Organisations that fail to gather and analyse people data intelligently are leaving themselves open to lawsuits and losing talented staff, argues Chris Sands, corporate analytics platform manager at COA Solutions Ltd.
In the modern working world, organisations face high absenteeism, staff churn, equal pay claims and accusations of discrimination on a regular basis.
The CBI’s 2007 Annual Report found the cost of absence for UK employers to be £13.4bn in 2006, with employees taking an average seven days off sick. A survey by the Chartered Management Institute and Remuneration Economics, in September 2007, found that female resignation rates have hit their highest level since 2002. There are estimated to be tens of thousands of equal pay cases running in local authorities, which could lead to £5bn in back-pay liabilities and future wage bills.
The corridors and kitchens of organisations are replete with people in huddles whispering about how different departments and managers perform, why people leave their jobs, why the staff churn for young females is twice as high for one manager compared to his colleagues, for example. Separating rumour from analysis enables HR to head off developments before they turn into problems and potential lawsuits.
So how to begin sifting through the data? Organisations need to measure what matters and what ties in to the organisation’s overall Key Performance Indicators (KPIs). While no one measure can reflect performance accurately, 10 areas to consider in any area of measurement and reporting are:
- Staff turnover and retention
- Employee engagement
- Training and development
- Talent management and succession planning
- Workforce demographics
- Fair employment
- Added value from people
- Organisational culture
There is a world of difference between outputting data and providing useful, strategic information. This is the area where HR professionals can operate at a level where they add value to their organisations, by not only compiling data but segmenting it, refining it, comparing departments with departments and the business against national trends, in order to devise consequent strategies.
The often-quoted military saying ‘a lack of information can kill’ holds true. Where there is no information or, more specifically, a lack of intelligently segmented and analysed information, organisations are at risk not only of litigation but also of not looking after their staff well – for example, in not knowing what sort of training they should be providing.
Such information can also enable HR departments to monitor and demonstrate compliance with employment law and with other regulatory mandates such as Best Value Performance Indicators in the public sector. Compliance is often seen negatively by organisations as an unnecessary administrative burden, but what they are being asked to comply with – a diverse and fairly treated workforce – is a good thing. In fact, the world’s best organisations are busting a gut to get there.
Identify the factors
When an employee leaves, they take with them experience, skills and knowledge, most probably to a competitor. Employees might also take their experiences to a lawyer and turn them into a lawsuit. Measurement and analysis enable HR departments to identify the factors that cause employees to leave. With this information, HR can create profiles of possible leavers, targeting resources to retain high-performers and analyse the impact and cost of losing key personnel.
HR must avoid the risk of measurement becoming a mere ‘box ticking’ exercise for the sake of compliance. The key to analysis is segmentation, and the key to segmentation is to look for patterns. For example, in equal pay situations, analysis can be broken down by pay, gender, length of service, age and training received. Through segmentation, you might find some very specific and hidden causes are having huge effects on HR issues.
For example, the HR team at Rotherham Metropolitan Borough Council used measurement and analysis software to understand and tackle long-term absenteeism among its workforce. Sickness absence decreased so significantly that the council achieved efficiency savings of £5.6m in three years. The use of metrics helped to pinpoint musculo-skeletal problems in the adult services sector as one of the main causes of long-term absence. In response the council set up a new procedure to fast-track workers suffering from these problems for physiotherapy treatment.
HR staff need to drill down deeper than many have been accustomed to, or have been comfortable with, preferring to see measurements as the job of their colleagues in accounts and operations. Deep and cohesive analysis will help HR staff identify factors lurking in their organisation before they develop into serious problems and potential litigation. Where a need for policy change, training or discipline is uncovered, HR must be ready to act decisively on this.
This is radically opposed to what is often seen from HR departments, which could be called ‘peanut butter management’ – uniform polices spread right across the organisation rather than well analysed, thought out, targeted and costed policies that have a real return on investment.
Making the appropriate intervention based on knowledge derived from segmentation enables organisations to spend their time and resources wisely. The intervention may be sudden (a manager removed, a department reorganised) or gradual (improved induction, training and appraisal programmes). Whichever intervention HR departments decide on, they should do so on the back of thorough analysis, and with the twin aims of averting crises and looking after their staff.
COA Solutions Ltd is a supplier of integrated business management and information systems to the public and private service sector.