For most organizations, employees, or the human resources, account for the largest percentage of total costs. Northeastern University D’Amore-McKim School of Business Distinguished Professor of Workforce Analytics and Director of the Center for Workforce Analytics Dr. Mark Huselid says the workforce often represents fully 60 to 70 percent of all expenses. Quite clearly, the refinement of workforce management, and attempting to “connect human capital and performance with management strategy and business goals” is a keen point of interest for both HR and upper management.
The fact that a Professor of Workforce Analytics position exists is intriguing, and the sort of academic research that the Center for Workforce Analytics conducts may well result in some rather unexpected outcomes for some industries. Consider this idea, for example: “Most organizations tend to invest in talent hierarchically, where senior-level talent gets the most pay, best development opportunities and other professional perks. However, organizations should be managing vertically in who and what really matters – and in measuring and managing the outcomes associated with these processes.”
In the tech world, the idea of investing a higher percentage of pay and perks in less senior and less experienced employees is not foreign. Raising pay rates and bonuses for, say, highly in-demand developers and designers can often be easily justified in shortened time-to-market or other deliverables. In other areas, though, HR and the business would have a hard time with the concept without some solid predictive numbers.
Advanced analytics, says Professor Huselid, can help a company figure out how to do more of that type of cost management, with less uncertainty about the outcome. But that’ll work only if the data both exists and is readily useable for this purpose. As IT Business Edge’s Loraine Lawson pointed out recently, one of the unanswered questions for many companies is how to deal with the fact that 80 percent of data is unstructured. In the case of workforce data, you might even count yourself lucky if you have tons of unstructured data to painstakingly decipher. More likely, you don’t have much at all, says Anand Srinivasan, writing at Smart Data Collective. Accumulating key data points like why employees leave their positions or what they believe the failings of their departments to be can be next to impossible, in the face of fears of negative results for one’s career and the desire not to burn bridges, Srinivasan says. Until such time as that challenge is reduced (maybe when the robots replace most of the humans), aggregated data analytics like ADP’s monthly Workforce Vitality Report offer workforce metrics to benchmark against.
ADP President of Major Account Services Anish Rajparia, writing at Entrepreneur, says his firm’s 2014 Total Cost of Ownership Study found that “only one in three leaders have done a formal cost analysis of at least one of the five human capital management (HCM) pillars: payroll, employee benefits administration, talent management, human resources administration and time and labor management.” You can’t manage what you haven’t measured, so Rajparia suggests starting by using that list as a five-pillar basis for determining workforce TCO. It’s not simple, but at least it does start with data to which you likely do have access.
Get ready for a Big Data crunching, number crunching year in all aspects of workforce management.
Kachina Shaw is managing editor for IT Business Edge and has been writing and editing about IT and the business for 15 years. She writes about IT careers, management, technology trends and managing risk. Follow Kachina on Twitter @Kachina and on Google+