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Mine Company Data with Decision-Support Tools

August 13, 2002
Related Topics: Human Resources Management Systems (HRMS/HRIS), Featured Article

How much do you know -- really know -- about your workforce? Sure, you probably can generate a report or create a spreadsheet indicating job titles, salaries, and the like. But do you know where the skills gaps are? How does your company’s turnover compare to industry benchmarks? How can you boost productivity in R & D?

If your company had implemented a decision-support/workforce-analytic system -- that is, software that gathers, analyzes, and manipulates data to assist in planning and decision-making -- you could answer all of those questions (and many more) in seconds.

For example: You could create what-if scenarios to test plans before implementing them and set goals and determine how well you reached them. You could measure productivity in a particular department or throughout the company and model various approaches for improving it. You could forecast staffing requirements for a future project. You could compare your company’s compensation plans with others in your industry; analyze your workforce by skills, demographics, or performance; and establish the cost and effectiveness of your training or recruiting methods. You could examine your workforce today, see how it has changed over time, analyze trends, and make long-range predictions.

"One of the largest voids in corporate America is lack of information about a company’s workforce," says Larry Hutchison, president of DoubleStar, a consulting firm headquartered in West Chester, Pennsylvania, that specializes in HR technology. "If you go to Ford and walk onto the factory floor, the supervisor can tell you everything about the robots that build the cars -- their downtime, their productivity, their error rates. Decision-support tools can provide the same kind of information on employees."

Better information, faster
SunTrust, a regional bank in the southeast and mid-Atlantic regions of the United States, is now implementing PeopleSoft’s Workforce Rewards application to improve compensation planning and job pricing. According to Richard Cherry, human resources systems manager, the tool will help the bank become more competitive in recruiting and retaining talent.

"For example, if we experience high turnover in a certain area, we can analyze why that is the case by assessing factors like training, location, and compensation," he says.

Fixing salaries to jobs had been a tedious, slow, manual process at SunTrust, Cherry says. "We had to gather job-market survey data from various vendors, price the job in each geographic area, and dump the information on a bunch of spreadsheets. This tool will automate the process, make the analyses accessible to managers, and provide better and more accurate information. It will also let managers look deep into issues such as salary actions and turnover head counts.

Integrating HR with the enterprise
That kind of ongoing planning, forecasting, and evaluating provides valuable insight into business performance and practices. "Companies that are best positioned to avoid being battered by sudden reverses or external factors are those that treat planning as a continuous exercise in operational decision-making, resource allocation, and performance management. [They] make consistent use of their Web architecture and business-intelligence tools," says Richard T. Roth, a managing director of the benchmarking firm Hackett Best Practices, which tracks the trends and performance of organizations throughout the world.

Sophisticated decision-support systems offered by major vendors don’t just focus on a particular HR responsibility, but analyze the enterprise as a whole, says Fumi Kondo, managing director of the IT consulting firm Intellilink Solutions. "They integrate business developments, sales, and other drivers of the business with HR, so HR becomes more than just a support area," she says. "HR becomes more strategic."

A data warehouse is the foundation of such an integrated enterprise-wide decision-support system. It serves as a central repository for the raw data from your company’s financial, customer-relationship management, and other systems, combined with external market information, such as salary surveys, for benchmarking. The system’s analytic tools then enable you to slice and dice and sort the data to create multidimensional what-if scenarios and hypotheses. In other words, it turns raw data into knowledge.

That kind of powerful system can cost anywhere from a half-million dollars to more than a million dollars a year to build, implement, and maintain. The price tag is the primary reason it’s still relatively rare in HR. According to a survey by META Group, a research and consulting firm, senior management does not yet appreciate the positive impact that strong workforce management can have on an organization’s bottom line.

"HR organizations need to do a better job of articulating -- and measuring -- the connection between good workforce management and business performance," says David Lindheimer, the report’s lead analyst.

Bottom-line benefits
DoubleStar’s Hutchison tells the story of a client company that implemented a decision-support system and discovered it could have saved more than a million dollars in hiring and recruiting costs. "In the past, every manager would go out and contract with any recruiting firm they wanted," Hutchison says. "With a drop-down menu and click of a button, the decision-support tool showed which advertising source found the highest-quality employees and which recruiting methods provided the best value."

Here’s another example of how decision-support/analytic software can help control costs throughout the enterprise. The Toronto Police Service recently implemented Workbrain ERM 3.0 to automate and manage scheduling, overtime spending, equipment and employee deployment, and special-event management.

"The program allows human resources to understand how resources are being deployed across the organization," says Bill Gibson, HR director.

A decision-support/analytic system monitors relationships between metrics, says Richard Howey, a senior consultant with the consulting firm Watson Wyatt. "It synthesizes HR metrics with the enterprise -- the supply side, CRM, operations, financials -- so you can see the whole chain and measure how factors such as retention or productivity affect the bottom line."

Some decision-support applications are narrower in focus, applying analytic technology to a specific HR function. For instance, Hire.Analytics by monitors and measures how well recruiting and staffing initiatives support an organization’s business goals and provides insight into performance and candidate quality. It measures cost per hire, expenses by division, and candidate diversity. It maps, in real-time, which people are needed, when, and where at any given moment. Another application, Visionware by Kronos, focuses on labor costs. It synthesizes information from billing, payroll, revenue, and time and attendance, and then captures, analyzes, and reports on labor-mix efficiency and staffing levels. As a result, managers can make better decisions on the type, quantity, and mix of labor they need.

Fieldglass, a human-capital management technology company, makes software to help businesses compare and rank temporary workers and evaluate the performance of suppliers and staff. The software integrates with payment and invoicing systems and corporate purchasing-card programs.

Other software, such as products made by DxCG and Parallax by Ingenix, focuses on reducing an employer’s health care costs.

Stop administering; start analyzing
According to the META study, "Workforce Management: Technology Trends and the Employee Life Cycle," more companies are likely to invest in workforce analytic programs over the next three to five years. But while such leading-edge applications may be the next big HR wave, for now they are more widely discussed than deployed.

Most HR systems now in use -- such as those focused on benefits, recruiting, or payroll -- are transactional. That is, they are focused on accomplishing or automating a specific task but provide no means for measuring how the business is performing as a whole. You can generate reports or create spreadsheets from such systems, but the data is based on transactions that have already occurred. Another downside is that the various systems are typically not integrated. So there is no easy way to merge data from one system into another.

"I am amazed how many people have implemented solutions that didn’t give them what they need for recruiting, leadership, or training," Hutchinson says. "They end up with eight systems, none of which talk to each other. This is the primary chasm that exists within HR."While decision-support/analytic technology is becoming more commonplace in areas such as customer relationship and finance, it’s still rare in HR, says Howey, the Watson Wyatt consultant. "HR people have always been information-poor," he says. "But now they need to rethink their roles and move away from the administrative mind-set of enforcing rules and processing transactions to the mind-set of becoming a strategic business partner. These systems represent an opportunity for them to become more analytical."

Workforce, June 2002, pp. 50-54 -- Subscribe Now!

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