DOI: 10.1002/hrm.

21850

SPECIAL ISSUE ARTICLE

Using workforce analytics to improve strategy execution

Alec Levenson
Center for Effective Organizations, Marshall School of Business, University of
Southern California, California, Los Angeles
Correspondence
Alec Levenson, Senior Research Scientist, Center for Effective Organizations,
Marshall School of Business, University of Southern California, 1149 S. Hill Street,
Room 950, Los Angeles, California.
Email: alevenson@[Link] 1 | INTRODUCTION

In this article, I introduce an approach to conducting workforce analytics

that is designed to improve strategy execution and organizational
effectiveness through the application of systems diagnostics. What the challenge with the current state of workforce analytics: a horde
differentiates the approach are two analytic steps that precede the of analyses that can, and often do, help with continuous improve
analyses that are typical of workforce analytics today: competitive How can we more effectively execute strategy through our work
advantage analytics and enterprise analytics. Conducting these two force, and what role should analytics play? That is the question that
additional steps enables the analyst to identify the critical busi ness frames the call for articles in this special issue, and it perfectly
issues that are the biggest problems for senior business leaders, and todescribes the fundamental workforce analytics challenge facing orga
determine if struc tural issues coming from the organization design and nizations today. In this article I argue that we need a different orien
culture are at play. First conducting those analyses best enables tation to how workforce analytics is defined and conducted in
traditional workforce analytics to provide insights the organization's organizations: a much greater emphasis on systems thinking and diag
lead ership views as truly valuable. nostics. The good news is that the models and tools already exist to do
this. The challenge is both getting the leaders of workforce analyt ics
KEYWORDS
efforts to change their orientation and usual practice, as well as
decision making, HR measurement issues, organizational effectiveness, raising the awareness of the importance of systems diagnostics among
strategic decision making, strategic HR the consumers of the results of workforce analytics: the busi ness
leaders/end users in organizations who are in a position to act on the
results.
The challenge is that most practitioners and researchers take a
straightforward, but too narrow, approach to determining if a work
force analytics effort adds value: They look for examples and case
studies where workforce analytics demonstrates some type of strate
gic benefit or positive return on investment (ROI). If they find a posi
tive impact, they consider the job done. At face value, that is a
reasonable approach because an economic benefit is established. Yet
demonstrating an economic benefit is not the same thing as prioritiz
ing which organizational challenges should be addressed first. That is
ment of existing HR and people processes, but with little guidance for
business leaders on how to address the highest priority issues
impeding successful strategy execution (Levenson, 2011, 2015).
For example, workforce analytics is often used to show how to
improve recruiting, training, workforce planning, performance man
agement, employee engagement, and many more core HR and
people-oriented processes. In each case, when done well, workforce
 analytics shows clear paths to improvement in terms of candidate (Levenson, 2015).
profiles, screening procedures, training programs, performance feed A large source of the problem originates from the focus of man
back, supervisor behavior, employee motivation, and so on. Yet ask ing agement researchers and social science practitioners in organizations
how to improve an HR process is not the same thing as identifying who are not oriented toward taking a systems approach when doing
what parts of the organization and which business pro cesses are in organizational behavior diagnostics. I firmly believe a large part of the
greatest need of insights. The help that most business leaders would problem is not aptitude but rather preference and habit. The fields of
like to get from workforce analytics, yet which is too often lacking, is organization behavior, industrial–organizational psychology and other
solving issues with business performance that mani fest themselves at
higher levels of aggregation than the individual role or person

