Aberdeen Group_Workforce Analitycs

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Workforce AnalyticsBusiness Intelligence Meets Human Capital

Management

October2007


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Workforce Analytics: Business Intelligence MeetsHCM

2007 AberdeenGroup.

Telephone: 617 7237890

Executive Summary

Workforce analytics is not a new concept. The ability to measure

human capital metrics to obtain greater insight into workforce-relatedissues has been possible for well over a decade, however feworganizations have adopted the practice in a meaningful way. Whilecompanies continue to struggle with the concept of workforceanalytics, there is no doubt that adopting a more sophisticatedworkforce performance measure allows human capital practitioners tomore accurately target needed solutions and play a more strategic rolein overall business development. This report is a roadmap for the restof the Human Capital Management (HCM) community that desires toachieve those goals through the Best-in-Class use of workforceanalytics.

Best-in-Class PerformanceAberdeen used four key performance criteria to distinguish Best-in-Class companies:

The ability to collect, compute, and report on a robust set ofHCM

data metrics

HCM data is delivered in a manner consistent withstrategic priorities

The integration of HCM data with other relevant business-related data

The ability to model HCM scenariosCompetitive Maturity Assessment

Survey results show that the firms enjoying Best-in-Classperformance shared several common characteristics.

Identify key HCM metrics (93%) The ability to search or query HCM data (93%) The ability to verify accuracy of HCM data points and metrics(80%)

The ability to make strategic decisions based on HCM data(71%)

Required Actions

In addition to the specific recommendations in Chapter Three ofthis report, to achieve Best-in-Class performance, companiesmust:

Measure the impact of the system within the organization Ensure the accuracy of the data utilized by the system

Use workforceanalytics data bothtactically and strategicall


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Research Benchmark

Aberdeens Research Benchmarks provide an in- depth andcomprehensive look into process, procedure, methodologies, andtechnologies with best practice identification and actionablerecommendations

"Analyzing our workforcerelative to employerneeds, now and fiveyears out, and

identifying trends nationallyand locally in order tobenchmarkourselves, are probably themost important things wemeasure. We use theinformation to brainstormand problem solve inproblem areas."

~ Chief HR Officer, mid-sized healthcare facility,using an ERP software

solution


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Table of Contents

Executive Summary....................................................................................................... 2

Best-in-Class Performance..................................................................................... 2Competitive MaturityAssessment....................................................................... 2

RequiredActions...................................................................................................... 2

Chapter One: Benchmarking the Best-in-Class..................................................... 4

Business Context ..................................................................................................... 4

The Maturity Class Framework............................................................................ 6

The Best-in-Class PACE Model............................................................................ 6

Best-in-Class StrategicActions............................................................................. 7

Chapter Two: Benchmarking Requirements forSuccess.................................... 9

CompetitiveAssessment........................................................................................ 9

Capabilities and Enablers......................................................................................10

LookingAhead........................................................................................................12

Chapter Three: RequiredActions .........................................................................15

Laggard Steps to Success......................................................................................15

Industry Average Steps to Success ....................................................................15

Best-in-Class Steps to Success............................................................................16

Appendix A: Research Methodology.....................................................................17

Appendix B: Related Aberdeen Research............................................................19

Figures

Figure 1: Top Coverage Areas of Measurement Initiatives................................. 5Figure 2: Top Pressures............................................................................................... 5

Figure 3: Best-in-Class StrategicActions................................................................. 7

Figure 4: Satisfaction with Current Workforce Analytics Solution ..................8

Figure 5: Best-in-Class Capabilities .........................................................................11

Figure 6: Top Technology Enablers ofBest-in-Class ..........................................13

Figure 7: Return-on-Investment...............................................................................13

Tables

Table 1: Top Performance Earns Best-in-Class Status......................................... 6

Table 2: The Best-in-Class PACE Framework .......................................................7Table 3: The Competitive Framework...................................................................10

Table 4: The PACE Framework Key ......................................................................18

Table 5: The Competitive Framework Key ..........................................................18

Table 6: The Relationship Between PACE and the Competitive Framework.........................................................................................................................................18


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Chapter One:Benchmarking the Best-in-

ClassBusiness Context

Workforce analytics can be an intimidating topic. It often evokes asense of rigidity and dehumanization that is contrary to the mission ofmost human capital practitioners. It also seems, at first glance, to bea terribly complex process, due to its close relationship with BusinessIntelligence (BI). Additionally, human capital metrics are usuallyconsidered a secondary consideration in regards to other corporatedata sources, and continue to be (in many cases) an untapped mineof strategic and operational data.

