Workforce analytics enable smarter decisions

Ventana Research: Workforce Analytics Enable Smarter Decisions
Workforce Analytics
Enable Smarter Decisions
Finding the Right Tool for
Human Capital Management
White Paper
Sponsored by
1 © Ventana Research 2013

Table of Contents
The Scattered State of Information 3
The Value of Workforce Analytics 4
New Technologies for Workforce Analytics 6
Exploiting the Potential of Analytics 7
The Risks of Spreadsheets 8
Arriving at Smarter Decisions 10
About Ventana Research 11

The Scattered State of Information
To achieve success in today’s intensely competitive market
environment, businesses must take all steps possible to enable their
employees to perform at their best and must allocate their workforce
as effectively as possible. In Ventana Research’s view, maximizing the
efficiency of the workforce is best done by applying analytics to the
broadest possible range of data to create the best available
information. When this is done, executives and managers will have
available complete and accurate workforce information that will guide
them in providing the assistance and motivation their people need
today to perform and compete effectively.
However, acquiring this information often is complicated. Businesses’
employee-related information typically is stored in a heterogeneous
array of formats and systems,
among them human resources
management systems, dispersed
across the enterprise. Global
companies may for example have
several of these systems as well as
multiple talent management
systems. The need to use data from
multiple, often dispersed systems
can make the goal of working with
complete and accurate information
more difficult to attain since the
leading source for workforce ana-
lytics is a human resources manage-
ment system (for 69% of all organi-
zations), and this is even more the case (83%) in large businesses
with more than 1,000 employees, as our benchmark research on work-
force analytics shows.
Before an organization can begin to analyze its array of data, it must
first collect, integrate and standardize it, which often is a complex and
time-consuming process. It’s also potentially an expensive process,
particularly in that it can require valuable resources who should
instead be analyzing the resulting information and using it to provide
recommendations for improvement.

Faced with this challenge, busy HR and business managers may
choose instead to rely on ready-at-hand sets of data that are
incomplete or even incorrect and will lead them to mistaken
conclusions. The likelihood that expediency will lead to errors and
partial data is increased by reliance on technology that is not designed
to deliver the outcomes expected from the investments in analytics.
The Value of Workforce Analytics
Although the use of analytics is not new in the field of human capital
management, most organizations have not taken them sufficiently
seriously to develop and use a dedicated approach. They fail to do so
at a cost – a cost that forward-thinking organizations recognize: Of the
five innovative technologies we investigated in our business
technology innovation benchmark research, 39 percent of
organizations ranked analytics as their
first priority, more than any of the others.
The ultimate purpose of workforce
analytics is to guide business in using its
workforce optimally, so that it is efficient
and delivers the best possible
performance. To achieve this large goal,
businesses must conduct analyses that
connect specific workforce metrics, such
as employee engagement or employee
retention, to their core business
information. This should include their specific goals and objectives,
such as customer service scores or sales metrics.
When this is done – and, in the modern world, increasingly only when
this is done – leaders can see the global business effects of HR
decisions – the effects of using collaborative onboarding tools on
retention rates for new employees or customer service ratings, or how
same-store sales are impacted by programs that increase employee
retention and the effectiveness of training. Our research on workforce
analytics shows that performance matters to businesses: The top three
goals that drive businesses to make changes informed by workforce
analytics all have to do with optimizing overall workforce performance.
These goals are to improve their business processes, improve their
decision-making and improve the productivity of their workforce.
The ultimate purpose
of workforce analytics
is to guide business
in using its workforce
optimally, so that it is
efficient and delivers
the best possible
performance.

Merely deriving workforce analytics from what has happened in the
past, though, is not sufficient to deliver future competitive advantage.
The relatively new technology of predictive analytics can help
maximize the potential of future workforce performance. It can do so
by determining the probability of retaining valuable contributors as a
factor influencing workforce performance, for example, or the
achieving of specific performance targets. Such analyses are
invaluable in enabling HR to make better-informed decisions about
probable future staffing needs and lower workforce costs over time by
predicting ebbs and flows. For example, using predictive analytics
retailers could better manage staffing requirements to avoid long
checkout lines or carrying excess personnel capacity at off-hours.
For the business to build effective workforce analytics, managers must
identify, track and measure the
information that is most relevant and
most important. Our benchmark
research on social collaboration and
human capital management finds
that the five most important work-
force metrics are employee satisfac-
tion and engagement, retention
rates, leadership development,
length of employment, and training
and development. These metrics,
combined with other business infor-
mation, will enable HR to act more
knowledgeably and more deftly to
deliver value to the organization and
fulfill on the promise of human capital management.
On the other hand, failing to measure employee satisfaction and
engagement can result in unwelcome surprises regarding turnover and
subpar performance – areas in which surprise is hardly desirable and
into which every organization serious about the quality of its
performance would like to have insight.

