I have been privileged to have had the opportunity to contribute to the recently published, “Positioned – Strategic Workforce Planning that gets the Right Person in the Right Job”, co-edited by Rob Tripp, Workforce Planning Manager at Ford Motor Company. The list of contributors is a Who’s Who of strategic workforce planning: Dave Ulrich, Jac Fitz-Enz and Tom Davenport among many others.  Beginning with an historical perspective, it includes a major section on current best practices and concludes with a look at future directions.  Sandwiched somewhere there in the middle is the chapter on Workforce Analytics that I co-wrote with my SAS colleague, Christian Haxholdt.  Reproduced below is an excerpt of the opening paragraphs from this chapter, laying out the issue, and hinting at the business analytics that underpin SAS’ contribution to the solution.  Enjoy, and if you agree that your workforce is your most important asset, be assured that the rest of the book offers much, much more for your consideration and action.

“HR executives are well-equipped to competently manage the basics – recruiting, hiring, onboarding, payroll, benefits, training, etc. – and operating unit general managers are generally satisfied with the results. The typical missing link for HR executives, however, is often their ability to assist general managers with the more strategic issues, like:

• Are we better off keeping our geographic sales structure after the acquisition, or do we now have sufficient critical mass and concentrations of expertise to take an industry-centric approach?
• Can we predict how the increased average age of our skilled workers, their upcoming retirement and the massive replacements by inexperienced workers will affect the business?
• The increased production and sales capacity is going to make R&D the bottleneck; what are the critical technical skills we’re going to need and what is the optimal mix of hires, layoffs and retraining to counteract that bottleneck?
• In order to meet the increased seasonal demand from new customers, should we build inventory early, run additional shifts or outsource some of our production needs?

As an HR executive, how do you feel about your ability to respond strategically to such requests? Are the desire and skills to respond there, but not the information, tools and systems? The problem often starts with the basics. To paraphrase the public service announcement, “It’s 9:00 a.m. Monday morning; do you know where your employees are”?  After all, you pay them every week, so of course you know where they are, right?

In a majority of businesses, that question might initially go to the finance department, not HR, because finance has the required data collection and consolidation systems.   As part of the monthly close and forecasting processes, financial systems may collect headcount data from 2,000 different cost centers, 80 different countries/business units/subsidiaries and 40 separate payroll systems, along with the financial data – but only at a very high level. The granular detail you need to contribute strategically to the operating units is just not there.

Three primary resources – people, money and technology – make up every organization. Of these, it is invariably the human factor that is the most difficult to manage.  For most businesses – excepting the resource extraction and heavy manufacturing industries – employee-related expenses (salaries, benefits, taxes, training) represent the single largest cost category. Many health care and public sector organizations have no significant physical or direct material components whatsoever (outside of facilities). For financial institutions, employee costs are the largest noninterest expense item. For airlines, they are the largest costs after equipment depreciation (even larger than fuel costs), and in telecommunications they are the largest costs after the physical network.

In spite of this, most companies have more system and IT resources invested in tracking office supplies and spare parts than they do in managing their critical human resources. Your company probably has more than $10 million invested in an ERP system(s) that tracks every single physical part or SKU from when it first appears on a purchase requisition, through receiving, production and inventory, out the door and to then each customer location, with that information often retained for years for warranty or defect recall purposes.

ERP systems can tell down to the SKU level how many left-handed widgets of each color are available right now in 11 different warehouses across the planet, but not how many synthetic chemists, C++ programmers, turbine-rated mechanics, OB-GYN nurses or Series 7 brokers are on the payroll anywhere – let alone how many have between five and 10 years of experience, combined with expertise in a particular industry, and reside within 50 miles of your potential client’s headquarters location. This institutional legacy from the pre-War industrial era should have been put to rest by the mid-1980s at the latest, but has somehow lingered on well beyond its expiration date.

Companies such as Google, Ford, SAS and Amazon like to say that their most important assets walk out the door at 5:00 p.m. every day, but do they act like they really mean it? Or do they still have more invested in an ERP system that tracks copying paper and yellow highlighters than they do in an HR system designed to get the most value out of those assets? If you base your answer on what you know about the success of these companies, you’ll probably guess that they do really mean it. So what do companies like these have that sets them apart from others in this area? The answer is strategic workforce planning and workforce analytics.”