5 reasons why CFOs should be interested in workforce analytics
Partnering for performance
Workforce analytics help companies to gain greater visibility into how key aspects of human capital management affect corporate performance. It can help companies to increase the effectiveness of the recruitment process, strengthen retention of employees, manage HR risks and provide a more objective, rigorous approach to performance management.
“By collecting more information about the workforce, and making it visible, companies are better able to make informed decisions and strengthen human capital management to drive performance improvements.”Drazen Nikolic, EY’s Advisory Center Lead for Enterprise Intelligence, Europe, Middle East, India and Africa
The CFO and HR: workforce analytics
EY professionals explain how the CFO and chief HR officer can drive better organizational performance by collaborating on workforce analytics. [See a transcript of this video]
Below are 5 key areas where analytics can be applied to improve performance:
1. Managing attrition
Companies typically have attrition rates of between 7% and 12%. This means that they must spend significant amounts of money on recruitment and training to replace employees and train new recruits. Using predictive analytics, companies can reduce attrition by examining behavior and communication patterns to create a better understanding of employee engagement and to spot early signs of burn-out or low productivity.
2. Fraud prevention
Most organizations carry out thousands of transactions a day. The sheer volume makes it very difficult for traditional internal controls systems to identify fraudulent activity. Analytics can enable companies to examine every transaction to identify any anomalies or outliers, which could indicate fraudulent activity. In this way, analytics can help companies to supplement their risk and controls frameworks.
3. Identifying hidden potential
Analytics can also be used to identify high-performing members of a team. Analyzing patterns of communication enables companies to spot individuals who both receive and send a lot of information, suggesting that other team members seek them out for advice, and that they make a strong contribution by providing information themselves. Equally, companies can use the same process to spot individuals who consume a lot of information but give very little back.
4. Spotting process deficiencies
When a company puts in place a new process, it can check whether it is working by comparing the communication structure with the process structure.
“When you implement a process, people tend to follow it for a while but, after 6 to 12 months, they will start to use other ways to locate information or secure a decision,” says Mr. Nikolic. “Although many companies measure the outcomes of a process, few look at whether the process is being followed.”
5. Strengthening the sourcing process
Recruitment and succession decisions are highly prone to subjective biases and human error. By combining traditional recruitment processes with the use of workforce analytics to screen potential employees, companies can improve hiring decisions, which ultimately leads to higher retention rates and increased productivity.
- Partnering for performance Part 1: the CFO and supply chain
- Partnering for performance Part 2: the CFO and HR
- Partnering for performance Part 3: the CFO and CIO perspective
- Partnering for performance: the CFO and CIO – an emerging markets perspective
- Drive organizational success through human capital