New Technologies for Workforce Analytics
As the workforce evolves, so does the nature of the processes that will
enable the most effective management of an organization’s human
capital. One notable change is the evolution of the technologies
supporting the analytics being discussed here. Systems now available
offer powerful capabilities that enhance insights, broaden access to
those insights and lower costs for their use anywhere in an
organization. More sophisticated big data technologies provide the
means to store and analyze larger data sets combining data from
various human resources and talent management systems and other
enterprise systems – an array of systems that previously were
inaccessible or too expensive to explore. As well, predictive analytics
can make it possible to reliably predict future opportunities and
challenges that should be addressed now
rather than later.
Cloud computing can reduce infrastructure
complexity and improve access to systems
and the ability of the business to manage
their use. Like other cloud-based systems,
workforce analytics in the cloud typically
are managed by the vendor, relieving in-
house IT staff of that burden and its
associated costs.
The rise of business mobility also is having
a pervasive impact on human capital management.
Nearly every modern human capital management application – human
resources management systems, talent management, workforce
management and workforce analytics – has been configured for and
deployed on one or more mobile platforms today. As a result,
workforce analytics users are now able to access and work with ana-
lytics on their mobile platforms. Our research on next-generation
business intelligence research shows that already three in five
companies have deployed analytics to employee smartphones, and 30
percent have deployed it to tablets; more plan to do both in the future.
Using mobile technology to provide secured access to workforce
analytics at any time and any place can increase usage and thus the
potential resulting value.
As the workforce
evolves, so does the
nature of the
processes that will
enable the most
effective management
of an organization’s
human capital.

Social collaboration, another of the business technology innovations
we track, will become increasingly important to HR’s role in the
business. Empowering managers and workers to see and interact on
information from workforce metrics can help expedite the resolution of
issues and lead to the discovery of new opportunities for improvement.
Social collaboration vastly improves the capability of members of the
workforce to engage with one another and makes it far easier to work
collaboratively towards specific goals
and objectives.
As social technology becomes a
standard tool used for a range of
workforce processes and concerns,
from recruiting to employee
satisfaction, businesses should be
able to measure their impacts in HR-
related areas like recruiting by
tracking key metrics that report the
effect social media is having. In our
benchmark research on social
collaboration and human capital
management, the metrics that par-
ticipants said they rely on most to measure the value of external social
media sites have to do with the recruiting process; the top three are
quality of hire (cited by 79%), cultural fit (66%) and the candidate’s
experience (59%).
We believe that organizations that embrace these new technologies
that support workforce analytics will be more able to leverage the
resources and potential of a workforce and empower its members to
be maximally productive.
Exploiting the Potential of Analytics
The array of today’s in-depth analytics may not be familiar to all HR
professionals, but they will readily recognize the value of the purposes
they can be put to. For example, finding expertise fast is increasingly
important in today’s competitive environment. Competing effectively
often means gaining access to particular skills on short notice; thus,
knowing all the skills in the workforce is an asset. As teams form
quickly for new projects, insights from workforce analytics can help

