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HR professionals for a national insurer—and at many other companies—create models of metrics.
Although Nationwide Mutual Insurance Co. has no companywide database of all available HR information and no sophisticated business intelligence software, that hasn’t kept its HR executives from using workforce analytics for human capital management.
Nationwide began to adopt workforce analytics about five years ago. It started in the 5,000-employee information technology group, where a data-driven chief information officer and a savvy HR business partner collaborated to understand IT job categories and requisite skills, assess skill levels of each employee, identify skills gaps, and launch programs to address these needs.
"It was a logical progression for us. You start with the existing workforce, you get it categorized," says Gary Sorrell, vice president of HR for the IT group. "Once you know what you have, you start asking questions like ‘How good are they? What are they capable of, and what are the gaps?’ That led to more-meaningful development planning."
IT had a large learning and development budget. "We were spending a fair amount of money, but not with a robust and disciplined approach. Now we know what we spend and get better results and ROI [return on investment]," Sorrell says.
Sorrell hired Justin Taylor, who has a doctorate in behavioral research methods and applied statistics, to develop employee surveys. The analytics continues for succession planning and other programs.
About the time IT began analyzing data, HR professionals in the finance division, sponsored by the chief financial officer, began a similar effort, according to Patti Cotter, vice president of HR, who reports to the corporate executive vice president of HR. They created a competency model for the workforce and quantified skills gaps and bench strength, thereby leading to development programs, succession planning and other efforts.
For example, Cotter says, "Through an assessment process, we learned that 42 percent of succession candidates for leadership positions needed development in conflict management. That informed a decision to take all of our people leaders in finance through a development process to skill them in conflict management."
Cotter has been in HR for more than two decades, but she started her career as a general business manager with profit and loss responsibility. "You live and die by the numbers. While there are different numbers to look at in HR, it was normal for me to do this when I came to HR."
The finance function is spread throughout the company’s business units with a small corporate group, but the CFO is responsible for developing and promoting all the talent, Cotter says. Data about those workers is also spread throughout the business units in databases that don’t talk to each other. Cotter grappled with data consolidation problems.
IT and finance went a long way just using MicrosoftAccess and Excel software. That process works for several thousand entries, but at the corporate level, with tens of thousands of entries, an employee data warehouse drawing from multiple sources throughout the enterprise is needed.
"We’re maxed out," Cotter says. "We lack an enterprise HR data warehouse, and that is our primary obstacle going forward. Fortunately, we have the support of Gale King [executive vice president of HR]."
Nationwide is creating an integrated talent management system and will incorporate feeds from diverse business unit HR systems into a data warehouse.
The results in IT and finance drew the attention of executives in other divisions. Nationwide HR launched a companywide effort last May, led by Joanne McGoldrick, associate vice president of associate services, the part of HR responsible for compensation, benefits planning and HR administration. McGoldrick has been joined by Taylor, who supported Sorrell in IT for more than two years.
"As an entire HR organization, we’re in our infancy. IT and finance have taken workforce information beyond where the rest of the organization is," McGoldrick says. "The goal is to bring this competency across Nationwide in the next 12 months. We’re looking at where we stand and how we get to a more robust function enterprisewide for HR."
According to Cotter, "Analytics is the next evolution. If HR wants a seat at the table, analytics is going to become table stakes. If you can’t talk in your business leaders’ language, you won’t be invited into the conversation."
Pick Your Pain—Any Pain
The use of fact-based decision methods in human capital management is limited only by imagination. Here are some more examples:
Employee cost-cutting. Driven by the recession, Thrivent Financial for Lutherans in Minneapolis recently used analytics to make fact-based decisions about what people-related costs to cut temporarily. "We looked at how much each item would save us and the impact on worker engagement and our ability to do business," says Sherry Holtz, director of HR effectiveness. The CEO accepted recommendations such as continuing a salary freeze and reducing the paid time off workers carry over year to year.
Call center employees. At Farmers Group Inc. in Los Angeles, a business unit of Zurich Financial Services Ltd. in Zurich, Switzerland, HR professionals are studying the correlation between call center employee traits and customer satisfaction. This is a pilot project for Randy Stevens, who recently became head of talent acquisition for Zurich North America, a subsidiary based in Schaumburg, Ill.
The pilot is an example of tackling the kinds of low-hanging fruit that show the power of analytics. "Dropped calls, call time, number of calls that require callbacks—if you can extrapolate customer dissatisfaction to a lost customer, then you can show ROI by improving the quality of hire. There is a direct tie to potential future revenue," says Stevens.
College hiring program. A few years ago, Freddie Mac, based in McLean, Va., shifted its hiring focus to recent college graduates. "The goal was to increase entry-level hiring, get people in early and let them grow here," says Mike Moss, director of workforce analytics. "We needed to know the implications of that shift."
Using employee surveys and other data, company officials learned that the employment experience of mid-career hires was far more congruent with pre-hire expectations than was the case for the less experienced employees.
This led to a higher turnover rate among younger workers. "Now, our college hiring program is much more involved in shepherding the hires through the adjustment process, and we find college hires have a lower turnover rate," Moss says.
Fact-based buyouts. To cut costs, leaders of one insurance company considered buyouts for senior underwriters, some of its more expensive talent. But the underwriters accounted for much of the company’s revenue. Hiring experienced people from outside would negate savings from buyouts. Using a modeling technique, the company found that more-successful underwriters had been promoted from the call center than from any other department, according to Brian Kelly, president of Infohrm North America, who declined to name the company because of client confidentiality. Newly promoted call center staff initially would be paid far less than departing underwriters. The call center could more easily absorb losses by hiring less expensive talent.
Talent plan for reimbursement. Medtronic Inc. in Minneapolis deals with hospitals and their funding agencies, including Medicare in the United States and governments around the world. Timely payment is a strategic challenge. The global reimbursement function employs only 150 people, but these employees are crucial; they work closely with government officials, hospital administrators and medical professionals to make sure payment processes occur on time.
By analyzing the activities and understanding the traits of a successful reimbursement professional, Conee Biggs, director of global talent management and planning, devised a workforce planning process. The project served as a pilot that could be replicated in other departments.
Reducing employee stress. BASF Corp. in Florhan Park, N.J., North American headquarters of BASF SE of Ludwigshafen, Germany, studied the relationship among stress, health and productivity in its 15,000 employees. "When we dug underneath the data, we found people needing support to manage the multiple priorities in their lives," says Judy Zagorski, vice president of HR development and strategy. "We also found that those things vary and that a corporatewide strategy is not useful."
The company put together a flexible approach that included various tools and programs that fit the circumstances of the individual employee and his team, business unit and customers.
The author is contributing editor for technology at HR Magazine.
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