In a world where we often let the numbers do the talking, two figures in particular are speaking volumes at Hitachi.
Only three years ago, the company’s operating profit margin was 4.7% on a $90 billion annual revenue, trailing the likes of GE and Siemens by more than half. Fast forward to 2016 and the figure is just shy of its 7% target, for the first time in Hitachi’s 106-year history, the result of an ambitious transformation plan, in which data analytics has played a significant role.
The Tokyo-headquartered business was introduced to cloud-based technology from Workday, a provider of enterprise cloud applications for finance and HR, in February this year. A few months in and the solution is fueling Hitachi’s move to a more aligned culture – that elusive Holy Grail of any multinational conglomerate which needs a displaced and decentralised workforce to work as one to achieve its objectives.
And the company has an ambitious goal to reach, namely to cement its status as a global player through a focus on its social innovation business, which combines IT and social infrastructure to improve the quality of life and promises us a world of sky taxis and micro-chipped-driven farming.
While analytics isn’t new per se, here it is the scope and detail of the data available which differentiates the proposition. Covering the core HR elements of compensation, absence, performance and talent management, reports and dashboards drill down and unearth the stories on gender equality, race and age in detail. The result is more visibility around the diversity of the workforce, which far from a box ticking compliance, is emerging as a key factor in ensuring the mix of perspective and creativity needed to foster innovation.
The result is an ever expanding library of intellectual property able to proactively manage gaps and address root causes, an intelligence now underpinning the company’s entire HR global strategy.
“Traditionally, HR data has been very primitive within the company which has left leaders having to make assumptions about headcount and labour costs,” said Imtiaz Shaikh, senior vice president for the global human capital division of Hitachi.
“Of course, people found ways to cope using local teams but without this basic foundation of data, there was a lack of overall HR strategy from the top down and without a deep understanding of exactly who was working for us, we were running blind.”
With 70% of costs spent on labour, it was the need to know more about those on the payroll which inspired the initial take up, in partnership with DayNine, a consultancy which specialises in Workday deployments.
Tapping into DayNine’s expertise meant Hitachi could sound out the technical capabilities of the solution before committing to a particular project as well as benefitting from training and counsel of the team’s onsite presence in Tokyo, Shanghai, Singapore and London.
Insight on employees’ length of service, their job level, who they reported to along with the number of contingency workers were just some of the fundamentals that had gone under the radar due to the scope of a business spanning 1,000 subsidiaries across the world and collectively employing around 330,000 people worldwide.
Yet having a greater steer on the basics while useful, only scratched the surface. Data itself has never been in short supply here, but the game changer was how it was being used and managed and critically, the speed of collation. While enterprise-wide HR reports had been generated in the past, the time taken to amass the data would often render the information obsolete by the time of the report’s completion. Now this process had become significantly faster along with the in-depth trend analysis which enables more strategic use of intelligence to predict and influence outcomes. In turn this has seen a shift in HR from a previous reactive fire fighting role to a more proactive driver of cultural transformation.
It’s evident in the area of accountability, with 89,000 employees already on a performance management programme, a move that has seen far more of the workforce become more strongly aligned to the organisation’s core goals and strategy, information which up until now, only the most senior teams would be privy to. Crucially, it’s a level of exposure, which has brought more clarity to Hitachi’s direction.
Furthermore, high performing employees can be more easily spotted and rewarded to pre-empt the risk of being poached from a competitor, while long serving contingency workers are identified with the view to converting them to permanent staff.
It’s the kind of tangible impact which begs the question why in general, analytics has remained so stubbornly underused in the HR arena, despite its proliferation across many other strands of the workplace. Like the proverbial of oil and water, HR and technology have traditionally not mixed, something Shaikh attributes to an ingrained intimidation of dealing with numbers and the perceived complexity. However, buoyed by the success of Workday and the discipline’s elevated status and impact, he is predicting a seismic shift from traditional reticence to a situation in which analytics become completely central to how HR is delivered.
“As soon as I came to this space, I realised that business leaders need facts, not emotions. HR used to be more about a softer, emotive approach, which lacked credibility. Now I have the specific reports and facts, I can go to the CEO and tell him why people are leaving for example and its information that he knows he can rely on; analytics has given me a seat at the top table.”
He recounts a recent conversation with a business partner in Silicon Valley, who was so impressed by the analytics he had seen first-hand he has continued to make his own data discoveries while seeing HR in a whole new light.
He added: “It’s typical of the huge excitement and buzz that the kind of information we are accessing has generated and this is only going to increase. Analytics will be central to how we develop our leaders to meet the challenges of tomorrow, to thrive in a market where everything is faster and can develop and coach the talent under them. Having the very best people in place from the start is critical.”
And used in tandem with the very best analytics, it’s a potent combination.