Talent Management Keeping Score With HR Analytics Software
Software firm Authoria, for example, allows managers to see an organizational chart on the computer screen with images of their direct reports presented almost like baseball cards. Below the photo of Joe Smith is his job title, performance rating, the amount of time Joe has worked at the company and how long he’s been in his current position.
This way of organizing information not only is easy on the eye, it eliminates much of the grunt work associated with trying to analyze data stored in paper records, spreadsheets or Microsoft Word documents, says Jeff Cooper, senior business consultant at Authoria. In effect, workforce analysis and presentation tools like those from Authoria raise the game of human resources managers and other company leaders, Cooper says. "Now that person can focus more strategically," he says.
Workforce analytics applications refer to software products that help a company draw conclusions from its human resources data. These tools are considered particularly vital for the most strategic talent management tasks, which include recruiting the right employees, measuring their performance, helping them develop and compensating them effectively. To make smart decisions around hiring, promotion and pay, firms ideally need to sift quickly through data such as performance reviews, salary levels and even store revenue.
Partly because organizations are eager to make wiser talent management calls, there is growing interest in workforce analysis applications and related "dashboards" or "scorecards." The momentum also stems from the way such software has become both more sophisticated and simpler to use during the past five years or so.
Still, some skepticism surrounds the analytics field. Vendors of analytics tools have not always provided effective software or guidance to customers, experts say. It remains difficult for large companies to gather basic employee data such as headcount—which makes scouring the information for trends difficult. And it’s not clear that organizations know what information they should be looking for.
Jodi Starkman, a talent management specialist with consulting firm ORC Worldwide, says diving into workforce analytics applications can just result in making a bad pro¬cess—such as recruiting from poor sources of candidates —more efficient.
"HR is collecting a lot of data," Starkman says. "But people are still confused about what kinds of business questions they should be answering."
Firms showing interest
A recent study from the International Association for Human Resource Information Management professional group and consulting firm Knowledge Infusion suggests many companies are not doing heavy analysis of their workforce data. In the survey, which polled IHRIM members and Knowledge Infusion customers, 52 percent of respondents with 2,500 employees or more cited very light to moderate assessment of the impact of HR initiatives on business results through standard reports and spreadsheets. Twenty-four percent of such organizations indicated they are not doing this type of measurement at all. Just a quarter of companies with 2,500 employees or more had implemented workforce analytics software.
On the other hand, the study found growing interest in workforce analytics. Thirty-five percent of companies with 2,500 employees or more are in the process of implementing analytics software, making it the top category among 12 types of HR-related applications. And, the study found, 30 percent of companies with 2,500 employees or more indicated they will make significant investments in analytics software during the next three years.
Software makers haven't done
enough to help organizations get the right data in front of the right people. "Different stakeholders need
different metrics. The vendors haven't really delivered on that."
--Jim Holincheck, analyst with
research firm Gartner
One firm dipping its toe into workforce analytics applications is Dallas-based software company Intervoice, which employs about 800 people worldwide and whose products include software for contact centers. Intervoice recently began using a dashboard within SAP’s E-Recruiting software. Among the tools available to the Intervoice staffing team are a summary of job applications waiting to be processed and links for recruiters to schedule interviews, says Don Brown, senior vice president of human resources at Intervoice.
Brown has higher aspirations still. He’d like to configure his SAP software to create an improved dashboard for line managers. Already, his manager self-service portal includes open job requisitions, employee birthdays and service anniversary dates. He wants to add such information as year-to-date turnover, talent development goals and progress toward them, and performance reviews ranked by score and linked to summaries. "We can justify the funding," he says, "but we can’t do everything at once."
Analyzing workforce data may be as complex as finding the most important factors in store profitability or as simple as generating a companywide breakdown of employees by age. Firms sometimes rely on their existing spreadsheet software to tackle the easiest of these tasks. More sophisticated application tools, though, can cost large organizations hundreds of thousands of dollars.
Analysis results can be presented in reports sent by e-mail or posted on a Web page. In some cases, the conclusions also can be seen on computer-screen dashboards that quickly signal whether a particular figure exceeds an acceptable level—say, annual turnover above 10 percent. Dashboards and scorecards, which differ slightly from dashboards by measuring progress toward a particular goal, often broadcast the status of a particular metric with a green light for "OK," a yellow for "caution" and a red for "trouble."
Besides slicing and dicing workforce data and presenting the information back to users, analytics tools can fire off e-mail alerts to employees when danger levels are reached.
Sellers of workforce analytics products divide roughly into three categories. The first is comprehensive business software providers such as Oracle and SAP. The second is talent management specialists including Taleo or Authoria. Then there are stand-alone analysis applications from vendors such as Cognos and Infohrm.
Lawson Software is an example of the first group. Like SAP and Oracle, Lawson makes software to automate various business areas including human resources, finance and manufacturing. Lawson, which is based in based in St. Paul, Minnesota, says its Lawson Business Intelligence software allows companies to peer across multiple areas of the business to come up with useful information.
"If HR leaders don't know what to do as a result of the metrics, then having them doesn't matter."
--Naomi Bloom, Bloom & Wallace
Cecile Alper-Leroux, Lawson’s director for human capital management product strategy, cites hiring metrics as an example. She says Lawson Business Intelligence goes beyond simply measuring the time it takes to hire someone to consider the effectiveness of the hire—seen through figures such as total cost of the employee, how quickly the person became productive and how successful they were in performance reviews. "That’s a much more complex view," she says.
