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Succeeding with HR Analytics
Talent Analytics or Human Workforce Analytics is a way to analyze data and generate insights for meeting the complex needs of the HR and business, and thereby enable high performance organizations. In the traditional HR role, the expectation was to somehow manage the people processes through insight and interpersonal relationships. Thus, the complex understanding of organizational and human dynamics happen by a most subjective process of hearsay, observation and interpretation.
Companies like Accenture are taking the lead in defining what is human analytics and developing an approach that would help organizations answer some critical people-related questions: whether programs really drive better workforce performance; what organizational and talent levers are impacting performance and efficiency; how to retain top performers, etc. Companies like IBM have developed talent analytics softwares that provides insight into recruitment, learning, skills, succession and retention.
Though the field of business analytics has made great strides in the recent years, HR processes have not yet caught up to the task of analyzing these complex dimensions to make decisions on talent management, be it acquisition, development or retention. The typical tasks that would fall under these heads would be assessing capabilities, identifying leadership behaviors, predicting performance indicators or studying retention patterns. Leveraging on analytics would mean an improvement in workforce planning, alignment of organizational capabilities, improvement of business strategies, all of which lead to improved organizational performance.
In understanding talent analytics, it is important to review what gets measured in the name of metrics related to human capital. HR managers take pride in estimating their employees’ cost of hiring, turnover rate, replacement rate, contribution to bottom line, all of which do not have much strategic importance. These matrics are useful in managing people and information; but not in creating value for the organization.
The shift that is required is from managing efficiency to creating effectiveness. To give an example, most organizations measure employee satisfaction levels or customer satisfaction levels. Providing this data to the top management is not enough if HR wants to be a strategic partner in managing the business. The next logical step would be to understand the type of management or employee behaviors that influence this level of satisfaction, the level of increased aspiration, and hence the behaviors that are required to improve the quality of employee and customer experience and finally, the impact of this increased satisfaction on the company’s performance.
And ultimately, employee and client satisfaction do not mean anything by themselves, unless they result in business performance, increased market share and profitability. Talent analytics helps in mapping how well the workforce is meeting the business needs and how aligned to the business vision it is. It also helps to identify ways in which a high performing employee will continue to contribute to the well-being of the company.
For instance, Thomas H. Davenport, in the HBR article ‘Competing on Human Analytics’, talks about how some companies that are very high on valuing employee engagement, can precisely identify the value of a 0.1% increase in employee engagement among employees on the performance of a particular store or brand.
Talent metrics is the most objective way of measuring what brings value to the organization, in fact, more objective than employee performance measures. The role of HR in providing intuitive analyses and creative thinking will still be required, but rather than applying it on behavior, they will be required to apply it on strategy.
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