Question

1) Why must managers have a good understanding of workforce demand and supply? How does this understanding impact their organization’s strategic planning process?

2) Discuss an example of how your employer (or a previous employer) uses HR analytics.

3) Why are equal employment opportunity laws necessary? Pick an EEO law, describe its provisions then discuss why this law is important to you?

Answer 1

1)Workforce planning can provide insights for organisations to go beyond merely reacting
to circumstantial market events. It can offer market and industry intelligence and help
organisations to focus on:
• reducing labour costs in favour of workforce deployment and flexibility
• responding to the needs of their customer base
• identifying skills gaps and areas of succession risk
• relevant strategies for talent management and people development
• targeting specific and identified inefficiencies
• employee retention initiatives
• improving the quality of outputs
• improving work–life balance
• recruitment and training responses to changes in the education system.

Labour demand forecasting is crucial, as businesses don’t want a surplus of employees who are not being fully and effectively deployed, nor do they want gaps in their employee pool which results in reduced productivity, performance and profitability.

When business owners are considering labour demand forecasting, their first questions are likely to be:

• Where are we going as a business – what is our intended growth in the next 3-5 years (or longer)?
• Will we be developing or expanding our services or product range?
• What technological advancements may affect what we do and will this affect our need for differing staffing levels?
• What are our absenteeism and turnover rates like?
• Do we have sufficient management support to progress our objectives and will they be behind the plans?

Any changes to the human resources needs within the business, should be led by the strategic business plan and the goals for the business – not the other way around.

When undertaking labour demand forecasting there tend to be two approaches – quantitative and qualitative. The quantitative approach is often uses a variety of statistical and mathematical approaches to determine the needs, including indexation (forecasts determined in relation to one or more fixed organisational indices) or trend analysis (forecasts based on the study of past human resource growth). These are often complex and expensive – but a real need, especially for larger organisations.

Small and medium sized businesses often prefer to rely on qualitative approaches to determine labour demand forecasting. These approaches tend to use experts within the business to determine future need i.e. the employees, managers and business owners themselves. Popular approaches include the Delphi Technique (uses problem solving and expert consultation methods in a structured manner); managerial judgement (business owners and managers assess their own labour requirements taking into account factors such as retirements, promotions, new technologies etc); and the Nominal Group Technique (using group processes to compare predictions on the staffing needs for the future).

One of the major advantages of using qualitative methods, especially with SMEs is that the techniques used involve the people that are likely to be affected by any changes to the business in relation to human resources practices. Therefore, there is likely to be greater commitment and acceptance of policies and practices by those involved. One of the downsides however is the time and cost of involving employees, managers and business owners in the processes.

Having a HR Consultant on hand, able to lead the process and adopt the most appropriate processes to lead businesses through these processes, can help to achieve effective forecasting of future employee needs.

Labour Supply Analysis

Once a business has forecast what it’s future requirements are likely to be, it is then important to determine what number of employees will be needed, with what skills and when. Labour supply may come from within the organisation or outside. The first step therefore, is to do an analysis of the skills currently within the business. If skills are not available internally, then they may need to be sought externally. Once looking externally factors such as availability of skills within the job market will be a major consideration.

Balancing the Supply and Demand

If a business is short of employees to achieve the business objectives, effective recruitment strategies will need to be devised. Considerations will then relate to job design, career development, flexible work options, remuneration and reward programmes.

If a business has too many employees, effective strategies will need to be created to manage retirements, redundancies and if appropriate, dismissals.

In conclusion

Workforce planning is imperative to businesses wanting to plan their growth and limit situations where they are faced with too many or too few employees or the wrong skill sets.

2.

Human resource analytics (HR analytics) is an area in the field of analytics that refers to applying analytic processes to the human resource department of an organization in the hope of improving employee performance and therefore getting a better return on investment. HR analytics does not just deal with gathering data on employee efficiency. Instead, it aims to provide insight into each process by gathering data and then using it to make relevant decisions about how to improve these processes.

Analytics and HR

This is an interview with Ian Cook, Director of Product Management at workforce analytics company Visier. In this interview Ian discusses the most common and valuable use cases for data analytics in the modern HR department, to what extent the department will be staffed by data scientists in the future, and how HR directors can better build the business case for analytics software.

1) Can you give us some concrete examples of how companies can make better decisions by manipulating and using data and insight? What metrics are they using?