Oracle also boasts of workforce analytics software that spans the typical "silos" of information in a company. It sells analytics tools for both its Oracle E-Business Suite and PeopleSoft Enterprise product lines, and is working to "embed" analytics in individual product modules. For example, its Oracle iRecruitment application is set up so managers who are asked to approve an offer letter to a new hire automatically see the range of salaries given to employees with similar jobs, says Gretchen Alarcon, Oracle vice president for human capital management product strategy.
Alarcon concedes that vendors specializing in talent management applications such as recruiting or compensation software may allow users to drill more deeply into the information presented in reports or alert e-mails. But she argues that the specialists’ products often lack the ability to compare data from different areas, which is a priority for customers. "Rather than getting into super-detail in any one type of product, they want to see how their learning management, performance management and recruiting data tie together to meet their business goals," Alarcon says.
Adam Miller, chief executive of talent management software firm Cornerstone OnDemand, agrees that vendors need to provide a range of applications in order for analytics tools to result in the most useful information. But Miller, whose firm offers software for performance management, succession planning, compliance management and compensation planning, takes issue with the idea that the big business software players have an edge in analytics and dashboard tools. "In virtually every case, it’s much easier to configure, navigate and report in our system," he says.
Also in the mix are companies that focus on analytics tools alone. These include "business intelligence" software makers Cognos and Business Objects, both of which make tools for analyzing a range of business information, including workforce data. Another analysis specialist is Infohrm, which focuses on HR and talent management matters.
Brian Kelly, vice president of sales and marketing at Infohrm, says his product will gather data from a variety of sources in an organization. But a key part of Infohrm’s pitch is its willingness to consult with customers about how to use metrics effectively in their management style. "It’s not a technology issue at companies," Kelly says. "It’s a change management issue."
Companies have been banging on Infohrm’s door. The firm has seen revenue grow more than 35 percent annually over the past three years, and clients include such big names as Starbucks, Nokia and Time Warner. Other vendors of workforce analytics software report growing interest in their products as well. "It gets talked about a lot," says David Ludlow, SAP’s vice president of product management for human capital management applications.
On the other hand, Ludlow says relatively few organizations have actually put analytics tools and dashboards into place to glean wisdom about their talent. Among the challenges to greater use of analytics is that many companies still make decisions about things like succession planning and performance management on paper or in spreadsheets, where data is hard to retrieve, he says. "You can’t have analysis unless you automate these processes," he says.
Another obstacle to the adoption of workforce analysis software is that the tools aren’t always easy to use. Authoria, for example, offers clients a variety of "pre-baked" reports designed to be simple to access and comprehend. One such report, intended to aid in succession planning, plots out employees on a grid showing both performance rating and potential. But using Authoria’s software to ask more complex questions takes sophistication, such as understanding how to construct a multi-variable search.
An example of such a search would be an attempt to find, for a given job family, all the employees and external candidates who meet criteria around current location, willingness to relocate, length of service and performance record. Cooper says HR "super users" and other champions of the tool are the ones likely to do such ad-hoc digging, which can lead to important insights. "Yes, it requires some understanding to create a complex, multi-variable search from scratch," Cooper says. "And rightfully so."
Vendors of analytics tools also must overcome some residual distrust, says Jim Holincheck, analyst with research firm Gartner. He says vendors haven’t always done enough to help organizations get the right data in front of the right people, whether they are the HR director, CFO or chief executive. "Different stakeholders need different metrics," Holincheck says. "The vendors haven’t really delivered on that."
Along these lines, Lawson is working on specific role-based dashboards, such as ones for compensation analysts or recruiting managers. But the company’s Alper-Leroux says there is a limit to the effectiveness of "canned" reports and dashboards. She says Lawson delivers about 275 preconfigured reports, but the nuances of every business mean clients almost invariably want to build their own metrics. "More than 50 percent of our customers use 25 or fewer of those reports out of the box," she says.
Some analysts, though, question the wisdom of HR departments in choosing how to analyze their talent management data. "If HR leaders don’t know what to do as a result of the metrics, then having them doesn’t matter," says Naomi Bloom, managing partner at Bloom & Wallace, a consulting firm in Fort Myers, Florida. "The missing piece is the business savvy.
Infohrm’s Kelly says clients thus far have focused on very basic data chores. "You’d be amazed how many companies struggle to get an accurate headcount figure," he says.
There was a flurry of activity around workforce analytics about five years ago, followed by a lull and now growing attention to the topic, Kelly says. He expects that attention to continue, in part because case studies of early adopters are persuasive.
In one example, a large retail client of Infohrm analyzed its data to determine that the greatest factor in store revenue and profitability was manager tenure. That sort of insight allowed the firm to do more to hold on to its store managers, Kelly says. "They know which levers to move," he says.
Holincheck says interest in analytics will follow the course of companies’ now-common adoption of recruiting, performance management, learning management and compensation management software. "We’re where talent management was three to four years ago," he says. "It’s going to be a mainstream thing that people are interested in."
In other words, it soon may be as normal to have a dashboard in front of you at work as it is to have one in front of you while driving there.
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