However, workforce related expenditures are one of the singlelargest corporate expense lines, and employee performance is oneof the most important success factors for any organization. Bettervisibility into the dynamics that impact these two critical areasallows companies to make better, faster decisions that positivelyimpact the bottom line.

Confus ion Abound sThe practice of applying quantifiable and objective measures to betterunderstand and develop these resources remains under-utilized in theHR departments. Part of this can be attributed to an overall lack ofunderstanding of just what workforce analytics is and does. When

asked to define workforce analytics, Aberdeen survey respondentsprovided explanations that ranged from the very simple to the quitecomplex, illustrating the confusion surrounding the topic, and the widerange of possible deployments. At its core, Aberdeen definesworkforce analytics as, ultimately, any systemic way in which acompany measures and analyzes information around a topicpertaining to human capital management.

Most companies are already doing this, to some extent. Eighty-fourpercent (84%) of respondents that claimed their organization did nothave a workforce analytics solution also indicated that they domeasure and analyze performance across at least one of 14 HCM

coverage areas identified in the survey. This disconnect perfectlyexemplifies the hypothesis that while companies may be measuringtheir HCM performance in a variety of ways, they often don't consider itto be part of a workforce analytics initiative. Workforce analytics neednot be an arduous large scale technology implementation - it can be assimple as comparing a few key metrics and monitoring them over time.However, a truly effective workforce analytics solution needs to includea wide enough variety of data points to effectively measure the criticalfactors that impact the overall health of an organization.

Areas o f FocusRespondents haveimplemented measurementinitiatives around a variety ofareas, spanning the spectrumof HCM. Five areas are beinmeasured by


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Fast Facts

89% of respondents measure workforce performance in regards toemployee performance management

81% of Best-in-Class organizations report on HCM data in amanner consistent with their strategic priorities

80% of Best-in-Class companies are satisfied with theirworkforce analytics solution

Our current system is manually intensive, time consuming, and prone toerrors."

~ Senior Operations Manager, mid-sized professional services firm,currently using spreadsheets from various applications to compile

workforce data


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more than 80% of all survey respondents: employeeperformance, compensation, staffing, benefits, and payroll.

Figure 1: Top Coverage Areas of Measurement Initiatives

Employee Perf ormance

Compensation

Staff ing

Benef its

Payroll

General personnel statistics

Retention

Rew ards

64%

62%

62%

89%

88%

85%

84%

84%

All respondents

"Anything that measureswhat our workforce is doingis part of our solution.Demographics, turnover,expected retirements,employment equity,breakdowns by jobfunction/title, etc. It is allimportant to measure."

~ HR Specialist, largeeducation institution,

using ERP HCManalytics solution

0% 20% 40% 60% 80% 100%

% of Respondents Measuring Area

Source: Aberdeen Group, October2007

Pressures Faced

Companies are facing a variety of pressures which are driving theiradoption of workforce analytics solutions. The leading pressure,reported by 56% of all respondents, is the need to improve overallcompany performance.

Figure 2: Top Pressures

Improve overall company perf ormance 56%

Increase quality of HR-related decisions

Maximize productivity

38%

36%

Business process management initiative 16%

Reduce costs 14%All respondents

0% 20% 40% 60% 80%

% of Respondents Identifying Pressure


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Definition ofMaturity Class

Mean Class Performance

Best-in-Class: Top20% of aggregate

performance scorers

Collect, compute, and report on an average of98data points

81% report on HCM data in a manner consistentwith their strategic priorities

78% successfully integrate HCM data with othercorporate data

Industry Average:Middle 50% of

aggregateperformance scorers

Collect, compute, and report on an average of27

data points



Laggard: Bottom30% of aggregate

performance scorers

Collect, compute, and report on an average of 6data points



0% successfully model HCM scenarios

The Maturity Class Framework

Aberdeen used four key performance criteria to distinguish the Best-in-Class companies from Industry Average and Laggard organizations. A

robust set of HCM data points measured, alignment of HCM reportingin accordance with strategic priorities, the ability to successfullyintegrateHCM data with other appropriate corporate data (financial, sales, CRM,etc.), and the ability to successfully model HCM scenarios forforecasting or predictive insight were all used to determine the Best-in-Class organizations.

