Monthly Archives : December 2018

compensation and benefits

TOTAL REWARD: Fully loaded

By: Jennifer Paterson, Employee Benefits; London

Many diverse elements can be included in an employer’s total reward strategy, adding up to a valuable employment package, says Jennifer Paterson

Total reward has no hidden meaning – it does exactly what it says on the tin. But in some cases, the term is used to describe total reward statements that are used alongside perks such as a flexible or voluntary benefits scheme.

However, a true total reward strategy comprises much more than this, including salary, bonuses, pension and healthcare benefits, plus wider aspects of the employment package such as training and development, the working environment, and an employee’s work-life balance. These can all add up to a total value of everything staff receive as a result of working from their employer.

The concept of total reward began in the 1970s and 1980s, growing out of the term ‘new rewards’, says Peter Reilly, director of HR consultancy at the Institute for Employment Studies (IES). “One of the characteristics of that new reward movement was to take a much broader view of what reward constituted rather than simply concentrating on the tangible, extrinsic rewards,” he says.

In the context of total reward, the employment proposition has historically been split into four categories: pay, benefits, career development, and the work environment. Over time, the boundaries between these have blurred. Julia Turney, head of benefits management at Jelf Employee Benefits, says: “Total reward today encompasses a large range of offerings, broader than the standard four brackets, including the nature of the leadership, corporate social responsibility, and work-life balance.”

There is no single approach to constructing a total reward strategy because different employees will be interested in different aspects of the proposition. The IES’s Reilly says: “A catering assistant or cleaner may be attracted to an organization primarily because of the intrinsic rewards, pay and good working hours, whereas for professional staff, like engineers, the principal issue will be the career offered and CV building. In the public sector more than the private sector, it is the mission or value of the organization. Staff work for [companies like] Selfridges or Virgin because they like the name and what it conveys. Equally, staff might work for a charity like Save the Children or Oxfam because they believe in what it does.”

Andrew Erhardt-Lewis, senior manager at Deloitte, adds: “At Google, total reward would include the fact that staff can wear jeans and can bring their dog into work.”

Career development

The opportunity for career development is an important aspect of total reward for staff looking to add value to their future. Chantal Free, director and head of reward, talent and communication at Towers Watson, says: “Employees are much more self-centric, and it is a lot more about them and their lives. The deal with the employer is that they know they are not going to be together for ever, and what [employees] want to get out of the employer while they are together is fair reward for [their] contribution, but also the right skills and capabilities to make them marketable for their next job.”

During the recession, learning and development opportunities were often among the first things to go, but these have now started to return, says Mark Childs, director of Total Reward Group. “Longer term, as employers have attached more importance to experience rather than qualification, a lot more staff are going through on-the-job training,” he says.

Another important element of total reward is the working environment and organizational culture. For instance, at private equity firm Apax Partners, staff have access to a free breakfast and lunch every day. Erhardt-Lewis says: “The climate, or the culture, at an organization can engage staff and pays for them in the non-traditional sense.”

Jelf’s Turney adds: “I had a client that moved to a new office with a gym on site, subsidized canteen, plants and a wide, open place to work. It had a lot of feedback from people coming through the office and that was a big thing – to create a pleasant place to work.”

Helping staff achieve a good work-life balance is another part of total reward. This can include flexible working and career breaks. Free says: “This plays to the diversity agenda. If an employer has the right environment and a nice work-life balance, it can look at issues more flexibly and have more diverse talent.”

In the current economic climate, the concept of total reward strategy is coming to the fore, especially as employers widen their packages to include more than traditional pay, bonus and perks. Stuart Hyland, UK head of reward services consulting at Hay Group, says: “Organizations are thinking how to motivate staff and get more return on investment from their people. A lot of the stuff in that intangible bracket can be fairly low-cost development work. This is attractive when budgets are low but an employer is aiming to improve engagement and motivation.”

Total Reward Group’s Childs adds: “Employers will be reluctant to hike up base salaries. Instead, they will try to differentiate themselves through a total reward offering.”

The term total reward is often confused with total reward statements, which are a tool to communicate the value of a package. Mark Carman, director of communication services at Edenred, says: “A total reward statement is the pinnacle of the communications programmed, but it is also worth researching employees’ perceptions of their benefits.”

Total reward statements carry details of salary, pension contributions and the benefits an employee receives, but the concept of wider total reward can be harder to communicate. IES’s Reilly says: “It can be communicated well at the attraction stage, but it is harder to do while in employment.”

