What is the purpose of a workforce analytics function?

Both the public and private sector are looking for a decision-making edge in the labour-market and robust data is seen to provide the actionable insights that can increase responsiveness in recruiting, retention, talent identification, remuneration and conditions. In turn, this has driven up the demand for better quality workforce analytics as business leaders seek to use analytics to understand the workforce drivers of business performance. There are several factors increasing interest in HR analytics, including: 

• The need to make evidence-based decisions in a complex workforce environment (e.g. increasing organisational flexibility requiring different employment frameworks and tighter financial conditions leading to a sharper focus on workforce efficiency and effectiveness) 
• A broader number of organisational channels, digital and traditional, that impact directly on how work is done 
• The increasing volume of data available through business technologies that require a more sophisticated understanding of workforce analytics and reporting.

Increasingly, insights into workforce performance and the integrated data sets that support them are being seen as assets with strategic value.

Why is workforce analytics important now?

The rise in the demand for workforce analytics reflects widespread changes across the labour market but also in the way work is done.

•  The role, function and practice of human resource management is changing across the public and private sectors. Longstanding HR processes are being challenged and re-designed to meet the demands of the changing workforce and workplace. To remain responsive and relevant, the way HR strategy and implementation has traditionally been approached will also need to change. Public and private sector organisations are strategically re-positioning HR practice as a capability that strengthens the delivery of business performance rather than one that delivers transactional services. 
• Talent scarcity, rising labour costs and tightening fiscal environment. Scarce talent, rising labour costs and tightening fiscal environment are all placing renewed emphasis on workforce planning. Traditional approaches to workforce planning are passively data-centric rather than dynamically business focused. There is a growing need for integrated data analysis that draws on advanced analytics to provide more immediate and actionable insights on the workforce. 
• Elevating the place of workforce as risk to business operations. The organisational and workforce performance poses a substantial risk to achieving organisational objectives. There is a need to cultivate a strategic risk management culture as a centrepiece of HR strategy. This represents a substantial shift in operating model for HR and re-positions the function from managing the consequences of risk (issues management) to actively managing workforce as a risk to operations. In this transformation, HR analytics is also re-positioned from describing lag indicators to predictive analysis as the basis of risk mitigation. 
• Changes in workforce strategy from delivering HR services to informed workforce decision making. HR has traditionally been a largely transactional support function; consequently, it is often removed from the strategic decision-making of the business. Managing the workforce as a strategic risk requires a closer alignment between business strategy and human capital strategy. 
• Increasing demand for workforce flexibility and mobility. Increasingly, mobility and agility within the organisations is being pursued as an enabler of organisational performance. Similarly, trends toward a more contingent workforce may place pressure on existing workforce strategy, policy and employment frameworks 
• Changes to operating models and the need for collaboration. There is a greater focus on core services and innovative ways to leverage ‘shared services’ to gain greater efficiencies, standardisation and scale in order to improve service delivery and increase productivity. The implementation of ERP systems will hasten the drive to achieve these goals but will also create new opportunities. This transformation will have significant organisational and workforce implications; in particular, it will drive greater levels of collaboration between HR and other business functions. Increasing, the drive for increased productivity will inevitably draw strategic workforce toward the centre of the business.

What can a good workforce analytics function do?

Workforce analytics can be used to:

• Better understand the differential impact of financial reward (remuneration and superannuation) and the experiential components of work (flexible working, training opportunities, and leave entitlements) to support the development of a targeted employment framework 
• Map and analyse organisational expertise to understand the gaps and relationships between key skills and capabilities that contribute to decision-making. The understanding of key capabilities can move from a pure count (e.g. ‘x’ number of project managers) to an informed mapping of key expertise and its contribution to decision-making 
• Analyse ‘at-work’ interactions from pre-existing big data to add depth to measures of workforce engagement and help to understand the scale, drivers and contagion of disengagement problems 
• Map the social relationships between key organisational units and identify critical capacity and capability hubs in the organisational structure. This gives an insight to how the organisation functions in practice as opposed to how it is represented in organisational charts 
• Develop behavioural simulations based on cognitive decision making models of key populations to influence behaviour. Scenarios can be developed to test interventions and simulate outcomes. These approaches add an additional layer of bottom-up meaning to behavioural insight programs 
• Enhance the quality of ‘performance dashboards’ to move from providing senior leaders with lag data to providing predictive insights into workforce issues that impact on performance 
• Profile employee retention. A predictive Employee Retention Model can be developed that can be used to develop approaches to targeting resources to those areas of greatest concern and highest need. 

