Amid lingering concerns about the health of the global economy and companies’ focus on operational efficiencies, workforce analytics is fast becoming a sought-after component to add to the broader portfolio of human capital management (HCM) software.
Once dominated by third-party vendors, workforce analytics is now an important workforce planning component of SAP’s own HCM suite. The software is designed to help HR professionals and line-of-business managers examine their workforce against key business trends. Workforce planning and analytics provides HR with real-time insights to aid in better workforce management decision making, including workforce analysis, from composition and head-count development to budgeting, recruiting and turnover.
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“The workforce is really the lifeblood of the organization, and you have to pay attention to it,” noted Lois Melbourne, CEO of Aquire of Irving, Texas, which specializes in workforce planning tools. “People are realizing how important it is to keep an eye on what's going on with the workforce. It's all about having the right resources to do the company mission.”
Workforce analytics a new approach
On a macro level, workforce planning gives companies the intelligence to evaluate and tweak the makeup of their organizations against the backdrop of their future needs and business goals. HR professionals and business owners can drill down into the data to determine what kinds of skill sets are necessary, what departments need to expand or shrink or exactly where to locate specific positions.
Consider the example of a company building a new plant determining whether to keep it local or move to another area with better tax advantages. By examining and analyzing different sets of historical data, companies can garner insights into a number of factors that may influence their decision, such as whether relocation might cause enough employee unrest to precipitate a mass exodus.
That’s not how companies have historically addressed the workforce planning issue, experts say. While most companies have done the work around traditional head-count planning and budgeting -- for example, determining how many people they need for a specific number of hours -- they haven’t had to tools to dive deeper, such as examining the broader skill-set makeup or identifying the groups that are the biggest retention risks.
Given the competitive nature of today’s global climate, companies can no longer afford not to have the answers to those types of probing questions.
Workforce planning and SAP
SAP, which bought into the workforce planning and talent management space last December with its $3.4 billion acquisition of SuccessFactors, says this level of workforce analytics is critical to its customer base and to the company for its own operations, according to Kouros Behzad, SAP’s director of solution management for line-of-business HR.
Behzad describes workforce analytics as an opportunity to help the company meet significant revenue goals. “We have a very rapid growth plan we want to achieve so we need to be able to look at the workforce and determine, do we have the right skills internally to develop and satisfy customer needs," Behzad explained. “Analytics gives us the perspective as to how to ramp up this workforce.”
Say the workforce analytics exercise determined that SAP needs to hire 1,000 more employees to achieve its goals. “Analytics would help determine what skills and competencies we needed, what seniority levels were necessary and what exactly the skills makeup of those people should look like so we could come up with a recruiting plan,” Behzad explained.
Workforce analytics mitigate risks
While companies have traditionally not conducted this systematic level of workforce planning and workforce analysis, experts say there is a risk if they don’t. The biggest hazard, according to experts, is not being able to execute the business strategy as intended.
“You may think you have this many people, but you’re fooling yourself because you’re not delivering training employees want, so turnover is high and many who are slated to be leaders in the organization are among those leaving,” explained Al Adamsen, CEO of People-Centered Strategies LLC, an advisory firm based in San Francisco that specializes in leadership development and talent strategies.
“Now you're in a tough situation where you have to hire externally for that talent. You end up in a chaotic, keep-the-wheels-on-the-bus situation as opposed to something that’s well planned and executed.”
This was first published in June 2012