A total reward strategy should also be aligned with an organization’s brand and culture, says Hyland. “Many organizations are trying to ensure their reward practice is aligned with company performance.”

If you read nothing else, read this

* Total reward has traditionally been divided into four categories: pay, benefits, learning and development, and working environment.

* It takes account of the fact that no two employees are seeking the same thing from their employment proposition.

* Total reward will see a resurgence as the UK emerges from the downturn.

* A true strategy is very different from just offering total reward statements.

diversity and inclusion

Making the business case for Diversity and Inclusion: Short case studies and research papers that demonstrate best practice in HR

Authors(s): Tracy Morley, (Reed Business Information/XpertHR, New Providence, New Jersey, USA

Over the past few decades, the US workplace has undergone a significant transformation. It continues to become increasingly diverse, and organizations are using this to create a competitive advantage. More than simply acknowledging differences, organizations with successful diversity and inclusion programs are embracing the different qualities in their workforce and learning how to leverage them to support organizational objectives.

It is important to understand that diversity and inclusion are two different concepts:

  1. Diversity generally focuses on the full spectrum of differences and similarities between individuals. It goes beyond equal employment policies and includes other things such as work experiences, values and beliefs, life experience and personal preferences and behaviors.
  2. Inclusion is what an organization does – the actions it takes – to ensure that individuals feel welcomed, supported and valued as a member of the team.

Becoming a diverse and inclusive workplace requires a commitment of time, energy and resources on behalf of the employer. Securing approval for those resources requires making a compelling business case demonstrating that the business results are greater than the resources needed to invest in the initiative.

Determine the business need and engage executives

The first step in making a business case is to identify the business problem, need or opportunity to be addressed. This is a critical step and should be given careful thought as it sets the tone for the project and, if done correctly, provides a clear picture as to how the solution to the problem impacts the organization’s needs.

The next step is to assemble a team to research the costs, benefits and challenges of the proposed initiative. In addition to HR, it is important to have representation from various departments such as Operations, Finance and IT, as well as other departments and individuals that may be stakeholders in a diversity and inclusion initiative.

Implementing a diversity and inclusion program requires buy in and support from the organization’s executive leadership. According to Deloitte Consulting’s (2017) Global Human Capital Trends: Rewriting the rules for the digital age, diversity and inclusion are now a CEO-level issue. CEOs view having a diverse and inclusive workforce as important because it affects the organization’s brand, reputation and performance. This is good news for HR professionals.

Quantify the benefits and costs

The benefits and costs of a diversity and inclusion program should be quantified as accurately as possible and are usually categorized as either tangible (measurable in monetary terms) or intangible (subjective and not measurable in monetary terms).

Both have a different but significant business impact and can help organizations overcome some of the business challenges they currently face in an increasingly global workforce.

Tangible benefits

Tangible benefits are usually measurable in monetary terms. For example, diversity and inclusion initiatives can minimize financial and reputational costs associated with employment discrimination claims. Other examples of tangible benefits related to having a diverse workforce include:

  • Increased market share. Having a diverse workplace allows organizations to more effectively market, better serve and communicate to consumer groups from different cultures, races and religious backgrounds, which in turn may lead to increased sales and profits and access to a more diverse market.
  • Productivity and innovation. Diversity widens viewpoints and takes different ideas and perspectives into account. This can translate into creating richer solutions, obtaining better results and maximizing productivity, innovation and creativity.
  • Employee attraction and retention. Recruiting from a diverse pool of candidates increases an employer’s chances of finding the best person for the job. Once on board, employees that feel valued and respected and that are part of an inclusive work environment are less likely to leave. Doing both of these successfully can help reduce expenses related to recruitment and retention.

Intangible benefits

Intangible benefits are subjective and not measurable in monetary terms. For example, diversity and inclusion initiatives can potentially increase employee satisfaction, but how would that be quantified? Other examples of intangible benefits related to having a diverse workforce include:

  • Improved employer brand and reputation. Fair treatment is important to employees, and a diverse workforce can make an employer more attractive to investors and improve the organization’s public image.
  • A positive and healthy work environment. Diversity can lead to an atmosphere of respect, mutual understanding, tolerance and enhanced teamwork.
  • Opportunities for employee growth and development. Employees may be challenged when exposed to new ideas and perspectives and when personal growth is encouraged.

Costs of the program

The costs of implementing a diversity and inclusion program should also be quantified as accurately as possible. It is important to identify all the resources and associated costs of the resources required to implement the program, such as costs related to:

  • the use of consultants;
  • training and educating the workforce;
  • hiring independent contractors;
  • potential policy changes and related implementation costs; and
  • communicating the program.

