To win a fair hearing in the boardroom, HR directors need to have all the facts, figures and statistics at their fingertips. Jessica Twentyman reports.
Who are our most productive employees? Who are the highest earners? How successful are our recruitment programmes in attracting future high-performers? What will our staffing and skills needs be five years from now?
In an increasingly metrics-driven world, HR professionals are expected to have a host of facts, figures and statistics at their fingertips. For many, however, the reality is rather more frustrating: they know the data they need is held on various IT systems around the organisation, but they have no idea how they can get it all into one place and analyse it.
In a recent survey of 200 HR managers, conducted by employment services company Adecco and City law firm Tarlo Lyons, most admitted they have difficulty providing even the most basic performance metrics. Given a week’s notice, just half (49%) could provide a report on staff turnover, 44% could report on HR budgets and a paltry 11% could provide information on employee satisfaction.
It is unlikely that board-level executives will tolerate this lack of visibility for much longer, argues Patricia Taylor, head of payroll and HR services at technology company LogicaCMG.
“To win a fair hearing in the boardroom, HR managers need to communicate the value they create in a way that the chief executive can understand – and that means moving away from ‘soft’ measurements to cold, hard metrics,” she says.
The barriers to doing so are numerous, however. The first hurdle is knowing what data to collect and where it is held.
The second is consolidating data from different HR and payroll applications and, often, a myriad of unconnected spreadsheets. Each data source contains important information about workforce performance, but each one provides only part of the overall picture.
The third challenge is to analyse that data effectively, to produce real answers to vital business questions. Again, that can be a struggle for many HR departments, says Taylor.
“Some report basic input numbers. Some may be able to calculate basic ratios such as cost per hire, but are unable to correlate that cost with the quality of each hire. Some have more sophisticated analyses (such as cost per hire per geography over time), but are unable to align them with the corporate strategy,” she says.
Tools of the trade
Many HR departments rely on so-called business intelligence (BI) tools from software suppliers such as Cognos, Business Objects, SAP, Oracle, Information Builders and Strata Systems (recently acquired by CedarOpenAccounts).
These systems are able to interrogate data sources, consolidate the data that they find into a single repository, and then users can model and analyse that data to create reports and forecasts.
Graham Walter, vice-president at BI tools supplier Cognos, says: “Business intelligence can help HR departments become a strategic asset within their organiÂsations in two ways: by generating efficiencies within the department itself and by using the insight that BI delivers to help their organisations make strategic decisions around staffing, planning, and budgeting.”
BI can also enable HR departments to monitor and demonstrate compliance with employment law and with other regulatory mandates.
At Rotherham Metropolitan Borough Council, for example, HR manager Ian Henderson uses business intelligence tool HR Analyser from Strata Systems to compile the council’s best value performance indicators (BVPIs) – a requirement of the Gershon public sector efficiency drive.
“The government requires us to calculate a number of BVPIs on a quarterly basis, and in HR terms, that means determining what percentage of workers we have, doing what tasks, and at what cost,” he explains.
For example, Henderson has to show the make-up of the council’s top 5% of earners – how many of them are women, how many are from ethnic minorities and how many are disabled.
The software also enables Henderson to benchmark Rotherham against figures submitted by other councils as well as look at comparable figures for the UK public sector as a whole.
The HR team’s efforts to tackle sickness, underpinned by the use of BI software, have resulted in cost efficiency savings that rose from £1.2m in the 2004-05 council year, to £1.4m in 2005-06. This year, that figure is set to soar to £3m, says Henderson.
“The HR professionals at Rotherham have welcomed business intelligence wholeheartedly and are thirsty for more. It gives them real credibility throughout the council in general, and at the leadership level in particular,” he reports.
But while BI tools are great for extracting and consolidating data, it’s crucial that HR presents this information effectively.
Most BI products can present complex data in graphic formats, including ‘dashboard’ layouts, geographical maps, pie and bar graphs and 3D charts. There are also tools that extract information from HR applications, other corporate databases and spreadsheets, and then arrange it into organisational charts.
You could, for example, depict employee hierarchies based on different variables such as salary, training completed, languages spoken or time off sick.
BT OpenReach, a subsidiary of the telecommunications giant BT, uses a programme called OrgPlus from software specialist Human Concepts to help it understand how reorganisations affect staff.
Lawton Harper, director of organisational effectiveness and efficiency in BT OpenReach’s HR department, says: “Whenever we’re considering some kind of reorganisation to improve efficiency, we use OrgPlus to extract information from our HR system and create an organisational chart that can contain information about tens of thousands of employees.
“What that chart contains would fill thousands of lines in a spreadsheet or thousands of pages of print-outs,” he adds.
Look at the implications
Harper and his team then analyse the implications of any potential restructures to the 33,000-strong workforce by cutting and pasting employees and shifting them around the organisational chart.
“We can see how reporting lines change, for example, and assess the cost issues involved in increasing or reducing the workforce to suit our changing business needs,” he says.
Eighteen months ago, Harper was working with OpenReach’s managing director on a potential reorganisation that would involve removing a layer of management in the field force.
It took seven weeks to compile the data and model the implications of the move. When he repeated the process using the software, it took just a week.
That is the kind of turnaround time that will make many board members sit up and take notice. In fact, says Taylor, it can win the HR department serious credibility.
“HR professionals who can get answers fast to directors’ questions get invited back to the boardroom again and again,” she says. “And when they do, they’re invited to join longer and more serious conversations about the future of the organisation and the role they have to play in it.”
How to show off your figures
- Avoid legends as readers will constantly have to refer from chart to legend and back again. Instead, label each slice, line or column individually.
- Avoid graphs and charts that need colour to interpret them. Around 10% of people are colour blind or colour deficient, plus documents tend to get photocopied or printed out in black and white.
- Avoid clustered column charts. If you want to show a pattern, do a line graph instead.
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- If you wish to do a graph but each bar has a lengthy label, place columns horizontally, not vertically, as this makes it far easier to read. Alternatively, what about a table instead?
- Put tables in some order other than alphabetical (sports league tables would be impenetrable if in alphabetical order).
- Descending numerical order is often better. Mentally, we find it easier to subtract numbers if the bigger number is on top, and by doing mental arithmetic on the data, it helps us better understand the table. Remove unnecessary gridlines, as they are distracting. Vertical gridlines interrupt the reader’s eye movements as they scan across a row.
- Use a title or verbal summary that leads the reader into your graphs and tables. Don’t leave readers struggling to work out their significance; explain it. For example, “Results just keep getting better”.
- Avoid unnecessary upper case, as it slows reading speed.
- Don’t underline words, as it merges letters together, making them more difficult to read.
- Avoid too many digits, as they hinder clarity and give spurious accuracy (“profit is up 16.276%” will just confuse people).
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Tips supplied by Jon Moon, a freelance trainer giving tips on how to show information clearly.
