Article: The Power of Analytics


The Power of Analytics

The power of prediction will enable HR to make business predictions, increasing their value exponentially
The Power of Analytics

Only 5 per cent of HR leaders did a critical array of talent analytics effectively, according to DDI’s Global Leadership Forecast 2014-15


Total Quality Management is no longer a buzz word. It has transformed the way we produce products and deliver services. Reengineering is another term that you don’t hear about anymore, but it gave us a new way of thinking about the intersection between people and business processes. Empowerment is no longer a buzz word, it has become the way we work in most organizations.

But, of all the advances we have made in human capital, there is one that will dwarf all others: Analytics. Payroll constitutes the majority of costs in almost all organizations today. Analytics allows organizations to maximize the investments they make in human capital, with the potential to either save billions or do a better job of top line growth. Keep in mind, that while payroll is our biggest cost, it has also become the source from which most organizations derive the majority of their value, making analytics all the more important.

Data and technology enablement has advanced rapidly in the last decade and will continue to do so. This means we will far more easily be able to store data about people and correlate with dozens of business metrics at the push of a button. A recent study by The Corporate Executive Board (CEB) estimated that 95 per cent of senior HR executives plan on increasing their spend in analytics (The Analytics Era: Transforming HR’s Impact on the Business).

What Are Analytics?

There is a lot of confusion over what really constitutes analytics. The Conference Board developed a maturity model that describes three types of analytics:

Describe: What happens, what is happening.

Predict: What could happen.

Prescribe: What should happen.

The latter two categories are the most important. Think for a minute about the type of questions you might be able to answer. What is the impact of a particular talent initiative like training on the quality of our talent pool? Does one initiative have better payoff than all others? Do we have a sufficient supply of talent to meet our five-year global expansion plans? What talent risks do we have in making our anticipated acquisition successful?

Our Scorecard

While the criticality of talent analytics will be paramount, we are a long way off. In the CEB study we mentioned above, only 15 per cent of executives have altered any business decision as a result of analytic data. Only 5 per cent of the HR leaders who responded to our own Global Leadership Forecast 2014-15 reported doing all of a critical array of talent analytics effectively. In India, the number is not much better. And in The Conference Board’s 2014 CEO Challenges, talent analytics was ranked 19 out of a possible 22 human capital strategies.

The Payoff

The move to talent analytics will require a major mindset shift for most talent management executives. New positions will need to be created and skills acquired. Yet, at the end of the day, the power of prediction will enable HR to make business predictions, increasing their value exponentially. Our own research from the Global Leadership Forecast showed that those organizations that use more advanced forms of analytics are far more likely to be in the top 20 per cent of financially performing companies. And CEB showed that an organization’s improving analytics impact from medium to maximum is likely to see a 6 per cent improvement in gross profit. And, India, with keen analytic minds and technology-driven organizations, is better equipped than anyone to lead the way!

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Topics: Technology, #HRMetrics

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