Table 1: Top Performance Earns Best-in-Class Status

"We currently reportquarterly, but doing itmonthly would allow for aneven quicker response tosituations in need of beingaddressed."

~ Senior Manager,Business Intelligence, mid-

size consulting firm, using BIsoftware

Source: Aberdeen Group, October

2007

The Best-in-Class PACE Model

To achieve Best-in-Class performance, as outlined in Table 1,requires a combination of strategic actions, organizationalcapabilities, and enabling technologies, as illustrated in Table 2.

Best-in-Class organizations are responding to the pressure to improvethe quality of their HR-related decisions, a slightly more strategic goalthan the tactical need to improve bottom-line performance reported by


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the majority of survey respondents. This narrower approach (measureHR better versus fix the whole company) allows Best-in-Classcompanies a more targeted focus in regards to a workforce analyticssolution.


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Table 2: The Best-in-Class PACE Framework

Pressures Actions Capabilities Enablers

Improve quality ofHR-relateddecisions

Provide on-demand

access to keyHCM metrics forstakeholders

Quantify theimpact

of HCM data on theorganization

Identified key HCMmetrics

Calculate key HCMmetrics

Leverage HCM data intandem withother corporatedata

Verify the accuracy ofHCM data points

Measure impact of HCMdecisions onthe

organization

Software with HCM analytics capabilityData warehouse of HCM dataInteractive analytics dashboard orscorecard

Searchable access to key HCMSecurity toolsDrill down data capabilityData modeling and forecasting toolsStandardized set of preconfigured reportsCustom report building toolsGraphical data display toolsData integrity and cleansing toolsHistorical trending tools

Source: Aberdeen Group, October 2007

Best-in-Class Strategic Actions

Best-in-Class organizations are utilizing both standardized andcustomized approaches when implementing workforce analyticssolutions. Forty percent (40%) of Best-in-Class companies areregularly reporting on key HCM metrics while also providing ondemand access to key HCM metrics for stakeholders. This two-tieredapproach provides both a framework for success and a level offlexibility necessary in real-world situations.

Figure 3: Best-in-Class Strategic Actions

Provide on demand access to key HCM

metrics f or s takeholders40%

Quantif y impact of HCM data reporting

on the organization33%

Accelerate delivery time of human

capital-related data33%

Document Workf orce Analytics

processes and procedures20%

Best-in-Class

0% 10% 20% 30% 40% 50%

% of Respondents Identifying Action


Industry Average companies identify regularly reporting on key HCM


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metrics, but are less likely to provide on demand access to the data when


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necessary. Laggard companies remain challenged by process - themost prevalent strategy identified is documenting workforce analyticprocedures, an action that implies an entry-level approach to asolution.

Sat isfact ion Fol lows Successfu l Implementat ionDoing it right also has its benefits: Best-in-Class companies are morelikely to report being satisfied with their workforce analytics solutionthan either Industry Average or Laggard companies. While no Best-in-Class companies reported being unhappy with their currentworkforce analytics solution,31% of Industry Average companies reported being dissatisfied with theirworkforce analytics solution, as did nearly half (45%) of allLaggard organizations.

Figure 4: Satisfaction with Current Workforce Analytics Solution

100%

80%

60%

40%

20%

0%

80%

0%

50%

31% 30%

45%

Best-in-Class Average Laggard

% of Respondents indicating satisfaction

Very or somew hat satisf ied Very or somew hat dissatisf ied


Aberdeen Insights - Strategy

A workforce analytics solution does not need to be all encompassingin order to be considered successful. Instead, organizations need toidentify the areas that would most benefit from increased visibility,and then work to create a solution for that specific issue. Attemptingto measure everything possible all at once is a recipe for disaster,unless an organization has considerable resources and a high levelof commitment to the success of the project. While there are certainlytechnology solutionsto assist in this process, they are not critical to begin a small scaleinitiative. Most companies find that implementing a simple, yetinsightful analytics solution can pave the way for more comprehensiveanalysis in the future. The lessons learned, and experience garneredduring a smaller scale deployment can be applied to more ambitiousprojects moving forward.

