Workforce Analytics can add value in two ways (only)
I think it is fair to say that Workforce Analytics, HR metrics and Big Data in HR is firmly on the map now. It is one of the key trends in global HR right now and everybody’s taking about it. And with some good reason. But before we become like a deer caught in the headlights (with references to the flashy dashboards, shiny conference stands from cloud based HRIS vendors and glossy brochures from data warehouse providers) let’s step back and see how Workforce Analytics actually can add value. This will also help us make our business case a bit stronger rather than the irrelevant “we will have our data at our fingertips”-type of arguments, which really hardly adds any value.
Looking at it from a high-level perspective; Workforce Analytics can add value in two ways; help to make better HR decision and help to make our internal processes better for the benefit of our customers. Let me elaborate on both.
The first one – to make better HR decisions – is obvious but it is probably to many not quite clear what this means in practice. The object here is to either test the efficiency of current programs, to produce knowledge upon which programs/interventions can be made or to predict which programs are more worthwhile implementing. This can be “what is the most efficient way to reduce talent turnover?”. Or “Which leader profiles have the most engaged employees and why?”. Or “How can we reduce our time-to-hire by 25% and improve our quality of new hires?”. Or “what will our turnover be next year if we implement our new Engage Our Employee program”. Or something along those lines.
The benefits can be significant. For example, If you can identify critical roles and reduce employee turnover in those positions this is worth a lot. Not only in direct cost savings but more so in productivity improvement and competitive advantage in critical areas. This should be enough to make even the most stubborn CEO love you.
But at the end of the day, it is ‘only’ directed at making your HR processes better. Chances are that you already do a lot for your talent and the object for workforce analytics is to make it even better. To many line and functional managers this is only of some relevance. They don’t really care too much for HR anyway. Some even hate HR. So it is worth also baring in mind the second type of benefits which Workforce Analytics can bring; to add direct business value.
To do this you need to combine workforce data with other data such as customer data, profit data and market data. The questions or hypotheses that you may look into are “Which leadership behaviors correlate most with high customer loyalty?”, “In which positions does employee engagement correlate the most with customer satisfaction?” or “How much will our sales increase if we higher 20% better (and more expensive) sales people?”. These questions are still about employees and leaders (HR stuff) but have their focus on their effect on customers and thus on profits. This is much more relevant to the functional manager who can see the direct impact on earnings. This is still HR stuff but this time he cares about it. As an aside; correlations do not imply causality – but lets stick to the easy stuff to begin with.
The competencies needed to do Workforce Analytics aimed at the two types of benefits are different. The benefits aimed towards the business value requires a more rounded set of competencies. You need to have statistical knowledge, HR knowledge and business knowledge. And the most important is probably the right strategic mindset. Not many – if any – excel in all. The best way to solve this is to build strong teams with complementary competencies to solve issues like this. But it is worth it.
So Workforce Analytics can add value in two ways; to make better HR decisions and to make better business-related decisions. Both are important. Don’t just focus on the HR stuff.