It’s one of the greatest challenges facing HR leaders today: how to use workforce management analytics to gain insight into an organization’s business processes and performance. But while cleaning data and building predictive models are key steps, many companies neglect to create a cohesive team around workforce analytics.
That’s a huge mistake, according to Wendy Hirsh, a principal at Mercer, an HR consulting firm based in New York. For one, Hirsh says that “workforce analytics and planning often happens in certain pockets across the organization. It’s very common for a company’s compensation data to sit in one system and for core HR in another and performance management data in yet another. The ability to bring together data from different sources so that they can talk to each other is a unique and critical skill set.”
Secondly, without a coordinated approach to workforce analytics that encompasses a wide array of expertise, Hirsh warns that inconsistent findings and redundant datasets can hamper any chance of deriving accurate and valuable insight from a workforce analytics system. For example, Hirsh says, “How headcount gets tracked in HR might be totally different than how it’s tracked in finance which could result in inconsistent interpretations and differing sets of data.”
To address this challenge, Hirsh says a number of companies are implementing a workforce analytics and planning Center of Expertise (CoE). (Mercer is a proponent of such an approach and offers a workshop entitled, “Workforce Analytics and Planning Execution: Building a Center of Expertise.”) Comprised of both HR and non-HR leaders from a cross-section of business units, a CoE is responsible for setting strategies, designing solutions and developing enterprise-wide policies around how an organization will use its workforce analytics system.
How will the company report on human capital metrics, what is the definition of ‘high turnover,’ what are the standards for collecting data, what deep-dive analyses are needed to address the company’s pain points – these are the types of questions that a CoE must answer before offering recommendations to HR business partners.
Only by “centralizing this core set of expertise into a team,” says Hirsh, can an organization properly leverage workforce analytics to identify labor trends, highlight areas of risk, or analyze the return and impact of specific HR initiatives.
For example, Hirsh cites one company where “a fair number of low performers were being given significant pay increases.” It wasn’t until the organization implemented a workforce analytics CoE that it could pool its disparate data sources and “drill down to find out which performers were being overpaid and which HR supervisors were overseeing those individuals before the situation got worse,” she says.
In addition to providing a more complete picture of the workforce, a CoE can ensure proper knowledge transfer, especially in an era of high HR turnover. “By having a core team where everybody has to share certain knowledge bases, you’re not left at risk if the primary knowledge owner leaves the organization,” says Hirsh. “You still have a team to carry on the remaining work.”
But that’s not all. Karen Piercy, a principal with Mercer who writes extensively about the benefits of building a CoE, argues that “most HR staff are busy putting out fires.” A dedicated workforce analytics CoE, on the other hand, can take the time to sift through datasets and identify and analyze a company’s most important workforce issues. “This type of work really requires you to step back and address issues that perhaps aren’t related to some burning issue,” says Piercy. “Often, an HR generalist or senior-level business partner doesn’t have the expertise or can’t take the time to do this kind of work.”
While some may bristle at the thought of a team of experts handing down recommendations to disparate business lines based on behind-the-scenes number crunching, Hirsh assures, “Business leaders are actually asking for it.” Piercy agrees. “I haven’t seen anyone have a bad reaction to creating a CoE.”
Cindy Waxer, a contributing editor who covers workforce analytics and other topics for Data Informed, is a Toronto-based freelance journalist and a contributor to publications including The Economist and MIT Technology Review. She can be reached at firstname.lastname@example.org or via Twitter @Cwaxer.