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Reporting and analysis techniques are often divided into two types – operational reporting and strategic analysis. Operational reports are those that help organisations understand how efficiently their business is being conducted – assessing factors such as the cost of hire or departmental attrition rates, and sometimes comparing them with industry benchmarks. Typically, these analytics measure day-to-day activities.

Strategic analysis is about helping managers understand trends, interpret meaning and carry out planning and modelling. This may take the form of specific HR tasks such as compensation planning, where managers use IT tools to assess the impact of introducing new benefits across the organisation. Alternatively, it may relate to broader business activities. A company that’s considering launching into a new market sector, for example, will want to understand what skills and competencies it can pull from its existing employee base, and how much hiring or retraining will be required.

In practice, of course, the lines between these different types of analysis are often blurred – especially as operational data informs strategic decisions. A more useful approach, therefore, is to define people-based business intelligence from the perspective of your people management priorities. These fall into broad categories of:

Statutory/Regulatory HR and Payroll Reporting – Covering everything from workforce diversity to P60s.

Operational Efficiency – This covers the efficiency of the internal HR function – for example, measuring how quickly employee enquiries are handled. But it also includes people-related business processes across the wider organisation, such as recruitment, where ‘days to hire’ metrics are impacted by the behaviour of line managers.

One key factor in managing operational efficiency is to ensure the metrics are relevant. While benchmarks are commonly used in HR and payroll as a means of comparing corporate performance against ‘world-class’ or ‘industry standard’ metrics, these can be misleading if taken in isolation, since the factors that impact performance vary from company to company. If you take two notional organisations with the same headcount, operating in the same industry and comparable geographies, the number of HR and payroll FTEs required will be influenced by considerations such as the degree of automation (How many processes are still handled manually? How widely is self-service used? Are the handoffs between HR, Payroll and Finance automated?). Likewise, if you compare HR performance between organisations, you need to take account of differences in the way responsibilities are split between HR, Payroll, Finance and other functions.

Operational Effectiveness -Where the actions of the HR function are analysed in the context of their bearing on the business – what Webster Buchanan Research terms ‘Workforce Business Impact Analysis’. If ‘days-to-hire’ is an HR efficiency metric, recruitment effectiveness might be measured in terms of the quality of people hired. Alternatively, days-to-hire averages might be broken down into the relative importance of particular employees. If you discover that it takes 30 days to hire a front-desk receptionist but 120 days to fill a senior position in sales, it casts new light on your recruiting effectiveness.

Cost Analysis – Although basic metrics such as HR and payroll FTE ratios are widely used, much people management cost analysis is still fairly rudimentary. In Webster Buchanan’s recent survey on recruitment, less than a quarter of respondents (23%) said they report on direct costs such as adverts or agency fees, with another 29% planning to do so within 12 months. Just 6% report on indirect costs (e.g. time spent by HR managers or line managers), although 29% plan to do so in the coming year. And measurement of time to productivity for new hires is even poorer, with only 1% of interviewees reporting on it at the time of the survey, 39% planning to do so within a year and 53% looking to long-term.

Reference: ‘Recruitment 2008: From Marketing Theory to the Practicalities of Web-based Hiring’, a survey published in March 2008 by Webster Buchanan Research

Trend and Root Cause Analysis – This relates to drill-down analysis, and is designed to uncover the meaning behind individual statistics.

Absence, again, is a good example. Different kinds of absence hit some organisations harder than others – it’s usually easier to replace a receptionist or administrator with temporary cover than to fill in for a product manager, salesperson or specialist IT expert. So while the cost of absence is a key indicator, it’s also important to know the business impact. Is absenteeism affecting productivity? Is it impacting customer satisfaction? It may not necessarily be the employees with the worst attendance records who need addressing: it could be those whose absence hits the organisation the hardest.

Reference: ‘Sickness Cycles,’ a report published in February 2007 at Webster Buchanan’s Human Capital Insider

Multi-dimensional Analysis – One common piece of feedback from organisations that have invested time and resource into people-related analysis is that you often don’t know just how much rich intelligence you can unearth until you start doing it. With the right tools, organisations can pull together pieces of information that might otherwise never have been linked. This might be the result of deliberate policy – such as comparing revenue per employee in the context of region, function, department, or seniority. But it might be accidental – if you contrast age and seniority across different departments, for example, you might stumble across business units where looming retirement will leave gaping holes in the senior management tier in two to three years’ time. These findings can trigger actions that will have a significant business impact, such as building a comprehensive succession plan.

Workforce Planning – In most budgeting and planning exercises, human capital is typically viewed from two perspectives – how much it costs, and whether there’s sufficient resource in place to fulfil forecast business activities. In reality, of course, the equation is more complex, and every business outcome is heavily influenced by skills, competencies, experience, motivation levels, and quality of management.

Strategic planning software adds the human capital element to traditional financial and sales planning. By making projections and carrying out ‘what if?’ analysis, organizations can make more informed tactical decisions about individual employee development, succession planning, and recruitment. Scenario-based compensation planning also allows companies to assess the cost of growth and test different compensation packages.

Computers In Personnel Ltd
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