To achieve business success in today's ultra-competitive landscape, it is crucial to understand your workforce. Analyzing factors such as workforce size, distribution, seniority, career progression, and key metrics can provide valuable insights for decision-making.
In part 1 and part 2 of our workforce dynamics blog series, we’ve examined what workforce dynamics is and how it drives informed decision-making. But, to more fully understand its impact, let’s look at some real-world examples.
The Gravity of Workforce Dynamics
To truly grasp the importance of workforce dynamics within your organization, let us delve into a compelling case study featuring Salesforce.
In the first quarter of 2023, Salesforce implemented significant layoffs, affecting approximately 10% of its workforce. This strategic move led to a return to profitability after experiencing a net loss in the previous quarter and substantial drops in share prices throughout 2022.
However, on September 15th of this year, Salesforce announced an exciting new wave of hiring, signaling a shift in focus toward growth. This shift was likely influenced by the completion of their cost optimization program and the need to invest in other capabilities to secure their strategic targets.
By leveraging Aura Workforce Dynamics, it becomes evident that this hiring strategy could have been identified earlier than the public announcement. The graph below illustrates that new job postings had already increased compared to historical averages even before the official announcement, potentially as early as late August.
In fact, during the week of September 13th, job postings experienced a remarkable 53% increase compared to the previous six months. This notable surge in hiring strategy occurred before it became widely known among the general public. Such valuable insights could have empowered potential investors to adjust their investment strategies or prompted competitors to proactively anticipate and respond to this shift.
This case study highlights the significance of having real-time access to selected metrics for a portfolio of companies. It demonstrates how leveraging these metrics enables users to make well-informed decisions promptly, staying one step ahead of the competition. Remember that this example focuses on a single metric during a specific period of interest. Still, the underlying principle remains: timely and informed decision-making is key to gaining a competitive advantage.
Real Applications of Workforce Dynamics
The concept of workforce dynamics has become increasingly important in the current business environment. An example of this is The Great Resignation phenomenon, where many employees resigned to take up new opportunities. This significantly impacts organizations and the workforce as a whole, resulting in increased recruitment costs as companies are forced to replace the departed employees. By understanding the reasons behind this trend and its implications, organizations can take steps to manage attrition better and thus retain their talent.
Real-World Spotlight on Attrition & Job Hopping
We conducted an analysis of publicly available data on the current and former employees of American Express, Mastercard, and Visa, as well as their subsidiaries. These are among the world's largest established payment companies, known for their stable business operations. Real-time monitoring of their workforce can provide valuable insights to interested parties, such as investors, revealing changes in hiring and attrition. This can potentially unveil strategic moves that have not yet been publicly announced or known outside the company.
It is important to note that these figures may underestimate the number of employees, as our sources rely on up-to-date online profiles, which may not provide complete coverage.
Mastercard has experienced the highest growth, both in absolute and relative terms, with approximately 6% growth as per the Aura data. In contrast, Visa witnessed around 3% growth, while American Express maintained a relatively stable workforce with a modest increase of 1%.
Based on these figures, it might appear that Mastercard's recruitment costs are relatively higher compared to other companies. However, this only presents a partial view of the recruitment landscape. Alongside these newly created positions, it is reasonable to assume that a significant portion of exits were unplanned attrition, resulting in the need for replacements, like the aforementioned job-hoppers.
Therefore, analyzing both hires and exits within each company by function is crucial to discern which hires were likely brought in to fill vacancies rather than being investments in new roles. Particularly when it comes to exits and attrition, it is even more probable that online public profiles aren’t updated in real-time, as some candidates only update their profiles after securing a new job.
The data presented above paints a contrasting picture. Although Mastercard experienced the largest growth in absolute terms, American Express required the highest number of new hires to compensate for employee departures. The tracked attrition rate for Q1-3 2023, as of November (likely an underestimate), indicates that approximately 4% of employees left each company. Notably, American Express had the highest attrition rate. Consequently, a significant number of these departures necessitated replacements.
According to the Society for Human Resource Management, the average cost-per-hire is approximately $4.7K, with executive hires averaging around $28K. Applying these figures suggests replacement recruitment costs of about $15M, $6M, and $5M for American Express, Mastercard, and Visa, respectively. While these amounts may seem relatively small for such large companies, they highlight potential inefficiencies and opportunities for optimization, especially considering current job-hopping trends.
This underscores the significance of actively monitoring attrition and hiring patterns in real-time. Such analysis may reveal compelling insights that have the potential to shape competitive decision-making and pique investor interest.
Workforce dynamics are a vital cog in the machinery of organizational success. By harnessing data-driven insights from tools like Aura Workforce Dynamics and leveraging the analysis of key metrics, businesses can pinpoint areas requiring improvement, make informed decisions, and enhance productivity. In a world where business landscapes are continuously shifting, timely and informed decision-making could very well be your ticket to staying ahead in the race.
Want to see the power of Aura for yourself? Schedule a demo with us today. And, if you’ve found our three-part blog series on this topic interesting, download our full ebook Exploring Workforce Dynamics: Unlocking Actionable Insights with Aura for even more context.