It is also important to note potential costs associated with “execution risk” which is the risk of a plan not working or taking longer than anticipated to implement. Execution risk is prevalent when implementing programs affecting organizational change, such as initiating a diversity program.

Measure the return on investment

Once the costs and benefits have been calculated, forecast the return on investment (ROI) of the program. ROI is calculated as the benefits (or gain) from an investment, minus the cost of the investment, divided by the investment costs and multiplied by 100:

ROI = (Benefits (or Gain)from Investment−Cost of Investment)/(Cost of Investment) × 100ROI = (Benefits (or Gain)from Investment−Cost of Investment)/(Cost of Investment) × 100

The forecasted ROI can make or break a business case for a project.

Here is a practical example to illustrate

Through employee survey results, Acme, Inc, determined its employees did not feel the organization promoted a diverse and inclusive workplace. HR conducted follow-up focus groups and determined the organization should implement a diversity training program for all employees and forecast the annual benefits and costs of the program as $336,418 and $61,700, respectively. Using this information, the ROI is:

ROI = ($336,418 − $61,700)/$61,700×100 = 445%ROI = ($336,418 − $61,700)/$61,700×100 = 445%

This means Acme can expect to see a net return of $4.45 for every $1 it invests in the diversity training program.

Make the business case

The last step is to present the business case for why implementing a diversity and inclusion program makes good business sense. When presenting the business case to stakeholders, make sure to:

  • identify the business problem, need or opportunity being addressed by the diversity and inclusion program;
  • list the benefits, tangible and intangible, of addressing the business problem, need or opportunity;
  • describe the alternative actions considered and the reasons why certain options were selected or rejected;
  • describe comparable diversity programs implemented by competitors or industry leaders and their business results;
  • discuss the required investment and timeline needed to implement the diversity program;
  • share the ROI analysis for implementing the diversity and inclusion program;
  • list actions that should be taken subsequent to introducing the program to ensure the initiative is implemented as planned;
  • plan for measurement of the actual business results generated by the HR initiative and the timeline for the measurement; and
  • plan for reporting the business results of the program to decision makers.

Measure outcomes and communicate success

Measuring and effectively communicating the short- and long-term successes of the diversity program can help improve employer brand and recognition. To help understand what is, or is not working, consider comparing year-to-year figures for the following:

  • hiring statistics to see if there is an increase in hiring for minority or other identified groups of employees;
  • employee survey results to see if employees see improvements in diversity at the workplace;
  • turnover to determine how many minority or other identified groups of employees leave the organization; and
  • retention to see if there is improvement in retaining minority or other identified groups of employees.

It is important to demonstrate the ROI of the diversity program and how important it is to the business. There are a number of different ways to communicate the program such as town hall meetings and community presentations, press releases, brochures, infographics and pamphlets. Regardless of the method used, make sure that your communication tools represent the diversity and inclusion the organization is trying to promote.

talent analytics

Human capital analytics: The Winding Road

By: Morten Kamp Andersen. Journal of Organizational Effectiveness; Bingley

This paper will explore the question: human capital analytics (HR analytics) – are we there yet? It will seek to clarify what is meant by “being there yet” and it will argue that the most positive proponents for this field are way too optimistic about the current state and what impact it will have on HR in the short to medium term but that the long-term outlook remain positive for the field.

  1. Where is the finishing line?

At a point in Lewis Carroll’s book Alice’s Adventures in Wonderland, Alice is lost and asks a cat which way to go. The story continues: “That depends a good deal on where you want to get to,” said the cat. “I don’t know where –” said Alice. “Then it doesn’t matter which way you go,” said the cat.

As with Alice, there has been much debate about where HR analytics is going. And without knowing where we are going and what to aim for, it is difficult to assess if we are there yet.

About five years ago, the first of many HR analytics conferences started to see the light of day and today it is near impossible to attend any respectable HR conference without analytics being the center of attention. The main message from these conferences is the same; HR analytics will transform and revolutionize not only what HR does but also the impact HR will have on organizations. HR analytics will bring HR to “the table” as is the common phrase. The finishing line is set quite ambitiously.

Looking outside of HR the view is quite different. When CXO’s are surveyed about their thinking about HR they all agree on three things: talent is on top of the agenda (although not as high as HR leaders tend to think), HR analytics is potentially value-added (although most leaders do not really know what they will get) and finally HR is if anything moving further away from “the table” than closer (due to the higher relative importance of technology). With them, the finishing line is more ambiguous and overall less ambitious.