Hum Resour Manage. 2018;57:685–700. [Link]/journal/hrm © 2017 Wiley Periodicals, Inc. 685
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686 LEVENSON
much more the exception than the rule: the pre dominant emphasis of
workforce analytics is precisely that—the workforce, and usually not a
disciplines, do not require that people be systems thinkers. Experts in
broader domain of organizational effectiveness.
employee motivation or capability can spend their entire careers,
whether they are in academe, consulting, or internal practitioner roles Even within the “narrow” domain of workforce analytics, there is
within organizations, focusing only on individual-level issues, and no shortage of approaches to be applied and questions to be
making real contributions to improved behaviors and performance. addressed. The challenge is knowing which analytics to apply in what
Their aptitude in doing so is manifested in the current practice of settings to get the best strategic insights. In this article I address that
workforce analytics, which is overwhelmingly focused on individual question, framed as “where will workforce analytics provide the
level issues in organizations and not group level, more aggregated deepest insights into improved strategy execution?” Defining the goal
issues (Levenson, 2015). as improved strategy execution sets the focus apart from where much
What I advocate for is a “both/and” approach. The current, highly of the field is today. Current research and practice cover enor mous
individually oriented workforce analytics approaches do not need to territory, drawing analytic frameworks from many different
be thrown out. In fact, under a systems approach, all of the approaches that represent the rich history of workforce analytics in
individual-level models and ways of conducting analyses still have a the social sciences. Yet that rich history and diversity is also a source
very critical role to play. The issue is where to start when framing the of confusion and distraction for leaders who want to close the big gest
questions to be addressed, and whether the ultimate focus ends up gaps in strategy execution: where they want simplicity and clar ity,
being individual-level issues and models, or group-level issues and they instead face a dizzying array of analytic topics and approaches
models, or a combination of both. So the first step of any workforce with little to guide them.
analytics exercise should start at the organization/enterprise, or busi To cut through the clutter I propose two separate but related
ness unit, or work group/team levels, and identify the critical business approaches: (a) focus on strategically important changes in workforce and
issues at stake. If the issues are entirely group level or at a higher level organizational capabilities, not just incremental improvements in
of aggregation, then that should be the focus of the analysis. If the people and processes, and (b) focus on contributions that support the
issues also relate to between-person differences that need to be organizational capability that provides competitive advantage, not just
analyzed, then the more traditional workforce analytics models and contributions that have positive short-term ROI or impacts on cash
analyses can be applied. If multilevel modeling and analysis are flow. Another way of stating the proposed approach is “some
needed, then they should be applied. Moreover, regardless of the improvements in organizational processes and capabilities are more
levels of aggregation at which the analysis is done, everything should important than others, and investments in the most important cap
be categorized and prioritized based on whether the insights will help abilities and processes can generate high short-term ROI compared to
with continuous improvement of organizational processes or whether other spending choices.”
they will help address the biggest barriers to improved strategy exe My critique consists of two parts. First, current practice in orga
cution and organizational effectiveness. nizations does not take enough of a systems approach at both the
To illustrate what I mean, consider a couple of points of evi dence. individual and group levels. Second, though there is guidance within
First, it is widely acknowledged that there is a fairly large gap between the research literature on how to take more of a systems approach,
the research conducted by academics and the knowledge used for the way that knowledge is shared between the research and practi
management decisions, especially with regard to people and HR tioner communities often ignores the systems approach. My empha
practices (Mohrman, Lawler, & Associates, 2011; Rousseau, 2006; sis on organizational capabilities is a central part of the message; in my
Rynes, 2010; Rynes, Brown, Colbert, & Hansen, 2002; Shapiro, Kirk view, these are the capabilities that create sustainable competi tive
man, & Courtney, 2007). Second, there are many examples of find ings advantage for organizations. For example, the organizational
from management research that are not well understood and/or capability of innovation is distinct from the individual competencies of
applied by managers (Rousseau & Boudreau, 2011; Rynes et al., 2002); the market researchers, research and development (R&D) scien tists,
yet the examples that are cited relate predominantly to spe cific HR and software programmers, who, depending on the industry, are part
practices such as the pros and cons of using stock options, using of the innovation process. Further, I focus on strategy execution and
intelligence to predict employee performance, the validity of integrity group performance, whereby the organization's overall strategic
tests, the benefits of goal setting, errors with performance appraisal, objectives are attained, rather than individual job performance,
measuring the importance of compensation for employee decision because of the line-of-sight and aggregation problems when going
making, and using utility analysis for selection. There are examples from individual to group performance.
where the focus is on phenomena at a higher level of aggregation than The source of the problem in my view is not a lack of knowledge in
individuals and roles (e.g., Offermann & Spiros, 2001). Yet those are the research and academic communities, but rather a failure to
 effectively translate that knowledge into the useful information work data-based through the application of workforce analytics. In short,
force analytics practitioners need to get deeper and more impactful the experts don't guide the end users enough toward systems analysis,
insights from their analyses. Moreover, I see the source as arising from and the end users aren't oriented enough toward that per spective to
both groups of players: there is not enough systems thinking and ask for it on their own.
diagnosis both among the workforce analytics experts (aca demics, I start with a cursory review of the general approaches taken in
consultants, and internal practitioners) and among the end user HR workforce analytics today, and an acknowledgment of the deep
professionals who seek to make their work more relevant and insights that they have provided historically, along with gaps in
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LEVENSON 687
workforce analytics experts in all three realms (academe, consulting,
and internally within companies) to take more of a systems approach
strategy execution and organizational effectiveness not adequately
when addressing workforce analytics questions that will be consumed
addressed by current common practice. I then present an alternative
by the end users.
approach that involves conducting two analytical steps preceding tra
The primary audience for this article first and foremost is the PhD
ditional workforce analytics: competitive advantage analytics, and
and master's level social scientists who define, lead, teach, and write
enterprise analytics. Competitive advantage analytics comes first, and
on the topic of workforce analytics. A large part of this primary
involves prioritizing the business issues to ensure that any group level
audience is the professors who influence the field through their writ
and individual-level analyses are closely aligned with specific business
ing, including for outlets such as this journal, and who teach the prin
challenges, and to ensure that the value of addressing a spe cific
ciples of workforce analytics to undergraduate and graduate students.
business challenge is understood relative to addressing alterna tive
The rest of the primary audience are social scientists work ing directly
business challenges. Enterprise analytics comes second, and is my
with companies to apply workforce analytics, either as consultants,
shorthand name for any analyses conducted at an aggregate level
in-house experts, or action researchers. These two groups are not
above the individual. The third step is to apply, if needed, human cap
mutually exclusive: There is substantial overlap between them. The
ital analytics, which I use to refer to traditional workforce analytics
secondary audience is the workforce analytic practitioners and HR
approaches that focus exclusively at the individual level.
generalists who want a more rigorous introduc tion to some of the
The reader should know that I see real value in the vast majority
principles behind different approaches to work force analytics,
of workforce analytics approaches currently being used in
including the research foundations behind the book.
organizations today. However, based on my personal experience
working with compa nies worldwide applying workforce analytics One way to think about the issues addressed here is that work
using an action research approach, teaching executive education force analytics can be likened to a symphony orchestra and its com
programs in HR analytics for over 10 years, and reading of the state of ponent parts. Taking a systems view is like being a conductor of the
the field, my firm conclusion is that there is little consistency in symphony: it is the conductor who has to see the big picture and know
approach, and even less guidance that enables practitioners to target how to get each part of the symphony aligned and executing its tasks
their efforts in the most value-maximizing way. What we have today is in the exact right order to make beautiful music. The conduc tor does
a scattershot approach to workforce ana lytics that in many ways the equivalent of competitive advantage analytics to ensure that the
resembles the wide array of analytical approaches taken to measure overall goals of the symphony can be realized.
virtually everything related to people and organizational effectiveness Within the symphony there is each section of instruments: the
in the management research literature. wind instruments, string instruments, and so on, and subgroups within
each of those, often with leaders at each level. Sometimes the
Each analytical approach that is derived from the social science
literature has at minimum some potential value to people working in challenges with getting the orchestra to perform properly are group
organizations. The question is how much value, and where is that level challenges within these groups and subgroups. Figuring out and
value best realized. The additional steps I advocate at the beginning of solving those challenges is the equivalent of enterprise analytics.
a workforce analytics effort help identify which social science models Finally, there are individual-level issues. Some musicians don't
and methods should be applied in what settings to provide the most understand their roles well enough, or don't have the competencies or
actionable insights to the practitioners working on the front lines. My motivation to perform their duties as needed by the orchestra.
approach has the further advantage of helping identify when Addressing those issues is the equivalent of human capital analytics.
qualitative analysis and interviews are sufficient for diagnosis,
removing the need—and strong tendency among workforce analytics
practitioners and researchers—to immediately jump into large-scale
2 | THE PREVALENCE AND IMPACT OF
data analysis employing elaborate statistical techniques that may be
of little value.
WORKFORCE ANALYTICS IN
This article is closely related to my book Strategic Analytics ORGANIZATIONS TODAY
(Levenson, 2015) and is best viewed as a companion piece that cov ers
a great deal of ground not addressed in the book. Specifically, the book Lawler, Boudreau, and Mohrman's (2006) and Lawler and Boudreau's
is targeted primarily at a practitioner audience with the aim of shaping (2009, 2012, 2015) triennial surveys of the HR function provide the
and changing the way the practice of workforce analytics is conducted best depiction of how broadly workforce analytics has been used in
in organizations; it aims to make the end user more savvy with respect large organizations over the past decade, and how far it still remains
to understanding and demanding more of a systems diagnostic from providing the insights needed for improved strategy execution.
Table 1 reproduces some of the data they report.
approach. This article, in contrast, places the book in the context of
On the one hand, over 90% of large organizations report that they
the research literature, while also extending the arguments
provide HR data to support change management at least to some
introduced in the book to address how workforce analytics is taught
extent, and over 80% provide analytic support for business decision
and led by researchers, consultants, and internal analytics experts
making to some extent or more. Yet the percentage of orga nizations
working with or within organizations. My aim here is to sway the
 indicating they do so to a great or very great extent ranges between The bottom part of Table 1 presents another view of the current
only 16% and 37% for both questions. So at least two-thirds of state: the link between enterprise information technology (IT)
organizations have room to improve in these areas, and by a sub systems and HR analytics. Enterprise IT systems are almost
stantial amount in many cases.
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688 LEVENSON

TABLE 1 Current state of workforce analytics in large organizations

To what extent does each of

the following describe the way
your HR organization currently
operates? Little or No Extent Some Extent Moderate Extent Great Extent Very Great Extent There is a data-based talent strategy
2013 21.1 31.0 28.2 16.9 2.8 2010 17.9 25.5 29.9 20.7 6.0 2007 18.3 29.8 31.7 16.3 3.8 2004 19.4 27.6 27.6 16.3 9.2
Provides analytic support for
business decision-making
2013 14.7 28.7 39.9 14.0 2.8 2010 11.4 27.7 32.1 23.4 5.4 2007 13.2 25.5 34.0 18.9 8.5 2004 15.3 17.3 37.8 19.4 10.2
Provides HR data to support
change management
2013 9.2 31.0 34.5 19.7 5.6 2010 9.2 25.4 28.6 28.6 8.1 2007 9.4 19.8 37.7 22.6 10.4 2004 5.2 23.7 34.0 23.7 13.4
Makes rigorous data-based decisions
about human capital management
2013 21.0 31.5 35.0 10.5 2.1 2010 17.8 26.5 29.7 20.5 5.4 2007 18.9 29.2 30.2 14.2 7.5 2004 16.5 20.6 41.2 17.5 4.1
To what extent do you consider your information technology system to … Little or no extent Some extent Moderate extent Great extent Very great
extent
Measure HR's impact on the business

2013 31.7 27.3 26.6 13.7 0.7 2010 31.0 29.3 25.0 12.0 2.7 2007 28.7 35.6 18.8 14.9 2.0 2004 37.1 25.8 26.8 9.3 1.0

