The Digital Transformation of People Management, a recent Oxford Economics research paper, dropped a bomb: only 31 percent of HR departments surveyed provide key analytics across the enterprise to support and drive the business forward (this figure drops to an alarming 24 percent for firms in highly developed economies).
In yet another survey, Analytics: The New Path to Value, an MIT Sloan Management Review, the authors (Steve Lavalle, Michael S. Hopkins, Eric Lesser, et. al.) claim the challenges over the next two years are to innovate in order to achieve competitive advantage.
Primary Challenges Facing Your Organization in the Next Two Years
How do these two surveys relate? Achieving competitive advantage without analytics from your HR Data is challenging? Given that employees are often a main cost driver (yes, I know they should be seen as an investment, but let’s keep this free from verbiage) and provide roughly 80 percent of a company’s value, they could provide the needed strategic differentiation—which is why people management is getting more and more strategic. But why do so many enterprises struggle to deliver relevant and valuable human resources analytics and see human capital management as a closed group of information holders mainly working on operational and transactional topics?
Instead, we should connect the dots between strategic HR initiatives (including workforce planning) and the business plan, taking inherent risk factors into consideration and incorporating social platforms. Grabbing unstructured information around employees, applying some predictive intelligence, and showing the risk of important talents leaving your company is a piece of cake in today’s technological world; so is breaking long-term plans into executable components to support day-to-day processes for line managers and HR professionals overseeing your company’s workforce. However, to do so requires analytics.
According to the MIT study, 67 percent of professionals base their business decisions on “gut feeling.”
Do You Make Decisions According to Your Gut Feeling?
Only ¼ use analytics daily. However, that might be because only one third of the participants (roughly) are capable of running sophisticated decision-support processes (analytics), while the rest rely on other functions for delivering insight and direction. Another reason might be that there’s simply too much information to process (60 percent saw this as the reason according to the study).
How About Big Data – Do You Have More Data than You Can Effectively Use?
People managers are unable to handle the big data issues out there, because they don’t have the 24/7 technical capability. However, it’s possible to take information usage to the next level.
One of the biggest professional services companies around uses data in its HR systems (everything from employee resumes to alumni applications) in conjunction with data in its CRM systems to answer sales questions such as:
- What employees have worked with a potential customer before?
- Which consultants are currently working with the customer?
- What former employees now work for customers?
- What former project pitches were successful and why?
HR-owned data gives your sales force useful intelligence when facing hard competition in pitches – and will provide the needed competitive advantage. And this is just the beginning. Imagine the possibilities that opening up Microsoft Exchange servers and analyzing e-mail subject lines to gain insights into business conversations between subject matter experts. (I know this would be a “no-go” in some conservative and work councils favoring regions like Germany or France). This would feed your organization’s knowledge pool and help you identify who the thought leaders are or could be.
Current technology also allows you to leverage social media analytics to understand “what your company knows,” giving you insight into:
- What your employees are talking about
- Whether your salaries comparable to the market
- Where you can find the talent of tomorrow
- How you can foster cross-departmental collaboration and leverage potential skills
- What the likelihood is of talent leaving your company
- Who the best-networked people are in your company – who the thought leaders are, maybe even outside their role
In order to support the business and sustainable growth, HR departments must redefine what they are–and analytics must be a mandatory part of the business day. Leverage existing technology to make fact-based decisions that align to corporate strategy. Automate your operational HR processes. Focus on analytical intelligence. And think strategically. In other words, be a real strategic business partner.