Whichever of the two finishing lines is used it is fair to assess that we are not there yet. A few very large multinational companies have set up large HR analytics division and have embarked well on the journey. Many of their cases and results point to interesting and not least value-added findings. Some industries also appear to be further than others with banks and technology being particularly advanced especially in the USA and UK. Outside of the few large companies the situation is different. Here the challenge is to get out of the starting block. Indeed, outside the exclusive few, HR analytics is fairly immature. The next section will explore why.

  1. Multiple reasons behind the problems

There are multiple reasons why HR analytics by and large is still in its infancy, which is also why there is no quick fix. Before the reasons are explored in more detail, it is worth remembering that HR analytics is a young field and therefore by its nature is in its infancy. However, I believe that HR analytics are further behind what is reasonable to expect and where it should be. These reasons can be divided into four categories, which will be elaborated below.

2.1 Maturity

Maturity covers reasons, which will be solved over time but are necessary steps to improve the quality of HR analytics. Such reasons include lack of the implementation of good software solutions, bad data/lack of proper data, too few resources as well as lack of organizational wide buy-in.

All those issues are important but especially bad data is a big problem. Many studies have shown that bad data quality cost a lot for organizations. This is true in all parts of the organization but for some reason this is in particular true for HR Data.

There are four reasons behind why bad data happens:

Lack of a coherent data strategy. Having a purely operational approach to your data is probably the biggest reason behind bad data.

Assume that analytics software is the answer. HR analytics software is great, but it is simply just another data collection tool, albeit one with more potential than most. To get the most out of HR analytics you must go through a strategic data process and decide what data are of strategic importance to you and how they ideally look like.

Garbage in, garbage out. This one is often overlooked although it should be clear to everyone. Your data are only as good as the component inputs.

Lack of critical data sources. While the quality of the data is critical, what data sources you incorporate is equally important.

Many good HR analytics projects have failed from the beginning due to bad data as analysis – and decision making – based on bad data is meaningless.

2.2 Mindset

The mindset issue is really about a lack of strategic thinking, but not in the traditional way. It is recurring issue that HR must be more strategic. This has been highlighted in books, research and studies for more than 25 years. In relation to HR analytics this is, however, a twist.

HR analytics can deliver as many facts as it is even possible to conceive. HR analytics can also deliver a lot of interesting information – i.e. converting data and facts into information. But the most difficult thing – and the most value-added on any data journey – is to find and convert the right information into strategic actionable knowledge. And the only way you can generate this knowledge is to truly understand the business and strategy of the company, know what the primary workforce drivers are behind delivering on this strategy and finally understand how to get information and convert it into strategic actionable knowledge. This ability – or mindset – is not always present.

2.3 Organization

Many HR analytics functions have been moved around in HR departments in re-organization initiatives as organizations have tried to understand where HR analytics is best fitted within HR. There has even been a lively debate within the HR analytics community itself about whether the function should be located within our outside of HR.

The proponents for moving HR analytics outside of HR advocate that HR analytics will lose its strategic potential as HR in many organizations are more operational and tactical rather than strategically focused, HR does not have the right capabilities (data analytics skills) and will struggle to attract the right ones as talents with those capabilities look to work within BI functions, HR does not have ownership of all the relevant data as many reside in finance (payroll), IT, legal and sales and that efficiency gains in having one big analytics/BI function are greater than having people sitting in HR, marketing, finance and operations all doing the same thing.

The proponents for keeping HR analytics within HR say that nobody else care about HR data and insights (as much as HR do), it takes HR knowledge to interpret and convert HR data to knowledge and information, it may make HR more data driven and improve HR impact on business, data ownership sits naturally in HR and finally it will increase the likelihood of the analytics actually being used.

But even within HR the function has moved a lot within many organizations. In one particular case, the organization had HR analytics report to compensation, talent and engagement at various times within an 18-month period.

This debate is not complete and while it is good that organizations think hard about how best to utilize the skills and output of HR analytics, the downside is that it creates confusion, lack of permanent ownership and identity issues for the people involved.

2.4 Competencies

HR analytics is complex, and the range of competencies needed to do it well reflects this. They are unlikely to be found in one or two individuals, which is why the team must have a broad composition or be assembled on a project basis. I therefore propose that you assemble a team with a range of competencies. Specifically, I suggest six competencies (in random order):

Excellent statistics and numbers skills: good analytics requires excellent statistics and numbers skills. You can get far with simple regression-, factor- and t-test analysis skills but at other times, you will need skills in more advanced statistics.