"We use a workforceanalytics solution, but weneed to take a moresystemic approach to

data collection and usageinorder to really use it to itsfull advantage."

~ Senior HR Manager,

US municipality, using

specialized workforce

analytics software


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In the next chapter, we will see what the top performers aredoing to achieve these gains.


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Chapter Two:Benchmarking Requirements for

SuccessThe implementation of a workforce analytics system plays a crucialrole in the ability of HCM practitioners to effectively convert theirstrategic actions into actual performance capabilities.

Case Study - Training Initiative Lacks Robust Functionality

A leading financial services firm implemented a workforce analyticssolution to better monitor its in-house learning and developmentefforts in July2006. This system replaced an existing solution that had beenprimarily managed and operated by the supplying vendor. Theinstallation went smoothly, and was completed on schedule.

The program manager responsible for training solutions is the primaryuser of the system. While she finds it helpful in general, she hasdiscovered several system limitations that she finds frustrating.

First, the system does not incorporate other data sets that wouldprovide valuable insight for strategic use. For instance, websitemetrics showing data about total site visits to her enrollment site,and page navigation information that is captured by other webanalytics software is not examined in tandem with enrollmentinformation in either system. Comparing the two data sets wouldallow the company to identify those courses that are considered, butnot registered for, as well as ones that may not be getting anyattention from visitors to the site.

Secondly, the system can provide basic information, but not in aneasy to use or analyze format. For example, reports includeinformation on the number of courses offered during a particulartime period, and the total enrollment during a particular time period,but does not provide percentage of enrollment versus total coursesdelivered. Those figures must be computed manually. This limitedvisibility (and additional work) takes away from the overallsatisfaction with the solution.

The program manager was quick to state that it may be her lack ofknowledge about system capabilities: "It can do so much, sometimes Idon't know what is and isn't possible. But I don't have the time to findout."While not unhappy with the system, she does often wish it waseasier to utilize and navigate.

Fast Facts 80% of Best-in-Class

companies verify theaccuracy of HCMmetrics

50% of Best-in-Classcompanies plan toimplement datasimulation technology inthe next 24 months

"I don't have time tobecome an analytics expert.I just want the system towork, and provide thereports I need to do my job."

~ Program Manager,leading financial services

firm using a specializedworkforce analytics solution

Competitive Assessment

The aggregated performance of surveyed companies determinedwhether they ranked as Best-in-Class, Industry Average, or Laggard.


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In addition to having common performance levels, each class alsoshared characteristics in five key categories: (1) process (the ability todetect and respond to changing conditions without placing additionalburdens on the organization); (2) organization (corporate focus andcollaboration among stakeholders); (3) knowledge management(contextualizing data and exposing it to key


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Best-in-Class Average Laggards

ProcessIdentified key HCM metrics

93% 61% 38%

OrganizationVerify the accuracy of HCM data points and metrics

80% 46% 6%

KnowledgeRegularly produce HCM reports for internal use

93% 50% 25%

Technology

Workforce analytics technology currently in use

93% searchor

querytechnology

87%graphical

datadisplay

87% drill downdata capability

87%custom

reports

85%standard

report set

79%interactive

42% searchor

querytechnology

56%graphical

datadisplay


58%custom

reports

72%standard

report set

32%interactive

17% searchor

querytechnology

31%graphical

datadisplay


33%custom

reports

44%standard

report set

31%interactive

Performance Impact of HCM decisions on the organization is40% 24% 13%

stakeholders); (4) technology (the selection of appropriate tools andintelligent deployment of those tools); and (5) performancemanagement (the ability of the organization to measure the benefitsof technology deployment and use the results to improve keyprocesses further). These characteristics (identified in Table 3) serveas a guideline for best practices, and correlate directly with Best-in-Class performance across the key metrics.