leaders find the employees whose skills match developing needs. For
example, someone with a hands-on accounting background might be
the best person to have on a client call with an accounting firm. But
simply choosing that person by job title or department is as likely to
miss as hit. Analytics can enable the company to find the right skill on
short notice as needed to start a new project, approach a new market
or establish rapport with a specific customer.
Similarly, workforce analytics aids knowledge sharing by locating
people who can provide advice to other employees when they need it.
Due to the complexity of modern organizations, many knowledge
management exercises have fallen short of connecting experts to
those who can benefit from the connection. As numbers of experienced
members of the workforce near retirement, companies face
unprecedented losses of knowledge if it is not identified and shared.
Workforce analytics can help identify pockets of skills and help manage
knowledge within an enterprise before it is lost, as well as identify the
skills and knowledge that will be needed for the future. An
organization’s ability to tap into its collective insights is now an
ingredient to stay abreast of market changes and perform effectively.
The Risks of Spreadsheets
To collect and analyze information
about their workforces, many
businesses depend on software that
is conveniently available and
familiar, particularly spreadsheets.
But individual spreadsheets and
reports are cumbersome to correlate
and may contain inconsistent data.
Using them in analysis is risky, and
the results can lead managers to
make mistaken decisions about the
workforce.
Nonetheless, spreadsheets are wide-
ly used in business, a situation that
has significant implications to business. In our workforce analytics
research nearly all (96%) participants said they use spreadsheets for
analytics universally or regularly. In our next-generation workforce

management research, nearly all (92%) organizations reported using
spreadsheets at some level to manage their core workforce
management information. Yet almost half of those said that the use of
spreadsheets makes it difficult to manage their workforce.
It has become increasingly clear that the convenience and versatility of
spreadsheets is more than offset by the frequency of errors resulting
from manual data entry and lack of data integrity. Our research
repeatedly bears this out. In one instance, our benchmark research on
performance management for talent management found that fully 61
percent of organizations using spreadsheets uncovered errors in the
spreadsheets, and more than one in three (37%) said those errors led
to incorrect performance reviews. Correcting such errors requires
managers and HR staff to repeat work, contribute to wasting the time
of valuable resources, and increases the legal and reputational risk to
the business.
In our research, one in three
organizations that use spreadsheets
for compensation management
reported occasional errors that led
to incorrect payments, and 5
percent reported many errors in
payments. All of these problems
using spreadsheets can damage a
business’s reputation among
partners, suppliers and employees
as well as undermine its cash flow
and general efficiency.
To minimize such risks, a business needs a centralized approach that
avoids the pitfalls of spreadsheets. Ventana Research recommends use
of a dedicated analytics system that can eliminate the risks detailed
above as well as offering access and security controls. Such a system
also includes key capabilities that can address the needs of HR and
business while providing the manageability and adaptability needed by
the enterprise as well as critical audit controls, validation of business
rules and effective backup procedures. All of these requirements are
available in enterprise-class analytics systems that can leverage
existing human resources and talent management applications.

Arriving at Smarter Decisions
Using workforce analytics can provide all levels of an organization with
improved visibility of information to make critical business decisions in
a timely way. Moreover, using the array of analytics available will
improve the ability of managers and executives as well as employees
to act in the organization’s best interests. With sharper insights into
how their teams are functioning, managers become better coaches and
guide better engagement and performance.
By adopting an approach to analytics that combines employee
information with business data, HR and executives can establish
meaningful metrics that will enable them to evaluate more usefully the
impact of HR investments for the entire workforce. Using behavioral
and predictive analytics, line-of-business managers and HR can
anticipate future workforce gaps and identify investments needed to
achieve their unit’s and the business’s goals.
The use of mobile and social collaborative technologies adds a new
dimension to the potential of workforce analytics. These mobile and
collaborative capabilities enable much broader access to workforce
analytics as well as their more effective use. Identifying and using
these tools can enable everyone to be more effective and make
effective decisions for achieving the goals of human capital
management.

About Ventana Research
Ventana Research is the most authoritative and respected benchmark
business technology research and advisory services firm. We provide
insight and expert guidance on mainstream and disruptive
technologies through a unique set of research-based offerings
including benchmark research and technology evaluation assessments,
education workshops and our research and advisory services, Ventana
On-Demand. Our unparalleled understanding of the role of technology
in optimizing business processes and performance and our best
practices guidance are rooted in our rigorous research-based
benchmarking of people, processes, information and technology across
business and IT functions in every industry. This benchmark research
plus our market coverage and in-depth knowledge of hundreds of
technology providers means we can deliver education and expertise to
our clients to increase the value they derive from technology
investments while reducing time, cost and risk.
Ventana Research provides the most comprehensive analyst and
research coverage in the industry; business and IT professionals
worldwide are members of our community and benefit from Ventana
Research’s insights, as do highly regarded media and association
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To learn how Ventana Research advances the maturity of
organizations’ use of information and technology through benchmark
research, education and advisory services, visit
www.ventanaresearch.com.

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