Here are some of the most common examples from our customers:

Retention

It is common for retention issues to have a stop/ start response where money is thrown at employees in the hope that it will change the outcome. More often than not, this approach does not work or has only a very limited and short-term effect. The money spent here does not deliver the outcomes expected.

Our customers report improved retention outcomes, as well as a better ability to focus resources and programs where they need them. They achieve this through the use of common metrics such as turnover, resignation, involuntary turnover, etc. However, the differentiator is the ability to compare trends over time, across business units or between key groups of employees to the overall organizational outcomes. It is not the standalone metrics that brings the insight, but the ability to quickly build comparisons, identify trends and find outliers that makes the difference.

In addition, these companies are using our clustering algorithms to determine the common features of employees that are related to higher or lower retention rates. This insight means the right approach can be taken with the right employees, leading to better results at a lower overall cost.

Pay for performance

There has been a steady and constant shift towards ensuring that what employees are paid is closely tied to their contribution to the organization. Some organizations are removing the artificial limits that kept high performers from earning more than their managers. For a number of the companies we work with the alignment of pay for performance is the number one shared agenda item between the CEO and the head of HR.

One of the best ways to demonstrate this practice is through a metric called the “Performance based compensation differential”. This metric expresses how much more high performers are paid compared to their average performing peers. For example, a score of 1.2 means that on average high performers receive 20% more compensation than average performers. Turning this critical question into a single number allows for powerful insight across the organization; it means that different locations, business units and groups of employees can be easily compared using simple visual analyses.

One powerful way this translates to business value is during the annual pay review cycle. Most HRIS systems allow you to enter changes in pay, however these systems do not enable you to analyse how these awards relate to performance and whether or not they are aligned to the goals of the organization. Most HR departments provide guidance and then trust their managers to get it right.

Being able to analyse all of these decisions in real time, report this back to the organizational leadership and then revise these adjustments before they are confirmed leads to a demonstrated ability to ensure that the budget increases going into labour costs are being applied in the optimal way.

Prediction

It is one thing to know what has happened in HR - the majority of HR data to date has focused on the reporting of transactional outcomes - but another thing to know what will happen. For example, lots of HR groups report the percentage of people that had a performance review or who completed an engagement survey. This type of reporting relates to the process orientation of HR and, although interesting, does little to demonstrate the true value of the functions.

In addition, the opportunities to add value through HR practices come more from stopping the wrong outcome from happening, than from reporting on what has happened. For example, the cost of voluntary turnover has been established at approximately 1.5 times annual base pay for salaried employees .Therefore, if you prevent two high value employees, with salaries of 50,000GBP, from leaving the organization you have saved approximately 150,000GBP. In order to achieve this type of saving you need to know who will leave, before they have left.

3.

Many of the equal opportunity regulations enacted through federal laws and enforced by the U.S. Equal Employment Opportunity Commission (EEOC) apply to small businesses. To be sure you are in compliance with these regulations, it is important to know what the primary equal opportunity laws are and understand how they apply to your business.

The four major EO laws are:

• Title VII of the Civil Rights Act of 1964prohibits employment discrimination based on race, color, religion, sex, and national origin. This act applies specifically to those businesses that have 15 or more employees on the payroll at any given time.
• The Age Discrimination in Employment Act of 1967 (ADEA) prohibits age discrimination against individuals who are forty years of age or older. This act applies specifically to businesses with a minimum of 20 employees on the payroll at any given time.
• Title I of the Americans with Disabilities Act of 1990 (ADA) prohibits employment discrimination against qualified individuals with disabilities. This act applies to employers with a minimum of 15 employees.
• The Equal Pay Act of 1963 (EPA) prohibits wage discrimination between men and women in substantially equal jobs within the same establishment. All employers should take special note of this act, as it applies to any business with a minimum of one employee.

Determining Employee Count

For the purposes of determining an employee count, be sure to include not just all regular full-time employees, but all part-time and seasonal workers as well. Independent contractors are notincluded in an employee count, but there must be paperwork to support the claim that they are working only on a contract basis.

As the ultimate determination of your employee count is decided by the EEOC, you should contact a representative if you have concerns regarding which regulations are applicable to your business.

Compliance

The EEOC provides representatives (upon request and at no cost) to provide any necessary information and training to employers or employer groups. Services provided include presentations, individual meetings, and a review of applicable regulations.