitment and retention, provide better visibility of workforce trends and events over time, and deliver timely alerts of workforce trends. Figure 1 shows a screenshot from ABN AMRO's application. In addition to providing a global overview of HR operations (e.g., head count, average compensation) by respective quarters and years, this dashboard-based application also gives end users the option of drilling down to examine various key performance indicators (KPIs) in greater detail -- for instance, to determine compensation by age group. Also note the ability to receive alerts at the bottom of the screen.
Figure 1 -- ABN AMRO's analytics application. |
Implementing this application has led ABN AMRO to more efficient employee selection and a reduction in the cost and effort associated with trying to understand how workforce trends affect the company's overall HR operations.
CONCLUSION
Although the use of BI for analyzing HR operations is not as popular as other BI application domains, companies appear to be gaining interest in it, particularly large companies that must better manage their large, distributed workforces. Packaged analytic applications that bundle prebuilt analytics and canned reports and metrics are helping to spur this trend, as is the need to comply with myriad workforce regulations and the growing corporate adoption of BPM techniques.