The quality of human capital determines the present and the future of any company. When top performers leave, they can not only impact the direction of the company, but also cause huge losses related to attrition replacement and productivity. This issue is more acute for the IT services industry, where the demand for highly skilled talent is a persistent issue.
“In any business, employee turnover is one of the top HR challenges. Employee turnover, if not checked, not only has an impact on cost but also impacts quality of service provided to clients. Additionally, every organization wants to hire employees that will stay for the long term, but at the same time those employees should also perform at productive levels. Improving employee’s productivity is always in focus,” explains Srikantan Moorthy, Senior Vice President and Group Head of Human Resource Development, Infosys.
Improving employee performance is also a critical factor, as every organization wants to hire employees that not only stay in the company for the long term, but also keep performing consistently at productive levels. Employees also have to be consistently engaged and motivated, which is highly crucial for organizations to remain relevant in a dynamic business environment. In the knowledge economy, the role of HR has become even more critical.
“Traditionally, across organizations, processes have been run based on set policies and with a focus on compliance. However, now the focus is on creating differentiators within these processes. That makes a significant demand on HR professionals’ time and they need to think innovatively rather than focusing on compliance alone. They also need to progress from a problem-solving mindset to innovation-oriented thinking. HR has now become a key enabler to business performance, more so in the knowledge industry. Therefore, meeting specific and varying needs of employees is absolutely important,” emphasizes Saurabh Govil, Senior Vice President– Human Resources, Wipro.
How can analytics help? Can analytics, which is being creatively used in a huge number of areas, be used to better manage human capital too? In the highly competitive IT services industry, where ‘human capital’ is the most crucial factor in impacting profitability, analytics can play a significant role. Not surprisingly, in India, almost all the top HR heads of IT service companies use HR analytics extensively.
Explaining the role of HR analytics tools, Ravi Shankar, EVP & Chief People Officer, Mindtree, says, “The role of HR analytics tools is reporting and analyzing the organization’s data and performance-related information, and then drawing meaningful insights for forecasting purposes. One such emerging area is called ‘turnover modeling’, which aims to predict/ forecast employee turnover (performance and engagement) level-wise, and category-wise, and then map them accurately so that the HR team can be better prepared to manage issues. We actively use turnover modeling at Mindtree.”
Shankar says that risk management of high-profile candidates is another area that effectively uses HR analytics. “Analysis of data using ‘regression analyses’ helps to determine the number of days/hours spent by employees on a task and repetitiveness of a job. Career aspirations of employees are factored in to arrive at an ABC risk model for high performers (high, medium, and low category risk). The HR team then uses these insights to create the right engagement and management strategy for the different risk categories,” states Shankar.
In a dynamic scenario, analytics helps companies better manage employee productivity, and analyze this with respect to revenues and margins. “Analytics allows HR to combine and compare raw contextual data, present it graphically to see historical trends and run “what-if” scenarios. This helps in visualizing how the movement of talent impacts hiring decisions, cost models, career-path initiatives, succession plans and risk management,” states Srikantan Moorthy of Infosys.
Moorthy believes that analytics provides the basis for specific action plans and workforce investments that address gaps or inefficiencies in an organization. “From a succession planning point-of-view, workforce analytics can view how many of the employees are nearing retirement stage. HR professionals can plan how those upcoming vacancies will be filled and how it will affect pay and performance throughout the organization. HR professionals can also identify employees at risk of leaving, build profiles of those most likely to leave or stay, and understand how risk is distributed throughout the organization. By analyzing skill inventory, HR professionals can track and analyze critical skills,” explains Moorthy.
With huge amount of data at their disposal, analytics allows HR professionals to combine and compare raw contextual data, present it graphically to see historical trends and run “what-if” scenarios. This helps in visualizing how the movement of talent impacts hiring decisions, cost models, career-path initiatives, succession plans and risk management.
HR analytics tools can help in predicting and forecasting attrition. Mindtree uses turnover modeling to predict employee turnover. “At Mindtree, the use of HR analytics tools has helped us to predict employee turnover for the next 90 days, create usable insights from data analyses that are fed into the forecasting model for the hiring teams (vacancy-based hiring). These tools are also used for high-risk employee management, using multiple policies of retention, preferences, etc. For example, for any opportunity inside the company, the high risk employees get to go for them first,” states Ravi Shankar.
At Infosys, analytics is used to better understand workforce structure and how inflow and outflow of talent at various levels impacts the structure. This analysis helps the firm understand its internal hiring and external hiring ratios for different roles and for different units. “We were able to identify roles which require more internal hiring and build in processes to facilitate these movements. This analysis also gave useful insights on patterns of movement outside a service line and movement of talent into a service line,” says Moorthy. Similarly, Wipro leverages analytics in multiple areas like performance management, retention, succession planning and talent management. “We design learning interventions for employees based on insights that we derive from analytics.
The competencies and the success profile for a role is decided based on the analysis of what kind of people have been successful in that role,” explains Govil. Wipro has also good experience in using predictive modeling — an area which is at the high end of analytics. “Predictive modeling can be used to understand the profile of people who may be at higher risk of attrition, and it can be quite accurate. The idea is to orient your efforts in the right direction,” says Govil.
From identifying talent to predicting attrition, and developing the next generation of corporate leaders, analytics is playing a major role in shaping the competitiveness of companies. As seen from the examples above, analytics can play a big role in predicting employee turnover, in improving employee performance, and most importantly in creating a consistent corporate culture.