Predictive Workforce Analytics
– The key link between Leadership development and business growth
XYZ Private Limited (Company) is a leading manufacturer of process cooling systems like water chillers, coolant chillers, hydraulic oil chillers, glycol chillers, panel air conditioners and coolant filtration systems. The company’s core technology is based on heat transfer using the vapor compression refrigeration cycle.
The ‘Company’ being a 25 year old company wanted to identify people areas which shall become their growth drivers; incidentally they had a long standing leadership (middle management level) crisis. Being into manufacturing of OEM equipment, their top revenue generators were repeat customers and the percentage of such customers hadn’t grown in the last 3-4 fiscals.
We (Aavishkaar Consulting) were gotten in to provide a long standing solution for the same. We did a thorough ‘initial system study’ and quickly identified the problem areas. We set the following as the objectives for this project –
- Validate the leadership competency model and its effects on business outcomes;
- Identify the most impactful leader behaviors on customer loyalty, and;
- Quantify the impact of these leadership behaviors on the customer delight and financial performance of a business unit.
We have had been working with the ‘company’ for over a year and had a clear insight about the existing leadership and the management style; this helped reducing our preparation time almost by 50%. Our approach towards the solution is as under –
Step 1: We created a leadership competency model that had global benchmark which could be used across the ‘company’ in diverse geographies;
Step 2: We further refined this model to ensure all critical leadership competencies were captured and each behavioral indicator was one-dimensional (only measuring one skill area) to the extent possible.
Step 3: Further using our ‘360 degree feedback’ mechanism, we finalized the leadership competency model, and a large repository of behavioral performance was aggregated.
Out of the many indices the following business metrics were of particular importance for this analysis –
- Associate Engagement – as measured by the annual engagement survey
- Customer Loyalty – based on customer feedback
- Rev Par Index – an industry measure of average revenue for a standard product range
The ‘company’ had approximately 35 leaders participate in the 360 degree feedback process. After deducing extensive analysis, ‘company’ created a Top Leadership Team profile using the properties with the highest-rated leaders (the top 25%), based on average 360 degree feedback scores.
We found a number of interesting relationships and the most significant ones being – Leadership behavior directly related to both Associate Engagement and Customer Loyalty; in turn, Customer Loyalty drives business results (Rev Par Index).
The conclusion that can be drawn is that high-performing leaders have more engaged associates. Ostensibly, associates translate that engagement into enhanced customer service, which directly affects Customer Loyalty. Customer Loyalty drives the ‘company’s’ revenue. In sum, even though the effect is indirect, leadership is an important indicator of business results.
Once establishing the relationship between leadership behavior and business results, the ‘company’ identified the specific leadership competencies and behaviors that had the greatest impact on Customer Loyalty. Consistently the four same competencies emerged as being the top predictors of loyalty; these competencies include:
- Customer Focus
- Alignment & Action
- Motivation & Inspiration
- Global Perspective
These findings have many implications for the ongoing strategy of the Human Resources department. The ‘Company’ can now ensure that all HR programs place special emphasis on the leadership competencies and behaviors that impact bottom line business results. Continuing to strengthen the leadership team in the specific behaviors mentioned above is one of the keys to their financial success.
This case study is an excellent example of how HR teams can clearly demonstrate the strategic impact of HR initiatives by combining behavioral data (360 feedback, performance evaluation or other data) with business drivers and translating the results into meaningful information. New information that reveals the effect of leader performance with bottom line results is of real strategic value to the enterprise. This study defines workforce analytics and validates the strategic role of Human Resources.
Ravishankar Srikantan Aiyar