Table 3: The Competitive Framework

"The system is helpful, butnot utilized to its fullestextent. It helps in basic stuff,like reviewing turnover,monitoring recruiting, andidentifying high potentialemployees, but we could doso much more."

~ HR Director, largeindustrial manufacturing

firm, using BI HCM solutionand specialized HCM

analytics software


Capabilities and Enablers

Based on the findings of the Competitive Framework and interviews


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with end users, Aberdeens analysis of the Best-in-Classdemonstrates that


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implementing the appropriate building blocks for success is criticalto any workforce analytics system.

Best-in-Class organizations demonstrate significant facility in

accomplishing the fundamental functionality of a workforce analyticsimplementation: they have identified the key HCM metrics, report theresults, calculate performance metrics, and verify the accuracy ofHCM data. They are also sharing the information, making decisionsbased on the data, and using it in conjunction with other companyinformation.

Figure 5: Best-in-Class Capabilities

Internally report on HCM metrics regularly

Identif ied key HCM metrics

Calculated HCM perf ormance metrics

Ver if y the acc uracy of HCM data

HCM metrics shared throughout the

organization

Make strategic decisions based on HCM

metrics

93%

93%

87%

80%

73%

Best-in-Class

71%

"Data integrity is a huge

issue. Maintaining aconsistency of measurementand analysis across nationaland divisional boundaries,using the right measures,and getting beyond simplehistorical data analysis isreally critical to our effortsmoving forward."

~ VP HR Manager,large banking institution,

using ERP software and aspecialized workforce

analytics solution

0% 25% 50% 75% 100%

% of Respondents Identifying Capab il ity


ProcessNinety-three percent (93%) of Best-in-Class companies reportedhaving identified key HCM metrics for their organization, comparedwith 61% of Industry Average companies, and just 38% of Laggard

companies. Without have a firm grasp on the key metrics to measureand compile, a workforce analytics implementation is doomed to fail.Best-in-Class organizations have clearly mapped out the key datapoints needed to compile the information most useful to their efforts.

OrganizationVerifying the accuracy of data is a critical component of any dataanalysis effort: a report that cites inaccurate information is worse thanuseless - it can be dangerous. Best-in-Class organizations recognizethis, and 80% have implemented processes to verify the accuracy of


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HCM data points and metrics. Forty-six percent (46%) of IndustryAverage companies report the


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ability to verify data accuracy, while just 6% of Laggard companiesclaim the ability to do so.

Knowledge ManagementSimply collecting and computing data is not enough; the informationmust be utilized and reported to key stakeholders. Ninety-three percent(93%) of Best-in-Class companies regularly report on HCM metricswithin the organization, compared with 50% of Industry Averagecompanies, and just25% of Laggard organizations. Twenty-nine percent (29%) of Best-in-Class companies regularly report on HCM metrics outside theorganization (SEC, investor reports, etc.)

TechnologyBest-in-Class companies are far and away outpacing Industry Average

and Laggard organizations in the adoption of technology solutions forworkforce analytics. Currently, the majority of Best-in-Class companiesare outperforming Industry Average and Laggard companies acrossevery technology enabling solution monitored in the Aberdeen survey.Best-in- Class companies have implemented tools to allow the basicsof workforce analytics functionality (standard and custom reporting,searching / querying, displaying data, drilling into data) and arebeginning to adopt technology solutions to better manage andmaintain the data (data integrity, data cleansing, security, datawarehousing, etc.) and to allow more strategic useof the information (dashboard, trending, modeling, forecasting,simulations,

etc.).

Performance ManagementForty percent (40%) of Best-in-Class companies measure the impactof HCM decisions within the organization. Twenty-four percent (24%)of Industry Average companies do, and 13% of Laggard companiesdo. Not understanding or quantifying how well (or how poorly) HCMinitiatives fare creates an information vacuum, and does not allow forfine-tuning or corrections in future endeavors.

Looking Ahead

Best-in-Class companies are not content to rest on their laurels - theyare planning for future functionality. While approximately 90% of Best-in-Class companies currently possess searchable access, drill-downdata capabilities, graphical data display tools, custom reporting andpreconfigured reports, nearly all the remaining Best-in-Classcompanies report plans to implement this functionality in the near-term future. And though approximately 80% of Best-in-Classcompanies already use an interactive reporting dashboard andhistorical trending tools, the remaining 20% of Best-in-Classcompanies report plans to adopt these technologies in the next six to

24 months.

