Saturday, February 13, 2016

Respond Effectively to Changed Circumstances

Below is a fictionalized case study that presents dilemma faced in real organizations. And written by me is the recommended solution to the problem. This has been published in Business Manager Magazine February 2016 edition.

Case Study - Is Metrics Panacea for all HR Problems in Century Software?

Century Software is one of the leading technology based companies engaged in management consulting, technology development, and outsourcing services. This company is well known for its innovative approach towards delivering business value and its commitment to sustainability. It aims at optimized utilization of natural resources, capital, and talent. It is engaged in activities like Big Data Analytics, Operational Analytics, and Supply Chain Analytics. It has 1 25,000 employees on its roll and offices in 110 cities around the world. The net revenue of this company is Rs. 13.0 billion for fiscal year 2014. In Century Software, people management cost constitutes nearly 59% of total expenses.

The HR department of this company is headed by Mr Easwaren, one of the senior leaders in the company. However, in recent times, the CEO of the company Mr Mahendra Singh has lot of worries about the functional efficiency of HR department especially in the context of serious erosion of manpower in Big Data Analytics - one of the core departments. The high attrition rate in this department has caused consternation among the top managers. The CEO and his team is wholly aware of the fact that the HR department has taken the issue seriously and conducting exit interviews to understand the root cause of the problem.  They also regularly collect information on absenteeism and turnover. However, the irony is that the top management is not informed of outcome of such exercise in desirable and actionable form for initiating necessary action. The absence of actionable report about the HR problems of Big Data Analytics department kept the top management always in tenterhooks. This is because the good and consistent performance of this department is essential for the execution of the strategic and operational plan of the whole organization.

Of late, the top managers began to believe that HR is not supporting the strategic agenda of the company. They are now toying with the idea of changing the leadership in the HR division and also effecting radical changes in the structure of the HR department.

Questions for discussions and solutions

1) Do you agree with the opinion of the top management that HR department is not effective in handling the attrition and absenteeism problems of Big Data Analytics department?
It is to be noted that that in Century Software, a management consulting, technology development & outsourcing services company having 1,25,000 employees on its payroll, offices in 110 cities globally, the people management cost constitutes nearly 59% of its total expenses. Hence it is but natural that Top Management would be concerned about the efficiency of the HR department since a sizeable portion of its revenue vis a vis expenses goes to people management. The Top Management would be looking at optimising its cost per employee of its various business departments vis a vis the revenues generated and their contribution to the overall revenue of the company. 

In the case of Century Software, one of its core departments Big Data Analytics is facing a serious erosion of manpower and has a high attrition rate. Although this issue has been identified, serious taken note of and actionable measures like Exit Interviews undertaken to get to the root cause of the problem, still there has been no significant improvement observed in stemming the flow of people leaving the organization. Hence the Top Management who would be monitoring the situation and evaluating the results of the actions taken, it’s effectiveness would naturally be concerned. If it is being reported to them by HR Head that action is being undertaken, Top Management would be looking at results, better changes and improvement in the scheme of things to come. However that was not to be seen or evident. Hence the Top Management is bound to be opined that HR department is not effective in handling the attrition and absenteeism problems of Big Data Analytics department. 

2) According to you, what needs to be done by the HR department from HR metric perspective to tackle the situation?
The HR department in order to tackle the situation from HR metric perspective should have regular reporting to the Top Management. A frequency to be defined. The HR metrics data should be collated, analysed and reported to Top Management with their comments and action plan for the future. Since the time of Top Management is valuable, the information being reported should be that which needs their urgent attention, be short, summarized and crisp. Top Management is not interested in going through volumes of reports and data. They are more interested in the outcomes and results and how it is helping the business. The information should speak the language of the Top Management.

It may help that before deciding on reporting structure, frequency, desired reporting method, etc…inputs from the Top Management to the HR Department be given as to what exact information is being desired and in what manner. Defining, in measurable, outcome-oriented terms. Clarity on this may make things easier and that may perhaps resolve the issue of reporting in desirable and actionable form for initiating necessary action. 

The HR department at Century Software may be using numerous metrics that may be providing information as to how the HR function is performing; however there may be some metrics that may be more important than others depending on the organization’s goals and strategy. At times, it is necessary to evaluate that as well i.e. effectiveness of the metrics being deployed. It may not be a bad idea to ask the Top Management for guidance as to whether this is the information which they desire or is there anything else that is required – what metrics are most important to the organization. Clarity of communication on it may help make the road ahead easier and perhaps keep the Top Management on less tenterhooks of the HR department.

3) If you were to be a HR consultant, what will be your specific suggestions and strategy to improve the efficacy of HR department?
If I were to be a HR consultant I would first of all look at the entire HR Metrics structure itself, look at the metrics being used and information being generated out of it. Four crucial considerations that need to consider when using HR metrics include:
•What metrics are most important to the organization?
•What data needs to be gathered or tracked to calculate these metrics?
•How will the data be analysed and benchmarked?
•How will the analysis be used for action planning, development/improvement, and problem-solving?

If the metrics do not satisfy any of these crucial considerations, then it needs to be looked at as to whether it makes sense to gather so much data and report when it is not really useful. Sometimes it is prudent to have only few metrics that are in line with the business requirements of the organization as compared to having many. Too much volume of data may lead to information overload and chances are that in it one may tend to miss out on crucial details that get hidden / over sighted in tonnes of data.

Have a Dashboard. A dashboard facilitates effective monitoring at all levels and makes management of implementation and related actions easier. A good dashboard that provides measures of leading indicators to help the Top Management understand what is important to the employees, how well it is delivering on those things that are important, the reaction of its employees, and the capacity of its work processes and delivery systems. With this advance knowledge, Top Management can make better decisions about the actions needed to be successful, bring more value to the workplace, and respond effectively to changing circumstances and new opportunities.