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Business book review: Calculating Success

4 Jan 2012 by BusinessTraveller
“How To” business books can be placed into two camps. The first is the easy reading; change your life in a few simple steps. The second is from the consultants, who have lots of original case studies, flow charts and hard data to back up their theories. As you might guess from the title of the present book under review, it is firmly in the second camp. Its authors believe that “The connective tissue between vision and action is analytics. No matter how brilliant a company’s strategic vision, it must be evaluated against how well the market will embrace it, how its supply chain can obtain the needed resources, and how much the company can invest in that strategy. Even then the strategy will fail unless it is clear how to organise and motivate the workforce to take action.” (A brief note here – although the title calls the discipline workplace analytics, throughout the book it is referred to as workforce analytics. I’ve no idea why that is.) So what are workforce analytics? They are “ …a set of quantitative approaches that answer a simple, yet often overlooked question: what do we need to know about our organisation and workforce to run the company more effectively, and (perhaps more importantly how do we turn that knowledge into action?” The authors do go on to show various methods of doing just that and also making sure that the workforce understands management’s goals and, the authors believe, “…make more justifiable decisions and prevent arbitrary actions that can have a negative impact on individuals!” There are many case studies here which explain in detail various success stories, though as is the way with business books, yesterday’s success stories might not seem so brilliant with the passage of time. Delta Airlines is the first, and its problem in recruiting well-qualified pilots during a period of trying to drive down costs, and the case study is convincing. RBS however, is less so, and it might need a greater interval than a few years before we can consider how anythign the bank did was a success. Then there's Qantas, and how the airline “…used scorecard analytics in a unique way to articulate the goals of its strategy, frame its strategic alternatives, and drive change throughout the organisation.” The six stage process the authors believe workplace analytics needs, begins with framing the central problem. In the case of Qantas, this was “… to create new business models and reengineer existing models, while simultaneously pursuing labour-cost reductions. At the same time Qantas needed to change the attitude of both management and twenty different labour groups.” Clearly this was a mammoth task, and the method chosen for doing this by Kevin Brown, Head of Human Resources, was to focus on “one critical metric”, namely unit labour per available seat kilometre. And the authors explain why this was appropriate, and how the relevant data was first captured, then analysed, and then presented to stakeholders including business heads and the labour force. The conclusion of all of this is worth quoting at length. “Brown knew that the transformation would be disruptive, especially in the Australian labour environment. Data-based facts gave him and the executives a way through the transformation. The impact on the make-up of the workforce was huge. In nine years, Qantas separated 7,000 workers and offered another 19,000 voluntary severance packages, averaging more than 2,500 workers per year moving out of the business.  Simultaneously, Qantas hired over 32,000 workers into the newly transformed organisation over this period. Ultimately, Qantas reduced ASK per unit labour costs by 10 per cent, but also increased route miles by 75 per cent and revenue by 60 per cent, becoming one of the most profitable airlines in the world.” Ignoring the unfortunate use of “separated”, reading this just weeks after Qantas grounded its entire fleet because of the continued labour disputes does undermine the assertion of last value. It’s not to doubt the huge efforts made by the airline to move forward, but it seems a strange paragraph to write in 2011, albeit of a period which must have ended some time in 2007-8. In addition it ignores the peculiar situation of Qantas which has enjoyed a lot of government support and derives much of those profits from its domestic market where for a long time it had little competition. And lastly, if the analytics was to “buy in” the support of workers (the ones who weren’t “separated” or offered voluntary severance), surely the grounding of the airline proved, in the end, that it didn’t work? But by then, the architects of the programme had long left, and with huge bonuses as a result of the profits that had been made. It’s that human story which is always murmuring away in the background of this book, like the sea gently moving up the beach while the executives are deciding on the best sort of sand with which to construct their sandcastle. The authors say their aim is “to inspire senior executives to move from aspirations to action by providing both a framework and methods to achieve their goals.” But all senior executives take action, it’s just whether they are the right actions. The authors would say that crunching the data in the way they describe will help improve the chances the decisions will be correct ones (or at least based on correct data). But all the time there are those tens of thousands of workers being asked to go elsewhere, or work harder for less. All companies face that dilemma, but those that succeed in convincing the workers to go along with it tend to have a stronger narrative than logic and data. Nevertheless, this is an interesting, if demanding read and I admire the authors for their insistence that “…there is more measurable value inside an organisation then meets the eye – if it is sought out and quantified.” Tom Otley
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