The Chief Human Resource Officer of our clien overseeing over 3000 staffs was faced with a sharp rise in HR cost in recent years despite maintaining a tight control on headcount and increments

The key questions we set out to answer was why HR cost is increasing and what can be done about it?


We implemented our analytics framework, and framed our strategies around a few methods

Descriptive: Understand Past & Present
We firmed up the problem statement by framing staff cost as a function of key workforce dynamics (i.e. hiring, attrition, promotion and increment) and salary. Using component analysis and a fair bit of calculus, we distilled the four main drivers of cost change: cost per head, headcount, structural change and combined effect. 

Predictive: Foresee What Is To Come
While stakeholders understand intuitively that such scenario would be disastrous if it were to continue, it is difficult to put an amount to it to compare against other priorities in the business. We studied and ran time series forecasting on the key variables to estimate potential impacts of inaction. The resulting model shows that evolving workforce dynamics will cause the workforce to be fatter at the higher end of hierarchy and thinner at the lower end. If such trend continues, staff cost will very quickly reach an unsustainable level.

Prescriptive: Pinpoint the Right Course of Action
The next question on everyone’s mind is naturally what should be done to contain the cost increase. To contain the cost issues driven by structural change, one can use the four key workforce dynamics as levers. We modeled staff cost as a function of the dynamics and embedded it into strategic and tactical simulators. With simulators at both levels, the HR management team can simulate scenario with different hiring rate etc., and set policies based on the results.