Note. The dates listed in the table correspond to when the data was collected in each survey. In each case there is a two-year lag between data collection
and the publication of the book.
Source: Lawler and Boudreau (2006, 2009, 2012, 2015).
lack key elements needed to understand the employee behavior and
motivation that drive most organizational performance. Social
ubiquitous in large organizations; the question is not whether there is
scientists understand those limitations, which is why they put so much
one, but rather which one and how many bells and whistles the sys
effort into developing and implementing employee sur veys, 360
tem has. In my and my colleagues' work with companies on HR ana
evaluations, competency profiles, and more. These and related
lytic issues, we often hear the lament that the HR function is
measurement approaches give incredibly important insights into a
challenged to “do something” with the company's fancy enterprise IT
variety of aspects of workforce behavior and motivation, which is why
system to show the value of the data collected in it. Such demands
they are the focus of the discussion in the next section. Yet despite the
from business leaders are understandable given the enormous sums
limited insights provided by standard warehoused data, business
spent on the IT systems, and the expectations of great insights cre
leaders put great stock in analyses of those data. They do this for two
ated by the vendors that promote the systems.
related reasons (Levenson, 2015). First, data that are part of
Yet Lawler, Boudreau, and Mohrman find that the vast majority of
enterprise IT systems are central to how business leaders maintain
company IT systems are not used to measure consistently the
and optimize operations: They provide objective measures that link
business impact of HR programs (bottom of Table 1). The disconnect
directly to outcomes that support competitive advantage. In
exists because the systems' data are used primarily to describe peo
manufacturing, data on uptime, waste, quality, and more are vital to
ple (demographics), how much they are paid (compensation), and their
maintaining efficient and effective operations. In call centers, metrics
activities (promotions, training, etc.) and responsibilities (job titles,
on wait times and customer service scores are a backbone of
reporting relationships, spans of control, etc.) in the organiza tion.
Such data are very useful for some types of analyses but they
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LEVENSON 689
themselves extremely well to comparisons across organizations.
There is a vast army of consultants who make their living providing
operational excellence. In financial services, measures of customer
bench mark data on any dimension imaginable, and in many cases
retention and profitability are crucial for knowing how to staff and
those data providing important insights on where operations can and
market to different customer segments. And so on. Every industry has
should be improved to support competitive advantage. In comparison
objective operational metrics that are essential to understanding and
with the other types of data warehoused in enterprise IT systems, the
managing the business; leaders know this and expect that all
HR data that reside there are suitable for benchmarking because they
functions, including HR, should be able to use their enterprise IT sys
are objective, just like the other operational and financial metrics in
tems for similar insights.
the IT systems. Yet the value of benchmarking is very different for HR
A second related reason is that leaders love to benchmark. The
met rics compared to other operational metrics. In most cases,
objective operational metrics they use to manage the business lend
benchmark ing HR data such as turnover, spans of control, time to fill tive development. In this section, I briefly review a number of them.
open positions, compensation, and more can provide some useful Unfortunately, there are, if anything, way too many options for
insights, but rarely is that data enough to determine the best course conducting workforce analytics in organizations. Any one of them can
of action; much more analysis and other data sources are almost be used to tell a story about what could be important for organiza
always needed to determine how best to support competitive tional success, and at face value all of them would seem to be at least
advantage. somewhat relevant, if not very important. In this section I briefly
The main reason for this divergence is that HR data historically review some of the most popular, based on the types of insights they
were collected for accounting purposes, not to inform more of a deci provide. In the next section, I address how to best employ them to
sion science approach to analyzing the workforce (Boudreau & Ram identify the most critical sources of organizational effectiveness.
stad, 2007). Yet because leaders heavily emphasize objective The overall approach I advocate is related to multilevel modeling
operational metrics and benchmarking, they also overly focus on and estimation issues in organizations (Klein, Dansereau, & Hall,
those types of HR data despite their limitations. This provides a very 1994; Klein & Kozlowski, 2000), specifically the micro-foundations of
strong lure for HR professionals to make warehoused HR data a cen strategy and the resource-based view of the firm, including the role of
tral part of their analysis strategy because otherwise they have to social capital in helping to create competitive advantage (Buller &
defend why they are not doing so. McEvoy, 2012; Burt, 1997; Leana & Van Buren, 1999; Leenders &
The good news is that annual employee surveys, which exist apart Gabbay, 1999; Nahapiet & Ghoshal, 1998; Tsai & Ghoshal, 1998). My
from enterprise IT systems, have also taken on a mantle of main cri tique of current workforce analytics practice is that it focuses
respectability as more and more business leaders have embraced the too much at the individual level, when the right approach often is
importance of having highly engaged employees. The surveys are used either a multi level approach that addresses both individual and group
to monitor how employees feel about the organization, their jobs, and (team, busi ness unit, function, site, etc.) issues, or group-level only
their careers. If the positive scores deviate too much from an expected analysis.
norm, the results can be used for feedback with the supervising
The body of work in the management literature that successfully
managers so they can improve their performance.
addresses multilevel issues related to human capital and
The downside, however, is that large segments of the parties
organizational performance is rich and growing. The field of
involved—the business leaders, HR professionals, and survey
workforce analytics needs greater guidance from social scientists who
consultants—subscribe to the idea that the constructs that come out
understand and contribute to the literature on the modelling and
of those surveys are often the only thing that needs to be measured
estimation challenges involved with multilevel theory and estimation,
and managed to improve operational performance (Levenson, 2014).
especially in the areas of human capital and HR (Dess & Shaw, 2001;
Even worse, they often fall into the trap of thinking there is an objec
Ployhart & Moltinero, 2011; Ployhart, Nyberg, Reilly, & Maltarich,
tive “amount” of engagement that should be achieved, such as at least
2014; Ployhart, Weekley, & Ramsey, 2009; Reagans & Zuckerman,
80% favorable responses on all survey items, or scores that are better
2001; Reilly, Nyberg, Maltar ich, & Weller, 2014). What follows here is
than their industry peers. What is missing in those situations is the
a brief overview of specific methodological issues that I believe should
appropriate lens through which to view such data, and a frame work
be addressed at both the individual and group levels so that workforce
to understand what they mean and how they should be inter preted.
analytics practitioners can be guided to provide the insights most
The answer lies in taking a more holistic, systems view of both
capable of improving strat egy execution and organizational
individual and group performance, using an approach such as the one
effectiveness.
advocated here.
The approach I recommend is to start with the business strategy
3 | WHAT WORKS WELL AND WHAT IS MISSING and the overarching objectives senior leaders aim to accomplish in the
IN THE WORLD OF WORKFORCE ANALYTICS marketplace. Identify the critical business issues that need to be
TODAY solved first, and determine what can be done to address them. This
first step is what I call competitive advantage analytics and is dis
Much of the guidance that business leaders and HR professionals cussed in detail below (see Figure 1). The reason why it's an impor tant
need to make better sense of their enterprise IT and employee survey first step is that it helps separate “nice to have” and incremental
data is available by applying established social science techniques and improvements in people and processes that could have a big impact on
measurements. In recent decades, many different analytical business success from the ones that should have a big impact through
approaches that originate from the social sciences have been applied successfully addressing the barriers to improved strategy execution.
within organizations to varying degrees, which has been a very posi
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690 LEVENSON

