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By Jason Geller

For a century, HR has included an analytical bent, but with the rise of big data, HR is rapidly evolving into a data-driven function that offers significant new opportunities to drive business results.

This latest trend in HR is, strictly speaking, not really a trend at all, but likely a fundamental, permanent change in how HR professionals will work, add value and manage relationships with other business functions. Yet new research shows that many companies are behind the curve when it comes to deploying big data to improve HR results.

According to the 2014 Deloitte Global Human Capital Trends Report, 86 per cent of companies report no analytics capabilities in the HR function, and 67 per cent rate themselves as weak when it comes to using HR data to predict workforce performance and improvement. Fewer than one in 10 companies say they have “strong” analytics capabilities. By contrast, 81 per cent of companies use analytics in finance and 77 per cent in operations, according to a 2013 study.

The good news is that 57 per cent of HR teams increased their investments in measurement and analytics last year. Companies that are leading the way in talent analytics are already reaping the benefits, showing strong signs of improvement in recruiting, tripling their leadership development capabilities and enjoying 30 per cent higher stock prices than their peers.

Talent analytics combines workforce data with business data to make better business decisions about people. Critical questions – such as whom to hire, how to manage people and what drives performance, retention and engagement – can now be answered with the assistance of data, not just opinion. A focus on analytics enables HR to shift from simply reporting and analyzing data to enabling the business to make informed talent decisions, conduct advanced workforce planning and – the final step – using data to help predict workforce performance and improvement. The push toward greater capabilities in analytics is a critical part of re-skilling HR. This transformation from people administration to people performance may redefine HR’s value to all areas of the business, from the C-suite on down.

Companies that are successful in harnessing the power of analytics generally rely on targeted technology investments, crossfunctional teams and strong partnerships between HR, IT and operations. Analytics is a positive disruption for HR. It offers an opportunity for HR to take a leadership role in identifying and solving problems that drive impactful business results. Indeed, it’s critical to the future of HR to show how talent analytics brings value to business leaders. Some examples of highvalue solutions seen in the marketplace include:
■ Understanding what makes high-performing salespeople successful, which assists companies to attract and select better candidates
■ Understanding what factors truly motivate high performers to stay or leave, which helps companies to make more targeted decisions about how to structure compensation packages and build cultures that maximize performance
■ Identifying work-related factors that contribute to fraud and accidents, enabling managers to focus proactively, not just after the fact, on reducing loss
■ Developing analytics models that help predict turnover so managers can more rapidly change work conditions to promote retention.

A transition of this magnitude cannot happen overnight – and for many companies, it must seem like a frightening leap into the unknown. It will take a wide variety of skills to build this new, yet critical, capability. It can take three to five years to build a strong talent analytics function and the same time or longer to develop a culture where people make decisions based on data and not just instinct.

That’s why it’s important to lay the groundwork now. In 2014, companies should take action to build HR and talent analytics capabilities, to conduct pilot projects focused on critical business and talent problems and to invest in developing the analytics capabilities that can drive HR in the future. This is the year to move from talk to action. First steps include looking for skilled analysts to lead the analytics team and adding other data experts, such as econometricians or demographers, who have deep experience with numerical analysis and generating insights from data.

It’s also critical that HR professionals become better versed with data analytics to better serve their leadership. Successful companies also build close relationships across the HR, IT and finance functions, as well as with the business directly. Companies should not be afraid to experiment or allow the perfect to be the enemy of the good. While it is true that analytics without good data will likely fail, it is equally true that insisting on 100 per cent data quality means that a project may never begin. By using the data that does exist to identify and address specific business challenges, companies are likely to see improvements in data quality over time as experience grows. Technology has already transformed the workplace.

Now, by leveraging analytics and big data, HR can position companies to outperform their peers when it comes to winning the talent game – and driving overall business results.

Jason Geller is the national managing director for human capital consulting at Deloitte Consulting LLP

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