People Analytics and Driving Growth: Part III
: Performance and Organizational Network Analysis
This is part three of a three part series on People Analytics and Growth written by HR Exchange Network editor Mason Stevenson.
Read Part I here.
Read Part II here.
It’s a complex and challenging time in HR. The need for high performing talent is the greatest it’s ever been in the history of business. It’s for that reason leveraging data in human resources is paramount to success.
HR Exchange Network editor Mason Stevenson continues his series on people analytics and driving growth. This week he focuses specifically on performance and organizational network analysis.
People Analytics Are Growing
Data and the analysis around it can be used for more than finding problems and preventing them. It can also be used to help encourage productivity and effectiveness at the employee and team levels. We’re talking about people centric analytics.
A great example of this is technology company Cisco.
At one point in time, Cisco conducted annual employee engagement surveys. Some 73,000 employees respond. And it took time to analyze all of that data, share it and then implement action plans based on the findings. In recent years, the company decided to shift its focus from the company all together down to the team level. This would allow them to get more useful feedback that could be turned into action almost immediately.
Cisco also conducts pulse surveys. The HR team then analyzes this data to measure team performance and leader interactions with their teams. This frequent analytical review provides leaders with data that links to key performance indicators, leading to paths of improved performance.
Roxanne Bisby Davis is the director of team analytics and research.
"We're not looking at it from the perspective of 'Who's performing bad?' Rather, we're looking at who's great to see what they're doing and how they're doing it, whether it's team members or leaders. By highlighting 'goodness,' it gives the teams opportunities to say, 'I really like that approach. Let's try it.'"
Organization Network Analysis
General Motors is one of the world’s largest automobile manufacturers. Their people analytics strategy focuses on Organizational Network Analysis; the analysis of the networks that exist between employees of the organization.
“We’ve known for years that under the organizational charts lay a web of hidden interactions. We now of the technology and analytical tools to look at those connections that were once invisible to managers and use them to drive agility and innovation,” Michael Arena said. He’s the Chief Talent Officer for GM.
Arena said HR has been focused on Human Capital for years. That’s nothing new. But they’re making the change to social capital and that’s where ONA comes in. But focusing on the analysis and the mapping out of internal networks between employees and teams, the company can drive innovation and increase productivity. They do this by understand which people and teams work best together.
In fact, ONA played a part in leading to the creation of Cruise. Cruise is General Motors’ team for building and designing the “world’s best autonomous vehicle network.”
Like Cisco, Parkland Health and Hospital System is among the companies around the globe using data to make decisions and spur growth. Sebastien Girard is the VP and Chief Workforce Officer for the company. Below he explains his company’s data strategy.
Title: Human Resources: Strategic, Predictive and Cost Effective!
Contributor: Sebastien Girard, VP and Chief Workforce Officer, Parkland Health and Hospital System
HR is a necessary evil! HR is a back office function that neither generates revenue nor adds value! HR always says “no” and is an obstacle to operating the business! HR is expendable! HR is reactive! HR is all about fluff and intangibles! I don’t trust HR! HR doesn’t have strong business acumen or understand technology!
I’ve heard these statements or ones like them countless times in my career; and I’ve wholeheartedly disagreed with them equally as many times. Yet they reflect the main struggle of HR executives and the transformation the industry is currently undertaking: how can HR leaders demonstrate results and added value? With the rise of HR digital capabilities, data analytics and strategic workforce planning, HR professionals may now showcase revenue generation and return on investment.
My estimation of the HR industry’s progression from tactical to strategic is illustrated at-a-glance below.
In the past three years, every business decision I’ve made has been geared toward one goal: operating in a proactive capacity based on HR data and trend analysis to maximize business outcomes.
To empower my team and set-up the department for success, we undertook a few projects to position HR as a strategic partner to all levels of the system.
The Talent Analytics team extended their services to predictive capabilities and metrics. On average, companies that excel at people analytics are 3.1 times more likely to outperform their peers financially[i].
