HR Challenge #2 - People Analytics Rahul Ghatak

For example if HR teams can lower the cost of hire while keeping the time to hire metric stable, they are more efﬁcient. This is a myopic approach with the focus being to optimize HR cost—and thus look at HR as a cost centre instead of focusing on HR as an investment and a function that adds value to the business.

In the second category in the middle column of the table, we observe the HRM effectiveness outcomes, which are commonly viewed as critical HR KPIs.

Examples include:

• Engagement

• Retention/employee turnover

• Absenteeism rate

• Individual performance

• Team performance

• Quality of hire.

All these KPIs provide data around the workforce, involving both HR and line management.

For instance the conclusion drawn that when engagement is high, HR seems to be doing a great job versus when engagement is low. A similar inference could be drawn for retention and (inversely) for employee absence.

Part of HR effectiveness is how well the HR processes are executed by managers. HR can do a stellar job, but with bad managers, employees will be more absent, less engaged and much more likely to leave!

It is important to understand that most of our HR processes are aimed at achieving positive HR outcomes. For example:

• We do not want to spend too much time on bringing in new people, otherwise we will lose the best candidates, bringing our quality of hire metric down while increasing time to ﬁll

• We are training our people to make them perform better and retain them

• We are adopting health and wellness initiatives to reduce absenteeism.

These kind of organizations measure and give credence only to HR outcomes that reﬂect a narrow and highly silo approach.

The last category to the right of the table is organizational goals. These are the strategic goals that the organization is focused on achieving. Examples of metrics include:

• Market share

• Proﬁt margins

• Market capitalization

• Customer satisfaction

• Customer loyalty

• Total quality.

These are the kind of outcomes that add value to the organization and make the business more viable in the long term.

These organizations focus on the business contribution they make with all of their people policies and processes. These are truly strategic HR functions.

HR organization Focus How

Operational Cost saving Through optimizing HR efﬁciency

Tactical Process optimization Through maximizing HR outcomes, cost saving is secondary

Strategic Business results Through analytics-driven effective HR processes and practices

This is where analytics comes in. HR serves the business and should be focused on organizational goals. All HR outcomes and processes that HR focuses on should lead to these business outcomes.

Analytics is a great tool to measure the effectiveness of the HR interventions aimed at hitting these business outcomes. Analytics enables organizations to pull together tangible evidence that brings out the HR linkages to clear business outcomes.

Analytics Response

• Built on the back of a RACI matrix

• Costs are allocated to people, processes and customers

• Roles and accountabilities are then mapped on to the RACI

• High-cost islands in people, processes are identiﬁed which otherwise may have been hidden

• Cost of customer service and delivery is identiﬁed

• The above is done through drill downs to the last detail right across the hierarchy.

A case example of an auto component company where the HR function uses analytics models to map its As-Is processes and analyse cost savings by moving to To-Be processes.

Case 2: Process Mapping—Business Case for Change Situation and Context

The HR team knew that their processes needed to be improved, but was not sure where it would get the biggest beneﬁt from change. It also was not easy to quantify how much time saving might be obtained by considering automation and self- service options. There were no existing records of what the HR processes were and how people at different levels (and costs) allocated their time to the processes.

Analytics Approach

The analysts worked closely with the HR team led by Smita, the HR Operations Manager. The HR team had already established their view of their people, their roles and organizational structures using analytics and visualization tools. In this section of work, they interviewed 11 key HR operations people about their roles and activities. They gathered all existing data on volumes of cases and time per case. After 6 weeks of work (8 days on site), they had a clear view of roles, activities and time spent. The organization could then see its process cost for each process. Then, the team mapped their new processes and the links to people, generating a view of savings per process and overall.

Analytics Objectives

• Map HR processes at a high level

• Clarify who is responsible/accountable, etc. for each activity

• Calculate the cost of each process step

• Develop the business case for change

• Communicate the activities within the business

• Build the capability in HR to make business cases for process change.

Analytics Solution

• Built on existing data available from its analytics tools

• Responsibility data captured through interviews

• Work volume data from HR service centre statistics (Exhibit 10.6).

Based on the RACI, the HR structure was redesigned, mapping people to roles (Exhibit 10.7).

Exhibit 10.6 Sample RAC/SI matrix is depicted below—to map responsibilities and accountabilities

Exhibit 10.7 HR organization structure redesigned, mapped people to roles and tracked actuals versus budgets

Key Outcomes

• The analytics model allowed the business to surface and visualize processes as seen by the staff

• The difference between the “As-Is” and the “To-Be” processes was shown intuitively and visually

• With a 34% saving within existing processes with a clear business case being made out.

The HR team became capable of producing business cases for process change which had previously never been part of their skill set. Roles were mapped to people, and costs were tracked real time.

Let us take another case example of a financial services company that was struggling to manage/optimize its high-cost processes such as “employee leave”.

Case 3: Optimization of Employee Leave practices towards reducing operating expenses

Situation and Context

In this ﬁnancial services company, taking two weeks leave was mandatory from an employment and compliance perspective. Employees not utilizing their full annual leave days and instead encashing it also cost the bank. Annual leave days accrued became a liability for the company since it needed to set aside money to account

for those days. Further, employees that were made redundant or decided to leave the company were entitled to cash out their leave days.

Key Challenges

On average, the bank employees were taking 18 annual leave days out of 20 that were authorized every year.

What did this cost the bank ﬁnancially? Those two days leave each employee was not taking was increasing liability by 15% year on year, which translated to about INR 12 million annually.

Who were the worst offenders? 50% of the company’s liability sat with about 20 per cent of its employees. A majority of the worst offenders list were in management staff levels.

What other patterns of behaviour were observed? Analysis on this population found they were also the sickest population, taking 100% of their sick leave in all instances before the end of the year. The less annual leave an employee used up, the more sick leaves that he or she was taking.

Analytics Solution

• First, all leave data was consolidated in the HCM system so that it was the

“single source of truth”. Missing data points were ﬁlled. The monetary value of leave hoarding was sized up

• Organization-wide leave patterns were mapped for better resourcing and compliance

• Analytics was leveraged to identify the worst offenders when it came to saving leave days

• Wider employee proﬁles were created, by linking with other metrics like grade, tenure, gender, location, function, career progression, basic pay, employee engagement score, performance, business delivery, etc.

Key Outcomes

System-generated quarterly lists went out to line managers on leave balances for their direct reports. The company achieved 100% annual leave rates result- ing in massive savings. Valuable qualitative insights were derived on employee behaviours leading to learning and development “carrot” interventions to mitigate the effects of the “stick” approach to leave hoarding.

Case 4: Let us look at the case example of an IT leasing company that needed to understand 100% of the costs whether from the point of view of people or processes or customers

See Exhibits 10.8, 10.9, 10.10, 10.11 and 10.12.

Exhibit 10.10 Linked only 33% of employees to business processes (170 out of 526); balance involved in non-revenue generating processes which emerged as a concern area

Exhibit 10.11 Only 14% of overhead costs allocated to business processes (8.5 m out of 60 m) with balance 86% of overhead costs allocated against non-revenue generating processes, again a huge concern

Dalam dokumen People Analytics Rahul Ghatak (Halaman 171-179)