HR Analytics for business performance

Brief: Talent Analytics is about understanding and making sense of workforce data to make decisions about people with the aim of aligning people decisions to business strategy. This article attempts to analyze what is talent analytics, how it is different from traditional human capital analytics, and where HR people are required to turn their focus.

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Talent Analytics or Human Workforce Analytics is the way by which data is analyzed to generate insights on meeting the complex needs of the HR and business challenges and thereby enabling high performance organizations. In the traditional HR role, the expectation was to somehow manage the people processes through insight and interpersonal relationships. Thus the complex understanding of organizational and human dynamics happens by a most subjective process of hearsay, observation and interpretation.

Though the field of Business Analytics has made great strides in the recent years, HR processes have not yet caught up to the task of analyzing these complex dimensions to make decisions on talent management, be it acquisition, development or retention. The typical tasks that would fall under these heads would be assessing capabilities, identifying leadership behaviours, predicting performance indicators or studying retention patterns. Leveraging on analytics would mean an improvement in workforce planning, alignment of organizational capabilities, improvement of business strategies and the like, all of which lead to improves organizational performance.

Companies like Accenture are taking the lead in defining what is human analytics and developing an approach that would help companies answer some critical people-related questions on what programs really drive better workforce performance, what organizational and talent levers impact performance and efficiency, how to retain top performers etc.Companies like IBM have developed Talent analytics software that provides insight into recruitment, learning, skills, succession and retention.

In understanding what is Talent Analytics, it is important to review what gets measured in the name of metrics related to human capital. HR managers take pride in estimating their employees cost of hiring, turnover rate, replacement rate, contribution to bottomline, all of which do not have much strategic importance. They are useful in managing people and information, not in creating value to the organization.

The shift that is required is from managing efficiency to creating effectiveness. To give an example, most organizations measure employee satisfaction levels or customer satisfaction levels. Providing this data to the top management is not enough if HR wants to be a strategic partner in managing the business. The next logical step would be to understand what type of management or employee behaviours influence this level of satisfaction, what is the level of increased aspired, hence what are the behaviours that are required to improve the quality of employee or customer experience and finally, what would be the impact of this increased satisfaction on the company’s performance.

And ultimately, employee and client satisfaction do not mean anything by themselves unless they result in business performance, increased market share and profitability. Talent analytics helps in mapping how well the workforce is meeting the needs of its business, how they are aligned to the vision of the business, to identify ways in which a high performing employee will continue to contribute to the well-being of the company.

For instance, Thomas H Davenport, in the HBR article “Competing on Human Analytics”, talks about how some companies that are very high on valuing employee engagement can precisely identify the value of a 0.1% increase in employee engagement among employees on the performance of a particular store or brand. The transcript of his interview relating to the article is found at http://blogs.hbr.org/ideacast/2010/09/talent-analytics-how-do-you-me.html

Talent metrics is the most objective way of measuring what brings value to the organization, in fact, more objective than employee performance measures. The role of HR in providing intuitive analyses and creative thinking will still be required, but rather than applying it on behaviour, they will be required to apply it on strategy.