Strong data management skills: you will quickly get stuck if your data are not clean, good and have a strong governance structure around it. Those and many other data management issues are essential for good analytics.

Captivating storyteller: analytics – even predictive – will only add value if a decision is made on the back of it. It sounds trivial, but data does not speak for itself and to move a decision making into a decision you must create a compelling story around it.

Visualization techniques – Ability to visualize your results: studies on cognitive load and other such issues show that if you give decision makers too much data, they will either not make any decision or make the wrong one.

Strong psychological skills: there are many reasons why strong psychological skills may be the most essential of all six. It is partly because you will deal with your data better if you truly understand terms such as bias and overconfidence. Partly because you will understand how to make more impact with your data but also, because your data have not meaning if you do not understand how to convert information to knowledge, which requires an understanding of psychology.

Understand the business: a final skill, which is most often not present as much as it should be, is the simple but powerful skill of understanding the business. This requires you to fully understand what the customer value proposition is is, what the strategy is, key differentiating factors, financial situation and more.

One of the reasons why HR analytics is not there yet and has been slow to progress has been the lack of varied competencies at hand. It requires a significant sized department to have many of all the above competencies. The answer is instead to build around them by building internal coalitions.

  1. Final thoughts

HR analytics is on a great journey and there is no doubt that the field is much further now than four years ago. The difference will be even more impressive in four years from now. HR analytics will, however, do itself a great service if the finishing line is not to “transform HR” or to “revolutionize the impact of HR,” but instead to “improve the quality of decisions around people in the organization.” While the latter may seem less ambitious it is in my view closer to what is going to be a reality. Instead of feeling like a failure it will set HR analytics up for success and will lead to potentially large shareholder value creation.

 

HR analytics

The Ball of Wax we call HR Analytics

Author(s): Julie Fernandez, (Information Services Group (ISG), Stamford, Connecticut, USA

It is not far-fetched to imagine a company using recruiting technology to help it find potential candidates for specific jobs. And it is not science fiction to imagine that the technology is based on machine learning, which involves identifying and repeating certain patterns and applying algorithms. Does this mean the software could, therefore, “learn” that most candidates hired come from a specific school or town? Does this encourage bias – or even profiling?

The potential for bias is certainly there, but does it have greater influence than the biases inherent in people-driven decisions?

First, it is important to recognize that human judgment as it is used today in recruiting is flawed. Even the most careful recruiter is drawn to certain nameless qualities. And, even if you ignore personal experience and bias in human recruiters, the battery of tests and selection methods available to HR teams today cannot be considered “fact-based” indicators of performance. Because so much of what enterprises mean when they talk about performance is unexplainable, they use two terms to measure how someone might contribute to the workplace:

  1. Performance indicators: These include sales, productivity and satisfaction metrics and attrition and promotion rates.
  2. Predictors: These include background/experience, test scores and interview performance.

These kinds of people analytics – also known as talent or HR analytics – can tell us a lot, and machine learning tools and techniques are evolving all the time to tell us even more. We are not far from having apps and products that can conduct sophisticated analysis to improve the speed and quality of finding and evaluating candidates for hire. No less than an army of data engineers, statisticians and dataphiles are racing to create competitive advantage in talent acquisition – better results with data-driven intelligence.

Armed in the past with little more than an applicant tracking system, are recruiters ready for the leap from being data-deprived to being artificially intelligent? For many companies, sourcing and attracting talent begins with casting a wide net and staying connected in the candidate pool. Social media channels have recently made it possible to access unprecedented volumes of data about the employment skills and experiences available in today’s workforce. The talent marketplace is exploding with software and services that aim to improve sourcing using data-driven analysis to perform candidate matches, automate rankings, short-list and pre-screen candidates. The dramatic impact to these top-of-funnel sourcing activities promise as much as 57 per cent efficiency[1] to the formerly unstructured work of narrowing down candidates, all the while yielding better quality and diversity outcomes.