These analytic possibilities are not innovative; this is analysis being used in public and private sector organisations today. 

What are limitations on building a workforce analytics function?

In an increasingly data-driven business environment, many middle managers and senior leaders are being asked to make important workforce decisions based on analyses that use data and statistical methods they do not fully understand. The converse of this is that many managers and senior executives are continuing to cling to traditional and comfortable workforce measures that provide little insight into workforce behaviour. Concurrently, HR, which professionally does not draw on strong analytic foundations, is dependent on using historical data to understand future workforce risk and uncertainty. 

Across the public and private sector, organisations have access to better quality data and more sophisticated methods of analysis than they did in the past. This has opened up new workforce analytics possibilities over the past five years. Consequently, the analysis and reporting of the past is no longer adequate to answer the key workforce questions. 

HR workforce analysis has become captive of the data and reporting tools it knows well. Today, workforce analytics is driven by the need to solve a business problem not a workforce problem. This focuses attention on the most relevant data that can answer the problem and contribute to an actionable solution or mitigate business risk. 

There is a credibility, capacity and capability gap in the ability of many organisations to move from where it is today to where it needs to be. 

Looking ahead, the situation is uncertain. For example, it is likely that many organisations will not have the management or analytic capacity and capability to sustain the development and delivery of workforce analytics function that meets the needs of the business in an uncertain environment. 

There is a need for greater sophistication in the way many organisations produce and consume workforce data and analytics. For example, evidence-based behavioural change requires timely, targeted and efficient data collection coupled with expert analysis and reporting in a form that leaders can understand and act on. 

Equally, there is a need to bolster senior executive understanding of the contribution sophisticated workforce analytics makes to organisational performance and behaviour change. There is a need to re-build or acquire the capacity and capability to generate the insights to support business decision-making that maximises the full range of workforce and workforce-related data available.

What might a renewed workforce analytics capability look like?

A renewed workforce analytics capability in most organisations would provide a strong centre for business-driven workforce analysis to support improved performance and behaviour change.

The management and analytic capability would be driven by a deep understanding of workforce and organisational issues as they apply to Defence such that it could provide tailored solutions to support business decisions at all levels, in particular: 

• The capability would be research-led but issues driven 
• The focus would be on business decisions and the contribution the organisation and workforce can make to deliver better performance 
• It would be technology enabled drawing on ‘best of breed’ tools and analytics ‘assets’ 
• It would be coordinated across organisation leveraging and integrating workforce data and analytic capability from across the institution 
• It would be value-orientated to deliver greater analytic sophistication in a way that is accessible to decision-makers 
• It would offer end-to-end data collection, storage, analysis and reporting capability.

This would allow the business leaders to take a more continuous improvement approach to monitoring and shaping the workforce. It would involve using analytic tools to create a more reliable and up-to-date picture of workforce capacity, capability and disposition. By analysing the patterns in employee behaviour, business leaders could identify changes that may signal emerging workforce risks, such as a drop in employee engagement. Early detection of these risks would enable leaders and managers to develop a response before a problem becomes an issue. 

Tracking the health of the organisation means business leaders can adopt a broader, longer-term system of organisational and workforce performance indicators that encompass predictive or leading workforce metrics as well as the traditional lagging metrics. 
If the organisation does not have the capability for workforce analytics or HR as the custodians of workforce data do not have the capability to contribute meaningfully to a business conversation then workforce analytics will continue to be skewed toward more easily accessible, and less reliable descriptive measures that will not take account of broader organisational and workforce issues affecting business performance.

[The views expressed here are the author’s and are not necessarily representative of those employing him, his family, or even those loosely acquainted with him.]