The Challenge for HR Professionals: Using workforce analytics to support business strategy and fact-based decision-making

2015 National EMSI Conference

September 23, 2015

Welcome

Lindsay Scott

Principal, Career Practice

Pay and Performance – Workforce Rewards

Buck Consultants at Xerox

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Today’s discussion

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The Situation: What’s going on in the market

The Challenge: Issues our clients are facing

The Solution: Integrating internal and external analysis

Workforce Intelligence: Analytics for strategic decision-making

The Situation: What’s going on in this market

The need for analytics-driven workforce planning and forecasting is increasing in most organizations

29% expect a growing proportion of contract and temporary

employees.

43% indicate that obtaining human capital and optimizing

human capital investments will be the biggest financial

challenges over the next 10 years.

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69% of HR professionals expect their organization's workforce to

grow in 10 years.

Critical gaps in capability and tools mean that less than 20% of organizations are ready to respond

Activities that HR professionals

identified as highly important,

but that their organizations are

not adequately prepared to

do include:

• Identifying and filling talent gaps

• Forecasting future talent needs

• Leveraging HR metrics

• Conducting workforce planning

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Source: Bersin by Deloitte: January 2013 Whitepaper – Predictions for 2013

Global workforce dynamics are also at play

Several key global workforce

dynamics are further increasing

the pressure on organizations

(especially multi-nationals)

to make advancements

in workforce planning

and forecasting:

• Emerging market growth in

China, India, Eastern Europe, and

South America

• Baby Boomers retiring

• Not enough “Business Ready”

graduates

• Free Agent Nation

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The next generation of workforce intelligence will include…

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SaaS (Software as a Service)

tools to support data

analysis

Access to workforce

analytics expanded

beyond HR

Prescribed actions

based on data

analysis

Collaborative

workforce planning

across functions

Comprehensive cost

modelling of

workforce scenarios

Strategies to leverage

remote and

contingent talent

The Challenge Issues our clients are facing

Our clients want to be able to…

Business

Leadership

Human

Resources

Line

Managers

Analyze historical workforce trends

Predict future trends using internal / external data

Model workforce choices and implications

Know when, how many, and types of people to hire

Use analytics to drive strategy and decisions

Optimize workforce capability and costs

Develop and enable global talent pipelines

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Clients are facing challenges knowing what data to look at and how to access it

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How do we

get access

to it?

What data,

metrics and

analytics

should we be

looking at?

For example:

• Acceptance rate

• Time-to-productivity

• Performance rating

• Productivity

• Total rewards cost

• Successor readiness

• Retention rate

• Flight risk

…by employee, manager, job

type, level, division, region…

…historically, today, in the future

For example:

• Talent availability

• Competitor plans and actions

• Cost of living

• Market compensation

…by job type, level, region…

…historically, today, in the future

Wealth of internal workforce data, difficult

to access

Wealth of external market data, difficult to

access

Clients are also facing challenges of having the right skill sets to make findings actionable

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Do we have

the right skill

sets to drive

actionable

workforce data

analysis?

Knowledge / skills / abilities frequent in HR:

• HR operational knowledge

• Talent management program delivery

• Business, performance, and service

understanding

Knowledge / skills / abilities frequent in IT:

• Systems and data flow expertise

• Data analysis for errors/discrepancies

• Project/implementation management

Knowledge / skills / abilities required to

analyze workforce data and develop action

plans to address findings:

• Strategic business knowledge

• Data analysis within organizational context

• Financial knowledge and cost impacts

• Project phasing/roadmapping

• Change management expertise

vs

The Solution Integrating internal and external analysis

Workforce intelligence solution

Identify key questions

and workforce

concerns

• HRIS Core

• Absence management

• Time & attendance

• Talent acquisition

• Performance management

• Benefit / retirement

Build business case

for investment

Recommend

Decisions and

Actions

Technology + Consulting

Identify and source

data for analysis

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Information +

• Labor & economic market data

• Population & demographics

• Job postings

• Recruiting optimization

• Competition for talent

• Commercial real estate market

• Educational institution profiles

• Weather & climate data

Inte

rnal A

naly

sis

E

xte

rnal A

naly

sis

Identify key metrics for

measurement

Key driver analysis – Turnover

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Workforce Intelligence Analytics for strategic decision-making

The situation

Optimize the locational delivery of service center

support

• National Fortune 1000 services firm with shared

service centers in 4 geographically diverse cities

• 12 shared services positions including customer

service, office / admin, and general office

management

• Shared service staff located in multiple facilities

within each city

Location assessment included a number of

dimensions:

• Workforce

• Local economy

• Market demand

• Industry competition

• Real estate market

• Educational market

• Transportation

• Weather

Objective

Organization

Scope of

Analysis

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Company profile – Headcount and costs

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How do the 4 service centers’ workforce

compare?