Companies today are quite comfortable evaluating tools and services for the user experience, for case studies in their industry and for estimated results to justify value for a business case. Without any real data expertise, what is the likelihood that HR buyers will go the extra mile to consider the methods, biases and algorithms that statisticians and purists would consider sound and defensible enough to act upon? Embedded HR analytics begin with a foundation or parameters that establish what makes a good hire, so alignment on this foundation is critical. Beyond the basic data premise, HR should also become familiar with various techniques that are used to improve the validity of results from any predictive analysis that is being calculated and applied, including the following:

  • At the top-most level, logic should identify and compare characteristics of best and worst outcomes, testing for statistical significance to focus on what is meaningful.
  • Next refining the analysis to subsets of data that determine results within the same unit/group (industry, field, business, geo, etc.) and job will yield more custom results. Adding credentials and experience that are industry-specific apply to certain job types or provide deep geographic context will resonate to companies seeking competitive advantage for talent in those areas.
  • Advanced methods should be used to ensure relevance and root out bias including techniques, such as regression analysis to identify and isolate certain characteristics or outside influences
  • Finally, a methodology that incorporates a look-back and adjustment based on hire, attrition and promotion results can be used to bring the analytics full-circle.

Establishing rule-driven programs to identify new talent or narrow down best-fit candidates has received a great deal of attention for its potential to drive efficiency in the search. Reducing time spent by recruiters to identify a top slate of candidates accelerates the search for talent and produces quantifiable value measured in cost-per-hire and time to fill. It is easy to get excited and lose sight of the effectiveness objectives – to identify hires that are best-fit for the position and who thrive in your company’s culture.

Another top problem area that HR professionals want to use people analytics data to solve is that of employee retention, or voluntary turnover, which XpertHR’s Michael Carty asserts is the number one data priority area for HR beginning in 2018[2]. XpertHR also cites voluntary resignation rates that have risen from 8.9 per cent in 2012 to 13.1 per cent, reflecting the strengthening labor market. Separately, blogger Maren Hogen[3] paints an even starker picture for making employee retention an HR priority. Of her nine alarming employee retention statistics, four indicate that as much as a third of all employees are at risk, whether newly hired or longer-term employees:

  • One-third of new hires quit their job after about six months.
  • One-third (33 per cent) of employees knew whether they would stay with their company long-term after their first week.
  • Some 35 per cent of employees will start looking for a job if they do not receive a pay raise in the next 12 months.
  • One-third (33 per cent) of leaders at companies with 100 plus employees are currently looking for jobs – even those in senior leadership aren’t immune to leaving.

Historically, companies have used exit surveys or termination reason codes to try to describe why employees leave, but how much more effective would it be to be able to predict which employees are most likely to leave the company? Getting an early heads-up provides management a chance to act to prevent its top talent from leaving while preparing for succession or backfill. As companies look for data-driven insights that will help prevent talent loss, we are seeing a wave of provider tools from the likes of Vizier, Otipo, Deloitte and WNS that are focused on workforce retention. Still, others are waiting more patiently for their global HCM software (Workday, SuccessFactors, Oracle Cloud, etc.) to advance from dashboard HR metrics to a more robust suite of analytics as part of the integrated HR technology suite.

The appeal of plugging in and turning on a product that taps into existing source data, displays visual HR metrics, and then predicts successes and relevant outcomes is captivating. However, the tremendous swirl of HR technology innovations means there are many stages to maturing from HR data created painstakingly for one-off requests to a culture of visual HR metrics at-the ready, and then beyond to a consumer of predictive analysis available to support key HR decisions. Even the savviest of dataphiles will recognize the scrutiny that you will be met with along the way:

How much competitive advantage can you gain from a commercial package?

The newness of having and using data to inform and even predict HR outcomes is powerful and has already created a compelling call to action for HR professionals. But as commercial toolsets are built, they must anticipate data sets that will be available and relevant to reaching insights about HR turnover, recruiting, absence, performance, pay and more. You might wonder if these commercial modules can address your company’s unique employment needs with out-of-the-box algorithms or whether they are destined to become a feature that is table stakes in your HR technology roadmap. Until machine learning makes it possible for outcomes to evolve separately for each data set and problem statement, you may find your data-driven insights look and act much like that of your peers.

What can we analyze and predict without clean data, big data and concerns for data privacy?

HR has long been challenged with having and using any data or metrics at all. Only recently have global HCM systems become a reality for HR organizations with more than a few thousand employees, prompting unprecedented levels of data aggregation and cleanup. Even so, many special-purpose data sets (absence, benefits, recruiting, learning) still reside in point solutions or external data sources that may need to be linked or scrubbed for use. Supposing quality data are available, is there enough of it to ensure your outcomes will be relevant? A Wharton School Professor, Peter Cappelli, put it bluntly in the title of his article in the Harvard Business Review “There is No Such Thing as Big Data in HR[4].” Simply stated, solving HR challenges at a scale of hundreds or thousands of candidates or employees is one of the reasons that tapping into large record stores across clients or from giants like ADP is attractive. New concerns surfacing just this year question whether it will even be possible to access HR data, stored and used for analytics purposes. How do data privacy concerns impact the use of personally identifiable information (PII) with recruiting or other HR tools that use machine learning? The European General Data Protection Regulation effective May 2018, along with a host of local data privacy regulations, will bring increasing scrutiny to the rights of employers to aggregate and leverage personal data without express consent from employees and candidates.