Through a regression model, the Talent Analytics team was able to present to hiring leaders when and where turnover will occur in the next 18 months within a single job segment. With this knowledge, the decision maker can recruit before being short staffed, thereby dramatically lowering their vacancy rate. The pilot conducted at Parkland achieved 92 percent accuracy and lowered the vacancy rate of the specific area from 6.4 percent to 2.1 percent over nine months. Since the pilot, this type of predictive hiring practice has been extended to five other departments encompassing close to 2,000 employees.
The following formula can be used to calculate the vacancy rate productivity value. It does not take into account the intangible benefits of a low vacancy rate (i.e. lower burnout, increased employee productivity, decreased FMLA usage, increased employee engagement, etc.)
Average number of FTE * Delta in Vacancy Rate * Average Hours Worked per Week * 52 weeks = Productive Hours Lost or Gained
In our experience, the productivity value of a one percent decline in the vacancy rate is about 191,000 productive hours per year!
Broadening HR’s Strategic Scope
The HR Strategic Business Partner team modified their meeting approach from solely people-focused to full business assessments. They meet consistently with Parkland leadership to define current business state and assess upcoming trends. The following data points are used to define the necessary actions for departments to successfully operate.
- Engagement score
- Turnover ratios (favorable and unfavorable)
- Vacancy rates
- Exit interviews
- Employee Relations cases
- New hire onboarding feedback
- Days to fill and start
- Upcoming department staffing needs
- Productivity assessment
- Seasonality reports
As a result of these efforts, Parkland’s turnover rate declined from 17.6 percent to 14.6 percent. Realizing that a single employee turnover costs the organization approximately six months’ worth of salary, the 3 percent turnover decrease saved Parkland close to $11 million per year.
Strategic Workforce Planning
Talent Acquisition implemented a Strategic Workforce Planning (SWP) function at Parkland. As a first step, the SWP team partnered with Finance and Operations to maximize labor optimization.
A daily report was created measuring staff, overtime, contract labor and float pool utilization matched up to each department’s productivity. Every time staff turnover occurs in any department, labor optimization stakeholders from SWP, Finance and Operations analyze the most efficient way to deal with the vacancy. By assessing the business trends and manpower usage, the SWP team provides guidance on the necessary next steps for the open position:
- Straight replacement
- Replace and add more personnel (open new positions) to compensate for volume increase
- Do not replace and use overtime, contract labor or float pool; as it is more cost conscious and matches the volume trends
- Do not replace and lower overtime, contract labor or float pool to match declining productivity trends
In the past two years, this initiative has saved Parkland more than $40 million in costs.
These vital new initiatives helped shift the mindset of our leaders across the system. Now more than ever, they realize that HR can be strategic and demonstrate value while expediting and amplifying results. In short, HR is a catalyst for our organization’s success.
Through new HR technologies, HR executives can finally have a clear picture of the history, current status and upcoming direction of their organization; thereby establishing credibility with the C-suite as a strategic department.
The HR digital transformation is here to stay and artificial intelligence . To anticipate and adapt to the ever-changing needs of their organizations, Talent Management departments must understand the business world, assess trends, comprehend data analytics, be technologically savvy and possess a best-in-class strategic workforce planning department.
The skills and requirements described have been predominantly used by a variety of business professionals for some time; what’s new is their use specifically within HR practices. Previously, HR professionals began their careers in traditionally entry-level roles (i.e. benefits, compensation, HR record keeping, and recruiting fields), then worked their way up and were groomed in business practices. What’s different now, though, is an increasing volume of HR executives who started in other business professions and moved to HR later in their careers. Consequently, we now must determine if business-groomed professionals are best equipped for success as HR executives; and if so, what must the quintessential HR professional do to adapt to this swiftly evolving field?
People analytics is not a substitute for strategy or critical thinking. It is, however, another tool in the HR professional’s tool box. With the right measurements in place, companies can use data to improve and grow the business on every level from talent acquisition to cyber security.
[i] People Analytics: Global Leadership Forecast. DDI, The Conference Board & EY, 2018.