The tools that have beenleast adopted by Best-in-Class organizations arethose that provide a greaterdegree of insight andstrategic functionality,


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"I would really like to implement better data quality checks, and the useof a business rules engine to allow for accommodating complexchanges in the data."

~ Senior Manager, Business Intelligence, mid-size consulting firmusing BI software


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including modeling / forecasting tools and data simulation tools.Both of those tools have high planned adoption rates by Best-in-Class companies over the next six to 24 months.

Figure 6: Top Technology Enablers of Best-in-Class

Searchable access

Historical trending

Interactive dashboard

Data modeling & f orecasting 57%

80%

79%

93%

42%

7%

20%

21%

Drill-dow n data capability

Graphical data display

Custom reports

HCM Data w arehouse

Preconf igured reports

87% 7%

87% 7%

87% 7%

73%21%

85% 8%

Security tools

Data simulation

Data c leansing

43%

60%

73%

50%

27%

20%

Current Planned40% 60% 80% 100%

% of Respondents Identifying Enab lers


Worth the InvestmentFifty-three percent of Best-in-Class organizations reportexperiencing a positive ROI from their workforce analytics initiative,compared with just19% of Industry Average companies and only 5% of Laggard firms.

Figure 7: Return-on-Investment

80%

60%

40%

20%

0%

53%

19%

5%13%

33%37%

33%

48%

58%

"By reducing overallemployee turnover andincreasing employeeproductivity, we have mostdefinitely experienced apositive return on investmentwith our workforce analyticsimplementation."

~ HR Manager, mid-sizedYes No Don't Know

% ofRespondents

Best-in-Class Average Laggard

financial services firm,using specialized workforce

analytics solution



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Aberdeen Insights - Technology

Implementing a workforce analytics solution is not a magic fix - itrequires consideration and careful planning in order to operate to its

full potential. Without careful forethought, confusion abounds, and theinitiative may not be as successful as anticipated. Data integrity,reporting guidelines, and identifying the proper measures to bestimpact the organization are critical factors to address beforeembarking on any workforce analytics initiative. The technologyenablers are simply tools to assist and streamline processes- they do not take the place of careful planning.

"We use a workforceanalytics solution, but weneed to take a more

systemic approach todata collection and usage inorder to really use it to itsfull advantage"

~ Senior HR Manager,US municipality, usingspecialized workforce

analytics software


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Chapter Three:Required Actions

Whether a company is trying to move its performance in workforceanalytics from Laggard to Industry Average, or Average to Best-in-Class, the following actions will help spur the necessary performanceimprovements:

Laggard Steps to Success

A workforce analytics initiative need not be cumbersome. Often, usingsimple data points in a consistent and concise manner can elicit agreat deal of insight into a particular function, and serve as alaunching pad for future analysis. Starting on a small scale andexpanding when appropriate is a perfectly sensible approach to

adopting a workforce analytics solution. Stay focused. Identify a particular point of pain within the

organization, and determine what information would assist inmaking more informed decisions in regards to that issue. Only38% of Laggard companies have identified the key HCMmetrics that need to be measured.

Assure the quality of workforce data. Just 6% of Laggardcompanies report being able to verify the accuracy of theirHCM data and metrics. Carefully monitoring the data that isused, and implementing tools to assist in maintaining dataintegrity, are critical technology enablers.

Quantify the results, and measure the success of theprogram. Best-in-Class companies are three-times morelikely to measure the impact of HCM metrics on theorganization than Laggard companies. (Industry Averagecompanies are almost twice as likely as Laggards to measurethe impact to the organization.) Obtain input fromstakeholders about ways to enhance performance, andproactively put a plan in place to implement the changes.

Industry Average Steps to Success

Industry Average companies have demonstrated a reasonable facility

in certain areas of workforce analytics, but lack many of buildingblocks necessary for long-term success. These companies appearcontent with simply implementing a system and then letting it alone. Asuccessful system needs continued nurturing and care.