might be barriers to improved performance. This is the step

I call
enterprise analytics (see Figure 1). Depending on the
particular issue
in question, this could mean looking at the entire
organizational
design, the design of specific business units or functions, the
design
of geographies or sites, the design of work groups or teams,
or the
design of specific roles—or a combination of two or more of
these.
 Using the language of the multilevel modeling literature (Klein et al.,
1994; Klein & Kozlowski, 2000), enterprise analytics encompasses
any analysis at a higher level of aggregation than individual people or
roles. Specific topics include group dynamics, culture, organizational
change, and anything that addresses business processes at an aggre
gate level, including the role of organization design and cross-silo col
laboration for driving innovation, customer service, go-to-market
effectiveness, sales and marketing, and more.
The third step, which I call human capital analytics (see Figure 1),
encompasses any analyses done at the individual people or role level
and is the domain of what is traditionally considered workforce ana
lytics. Specific topics include motivation, employee engagement, com
petencies, leadership development, training, compensation, and more.
FIGURE 1 The steps to conduct strategically relevant workforce
In addition, any analysis that seeks to explain business processes
analytics
through the lens of individual differences falls into this bucket. For
example, analyses of the sources of variation in performance across
Because of budget constraints, every single role and business
people working in specific roles such as sales, marketing, customer
process can always benefit from additional resources and support. If
service, software development, distribution, and more.
the bar for deciding what to change in an organization is set as “will
Before getting into the details of my approach, I first review the
this change have a positive impact on the business,” it is very easy for a
six general domains that cover the landscape of organizational behav
horde of potential organizational changes to clear that hurdle. For
ior topics addressed by social science. In order to conduct the type of
example, a leadership development program that improves the quality
systems diagnostics I recommend, each of the six domains has to be
of communication between managers and their direct reports is a
considered to determine what drives the behaviors and performance
worthwhile endeavor if it is effective. Yet communication prob lems
most critical for improving strategy execution: individual capability,
may not be a high priority problem for the organization. Imagine a
motivation, job design, organizational capability, culture, and organi
scenario where the organization has scrimped on the compensation
zation design.
paid to some key roles for a number of years. As a result, the people
currently in those roles are less motivated to perform and have lower
competency levels than the organization expects. The subpar motiva 3.1 | Individual capability, motivation, and job
tion and task execution lead to regular conflicts with their managers design
who are frustrated with their performance. An observer who does not
know about the compensation challenges might mistakenly con clude One of the bedrocks of industrial–organizational psychology is the
that developing better leadership communication skills is the best capability–opportunity–motivation (COM) model (Blumberg &
Pringle, 1982). Though the three elements of the model are not always
solution to the problem. Yet under that approach, at most the
called those names, much of what matters at the individual or role
managers might learn how to minimize open conflict while not ade
levels can be grouped under one or more of those three parts.
quately addressing the underlying performance problems that are the
real source of strategy execution gaps. In this case, improved commu
nication is “nice to have,” while compensation is the real source of the
3.1.1 | Individual capability
performance problems. Capabilities and competencies are often used synonymously. The
Any organizational change, no matter how clear the bottom line importance of competencies as a measurement tool for workforce
benefits might be, is not guaranteed to be implemented successfully. analytics is clear. Competencies evolved as a way of objectively
describing the knowledge, skills, and abilities required for a specific
Consequently, I have seen repeatedly that it is easier to get senior
job (Spencer & Spencer, 1993). They are a vast improvement over
leader buy-in and support for changes that are more critically impor
measures such as intelligence and job descriptions. Today, they are the
tant to improving business results and strategy execution. The first
foundation of much work on employee capability and what is needed
step of conducting competitive advantage analytics and prioritizing
for successful job performance.
what workforce analytics issues should be addressed helps maximize
Organizations use competencies to evaluate, reward, and pro
the chances that any diagnosed change will be given the green light to
mote employees across a wide range of industries (Briscoe & Hall,
be implemented.
1999; Lawler & McDermott, 2003). Competencies can provide a
The second step is to look at the appropriate level of analysis and
method for predicting job performance for individual workers in
identify the highest level issues rooted in the work design that
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LEVENSON 691
McKee, 2002; Zenger & Folkman, 2002). However, there is only a
tenuous link at best between managerial competencies and organiza
nonmanagerial roles (McClelland, 1973; McClelland, Baldwin, Bron
tional performance (Hollenbeck & McCall, 1997; Levenson, Van der
fenbrenner, & Strodtbeck, 1958; Spencer & Spencer, 1993).
Stede, & Cohen, 2006). One reason for the tenuous link is that mea
Competency-based pay for frontline workers also can be an effective
suring competencies and linking them to individual and other perfor
tool to promote the development of skills that improve productivity
mance measures is only one part of the analytics needed to diagnose
on the job (Ledford, 1995; Ledford & Bergel, 1991; Ledford, Tyler &
the drivers of performance at the individual level. A more compre
Dixey, 1991).
hensive approach that also addresses motivation and job design
Competencies increasingly have been used for selecting, reward
almost always will yield better diagnostics and action plans than
ing, and promoting managers (Boyatzis, 1982; Goleman, Boyatzis, &
focusing only on competencies.
 and develop action plans for improvement. Yet these same organiza
tions almost universally are disappointed with the outcomes year
3.1.2 | Motivation after year because none of the other parts of the COM model are
A central problem faced by leaders and frontline managers alike is addressed at the same time.
how to elicit the motivation and effort the organization needs for
successful task execution and operational excellence; without motiva
tion, job performance is virtually guaranteed to suffer. Consequently, 3.1.3 | Opportunity
the study of employee motivation is as old as the field of manage ment The final part of the COM model—opportunity—is more commonly
study; for example, see Vroom (1964), Porter and Lawler (1968), known as job design. Job design is as old as the study of organiza tions.
Herzberg (1968), Maslow (1970), Lawler (1973), Steers and Porter Adam Smith (1776) described the productivity benefits of designing
(1991), and Latham (2007). jobs in a pin factory so that people could specialize and not be spread
Some common motivation-related constructs that have been suc too thinly across tasks requiring very different competen cies. Taylor
cessfully developed in the research literature and often appear in (1923) used industrial engineering principles to determine how such
annual employee surveys include job satisfaction, supervisor support, specialization could occur in practice, which helped give birth to
opportunities for development, work–life balance, pay satisfaction, modern manufacturing lines staffed by relatively low-skill employees.
and intention to turnover. Getting management to pay attention to Both Smith and Taylor focused on making jobs as narrow as possible
such measures usually is not difficult because they have very strong to enable them to be done in a simple and straightforward manner.
face validity: it is easy to see the direct link between any of these More recently, Hackman and Lawler's (1971) job characteristic
measures—and many more—and the motivation desired of employ model and Hackman and Oldham's (1980) model of team design
ees. That is the good news. highlight the potential benefits of job enrichment as a counterbal ance
Less helpfully, more recently, many consultants have combined to very narrow specialization. The trade-off between designing a job
parts of different constructs together under the general umbrella of as enriched versus not enriched are tied into the larger work design.
employee engagement and marketed them as essential management Enriched jobs have more autonomy and decision-making authority,
tools (Levenson, 2014). What has been adopted in a wide swath of requiring less supervision and greater ability to handle complex
organizations usually are not the multi-item constructs that come decision making. Such jobs may require greater compensa tion to
directly from the research literature (Fields, 2002), nor the specific attract and retain the more highly skilled people who may be needed
measures of engagement that have been more recently developed to staff them, but that can often be funded through fewer supervisors
(Bakker & Leiter, 2010; Macey, Schneider, Barbera, & Young, 2009), and greater spans of control, as well as from the increased
but instead single-item measures that are reported on their own or as productivity these jobs often create. Consequently, enriched jobs
part of a composite index. Gallup's 12-item measure is perhaps the often are used as part of high-involvement, high performance work
most well known and has been the subject of some validation research design.
(e.g., Harter, Schmidt, & Hayes, 2002). Yet the Gallup mea sure has the Today, job design remains a core competence that HR and organ
same predictive ability as a single-item job satisfaction measure ization development professionals need to have (Parker & Wall,
(Levenson, 2014), a trait almost certainly shared by other similarly 1998), yet it by far is the least applied part of the COM model by HR
constructed indexes. professionals. The overwhelming focus tends to be on capability and
A further problem is that these and other measures of employee motivation for two reasons. First, HR more often than not is excluded
