New Workforce Math

A growing number of companies have decided that traditional human-resources benchmarking doesn't work for them anymore. Todd Raphael looks at the advocates of a new metrics movement.

August 29, 2003
Patricia Murray, senior vice president at Intel, realized six years ago that her company lacked the workforce-management information it needed to make decisions.

    This gap included everything from executive-compensation data to best practices on recruiting women to engineering positions. "HR as a function is weak on metrics," Murray says. "A lot of non-analysts have grown up in HR. You have got to go figure it out on your own."

    She did. She set up an in-house workforce-research group, where eight people consider matters such as figuring out how many engineers Intel will need in 10 years, to studying whether people are more productive if you move them to new positions within the company once in a while (they are). The group also conducts Beta-tests of workforce-management programs--such as a tool to figure out what skills are lacking at Intel--within subsets of the company’s workforce.

    Murray spends her time with management-committee members like the CFO, CEO, COO, and legendary founder Andy Grove. Intel’s workforce-management practices are among the most forward-thinking in America. What Murray does is what others will be doing very soon.

    In fact, everywhere you look, companies are finding out that the old workforce metrics just aren’t enough. Books like The HR Scorecard have gone far in demonstrating how workforce-management policies like hiring from within and providing job security can help a company’s earnings. So have the frequent studies by the big consulting firms demonstrating the impact of workforce investments to shareholders.

    But all that research isn’t enough for Murray and some other executives. Cisco, Raytheon, GE, Tenet Healthcare, and others all have dedicated, in-house staff to study metrics. At Microsoft, Carrie Olesen heads up the Workforce Consulting Group that analyzes various Microsoft business units and recommends how much work should be outsourced, performed by temps, or done by full-time staff. At Northrop Grumman Mission Systems, Ken Ainslie--a former Bureau of Labor Statistics employee--is graphing unemployment patterns in Fairfax County, Virginia, where many of the company’s employees work, and comparing it against company turnover to project future labor shortages. At Agilent, senior VP Jean Halloran gives strategic goals to her staff, like increasing or reducing the number of managers. The metrics team, led by data analyst Bernard Carrot, reports back to Halloran on the levels of managers per employee for each Agilent business unit, and Halloran reviews the data with the CEO, COO, and CFO.

    The common denominator among these companies is that the so-called "benchmarks" everyone’s been using to measure workforce-management aren’t sufficient. Mark Huselid, a Rutgers professor who helped write The HR Scorecard, says there’s a "sea-change afoot" in the area of workforce metrics, and that in some cases, "benchmarking is likely to diminish, rather than enhance, value for shareholders." If you’re comparing yourself to the next guy, you’re shooting yourself in the foot because you may adopt a practice that doesn’t work for your firm.

    Olesen says, for example, that the "time to hire" statistic that recruiters know so well is less useful to her than quality per hire. On the other hand, "if you’re Dell and you’re coming into Christmas season, time to hire might be critical," she says.

    This revolution isn’t confined to Silicon Valley. In Anchorage, Thomas P. Showalter manages comp, benefits, risk management, and technology for Alaska Communications Systems. "We’re not always interested in knowing what others are doing," Showalter says. "We’re not interested in benchmarking to mediocrity. If I were, I’d be a fund manager." Showalter uses about 30 different workforce-management measurements, from whether the company’s HRMS went up on time to how employees perceive their benefits.

    Meanwhile, in the world of compensation metrics, the old see-what-everyone-else-is-paying benchmark isn’t cutting it for a group of workforce-management leaders at several companies, including Wendy’s, Procter & Gamble, Standard Register, and Nationwide.

    Peter V. LeBlanc, senior vice president at Sibson Consulting Group, got the companies together to devise a process that will allow a company to calculate salaries based on the unique qualities of its own organization. LeBlanc unveiled the approach to 27 companies in April.

    In short, everybody is talking about these new metrics, says Heather Hartmann, who heads up the Human Capital Metrics Consortium, a group trying to develop measurements relevant to today’s workplace.

    If you’re not talking about them in your company, this is the time to start.

Workforce, June 2003, p. 120 -- Subscribe Now!

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