Tighten controls around the collection and manipulation ofworkforce data. Verify the accuracy of all data sets, documentthe procedures necessary to fuel the system, and dogmaticallyreporton the results in a regular fashion. Best-in-Class companiesare

twice as likely asIndustry Averagecompanies to reportbeing ableto verify the accuracyHCM data and toregularly report onHCMmetrics within theirorganization.


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Fast Facts

Best-in-Class companies are six times as likely as Laggard firms touse advanced statistical analysis tools

Best-in-Class companies are twice as likely to measureperformance around learning and skill development than Laggardcompanies

Best-in-Class companies are almost 11 times more likely to report apositive ROI on their workforce analytics initiative than

Laggard companies.


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Integrate other company data with HCM information toprovide a more in-depth view of the organization. Only7%of Industry Average companies rate their ability to use andcompare HCM data and / or metrics with other corporate dataas good or excellent, compared with 78% of Best-in-Classcompanies. Financial data, sales performance, customerservice records, operations metrics, etc. all can enhanceworkforce analytics efforts.

Use the information collected and compiled in both atactical and strategic fashion. Best-in-Class companies arethree times more likely to make strategic decisions based onHCMmetrics than Industry Average companies. Applyingworkforce analytics data to strategic planning initiatives

increases the visibility of the project and the quality of thedecision-making.

Best-in-Class Steps to Success

Best-in-Class organizations must continue to monitor the success oftheir current initiatives, while expanding on their existing capabilities.

Adopt new ways to expand workforce analytics efforts toprovide even more strategic functionality. Data modeling,forecasting, simulation, and advanced statistical analysis toolsallow a much more robust view of the data, and can help shapethe future

of the organization. Less than one-third of Best-in-Classcompanies currently do all three.

Continue to monitor and control the fundamental buildingblocks of the current initiative. Best-in-Class companies areadopting tools to secure, store, and assure the quality of HCMdata at much higher rate than other companies, however lessthan 50% ofBest-in-Class companies have implemented allthree of these solutions in tandem. Corrupt data, avoidablesystem errors, and inaccurate reporting can jeopardize thelevel of faith placed in the results generated by any workforceanalytics system.

Benchmark performance against external data. Fortypercent (40%) of Best-in-Class organizations currentlycompare their internal data with available industry data(salary info, benefits data, workforce demographics, etc.).Understanding where thecompany stands in comparison to other companies provides amuch higher level of insight than simply examining internal dataalone.

Aberdeen Insights - Summary


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Workforce Analytics seem far more complicated than they actuallyare - yet they are not nearly as simple as some would hope. As withany important initiative, proper planning and implementation proveto be the ultimate measures of success. A small amount of effort atthe start of the process can reap significant benefits.


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Appendix A:Research

MethodologyBetween July and September 2007, Aberdeen examined the use,the experiences, and the intentions of more than 200 enterprisesregarding workforce analytics solutions in a diverse set ofindustries.

Aberdeen supplemented this online survey effort with telephoneinterviews with select survey respondents, gathering additionalinformation on workforce analytic strategies, experiences, and results.

Responding enterprises included the following:

Job title: The research sample included respondents with thefollowing job titles: manager (31%); director (23%); vicepresident (14%); senior management (10%); staff (9%), andconsultant or other (9%).

Function: The research sample included respondents with thefollowing functional areas of responsibility: human resources(60%); operations (5%); strategic development (5%); businessprocess management (5%); finance (4%); and IT (4%).

Industry: The research sample included respondentsexclusively from the following industries: high technologysoftware (16%); health/medical/dental (15%); finance / banking/ accounting (9%); education (9%); computer equipment and

peripherals (7%); and utilities (7%) Geography: The majority of respondents (75%) were from

North America. Remaining respondents were from the Asia-Pacific region (8%) and EMEA regions (17%).

Company size: Twenty-eight percent (28%) of respondentswere from large enterprises (annual revenues above US $1billion); 39% were from midsize enterprises (annual revenuesbetween $50 million and $1 billion); and 33% of respondentswere from small businesses (annual revenues of $50 millionor less).