engagement are marketed into organizations as causal measures of from taking part in the job design decisions usually made by senior
organizational performance: the promise is that improvements in the leaders and strategy consultants whenever redesign happens. My
measurements will necessarily lead to better strategy execution and claim here is based on years of experience working with organiza
organizational effectiveness. Aside from the co-determination tions, and based on communications with my colleagues at the Cen ter
problem—measured engagement and performance often are interde for Effective Organizations. I do not have data to explain why this is
pendent and codetermined—such sales pitches ignore the importance the case. I suspect it is part of the larger malaise that HR suffers from
of the other main determinants of individual job performance: that leads it to be called “not a strategic contributor” to the business, a
employee capability and job design. I personally have encountered commonly heard lament, even though some progress has been made
many organizations that field annual surveys with such measures, and (Ulrich, 1994).
have well-designed processes for managers to work with their results
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692 LEVENSON
insights the analytics can provide. If there are issues with employee
motivation, there are a host of approaches to diagnosing the sources
Second, job design decisions often are wrapped up in annual
and deciding among alternative solutions. If there are skills and abil
budgeting allocations because of the implicit assumptions about pro
ities gaps, then competency modeling can help point the way to
ductivity that are built into the annual operating plans and compensa
improved performance. If roles and responsibilities are not well
tion levels. So when HR professionals want to help improve the job
defined and supported, then job design analytics can improve clarity
design, they frequently hold back because they know they don't have
and alignment.
the ability to change the annual budgeting allocations, or are shut out
of the budget decision-making processes entirely as a matter of policy. No job is perfect on any of these three dimensions. The common
mistake made in organizations is to do analysis along only one dimen
sion, without considering the other two, and look for areas of
3.1.4 | Using all three parts of the COM model together
improvement only in that area. Doing so usually reveals changes that
when doing workforce analytics
in theory will support the organization's strategic objectives. For
Each part of the COM model has a rich history and wide range of example, no one can refute that there is always training that can help
improve skills that are relevant for the job; or that the way compen organizational and group levels, the overall focus of this article and my
sation is set can be improved at least a little; or that onboarding can be critique, there is a failure to conduct enough systems analysis at the
conducted more effectively; or that screening procedures for new hire job level—hence why we need greater teaching and application of
candidates could be tightened up; and so on. systems diagnostics at the job level.
Yet following through on the results of such limited analysis leads
most often to second-best solutions: there usually is something more
effective that is being overlooked because either or both of the other
3.2 | The missing focus on organizational
dimensions have been ignored. I have seen this mistake made count effectiveness: team design, organization design,
less times within organizations, and find that the vast majority of and culture
workforce analytics practitioners take a too-narrow approach to
This brings us to the more general critique that applies to most work
defining the domain of the issues they address at the individual role
force analytics today: there is not enough focus on organizational
level (see Levenson, Fenlon, & Benson, 2010, for an example). Learn
effectiveness. My proposed alternative approach, described later in
ing and development practitioners focus on competency models and
this article, provides one way to ensure a focus on strategy execution
measuring skill acquisition. Total rewards practitioners focus on per and organizational effectiveness. However, that is not the only way to
formance management processes and the incentive effects of com improve current practice. What's missing in general from current
pensation. Recruiting practitioners focus on time to fill and quality of practice is not enough focus on team- and organization-level design,
hire metrics. And so on. Their requests to their workforce analytics processes, and outcomes. Using the language of multilevel modeling
colleagues, if they do not lead the analyses themselves, are usually and analysis (Klein et al., 1994; Klein & Kozlowski, 2000), there is too
similarly narrowly focused. Yet failing to address all three parts at the much attention paid to addressing workforce analytics questions at
same time when doing workforce analytics usually leads to solutions the individual level (individual roles) and not enough attention paid to
that are suboptimal at best (Levenson, 2015) and, at worse, could be addressing issues at higher levels of aggregation: the team, work
the HR equivalent of a tree falling in the forest with no one there to group, site, business unit, and function, as well as the entire
hear it—a change that has no material impact on either strategy exe enterprise.
cution or organization effectiveness. Modeling and analyzing issues at higher levels of aggregation
than the individual is commonplace among management researchers
Left to their own devices, I highly doubt workforce analytics
who study teams, culture, and organization change, among other
practitioners on their own could wade through the enormous volumes
topics. As useful as the analytics that are part of the COM model can
of work from the social sciences that address individual level issues
be, analytics that focus on team/group, unit- and organizational-level
and realize the importance of tackling all three parts of the COM
processes and outcomes are usually more relevant for making a direct
model simultaneously. I believe that a large part of the problem is that
link to strategy execution and organizational effectiveness because (a)
most industrial–organizational psychologists and other PhD
most organizational outcomes that matter for promoting and
and master's-level social scientists working with organizations do not
maintaining competitive advantage occur at the group level or higher,
embrace that type of a systematic approach when looking at issues
not the individual level, and (b) roles are interdependent, so focusing
that, at first glance, appear to be related primarily to individual roles
only on solitary roles does not paint a large enough picture of the
and specific HR processes. For example, competency modeling
dynamics and complexity that underpin organizational performance
(Spencer & Spencer, 1993), using the Kirkpatrick approach to evalu (Levenson, 2015).
ate training (Kirkpatrick & Kirkpatrick, 2006), calculating the ROI of Yet despite the central roles that the higher level (team/group,
existing HR programs (Phillips, 1994), and many more analytical unit, organization) processes and outcomes play in strategy execution
approaches have roots in models that were developed in academe and and organizational effectiveness, and despite the large body of
the research world, and are presented to practitioners as state research and practical knowledge about those processes and out
of-the-art analytics practice. Yet these narrowly focused, standard comes that comes from the scientific community, they have been
practices too often fall short of the systematic analysis needed to largely ignored by many practitioners who focus primarily on
diagnose the root cause of problems at the job level (Levenson, 2015).
So in addition to the issue of doing systems analysis at the
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LEVENSON 693
literatures on individual job design and performance, and on team
design and performance, have evolved separately within the research
workforce analytics. As with the cursory review of the COM compo
world. Second, most of the practitioners and consultants who work in
nents above, I here provide a very brief treatment of these topics.
the field of workforce analytics tend to come from an individual job
design and analysis background; they understand the principles of the
COM model quite well but fail to look at the larger picture of the
3.2.1 | Team design
context in which the jobs operate, so long as they can find potentially
There is a very long line of research and practice on team design and useful insights at the individual job level.
dynamics that has largely been overlooked by many people working in The costs of that neglect can be quite high when it comes to the
the field of workforce analytics (Balkundi & Harrison, 2006; Cohen & strategic and organizational effectiveness relevance of workforce
Bailey, 1997; DeRue, Hollenbeck, Johnson, Ilgen, & Jundt, 2008; analytics. The overwhelming majority of work in organizations is
Gibson, 2001; Gilson, Mathieu, Shalley, & Ruddy, 2005; Hackman, interdependent, requiring groups of people to work together to
1987, 1998; Hackman & Wageman, 2005; Joshi & Knight, 2015; accomplish their individual job objectives. If we want to talk about the
Kirkman, Rosen, Tesluk, & Gibson, 2004; Maznevski & Chu doba, right competencies for a role, how motivation contributes to per
2000; Millhiser, Coen, & Solow, 2011; Ohland et al., 2012; Wageman, formance, and whether the role is designed correctly to begin with,
2001). In my opinion, the reasons for that neglect are largely benign, the group of jobs that role has to work closely with cannot be
but by no means inconsequential, for two related rea sons. First, the ignored—yet that is precisely what takes place with regularity today.
 It is important to recognize the role that teams play as part of To deal with alignment challenges and silo behavior, organiza
high-performance work systems (Appelbaum & Batt, 1994; Blasi & tions use lateral integrating mechanisms that take a number of differ
Kruse, 2006; Cappelli & Neumark, 2001; Cooke, 1994; Devaro, 2008; ent forms (Galbraith, 1977, 2009). At one end of the spectrum are
Ichniowski, Shaw, & Prennushi, 1997). The interdependence of work formal matrix reporting relationships. At the other end of the spec
across roles virtually requires that any workforce analysis include a trum are informal arrangements such as communities of practice and
component that looks at a larger picture than just one role or the self-organizing working groups. In between are groups that are
