Workplace analytics can help you to calculate who does what and where in your organisation. But can the application of science to business make a difference to the quality of your company?
Engineering managers have never had it so good. We live in an age where we no longer have to work on hunches. We now have screeds of data about every aspect of our companies, and because we tend to be numerate and analytical, we should be able to extrapolate meaningful conclusions from this data that help us to bring better products to market, make more money and even improve the quality of our professional lives.
It's sad but true that most of us don't take full advantage of the information at our fingertips. We strain under the weight of 'data overload', and run the risk of becoming victims of 'analysis paralysis'.
But it doesn't have to be this way, argues Tim Ringo, one of the authors of a new book that sets out to define how we can change our approach to marshalling this data and applying it to our biggest corporate asset – the workforce. In 'Calculating Success', Ringo and his colleagues Carl Hoffman and Eric Lesser – all researchers or consultants with experience at IBM – set out to dispel the myth that workplace analytics is merely about statistically presenting a clinical view of your trading position in stark numbers.
Employing the subtitle 'How the new workplace analytics will revitalise your organisation', the authors make the case for scientific analysis providing the tools for better business practice. Says Ringo: "It's about what happens when science meets business. Workplace analytics is not always about how to improve efficiency by reducing your headcount. It can be about how to make work a better place.
"The way we found the niche for this book," he says, "was through experience. In my role as the global leader for IBM's Human Capital Management practice I went all over the world meeting very senior executives." In this process what struck Ringo was how most organisations have a "really good grasp of their financials", capable of telling their management what the return on investment would be on, say, building a new manufacturing plant in China. "But they wouldn't be able to give you the return on investment in people. If they were to hire 200 new sales people in Asia there would be the assumption that while people cost money, there was no way of measuring the return on investment."
By Ringo's own admission he found this "curious" because having worked with a number of clients on analytics projects he knew that there was a very specific way of defining what the benefits or otherwise would be related to human capital investment. "We knew that if you were to hire more people, you could predict what the revenue, cost and profit would be." For Ringo this was fundamental because as he says your investment in people is your biggest investment. "So it was strange that these organisations had a grasp on the hard assets, but viewed people as soft assets that couldn't be quantified."
There are lots of books on analytics and business intelligence, but Ringo, Hoffman and Lesser were convinced that there wasn't one in the genre that specifically worked out what the return on investment in people was. The team knew that the data was there. But it also knew that there was no real advice on how to harness that with the intention of improving how our businesses work.
"But it can be harnessed," says Ringo. "This is the intersection of science and business. It is hard analysis and it is no different to buildings and materials. You can quantify and predict what's going to happen based on human capital. What we try to do in the book is give real examples of how companies have solved human capital issues in a simple and easy-to-read way."
Ringo's conversation keeps coming back to the key phrase "the intersection of science and business". He explains that while as a slogan it might sound glib, it draws the distinction that his work is not just about gathering mathematical data. It's more about asking ourselves what we are trying to answer. There are, he says, four questions.
1) What is the work that needs to be done?
2) How do you fill the human capital supply chain with people capable of doing what's required at the quality, quantity and cost required in a way that the business model says is optimal?
3) Is the workforce fully engaged and motivated to meet and exceed the performance objectives?
4) How do you detect and then test the need for change, create innovation within the workforce, and then disseminate that through structure into the business?
What Ringo found is that you have to ask yourself these four questions, and having found the answers you can work back to the business strategy. "That gives you analytics that actually solves problems."
This is different from the phenomenon of companies that install workplace analytics for their own sake, which is often little more than the acquisition of basic information without insight. "That's not really analytics. New analytics takes the data and extrapolates ideas."
What we're talking about is people, says Ringo. An individual, by definition is just that: individual. Everyone will have different skill levels, work rates and attitudes, and will produce different outcomes in different phases of their career. This big question is, does the new workplace analytics take into account the flexibility required by the fact that we're all human?
"There's a lot of analytics that show that people aren't really motivated by money and are more motivated by what they do and who they work with. Analytics in terms of people should really be focused on how to get them engaged. Using the data as a two-way street – using more advanced engagement measurement tools – is where the fulcrum is. Gaining insights and then acting on them and mapping their objectives and metrics around them."
The message is clear. Owning data on your workforce is not enough insight into how to get the best from them. 'Calculating Success' takes us to a level where the data you've accumulated can be converted from a passive description of where you are now to an active set of tools that will help you decide what to do next. 'Calculating Success' is destined to become one of the most important investigations into the topic to have emerged for years.
'Calculating Success' by Carl Hoffman, Eric Lesser and Tim Ringo is published by Harvard Business Review Press, '23.99