Headcount: Fifty-two percent (52%) of respondents were fromlarge enterprises (headcount greater than 1,000 employees);29% were from midsize enterprises (headcount between 100and 999 employees); and 19% of respondents were from smallbusinesses (headcount between 1 and 100 employees)

Solution providers recognized as sponsors of this report were solicitedafter the fact and had no substantive influence on the direction of theMeasuring with Metrics report. Their sponsorship has made it possiblefor Aberdeen Group to make these findings available to readers at nocharge.


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Table 4: The PACE Framework Key

Overview

Aberdeen applies a methodology to benchmark research that evaluates the business pressures, actions,

capabilities, and enablers (PACE) that indicate corporate behavior in specific business processes. Theseterms are defined as follows: Pressures external forces that impact an organization s market position,

competitiveness, or business operations(e.g., economic, political and regulatory, technology, changing customer preferences, competitive)

Actions the strategic approaches that an organization takes in response to industry pressures (e.g., alignthe corporate business model to leverage industry opportunities, such as product / service strategy, targetmarkets, financial strategy, go-to-market, and sales strategy)

Capabilities the business process competencies required to execute corporate strategy (e.g., skilledpeople, brand, market positioning, viable products / services, ecosystem partners, financing)

Enablers the key functionality of technology solutions required to support the organizations enablingbusiness practices (e.g., development platform, applications, network connectivity, user interface, trainingand support, partner interfaces, data cleansing, and management)


Table 5: The Competitive Framework Key

Overview

The Aberdeen Competitive Framework definesenterprises as falling into one of the following threelevels of practices and performance:

Best-in-Class (20%) Practices that are the bestcurrently being employed and are significantlysuperior to the Industry Average, and result in the top

industry performance.Industry Average (50%) Practices that representthe average or norm, and result in average industryperformance.

Laggards (30%) Practices that are significantlybehind the average of the industry, and result inbelow average performance.

In the following categories:

Process What is the scope of processstandardization? What is the efficiency and

effectiveness of this process? Organization How is

your company currentlyorganized to manage and optimize this particular

process?Knowledge What visibility do you have into key

data and intelligence required to manage thisprocess? Technology What level of automation

have you usedto support this process? How is this automationintegratedand aligned?

Performance What do you measure? Howfrequently? Whats your actual performance?


Table 6: The Relationship Between PACE and the Competitive Framework

PACE and the Competitive Framework How They Interact

Aberdeen research indicates that companies that identify the most impactful pressures and take the mosttransformational and effective actions are most likely to achieve superior performance. The level of competitiveperformance that a company achieves is strongly determined by the PACE choices that they make and how wellthey execute those decisions.



31/31


Appendix B:Related Aberdeen Research

Related Aberdeen research that forms a companion or reference tothis report include:

The Strategic Development of Core HR Systems;September 2007 Learning and Development: Aligning Workforce with Business Objectives;

September 2007

Competency Management: The Link Between Talent Management andOptimum Business Results;August 2007

The Global War for Talent: Getting what You Want Won't Be Easy; June2007

Enhancing Operational Results with Employee Performance Management;June 2007

Information on these and any other Aberdeen publications can befound atwww.Aberdeen.com.

Author: Allison Stamm, Research Analyst, Human Capital Management,

[email protected]

Founded in 1988, Aberdeen Group is the technology- driven research destination of choice for the global businessexecutive. Aberdeen Group has 400,000 research members in over 36 countries around the world that bothparticipate in and direct the most comprehensive technology-driven value chain research in the market. Through itscontinued fact-based research, benchmarking, and actionable analysis, Aberdeen Group offers global business andtechnology executives a unique mix of actionable research, KPIs, tools, and services.This document is the result ofprimary research performed by Aberdeen Group. Aberdeen Group's methodologies provides for objective fact based

research and represent the best analysis available at the time of publication. Unless otherwise noted, the entirecontents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed,archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

As a Harte-Hanks Company, Aberdeen plays a key role of putting content in context for the global direct and targetedmarketing company. Aberdeen's analytical and independent view of the "customer optimization" process of Harte-Hanks (Information Opportunity Insight Engagement Interaction) extends the client value and accentuates thestrategic role Harte-Hanks brings to the market. For additional information, visit Aberdeenhttp://www.aberdeen.com orcall (617) 723-7890, or to learn more about Harte-Hanks, call (800) 456-9748 or go to http://www.harte-hanks.com

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