people in that role. Depending on the situation, the group-level part of formed as part of the organization design to address specific issues,
the analysis may need to be done in only a cursory fashion to ensure such as cross-functional new product development teams, commit
that analysis at the individual level is sufficient, but it may also identify tees convened to decide various policies, vendor purchasing teams, or
deeper analyses at the group level that are more important and must customer segment teams. There are design issues and diagnostics that
precede any analysis at the individual level (see later discus sion in this focus specifically on team effectiveness (see previous discussion).
article). Just as there are many things that can be fixed or improved with
On the positive side, because the teams literature is so well any role in the organization, the same applies even more so for the
developed, there are many available measures that can be employed organization design. The necessity of assigning decision rights for
as needed, including as part of companywide annual employee sur proper resource allocation and control creates silos and the need to
veys or one-off more-targeted surveys. One of the central principles overcome them through lateral integration. Yet virtually all types of
of the teams literature is that a team can be more effective and have lateral integration are challenging to implement well and are imper
greater productivity than a collection of individuals if the team is well fect at best. It is easy to find things to be fixed or improved with the
designed and aligned in its objectives, methods, and rewards (Cohen & organization design. What is hard is prioritizing which changes to the
Bailey, 1997; Hackman, 1987, 1998). The literature has developed organization design are most important for improved strategy
many different constructs over the years to measure and monitor execution.
team effectiveness, including examples such as shared understanding,
integration, and trust (Cohen & Bailey, 1997) and
bounded team membership, stable team membership, interdepend 3.2.3 | Culture
ence, knowledge of results, and information sharing (Wageman, The final piece of the puzzle missing from current workforce analytics
Hackman, & Lehman, 2005). approaches is a consideration of culture (Gordon, 1991; Hatch, 1993;
Sackmann, 1992; Schein, 1990, 1992; Wiener, 1988). Culture is a
source of both competitive strength and weakness. Whether it is a
3.2.2 | Work and organization design strength versus weakness depends on the strategy and how well
The design of the organization is just as important as team design aligned the culture is with it (Barney, 1986; Denison, 1990; Jassa walla
when it comes to diagnosing the problems with strategy execution & Sashittal, 2002; Saffold, 1988; Schein, 1996).
(Galbraith, 1977, 2014). Arguably, problems with alignment in the Culture to date has been part of few workforce analytics efforts
organization design are the primary source of many organizational largely for similar reasons as the neglect of organization design. Since
effectiveness problems. The reason is that the very nature of organi it is hard to change (Canato, Ravasi, & Phillips, 2013; Detert, Schroe
zation design creates silos based on how decision rights are allocated der, & Mauriel, 2000; Neal & Tromley, 1995; Roberto & Levesque,
(Galbraith, 2009). If the primary decision rights allocation (the main 2005; Wilhelm, 1992), it is easier to exclude culture from the analysis
organizing principle) is functional, then the silos are created between than to take the risk of learning that culture change is needed for
functions; if it is product based, then the silos divide the product performance improvement.
groups from each other; if it is geographical, then the silos are
between the regions; and so on.
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694 LEVENSON
processes, customer outcomes, and financial and strategic out comes
on the other hand (Becker, Huselid, & Ulrich, 2001).
As with other areas of organizational effectiveness, the alignment
Referring back to the scientific literature, the concept of social
of culture with other aspects of organization design, including
capital is closely related to organizational capability (Burt, 1997;
rewards (Kerr & Slocum, 2005), usually is a prime candidate for diag
Leana & Van Buren, 1999; Leenders & Gabbay, 1999; Nahapiet &
nosis. Lack of alignment at some level is the typical source of prob
Ghoshal, 1998; Tsai & Ghoshal, 1998). Social capital generally refers
lems with organizational effectiveness: It is the cause of siloed
to the value created by networks of resources (Nahapiet & Ghoshal,
behavior originating from the organization design, and often a source
1998); organizational capability refers to the way that resources are
of teams' efforts not being optimized.
combined together to create competitive advantage. Whereas social
capital tends to be defined primarily in terms of social relationships,
3.2.4 | Organizational capability
organizational capability is created through the combination of social
The concept of organizational capability is central to understanding relationships along with organization design, job design, and individ
how to prioritize workforce analytics efforts. Under a proper systems ual capabilities. Though they are not the same, the individual beha
diagnosis, all of the analyses of organization design, team design, cul viors that are associated with individual motivation and the group
ture, and the individual-level diagnostics elements (individual capabil behaviors associated with culture contribute to the building of social
ity, motivation, job design) should be mapped onto the organizational capital.
capabilities that build and maintain competitive advantage (Levenson,
2015). A common approach is strategy maps (Kaplan & Norton, 2004)
or any other tool that shows the step-by-step link between individual 3.3 | The problem with ROI and other common ways
people, roles, and HR processes on the one hand, and busi ness of evaluating HR and diagnosing organizational
effectiveness big gaps in strategy execution and organization effectiveness.
For example, most screening, compensation, training, coaching,
Above, I argued that there are many different types of analytics that
and other HR processes are essential for maintaining the business day
provide useful insights into organizational phenomena that are not
to day; if the organization stopped doing them tomorrow, then
fully utilized currently by workforce analytics practitioners. Many of
business results would suffer. Yet the question is not whether such
them are process-based measures that focus on improvements in
processes provide value added—of course, they do—but instead
measures of individual satisfaction (intention to turnover, job satisfac
whether any of them need to be improved in specific ways to close the
tion, pay satisfaction, career satisfaction, relationship with supervisor,
existing gaps in strategy execution. The same can be said for the
etc.), competencies (measured behaviors and human capital), and
finance function's responsibilities of managing the organization's bud
team dynamics (conflict, overload, etc.). Yet a quick look at the topics
gets, bank accounts, accounts receivable and payable, tax filing, and
featured in the myriad of workforce analytics conferences, webinars,
the like, as well as the IT function's responsibilities of maintaining
and books shows a large amount of effort dedicated toward measur
existing systems, providing user support, working with vendors to get
ing business outcomes that matter. Here, I provide a brief review of
better service agreements, and so on.
some of the most prominent ones and highlight the conceptual chal
In all of these cases, the overwhelming majority of existing pro
lenges that often keep those approaches from offering the needed
cesses are not top priority for improvement. Could a narrow analysis
insights into strategy execution and organizational effectiveness.
of improvements in any specific process demonstrate a positive ben
The first and biggest challenge is that current workforce analytics
efit to the organization that leads to incremental improvements in
efforts usually start with existing HR programs and policies and
efficiency and effectiveness of the process? Would those incremental
attempt to measure their impact or identify ways they can be
improvements lead to pennies or even dollars saved per transaction,
improved. This is a perfectly fine way to use analytics if the goal is
which, added up over many, many transactions, could lead to sub
incremental improvement in existing processes. And it is indeed an
stantial financial benefits? In principle, yes; and in practice in the vast
operational goal to improve the efficiency and effectiveness of exist
majority of cases, the answer is also yes because no process is per fect
ing processes to cut down on waste, save money wherever possible,
and can always be improved. Yet demonstrating such potential
and free up resources for spending in other areas or to increase mar
financial benefits can be quite different than finding which organiza
gins and bottom-line profitability.
tional changes are most needed to close the biggest gaps in strategy
Yet such evaluations are often received less than enthusiastically
execution and organizational effectiveness. If the only improvements
by senior business leaders precisely because they focus on incremen
to be made were incremental changes in existing processes, then the
tal improvements to existing HR processes. A large challenge facing
business's leaders would not spend so many nights worrying about
all organizations is the trade-off between optimizing existing pro
the big challenges they face in the marketplace.
cesses at the margins versus identifying where existing processes
should be challenged and potentially radically changed. If you ask For example, consumer products companies' competitive advan
most senior business leaders to identify how existing HR processes tage comes from having large-scale production, marketing, and distri
provide substantial value added, they would struggle to come up with bution systems that give them scale and efficiency with which their
coherent answers in most cases. The reason is that most HR pro smaller competitors often cannot compete. These organizations' stra
cesses, like most processes of all support functions including finance, tegic objectives usually are to maintain and build greater branding
IT, and so on, are essential for “keeping the lights on”—maintaining impact and distribution system breadth and efficiency. Improving the
current operations as is—but are not essential for closing the current efficiency of existing HR processes such as recruiting and

