HR analytics spoils leave party at NAB

Employees at NAB were saving up their annual leave days and costing the bank a mint. NAB's people and culture head of consulting, Stuart Moseley, decided to put a stop to that with the help of human resources analytics.

At the National Australia Bank (NAB), annual leave hoarding was becoming an epidemic and it needed a cure.

It's customary in Australia for workers to be able to save up their annual leave if they do not use up their 20 days in any given year. However, annual leave days accrued becomes a liability for companies since they need to set aside money to account for those days. Employees that are made redundant or decide to leave the company are entitled to cash out their leave days.

It becomes dead money for businesses because they cannot touch it or invest it elsewhere.

The bank's human resources (HR) analytics team, led by NAB people and culture head of consulting, Stuart Moseley, calculated that, on average, the bank's workers were taking 18 annual leave days out of 20 every year.

"We needed to find the dollar value in this and that's where analytics comes in," he said at the SAP Cloud SuccessConnect event in Sydney. "We needed to talk to the company in terms of our financial position."

Those two days each employee wasn't taking was increasing NAB's liability by 15 percent year-on-year, which translates to about AU$20 million annually.

Moreover, Moseley's team used HR analytics and found that the less annual leave a worker used up, the more sick leaves that he or she was taking.

So Moseley decided to take action. He gave each business unit within NAB a target to ensure that workers within each division would take an average of 105% of their annual leave — essentially pressuring them to take extra days of annual leave. But not all employees would be treated equally on this issue.

First off, Moseley's team would consolidate all its HR data into NAB's existing SAP HR system so that it was the "single source of truth". Then he would use HR analytics to identify the worst offenders when it came to saving leave days.

"We found out that 50 percent of our liability sat with about 20 percent of our employees, and this was the population we needed to get our hands on," Moseley said. "We haven't been looking at that population very well and had not been encouraging them to cut leave.

"We did a bit of analysis on this population and found they were also the sickest population — it's all very much connected."

One of the worst examples was an NAB employee who had over 100 days worth of annual leave sitting in the bank.

A majority of workers on the worst offenders list were also at the executive level. But Moseley found it wasn't hard to get those senior managers onboard when you put a dollar value on the table.

"I told them that they can save that money [for the company] and all they have to do is sit on the beach for five extra days a year — it's a light bulb moment for them," he said. Moseley also convinced them that by taking those extra leave days, it gives their respective business units some breathing space if they do not hit their revenue or income outlook.

But probably the most convincing piece of the puzzle was Moseley's threat to cut the bonuses of senior managers if they do not comply with taking extra annual leave days.

Through SAP's HR system, Moseley is now able to keep track of all the annual leave days of every employee within NAB.

"The data belongs in HR in our SAP system and I can see where people are moving it around, and where they're putting it," he said.

Using analytics, Moseley is able to produce a 'naughty' and 'nice' list so each business unit knows when to start to target employees in terms of adding pressure for them to take annual leave days each year.

By taking initiative to target annual leave hoarders, NAB has reaped the benefits, according to Moseley.

"Even though we implemented it only in the middle of our last financial year, we didn't quite hit our 105 percent target but for the first time ever, we achieved 100 percent annual leave rates," he said.

NAB wants to encourage more leave days to be taken not just because of the liability, but also ensure that the company has a more rested workforce, said Mosely.

The next step for the bank is to target rostered days off and dealing with long service leave.