It's Time For A Workforce Analytics Revolution (Part 2)

?? AUDIO VERSION

Dear LinkedIn Friend and Circular Leader,

Do you remember your initial experience of the original Avatar movie? I remember mine.

I sat in the theatre which had just gone dark. The bulky 3D glasses made me feel self-conscious. But I also felt eager and impatient, the enthusiasm of a ten-year-old kid bouncing around in my forty-seven-year-old body. The very same feeling I used to get when I’d lie about my age to see the latest Bond film. Back in those days, in the plush seats of the Capitol Theatre on Donald Street in Winnipeg, I watched transfixed as I was transported to M’s office in London and waited for the signature line, “Bond, James Bond.”

But let’s get back to the opening of Avatar. Black screen. Otherwordly singing. And then we’re flying over the misty forests of Pandora. Then?into?the mist. And then?through?the forest which was magically all around us.

I was instantly captivated and I didn’t want the movie to end.

Do you remember?

James Cameron changed the movie experience simply by adding an extra dimension to his film. Okay, not so simple ?? but you get my point.

I’m no James Cameron but I am here to tell you that by adding a human dimension to business analytics we can change the executive experience.

So grab your popcorn and Pepsi and settle back while?The Circular CEO?presents “Workforce Analytics Revolution”. We open by flying across the broad, flat contours of a profit and loss statement…

—Alex

It's Time For A Workforce Analytics Revolution (Part 2)

In?part 1 ?I said that overzealous management theory, a pandemic-induced pushback and the latest workplace research had combined to create a perfect storm. We were sharply reminded how fundamentally important people are to an organization’s performance.

I also said that executives could use this insight to gain a significant advantage. Adding workforce analytics to their toolbox would help them improve the following areas of their organization:

1. Gross margins
2. Intellectual property retention and productive capacity
3. Transformation
4. Innovation and customer satisfaction

Let’s explore each one in greater detail.

1. How workforce analytics improves gross margins

Increasing gross margins is a holy grail for managers because it directly impacts the bottom line. By adding the extra dimension of workforce analytics, managers can uncover useful options they might otherwise overlook.

For example, let’s consider a sales manager who is concerned about an underperforming team. They’ll have seen this in a ranking system that measures one dimension:

Our manager might consider the following options to boost the performance of the yellow team:

1. Provide more sales or product training (to improve the team’s skills)
2. Change the remuneration (to make it more rewarding or more punitive to improve the team’s motivation)
3. Increase marketing (to improve the number of sales opportunities for the team)

Any one of these traditional approaches might do the trick. However, if our manager could also visualize the team dynamics, they might see something like this…

…and it might make them curious about another options:

4. Would sales performance be better if team dynamics was better?

In 2022 my colleagues and I worked with sales teams in several industries. We found that human factors correlated with sales performance in every organisation. Which has always made intuitive sense, hasn’t it?

And when team dynamics unlocks sales potential, productivity metrics at every level of the organization improve, including gross margins.

What productivity metrics do you use? Can you imagine how workforce analytics might make them more useful?

2. How workforce analytics improves IP retention and increases productive capacity

The biggest complaint I heard from executives in 2022 was about staff retention. And for good reason: losing a person adds a drag on an organisation in several ways. Losing lots of people accelerates the drag.

We lose intellectual property

When people leave,?we lose intellectual property?whether it be invaluable technical know-how, important cultural knowledge or an understanding of customers and partners.

Losing IP slows the pace of innovation and progress. Our time to market increases. So, too, does the competitive threat and our customers’ impatience.

We lose productive capacity

When people leave,?we lose productive capacity?because there are less people to do the work. Further, people who train the replacements have less time to do their regular work. The impact is particularly high for roles that require months to become fully operational.

Reduced capacity delays new product releases, slows revenue and stretches delivery timelines. It hurts customer relationships. It opens doors to competitors.

We lose money

When people leave,?we lose money.?The financial costs to find and onboard a replacement can easily exceed the role’s annual salary. Excess staff turnover affects firm profitability and prevents that cash from being invested more productively.