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LEVENSON 695
(Levenson, 2015). On the one hand, when it comes to optimizing
existing processes and making them incrementally better, a focus on
compensation will not materially increase the organization's competi
how to do the same tasks in less time and/or using fewer people, or by
tive advantage when applied to most jobs in the company. Yet in a
substituting technology for people, is precisely what the business
handful of cases—the ones that are the bottlenecks for improved
needs to squeeze costs out of existing processes and (slightly)
competitive advantage—such changes could have the sought-after big
increase margins. On the other hand, the big gaps in strategy execu
impact; the challenge is identifying which ones matter most (see the
tion often require significant investment in new organizational capa
next section for details).
bility where the organization currently is relatively weak.
A big challenge in many organizations is the constant pressure to
optimize business processes by streamlining them to save money and For example, when Boeing embarked on building its new Dream
increase productivity and margins. In many cases, business processes liner/787 series of aircraft, it had to invest substantially in new organ
can be improved incrementally without degrading performance, so izational capability working with composite materials instead of
business leaders often demand cost reductions as a core part of how traditional metal materials. The large cost overruns and production
they manage the business. Yet constant pressure to reduce costs can delays meant low to negative short-term ROI, and large cash outlays
lead managers to cut spending in ways that is “penny wise and pound to deal with them. Any ROI calculated over reasonably short-term
foolish”: The spending cuts degrade organizational capability so it horizons would have been negative. Yet Boeing's leadership never
becomes harder for the organization to maintain or increase its com deviated from their decision to use substantially more composite
petitive advantage in the marketplace. materials in their aircraft because the competitive advantage from
doing so was so compelling: much lighter plane weight, better fuel
Currently, ROI is the gold standard for evaluating the financial
economy (which created significantly lower operating costs for its
benefits of an organizational change or existing process. Yet often
customers over a plane's lifetime), and the assurance of knowing it
there is a fundamental trade-off between demonstrating immediate
would maintain parity with Airbus, its primary competitor, which also
ROI of a change versus improving the organization's competitive
was incorporating composite materials into its production processes.
advantage through increased ability to win in the marketplace
The bottom line is that incremental improvements in perfor
mance certainly contribute to the business, and they often have an For another example, social network analysis currently is gaining
impact that can be measured in financial terms or ROI. But optimizing greater traction within companies as a way to understand the “infor
existing processes is not the same thing as improved strategy execu mal organization”—the people who are the most trusted and relied
tion, and can even run counter to it, especially if the finance function upon to get things done in the day-to-day work of the business. Such
focuses the organization too much on short-term cash flow and ROI insights can be helpful for fine-tuning reporting relationships, budget
measures (Levenson, 2015). In situations like that, HR and the busi allocations, and even decision rights. However, they are no guarantee
ness leaders may opt for more narrow, incremental improvements in that the right people are in place to improve strategy exe cution; that
organizational capability and processes that offer relatively meager the correct lateral integrating processes are in place to overcome
short-term boosts to the bottom line, while forgoing more forward organizational silos; that people are being held accountable for the
looking, longer-term investments in people and the business that can behaviors needed to improve organizational effectiveness; and so on.
truly move the needle in terms of improved strategy execution and The previous are two examples of established social science ana
organizational effectiveness. Such issues are often at play in publicly lytics techniques that are making their way into common organiza
traded companies that feel the pressure to deliver improvements in tional practice in workforce analytics. Along another front, vendors of
financial results over relatively short time horizons. enterprise IT systems are building greater and greater functionality
A different but related problem with current practice is a some for doing basic data analysis, including data visualization, into their
times overemphasis on interesting or novel statistical methods and software packages so that anyone in the HR function or the business
new data sources without the right framework for evaluating their can manipulate HR data that previously was available to only a small
strategic importance. For example, a few years ago a number of con number of analytics professionals. However, rather than improve the
sulting companies started making a big deal about applying conjoint quality of insights derived from existing data, such ease of use only
analysis to questions of employee choice over different aspects of the increases the tendency to rely on existing warehoused data for analy
job and compensation or benefits. Conjoint analysis has had a very sis despite their extremely limited nature (see discussion above).
long and successful history in marketing of helping companies
determine what types of product features to offer, such as the colors
of a car and what options are provided. Applying the same statistical 3.4 | An alternative approach
tools to employee choice over specific benefit packages including
The biggest challenges with current workforce analytics practice are
better health care coverage, vacation time, and the like versus money
(a) too much focus on individual or role-level questions, and (b) too
spent on raises is a novel approach that until recently was not widely
much emphasis on evaluating existing HR programs without looking at
employed. The insights that have emerged from such analyses have
the bigger picture of strategy execution and organizational effec
helped companies squeeze better value for their employees out of
tiveness. What is missing is a way to compare and select which types
existing budget allocations for benefits and compensation. Yet such
of workforce analyses will yield the most important strategic insights.
improvements typically provide little to no value in overcoming the
To make things better, workforce analytics needs to be focused more
operational bottlenecks that most challenge senior leaders on the
on building and preserving competitive advantage and on closing the
business side.
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696 LEVENSON
be prioritized lower than issues affecting R&D, marketing, mergers
and acquisitions (M&As), and government relations.
gaps in strategy execution that most bedevil the business's leadership.
It does not require a great deal of effort to conduct the com
The solution I propose is to start with the current gaps in organi
petitive advantage analytics step, yet it requires an ability to assess
zational capability and the organization design problems that degrade
competing priorities for the business where the agendas of key
competitive advantage. The steps to take are shown in Figure 1 and
leaders can come in conflict with each other. In the pharmaceuticals
are discussed in detail in Levenson (2015).
example, the diagnostic needs to address the relative needs for
improvement in each key part of the business. Key questions to ask
include: What are the biggest challenges in R&D, marketing, M&As,
3.4.1 | Step 1: Competitive advantage analytics In this first
and government relations? What types of organizational change might
step, the competitive environment of the organization is assessed
be needed to address the challenges, and would the leader ship be
through interviews with senior leaders and through inde pendent
more receptive to supporting certain changes over others? Is the
knowledge about competitive issues in the relevant industry or
likelihood of success greater for some potential initiatives over
industries. The most important issues holding the organization back
others? Answering these questions and other related ones is an
from better strategy execution and organizational effectiveness are
essential part of the prioritization process; for further details see
identified and prioritized. Specific tools that can be applied include
Levenson (2015).
strategy maps (Kaplan & Norton, 2004), SWOT (strengths,
One of the biggest conflicts when prioritizing is between cash
weaknesses, opportunities, threats) analysis, value chain analysis, and
flow and margins on the one hand and achieving strategic objectives
product maturity models.
on the other because investing in strategic priorities can have con
For example, branded pharmaceutical companies such as Pfizer,
flicting impacts on profitability: there is tension between the strategic
Glaxo Smith Klein, and others derive their competitive advantage
priority and the need to keep costs down to make money. For many
from R&D, marketing, successful acquisitions of other companies and
consumer products companies, the priority is low finished product
compounds, and government relations. Capabilities such as manufac
cost and high quality. For technology and pharmaceutical companies,
turing, distribution, and sales are important contributors to margins
it is cutting-edge innovation that doesn't cost too much to create. For
and financial success—yet they are not the organizational capabilities
many consumer and financial services firms, it is cost-effective
that provide true competitive advantage. So organizational effective
customer service. Safety is a primary concern in manufacturing, min
ness issues that address manufacturing, distribution, and sales should
ing, and construction—but organizations can overspend on safety to decision rights allocated? Where do problems arise in decision mak
the point where there are few to no additional safety gains while ing? How do people overcome the flaws in the organization's design?
margins erode, and so on. Where does matrix decision making need to be improved? Are
The tension often gets translated into “do more with less.” Prob resources properly allocated to support the strategy? Which aspects
lems in strategy execution arise when the benchmarks that senior of the organization's design and capabilities reinforce the culture and
leaders use to set productivity and quality targets cannot be attained make change more difficult? What are the group norms that drive
within the allocated budgets. In most organizations, that is close to a behavior? Where do those group norms support effective strategy
daily occurrence. Figuring out why productivity or quality are falling execution, and where do they get in the way?
short or why costs are exceeding budgets takes up inordinate amounts
A key task for this stage of the analysis is determining at what
of time for middle and frontline managers. They rarely arrive at the
level deeper analysis should take place. In my view, there are two
best diagnoses and solutions because they do not know how to
fundamental challenges with the way workforce analytics are com
incorporate what is going on with the people. That is the job of the
monly practiced in organizations: too much emphasis on individual
workforce analysts.
level issues (not enough on group-level issues), and analyses that are
Yet the workforce analysts cannot do the prioritization on their
too heavily weighted toward multivariate analysis (including
own. They have to engage senior leaders to identify the issues at hand,
regression analysis, analysis of variance [ANOVA], conjoint analysis,
and determine what is most needed by the business, where change is
multivariate choice/logit/probit, and more). Both challenges are inter
most likely to be supported, and how to trade off prioritiz ing certain
related because fancy multivariate methods are most often appropri
potential changes over others.
ately applied at the individual level where there are numerous
repeated observations on (relatively) homogeneous samples of people
in roles.
3.4.2 | Step 2: Enterprise analytics
Yet the higher level of aggregation focus of group-level analysis
Once the competitive advantage analytics step has been completed
(team, group, unit, function, enterprise, etc.) does not often lend itself
and the issues to address identified, the next step is analytics at the
to multivariate statistical analysis. Only when there are repeated