Can I reasonably control for bias and influence that are programmed in?

This question comes at a time when social media bigshots Facebook and Twitter are being criticized for programming universal bias in their display of content and a suspicious refusal to share the underlying algorithms. In time, it may not be hard to assess whether institutional bias was present. HR professionals should take note of the issues raised by this broad example. First, the premise of bias alone is enough to cast doubt on company practices, intent and reputation which in people matters can have grave consequences. Second, there are no clear precedents for determining who is accountable, if there was intent and whether there is fault or damages. To address these perceived risks, HR professionals will want to adopt measures that mitigate the risk of unintended bias by ensuring due diligence or seeking a means to certify or protect against allegations stemming from using the output of HR analytics.

Because machine learning and artificial intelligence programs are rules-driven, they may someday be able to identify and flag bias when and if it shows up, essentially overturning human decision-making. But when, and under what circumstances, will human judgment overturn an automation result? If the automation recommends the hiring of a group of recruits who then promptly leave the company, how will humans manage the fallout? Is it defensible to de-select a number of candidates based on a model that predicts their fit and success for the position? And if predictive analytics are responsible for sweetened pay or benefits to an at-risk employee versus his/her peers, how does HR ensure it is on solid ground in equitable pay and opportunity to its broader employee base? Can employers broadly trust the outcomes of predictive tools and programs when even the largest and most resourceful tech companies falter, as was recently reported that Amazon scrapped its AI recruiting tool that showed bias against women[5].

One thing is certain – as HR departments become increasingly reliant on advanced technologies and the numbers they produce, they also will experience the need for new skillsets required to deploy and use them. It is a difficult-to-find combination that bridges technology and ethics and that can oversee the monitoring, auditing and enforcing of such automation. This is just one of several new roles arising from the adoption of a digital workplace. As HR departments race to deploy cloud technologies, robotics process automation, and HR analytics there is a growing need for a center of expertise (COE) dedicated to HR data and technology. Here, strong HR process knowledge is combined with a penchant for HR data and technology to own HR data cleansing, harmonization and maintenance, as well as oversight of any teams or providers responsible for your strategic HR technology platforms. Armed with the knowledge and inner workings of all of your best HR data sources, the HR Tech COE is an ideal place to focus resources on workforce analytics to drive business insights and recommendations.

We may be just at the beginning of the debate about tools that thrive on the use of more and more data points to make what have historically been “gut” decisions. It would be wise to get clear now about the implications of advanced analytics on recruiting and people management.

workforce planning

Workforce Planning: One of the Most Challenging HR Compliance Issues for 2018

Author(s): Beth Zoller, (XpertHR, New Providence, New Jersey, USA)

Each new year brings changes in the workplace, government, society, culture, technology and the legal landscape that translate into challenges and obstacles for employers. To gain insight into these challenges, XpertHR conducted a survey in October 2017 soliciting input from over 1,000 HR professionals on their view of the most significant compliance challenges in 2018.

Workforce planning amid an evolving workforce

With an evolving workforce and changing societal demographics, workforce planning appears to be one of the top challenges for employers. In today’s increasingly global environment, twenty-first-century employers need to respond to both external and internal factors that shape and impact the recruiting, hiring and retention of workers.

The use of technology and mobile devices allows workers to communicate in more effective and productive ways with employers, managers, coworkers, clients and customers. Brick-and-mortar offices and the traditional 9 to 5 workday is quickly fading, and we continue to see an increase in flexible working arrangements, remote working and a focus on achieving a greater work-life balance. Employers are witnessing the rise of the gig economy and alternative work arrangements, as workers are no longer swayed by the promise of a steady paycheck and benefits and crave freedom and flexibility. Notions of automation, smart devices, robotics and artificial intelligence are beginning to disrupt the workforce and challenge traditional workers.

Hiring today is challenging and complex amidst the many laws that restrict an employer’s ability to gain valuable and insightful information into job candidates. Additionally, there also may be a disconnect between the skill sets of individuals seeking jobs and the positions an employer needs to fill.