In recent work with an international tech firm we were able to identify several factors related to team dynamics that strongly correlated with their staff turnover in 2022.

Identifying these factors expands employee discussions beyond the usual topics of pay, promotion and projects. Every manager now realizes that their people’s experience of trust and fairness contributes to their willingness to stay or go.

Think about your organization’s retention rate.?What if you were able to identify and improve its risk factors? Would this improve your retention rate in 2023?

3. How workforce analytics improves the success of transformation projects

Success rates in large transformation projects are awful. CEOs who initiate these projects say that two-thirds of large change projects do not achieve their objectives. Front line workers say it’s more than 90% of change projects that do not achieve their objectives.

The costs of failure are enormous. Of course, there’s the financial cost. But there’s also the months or years that were wasted, the loss of confidence by investors and the market, staff exhaustion, and so on. Taken together, they diminish market opportunities, increase competitive threat, grow staff turnover, reduce organizational capacity and make any future change projects much more difficult.

It’s a wonder that any organization embarks on a big change project when the costs of failure are so high! But we live in a time of ceaseless change. The status quo is often not an option.

If so, then we are wise to learn the factors that contribute to successful transformations. One factor not considered often enough is the staff’s capacity for change. Are our people resilient enough to weather—and even embrace—the change that’s coming? Or will they resist it? Will they actively participate in solving the myriad issues that arise, or will they passively watch when the initiative stumbles?

Workforce analytics helps managers understand this. Managers get critical information in advance that lets them prioritize tasks more effectively and provide support to teams who need it.

Take our experience with an energy utility (image below). Despite strong market forces that dictated the need for fundamental change, the entire transformation project was delayed by six months to give the organization more time to plan and prepare.

Deciding to delay was not a trivial decision because it added significant costs. But the cost of failure would have been much higher.

Do you have changes planned for 2023? Are your people ready?

4. How workforce analytics enhances innovation and customer satisfaction

It may seem curious to connect creativity with a tech firm’s innovation and a retail chain’s customer satisfaction. But it turns out that innovation and customer satisfaction are rooted in the same human dynamics.

For creativity to thrive in any organization, people need to feel safe to speak up and they need to feel safe to try new things. When we’re at work, some part of our subconscious is always asking these questions:

Do I feel comfortable speaking up with my idea?

Do I feel comfortable trying something on my own?

Tech employees who answer “Yes” to these questions don’t have more ideas or better ideas than those who answer “No.” But they feel?more comfortable?talking about them and trying them out. They’re more likely to share their successes?and their failures?with their team and their manager.

Ideas are at the heart of innovation. But only ideas that surface can be discussed and improved and commercialized. The more comfortable we are to discuss our ideas, the better.

Similarly, we’ve seen that retail staff who answer “Yes” to the above questions are more likely to have satisfied customers. We’ve discussed these results with them. They told us that when they feel more comfortable being themselves they approach customers more naturally. They feel that it’s easier to go out of their way to help. And customers respond positively.

When we chart human dynamics against traditional business results, like in the graph above, executives and store managers can get fresh ways to think about how staff and customers interact and what we can do to support them both.

It?is?time for a workforce analytics revolution

I watched the first Avatar movie again last night on my flat screen TV. Even without the third dimension, it’s a wonderful story that’s beautifully told. I’ve no doubt that it would have been a success even without 3D.

But the extra dimension moved it to a different level. Wikipedia tells us that it set the worldwide record for the highest gross of all time. And it did it twice as fast as the previous fastest-grossing film (Titanic).

The same could be said of organizations that don’t use workforce analytics well. Like Avatar without 3D, they may do just fine. But that extra dimension helps us see more clearly and make better decisions. So we can improve gross margins, reduce IP loss, strengthen productive capacity, boost our transformation projects, enhance innovation and make our customers more satisfied.

And, like Avatar 3D, move our organization to a different level.

The revolution? It’s time.

—Alex

Does the comparison between workforce analytics and Avatar work? What other movies should I be thinking about? ?? Say 'hi' and share your thoughts in the comments below.