team/group, unit, and/or organization level. This step addresses the
observations of identical groups, such as sales locations/branches,
challenges to executing the strategy that arise from the group-level
work teams, and so on, can multivariate analysis even be considered in
work design, including the organization design.
the first place. In all other settings a different type of analysis is
The types of issues to address in this step are discussed in the needed. Moreover, when the diagnostics have to focus on issues of
previous section on team design, organization design, and culture. organization design, including the implications of decision rights
Specific issues to address in organization and team design include
problems with the design decisions and lateral integration. How are
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LEVENSON 697
which can be assessed only by considering the strategic context
(competitive advantage analytics) and whether any group level factors
allocation, collaboration across organizational silos, and business
drive, or at least contribute to, the observed individual behaviors and
process issues such as go-to-market effectiveness, innovation, qual ity,
business results (enterprise analytics). Levenson (2015) provides
and customer service, the focus often is on the overall results for a
examples of the three different combinations of analyses that are
collection of work groups. In such settings, the only type of diag nostic
possible: (a) where the vast majority, if not all, of the diag nostic time is
that often is needed is qualitative in nature (Levenson, 2015).
spent looking only at group-level issues; (b) where the vast majority of
diagnostic time is spent looking only at individual level issues; and (c)
3.4.3 | Step 3: Human capital analytics where both types of analysis are needed for a complete diagnostic.
Once the enterprise analytics have been conducted, the final step, if
needed, is human capital analytics, including analyzing potentially all
3.4.4 | Case study example
three parts of the COM model. The reason I say “if needed” is that this
To illustrate the different steps with a specific example, consider the
final step should be employed only if the results from the enter prise
TD Canada Trust case (Campbell and Kazan, 2008). The case focus is
analysis are insufficient on their own to show a clear and defini tive
the acquisition of Canada Trust by TD Bank in 2001. Because of a
course of action to take. For example, many problems with silo
variety of regulatory issues and the shape of the competitive land
behavior and (lack of ) organizational alignment that arise from pro
scape in Canadian banking, the success of the merger hinged on
blems with the organization design can be addressed sufficiently using
retaining the customers of Canada Trust as that company was
only enterprise analytics, not workforce analytics.
acquired. Canada Trust had built a successful business on the founda
Carrying out all three steps of the diagnostic is more involved and
tion of being different than the big banks, so the acquisition pre
time consuming than traditional workforce analytics approaches that
sented large risks in terms of customers moving their money to other,
focus predominantly on the individual level of analysis. Yet that does
smaller banks.
not mean that the end result will necessarily be very different than
The competitive analytics step in this case is described almost
when only individual-level analyses are considered. A main rea son for
completely by this summary. The overall strategic objective is “suc
doing the first two steps in the approach advocated here is to put in
cessful merger.” Of course, there are many different measures that
context any individual-level analysis that might be considered. There
could indicate a successful merger, including maintaining the right
is always variation in performance, motivation, and the oppor tunity
mix of products sold; greater cross-selling to clients from a more
individual employees and managers have to impact business results,
diversified portfolio of products and services; reducing redundant
so there usually is some type of analysis that could be con ducted at
costs/streamlining operations across the two organizations; expand
the individual level that will yield potentially actionable insights. The
ing the geographic reach of the acquiring company; and maintaining
question is the relative value of the individual-level anal ysis results,
 the existing customer bases from both organizations. In this case, Moreover, as the merger progressed, customers did start to leave at a
though, the objective of reducing redundant operations had limited faster rate than was the case historically because of dissatisfaction
value because of the regulatory environment: the bank “had been with aspects of the merger such as standardizing accounts and differ
asked to be sensitive about its branch closures and layoffs” (Campbell ent terms of doing business (fees, hours of operation, and service in
& Kazan, 2008, p. 6). So rather than more of a bottom-line focus to rural areas).
gauge the merger's success (cost reduction), the emphasis instead was The second step of the diagnostics focuses on the organization
on keeping the existing customers happy. design and culture needed to support the strategy and a successful
In this case, the company was pursuing a growth strategy merger. The bank realized that it had made some errors with the ini
whereby it could save money through increased economies of scale. tial integration steps, so it designed a strategy to correct those. In
The organizational capability the bank was trying to maintain and particular, the leadership decided to gradually roll out branch integra
build to support that strategy was the ability to serve a larger set of tion across the country. This enabled them to learn how to work out
customers via a more diversified product portfolio. For example, the kinks of systems integration as they went along. It also minimized
Canada Trust was an innovator that often led Canadian banking into branch employee dissatisfaction and turnover, which can directly
new ways of doing business such as commission free mutual funds and impact customer satisfaction and retention.
pioneering the use of ATMs. So the merger offered the prospects of The conclusion of the enterprise analytics in this case was that
greater topline growth for TD Bank. And if the merger could be done they had to focus on integration of business process systems at the
successfully, top-line revenue should have increased without a large corporate level, as well as integration of branch operations at the local
increase in branch or employee costs, since outright cost reduc tion at level. Doing so successfully included leadership communicating clear
a large scale was politically infeasible. This led to the focus on expectations that were followed through on with both custom ers and
customer retention: A higher customer retention rate means main employees regarding what the outcomes of the merger would be. A
taining a given level of assets under management and rates of sales of core message was that the merged bank would look and feel (have the
products and services as current customers stay with the bank, while culture) of the acquired bank, Canada Trust, not the acquirer, TD
offering the prospects of increases in both as new customers are Bank. Operationalizing that objective, many Canada Trust executives
successfully recruited to engage with the bank; both assets under were put into key leadership roles even though TD Bank was the
management and sales should increase if greater customer retention larger organization to start with.
means that more customers join than leave in any given time period.
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698 LEVENSON
prise analytics are needed to understand the relative value of that
type of human capital analytics. In the case of the TD Bank–Canada
Note that the decision to put Canada Trust executives in charge
Trust merger, the first two analytics steps revealed that that third
of key parts of the business reflected a type of human capital analyt
analytics step was not needed to address the big strategic issues of
ics: understanding the different aspects of leadership competency
the merger. Could such analyses nonetheless have revealed key
needed for the merger's success. One aspect was ability to lead and
insights to help local branch managers deal with voluntary turnover
manage complex organizational processes, a relative strength of TD
issues? Of course, they could; however, in this case that analysis would
Bank executives who worked with a larger organizational scale. The
just help with incremental improvement of existing operations, not
second and equally critical aspect was ability to maintain and spread
closing any gap in strategy execution related to the merger.
the Canada Trust culture to the merged organization, a core strength
of the Canada Trust executives. Not addressed in the case study dis
cussion is another likely reason for putting executives from both
companies in leadership roles: integrating processes across two large 4 | CONCLUSION
organizations almost always requires leaders from both companies
working on the integration to ensure that tacit knowledge about busi In this article I have taken a relatively critical look at the current prac
ness processes and organizational culture is used effectively during tice of workforce analytics in organizations. Looking at the glass as
the integration. half full, much of the workforce analytics being applied today is capa
What is not detailed in the written case study are any in-depth ble of delivering useful insights that can enable more effective deci
analyses at the human capital level that shed insights into between sion making, cost savings, streamlined operations, and employee
employee differences in motivation and productivity, and how those engagement practices. Looking at the glass as half empty, there is an
were addressed during the integration. A likely reason for this is that overwhelming number of business and people processes that can
this type of case study, a merger integration, is a classic case where benefit from such improvements. Yet current practice offers little
many, if not most, of the most important diagnostics are done at a guide on how to prioritize which improvements are most important
group level. However, in other merger cases more in-depth human for strategic success and, thus, should be analyzed before others.
capital analytics might be appropriate. For example, if there were In order to make progress in this domain, I firmly believe that the
large-scale cost reductions through branch closing and layoffs, under practice of workforce analytics needs to change from the top down,
standing individual differences in how people perceived the merger to starting with how it's taught and applied by management professors
avoid a large-scale increase in unwanted voluntary turnover could and university-based researchers, by consultants, and by internal
have been critical for the merger's success. Yet that focus was not experts. The three-step approach I propose is one path. Undoubtedly,
relevant in this case given the regulatory pressure on the bank to do there are others. Which one(s) to teach, and the relative merits of
minimal branch closures and layoffs. each, is an important topic for further investigation.
This discussion of whether and how to employ human capital In order to be effective, the changes I seek will need to take place
analytics to look at the drivers of voluntary turnover illustrates a main not just among the community of people teaching and leading
point about why the initial steps of competitive advantage and enter workforce analytics, but also among those implementing it on the
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AUTHOR'S BIOGRAPHIES
 ALEC LEVENSON is a Senior Research Scientist at the Center
for Effective Organizations, Marshall School of Business, Univer
sity of Southern California. His action research work with compa
nies optimizes job and organization performance and HR systems
using organization design, job design, human capital analytics, and
strategic talent management, and emphasizes the practical,
actionable changes organizations should take to make lasting
improvements in critical areas. He has trained HR professionals
from a broad range of Fortune 500 companies in talent analytics.
His books include Strategic Analytics: Advancing Strategy Execution
and Organizational Effectiveness, What Millennials Want from Work,
and Employee Surveys That Work. His research has been featured in
numerous academic and business publications and in the New York
Times, The Wall Street Journal, The Economist, CNN, BusinessWeek,
and many other news outlets.

How to cite this article: Levenson A. Using workforce ana

lytics to improve strategy execution. Hum Resour Manage.
2018;57:685–700. [Link]