Employee Identity Number (EIN) is equivalent of a PNR (Personal Name Record) in the organizational context providing link to all kind of demographic and work history data of the employee
As the Shakespearian quote goes ‘What’s in a name?’ One needs to look beyond name to get the meaning or essence of the object. Same is the case with Employee Identity Number (EIN), which is equivalent of a PNR (Personal Name Record) in the organizational context providing link to all kind of demographic and work history data of the employee. That seems to be a simplistic way of looking at EIN without attempting to understand the powerful insights this number can provide into a working of an organization.
EIN is allocated to a full time employee on joining upon the organization and in some organizations, all types of employees like FTE, contract, contingent, temp etc. have same continuous series number whereas in some organization EIN for FTEs is different than that for non FTE employees. Irrespective of how it is being deployed, use of People Analytics approach can throw up interesting insights hidden behind this number. Like any People Analytic approach, EIN analysis can be applied to a specific organization to get required insights about workings of the organization. EIN as a tool is like EBITDA or Earning Per Share (EPS) analysis which if done properly can provide lot of information about any company working.
Let us take a case of a company to illustrate this. An employee, John joins in Company X in June 2004 and given an EIN as 19450. Company X was founded in 1995 and operates in the IT Services Sector. IT services sector typically has attrition rate of 15 to 20% per annum and business growth rate ranging from 10 to 20%. After few weeks of joining, John found that total employee headcount including all type of employees is 4600. John worked in the company for 8 years and left in April 2012. At the time of leaving John found that latest EIN is 52157 and total headcount is 12350. A quick analysis of EIN data for company X from 1995 to 2012 shows that:
i. From 1995 to 2004, company had hired 19000+ on its rolls during 9 years period and actual headcount in June 2004 was 4600
ii. From 2004 to 2012, company had hired 32000+ employees during the 8 years period and actual headcount in April 2012 was 12000+
iii. And company since its inception in 1995 had hired 52000+ employees till 2012 but actual headcount in April 2012 was 12000+
A quick interpretation of above data shows that:
i. From 1995 to 2004, headcount churn was close to 5x in 9 yrs
ii. From 2004 to 2012, churn was 2.5x in 8 yrs
iii. And from inception till 2012, churn was 4x in 17yrs.
If the company A had grown within the growth rate range of 10 to 20% and had an attrition rate in the range of 15 to 20%, it would had have experienced a homeostatic state on the headcount front.
Nevertheless, using data analytics approach, what insights does this data provide about the business and growth of company, people management approach of the company, culture and more importantly a peep into the operating philosophy of the Senior Management? Let us try to derive some insights from this analysis by looking at impact on business outcomes:
1. Business and Business Growth Quality: Data analysis points out that:
- Company has witnessed fast growth at different time periods in 17 yrs of its existence.
- Growth is not a stable one and has periods of high growth followed by sharp drop in growth. This is evidenced by high volume hiring of 32K during the period 2004 to 2012 whereas the actual survival is close to 1/3rd.
- That company lacks a focused business strategy with clarity on what business it is in and what business it is not in rather than an Indian Thalli (a large plate served with everything available to eat!) approach which has spread of all dishes, leaving the consumer confused. It points out that company is unable to figure out where to invest and grow and where to get out.
- Company has been unable to develop core competence areas as a differentiator from similar companies in the industry as this would have enabled to maintain a steady growth in core areas without witnessing too much turbulence in employee headcount while allowing it at the same time elbow room to explore emerging areas.
2. Culture of the Company: In the absence of data related to how many employees have the longest tenure in the company since its inception, yet it can be concluded that culture will be always in a flux with the absence of a true culture acting as a glue for creating identity of the company. As churn ranges from a multiple of 2.5x to 5x over a period of 17 years, one can easily imagine challenges related to process implementation and continuity as well as creating a cultural identity for the company.
3. Customer Satisfaction: With such a high employee churn rate and low tenure rates, customer service will suffer as Service Level Agreement (SLA) impacted due to constant deployment of new employees and thereby inability to deliver consistent quality service to customer. As a consequence, one can safely assume that company might be experiencing high customer churn also.
4. Senior Management Quality: As the data shows, 12K is the headcount in 2012 whereas 52K were hired since 1995, so it implies that company has witnessed complete replacement of employees 4 times in its life cycle so far barring few ( assuming 5 to 10%) continuing over longer periods beyond 10 yrs tenure.
i. This points out Sr. Management’s preference for mirror images of self at different levels who can have a longer tenure.
ii. Also it highlights deficiency of sound business and operational knowledge coupled with lack of leadership skills in Sr. Management as evidenced by inability to build a sustainable and lasting organization (or institution).
5. People Management: As in any IT services sector company, people are the key drivers and differentiators of business and insights based on Company X’s data analysis shows that:
i. Company believes in just in time hiring that hiring for growth as headcount maintained is linked to what business can sustain.
ii. Just in time hiring raises overall employee costs as lateral hiring is always costly than developing from entry level upwards, thereby providing less elbow room for employee investment or innovation.
iii. Company has pure ‘task based’ (or project based in IT parlance) approach towards talent rather than ‘people’ or ‘individual’ based. What this means is that as soon as project or task is over, an employee loses its value unless can be deployed for a similar task if available. One the hand people or individual based approach signifies that organization values an individual beyond the skills for current task or project and willing to help individual to grow and develop over a longer period by skill development.
iv. Employee development and growth is purely a tick mark approach as evidenced by lack of company’s interest to maintain a pool of people for projected or anticipated growth. Clearly talent management will be restricted to task or work at hand with no planning for future.
v. HR will be heavily transaction focused as large volumes of hiring and onboarding and exit management will consume significant amount of HR team.
vi. Also just in time hiring has another unintended consequence of pulling resources from ongoing projects for deployment to new projects to prevent the revenue loss till the time new hire joins, which creates adversarial relationship between HR and line managers as latter sees HR prowling for people for new projects.
6. Employer Brand: More than 40K people have passed in and out of the company doors. Thus company has a huge alumni outside at any point of time than the actual employee strength. Now these alumni might have worked for different periods of time while in the company, more likely joined as laterals and had good and bad experiences while at the company. Assuming only half of alumni talks good about the company while other half shares negative things, still the numbers are huge for any company to sustain and build its employer brand to keep attracting quality talent.
Above narrative based on simple analysis of EIN data and looking beyond what EIN hides shows that data analytics even if very simple can be source of powerful insights about what is happening inside the company. Typical HR Person need not to apply sophisticated algorithms to People Analytics. And if this EIN data is supplemented with more data like quality of hire, quality of performance ratings, manager and senior management churn rates, actual attrition rates, actual business growth rates and customer satisfaction etc., more powerful insights can emerge on the state of affairs of a company.
Disclaimer: This is a contributed post. The statements, opinions and data contained are solely those of the individual authors and contributors and not of People Matters and the editor(s).