Dashboards, deep dives and data crunching do not always work as intended, but there are four signs the metrics are living up to their promises.
—By Donna Chan
Successful talent analytics programs can take many forms. There is no “one-size-fits-all” program that will work for every business, so many HR teams are using analytics systems that are custom-built or cobbled together from a variety of tools.
Yet no matter what kind of off-the-shelf or custom system is being used, there are four key signs that a talent analytics program is appropriately serving the needs of the firm.
Numbers Clearly Connect to Key Business Outcomes
It sounds like the most obvious thing in the world, yet many HR professionals have been handed at least one useless analytics report in their careers. The problem is compounded when those same reports make their way over to functional leaders and business partners, whose confusion can set an HR partnership back years. Often, the report is meant well, or needed to comply with a specific regulatory need. Unfortunately, the end result is the same … confusion and a stack of numbers with no clear connection to the business bottom line.
According to the Harvard Business Review, effective and functional human capital analytics programs should build a clear cause-and-effect story for both HR teams and business partners. They cite Best Buy as an example, where a 0.01 percent movement in employee engagement has been shown to correlate with a $100,000 swing in margins per store. For that HR team, getting business buy-in for engagement initiatives is a no-brainer, and telling the story of how HR connects back to desired business outcomes is easy.
Best Buy is a straightforward case, but it is hardly the only example. At Google, analytics pinpoint the 5 percent of the organization most in need of coaching. It is an unusual metric, but given the high cost of hiring, it is a data point the company needs to keep turnover rates down.
The best analytics programs will deliver the same kind of clear connections between HR performance and the business bottom line, no matter what basket of numbers is being measured.
It Offers Accurate Rorecasts
A second sign of a successful talents analytics program is the ability of the program to offer accurate forecasts. According to a Bersin by Deloitte study, only 15 percent of organizations give themselves high marks for HR data accuracy. Yikes!
Analytics programs that can deliver reliable, trustworthy insights around retention, satisfaction, training costs, and recruitment spending are true assets for an organization.
While companies have access to more data than ever before in terms of the breadth of information at their fingertips, many analytics programs suffer poor data quality that renders their predictions useless. High-performance analytics groups are militant about core data quality, doing their own research, and double-checking automated reporting. After all, errors in data entry, duplications, reports that do not pull correctly, and more can combine to sabotage even the most well-intended predictions.
This flaw in the analytics movement is a major reason accurate forecasts are a sign of a working system. Analytics programs that can deliver reliable, trustworthy insights around retention, satisfaction, training costs, and recruitment spending are true assets for an organization. If these numbers are coming in on point and business partners are using them, the system is beating out 85 percent of the competition.
Business Partners Outside of HR Willingly Use it
A ringing endorsement of any HR system is whether business partners outside the HR team willingly use the system. All too often, HR dashboards, scorecards or “deep dive” reports get negative reviews from business partners who do not see their value (or find them inaccurate). When those same partners want analytics reports, ask for them without prompting, and seem to be actually applying them to their core functions, HR can be satisfied that the analytics program is working.
One example of this integration of HR analytics with organization-wide culture is Sysco. The global food-service firm uses analytics to give line managers notice and guidance when team scores shifts on a carefully selected basket of satisfaction and retention markers. As a result, managers in the company’s 100-plus autonomous units can better manage their costs and retain more key staff members by making smart use of their analytical insights.
The Executive Team Embraces it as a Competitive Advantage
The final sign of a successful talent analytics program is that the executive management team views it as a competitive advantage. When this happens, the analytics team and function move out of the HR silo and into the core culture of the company. As a result, the metrics and their impact become a natural part of the ongoing conversations and successes of the firm.
Deloitte identified a handful of markers to signal that a company had put human capital and talent analytics into their “spotlight” competitive advantage categories. First, the analytics function becomes a dedicated team, something 50 percent of major firms now have in place (though only 8 percent of firms categorize their teams as “strong,” a sign of the newness of the groups). Next, when analytics are being used as a part of strategic forward-planning discussions, it is an indicator that the function has matured into the culture. Finally, when the HR analytics group is treated as an equal business partner and given a regular “seat at the table” for all business decisions, it signals a firm where people and their behaviors truly are the cornerstone of the business.
Not There Yet?
For businesses without these four markers in place, there is hope. Each is sequential and builds on the other.
To end up as a trusted business partner, the analytics group needs to start by focusing on linking the numbers to a clear business story. From there, improving efficiency and accuracy of reports will lead to business partners voluntarily adopting the system and later making talent analytics an ongoing partner in all the business does.
It is not overnight, but it is a clear path savvy HR leaders and their analytics teams can follow to make meaningful improvements and discover success in the analytics function.