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Article | Beyond Data

Shape your organization’s future with workforce analytics

By Tatjana Ricketts | March 17, 2022

The way organizations are sourcing talent, defining jobs and designing work is changing, and that makes workforce planning more important than ever.
Compensation Strategy & Design
Beyond Data

Pressure points – political, health- and climate-related – have emerged and intensified in the past three years and are requiring organizations to change their approach to workforce planning. Two out of five organizations believe the way they source talent or the jobs they offer/type of work done will be significant factors in how work evolves in the next three years.

Organizations are re-examining their definition of a job, the tasks that need to be fulfilled, and how all can be reconstructed into new, optimal combinations balanced among permanent employees, contingent workers and automation/AI. With this priority, workforce planning is effectively turned on its head and is far more impactful.

Additionally, with other factors like environmental, social and governance (ESG) initiatives increasingly coming under the microscope, workforce planning itself is evolving to incorporate work and risk analyses to better predict future workforce and work requirements.

As an example, consider leadership capability. Effective leadership is a critical element in high performing businesses; after all, leaders set the organization’s vision and inspire the workforce. But along with installing the right individuals to frame and champion the desired values and culture, the shape and size of the leadership organization is an equally important requirement as it directly affects the organization’s overall agility and resilience.

When examining the organizational structure, leadership and deployment of resources, many questions come to mind:

  • Is our current leadership structure right for the strategy we want to achieve? Is it shaped for agility?
  • Do we have the appropriate layers of managerial levels and controls?
  • How does the relative size of our corporate functions (e.g., finance, human resources, corporate affairs) compare to our peers?
  • Are we too top heavy? What proportion of our workforce should be executives?
  • How many direct reports make sense? What should our span of control be?
  • Are there duplicate or shadow roles in place that could be streamlined for greater efficiency?

The new world of work has made it complicated to answer these questions as well as analogous questions about the broader workforce. By leveraging workforce analytics when you review the overall effectiveness of your current organizational structure, you get an objective picture of your organization’s shape and size relative to evolving business and work goals. You also make progress toward organization alignment, which refers to the kinds of outcomes desired, like having the right people in the right roles at the right levels, having the right spans of control to ensure efficiency and efficacy, and ensuring diversity, equity and inclusion across pay, benefits and career opportunities.

To achieve this alignment, it’s important to begin by understanding the organization’s architecture and using benchmark data to review internal metrics against peer organizations. Through benchmarking, you can apply data-based solutions to your current pain points, leverage market best practices and determine systematic approaches to change.

Let’s look at four metrics for analyzing your organizational structure.

  1. 01

    Management-level ratio analysis

    By reviewing how the current leadership distribution aligns to market practice, you can reveal managerial levels within the organization that have high incumbent counts and determine if the management structure is top heavy or too lean. Using this information, you can decide whether the structure supports the way work is established. How much supervision is required to get work done at certain levels?

  2. 02

    Function/job family ratio analysis

    By assessing whether certain functions are over- or under-staffed, you can ensure that the headcount within each work group represents its strategic priorities and core capabilities. This assessment also gives insights into how well the current structure meets the business strategy and helps determine if functional allocation is affecting how work is done and decisions are made.

  3. 03

    Levels/layers analysis

    By reviewing the number of employees by level in each layer, you can identify whether key areas across the structure are too heavy or have redundancies. Look at the number of layers against the number of levels in each role or function. An overly complex hierarchy can impact the speed of decision making, and the same level of reporting relationships can impact management relationships. For example, some managers may be too deep in the reporting layers for their level. Have these become misplaced roles? Is there slowdown in decision making because of a heavy reporting structure?

  4. 04

    People manager-to-individual contributor ratio analysis

    This analysis looks at the number of managers with direct reports in a particular function vs. the number of individual contributors who don’t have direct reports. This ensures the appropriate percentage of executives, mid-level and frontline managers to manage work effectively – and this helps determine if some critical functions may only need talent with senior-level expertise rather than people management skills. It is important to identify the appropriate ratio of leadership talent to manage work efficiently. Benchmarking data also helps correctly classify the range and type of oversight for the work.

Plan for success

Ensuring an effective organizational structure is a critical and foundational action that can build your organization’s resilience and ability to manage through change. Leveraging workforce analytics equips you with reliable insights to help inform intelligent design decisions such as:

  • Rightsizing the overall management and corporate function structure
  • Eliminating redundant, misplaced, duplicated or shadow roles
  • Ensuring that managerial spans of control reflect the changing nature of work
  • Streamlining reporting layers and decision-making processes
  • Clarifying roles and responsibilities for both managers and individuals

It’s important for organizations to understand how their work and workforce is changing, then identify improvement opportunities for organizational efficiency and effectiveness. Decisions must be based on data rather than anecdotes. In carrying out a close, more thoughtful review of evolving work goals and changes, workforce planning will enable organizations to manage through change and new risks successfully – whether it’s to respond quickly to a growth spurt, sustain profitability for the long-term or adapt to sudden and massive shifts in the competitive landscape.

Author

Tatjana Ricketts
Director, Work & Rewards
Rewards Data Intelligence
Custom Studies Leader, North America
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