Does your human resources department use the data they collect to help the organization make better fact-based decisions and improve business performance? For all the data they collect, most HR departments fail to exploit this huge potential and simply use information for a retrospective view of the organization. We all know that the amount of available HR data is only going to increase, so why not tap into it?
In many cases, there is simply a lack of awareness of the latest generation of HR analytics that can link investments in people to a company's returns on financial capital. Your HR executives should be aware that some of their most astute peers are actively shaping their organization's future by managing talent and directing programs toward the long-term needs of the business.
An Accenture study has shown that 68 percent of U.S. executives at large enterprises believe their company must improve its analytical capabilities to remain competitive. How can HR managers do this? It's simple. They need to understand what programs drive better workforce performance. This will mean, for example, that after a merger or restructuring, they can use HR data to tell leadership what organizational changes are needed to ensure the company hits peak performance. They can identify key senior people who are at risk of departing and help retain them.
Prescribed use of HR data leads directly to increased employee productivity, improved service to customers and measurable impact on the business at a time when unprecedented levels of data are available. Average company data will increase 10 times between 2005 and 2012, according to industry experts. New sources of data come online every day, including public, private, third-party and social data, not to mention the physical data contained in mobile devices and sensors.
Our research has shown that high-performing businesses that are using this data have a much higher analytical orientation than other organizations. This analytical capability sits in every key function, including HR. Some 15 percent of top performers (but only 3 percent of low performers) told us that analytical capabilities are a key element of their strategy.
HR cannot afford to miss this wave. While many may believe they differentiate by merely providing information, leading organizations are innovating with data-driven insights. A good example of this is one of the world's leading Web companies, an organization that is proud of its tough screening process with job candidates. However, it became a victim of its own success, making it increasingly difficult to find the best recruits. Because this company receives some 100,000 applications per month, HR found it that much harder to identify the best candidates using traditional screening techniques such as grade point average.
So the organization created a tool to carry out an extensive survey to assess applicants' attitudes, behaviors, personality types and biographical information. Survey results for individual job seekers were then matched against a list of the best predictors of exceptional workforce performance - a list generated from a control group of current employees who also took the survey.
As a result, the business has generated new insights into what qualities are more likely to produce successful employees. One surprising finding is that applicants who are record holders - in anything, from sports to yodeling to solving a Rubik's Cube puzzle - have a predictor of success in this company's working environment. Analytics offer the ability to generate these kinds of nonobvious insights - knowledge that offers companies the chance to link workforce and business performance in unique, hard-to-imitate ways.
To gain the sorts of insights that this leading company has been able to establish, it will take some up-front work on your organization's data. But you won't be alone. Two-thirds of U.S. and U.K. senior managers view getting their data in order as an immediate priority, according to Accenture interviews with 600 executives from a cross-section of blue-chip companies. Their long-term top objective is to develop the ability to model and predict behavior, actions and decisions to the point where individual decisions and offers can be made in real time based on the analysis at hand.
So if you want to grasp the advantages offered by HR analytics, three general steps will be at the core of any strategy. First, you will need an accurate workforce assessment of the way things really are, one that is not skewed by emotion or limited to anecdotal evidence. Second, diagnose the causes of whatever workforce problems exist and create plans to address the underlying causes. Third, determine what might or should happen. Companies want to develop predictive and forecasting capabilities to help them see issues before they encounter them, or to seize opportunities before they become obvious to all peers. Predictive analytics is becoming the real business differentiator for high-performance organizations. If you can get to that point, the data on staff will be delivering business value, not just satisfying legal compliance or sitting dormant while your best people walk out of the door.
Greg Todd would like to thank Jeanne Harris, executive research fellow and senior executive at the Accenture Institute for High Performance, for her contributions to this column.