Service Center Jobs / Employment:

• Unique jobs within the 12 SOC’s range

from 52-149

• Total service center employment 3,600

• SC-4 has 41% of employment base

• 70% + employment base is female

Service Center Compensation:

• Varies both due to market and position mix

Prime Working Age Population:

• Company share of prime working age

population (20-44) substantially higher than

local market

Company profile – Real estate assessment

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How do the 4 service centers’ facilities /

infrastructure compare?

Service Center Real Estate:

• 16 Service Center locations in 4 cities with nearly

710,000 square feet of floor space

• SC-2 has smallest city footprint, SC-4 the largest

• Company floor space and cost vary significantly

by location

• Differential market vacancy rate may be an issue

15% Vacancy

Threshold

Role profile – Customer service rep

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How does the service center

workforce compare for a single role?

Service Center Headcount:

• SC-1 headcount for CSR lowest

• SC-2 headcount for CSR highest

• Headcount trend reduced in 3 SC’s

Service Center Turnover:

• SC-2 voluntary turnover is much

higher than the 20% target

• SC-3 retention is improving

• SC-1 turnover is not improving

• SC-4 is role model for retention

20% Target

Turnover

CSR role – Labor cost vs market

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Competitive Market Comparison:

• Pay is much higher than market for

SC-1 and SC-4

• SC-2 & SC-3 pay is in EMSI range

Company pay is “fully competitive” when between 90% - 110% of the

comparable market median

EMSI vs Survey Market:

• Customer Service Rep is a SOC role

• Surveys typically have 3 unique jobs

within the CSR SOC role

• EMSI distribution represents entire

market; surveys represent a subset

• Remember peer competitors

CSR role – Labor market supply vs demand

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What is the condition for the CSR

labor market in the 4 service

center markets?

Labor Availability:

• Very large SCO-1 labor supply but

growing very slowly

• SC-3 labor supply large and

growing quickly

Market Demand vs Supply:

• Monthly postings & monthly hires are

independent measures of labor demand

• Ratio of labor supply / labor demand

measures labor tightness

• CSR markets are tightest in SC-2 & SC-3

Local economy – General

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How might general economic

conditions influence workforce and

siting decisions?

Indicators of employment

Measured relative to percentage growth

for 4 city average:

• City-1 slowest growth historically but

improving

• City-3 all green < 0.2% + - 0.2% > 0.2% Key:

City -1 City -2 City - 3 City - 4

Labor Force

Employment

Unemployment

Labor Force

Employment

Unemployment

Annual Growth 2005 - 2014

Annual Growth 2013 - 2014

Trends in unemployment

Full employment economy typically defined

as 5% unemployment rate:

• All 4 cities have large drops in the

unemployment rate

• Historically City-2 & City-4 have lower

unemployment impact

• Three cities are near 5% threshold

Findings and recommendations

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Objective – optimize the locational delivery of service center support

Service

Centers Workforce Findings Local Market Findings

SC-2 • CSR large share of headcount

• CSR turnover high, trend unchanged

• CSR pay likely not peer competitive

• Competitive real estate cost

• Very low RE vacancy rate

• Unemployment less than 5%

SC-3 • CSR large share headcount

• Turnover near target and improving

• CSR pay greater than broad market

• RE cost very competitive

• RE vacancy rate greater than 15%

• Economy indicators “green”

SC-4 • Largest headcount & number of jobs

• Turnover is low and improving

• CSR pay greater than broad market

• Largest area footprint

• Low real estate vacancy rate

• Unemployment less than 5%

Recommendations:

• Investigate closure of SC-2 and consolidation of support to other centers

• Investigate selling / leasing SC-2 company buildings in “hot” real estate market

• Investigate expanding SC-3 for CSR role; assess hiring market impact on timing,

and determine cost to expand / consolidate existing real estate

• Investigate real estate consolidation in SC-4 and selling / leasing excess space

• Determine drivers of SC-4 retention success

What competencies does HR bring to these analysis?

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Competitive

Assessment

• Understanding the typical composition of jobs

and “peer” market value within a broad SOC role

• Enhances the market estimate of labor costs

based on the “mix” of jobs within a SOC role

• Identify SC-2 “Top Performers” and determine

transfer potential

• Potentially lowers SC-3 hiring costs, maintains

key skill levels, enhances supply of “mentors” for

new hires

Performance

• Determine the key drivers for low voluntary CSR

turnover in Service Center 4

• Use the learnings from the key driver analysis to

enhance retention at other service centers

Culture

Questions

Lindsay Scott

Principal, Career Practice

Pay and Performance

Buck Consultants at Xerox

Lindsay.scott@xerox.com

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