Generationally, millennials and Generation Z have joined the workforce in record numbers and are seeking new ways of working and have different expectations of their employers. Further, employers must confront and account for an aging Baby Boomer population, increased health-care costs and making plans for succession and retirement.

XpertHR’s survey confirmed workforce planning amid the evolving workforce as a top challenge:

  • almost 50 per cent of respondents said this was among their top three workplace challenges;
  • 52 per cent of respondents viewed increasing employee engagement, morale and satisfaction as very or extremely challenging;
  • 48 per cent viewed retaining employees as very or extremely challenging;
  • 47 per cent were very or extremely challenged by succession planning;
  • 46 per cent viewed aligning talent retention strategy with business objectives as very or extremely challenging;
  • 44 per cent viewed upskilling employees for future responsibilities as very or extremely challenging;
  • 43 per cent viewed managing performance and providing professional development opportunities as very or extremely challenging;
  • 29 per cent stated that joint employment and the changing definition of the employer was very or extremely challenging; and
  • 28 per cent were very or extremely challenged by flexible working/telecommuting.

Respondents stated that “growth and retention”, “capacity planning, talent pipeline development”, “retention in a very competitive workforce” and “attracting and retaining skilled labor”, “the ever-changing laws and keeping up with them”, “recruitment of high performing individuals”, “providing training related to the changes” and “the declining and aging population in rural locations” were top concerns. Additionally, one respondent noted that “it goes beyond compliance — it’s how to create a transformative HR strategy”. Another respondent revealed that, “employee engagement/organizational health will continue to be a top focus for us”.

What an employer should do

Given these challenges, it is important to be proactive and prepared. An employer needs to be able to effectively plan its workforce to make sure that it has the right people for the right jobs at the right cost to be successful in a global and competitive marketplace. An employer also needs to take into account the unique factors that affect its business and shape its workforce.

To begin, HR should identify key stakeholders and members of management in different areas of the business and open up communications with them to understand the organization’s short- and long-term goals and how employees can play a role in bringing them to fruition. It is also critical to understand how to effectively use data throughout workforce planning, from recruiting and hiring to performance management to retention. Good data analytics can help to understand where and how to focus efforts and can assist in tracking progress. Primary goals should be to increase productivity and efficiency in the workplace and keeping costs low.

With respect to hiring, an employer should:

  • focus on looking for experience in the industry, but also focus on the skills, competencies and talent individuals may bring to the table that can benefit the organization;
  • keep budget and business goals in mind;
  • consider whether when and how to use gig and contract workers as part of the workforce and what the primary objective will be (i.e. cost savings);
  • understand how technology and mobile applications can aid recruiting; and
  • be aware of new laws that ban an employer from seeking salary history information or criminal history and make sure recruiting is legally compliant.

With regard to training, an employer should encourage employees to continue professional development and work with them to develop long-term skills. A focus on leadership and development, along with mentoring and coaching programs, may provide support and guidance to employees who will be able to move into key roles in the organization. An employer can help close the talent gap by creating an atmosphere centered on education, professional development and leadership opportunities throughout an individual’s career. Employees should be able to highlight their key strengths and competencies and work to build on them for the better of the organization.

An employer should consider how it will handle performance management and reviews, what its goals will be, who will conduct the review and how often reviews will be conducted. It is important to evaluate employee retention and engagement and why the employer may be losing employees, which employees it is at risk of losing and how to retain them (i.e. increased compensation, better benefits, better work–life balance).

It is important to listen to feedback from employees, whether it be through informal meetings, employee engagement surveys, etc., to know what is, or is not, working in terms of employee engagement and retention as this can provide valuable information to employers on how to improve.

With aging Baby Boomers, an employer needs to consider retirement and how employees will leave the workforce, what packages and benefits it will offer, when employees will be eligible, who will replace them and will it be possible to retain older workers in an alternative work capacity.

The workforce is often an employer’s single largest cost. Therefore, having the right people in the right place and at the right time and cost is extremely important. With proper planning, you minimize risks associated with executing a business strategy. As the cornerstone of strategic human resources, workforce planning can have a positive impact on a company’s ability to acquire, inspire and retain talent.

Workforce planning is, and will likely continue to be, a primary concern for HR and one that will require thoughtful planning and development as the workforce continues to grow and evolve.

Clear Company, HR.com (2016) “Workforce planning: a forward-looking approach to getting the right people in the right Jobs”, available at: http://info.clearcompany.com/hubfs/Workforce%20Planning.pdf