Data-Backed Insight Coming to the Forefront in HR
A recent article on hrmagazine.co.uk addresses
the rising expectations for data-backed insight in human resources. The
upshot: investors and senior management are more interested in talent
data than ever before. If HR departments aren’t primed to deliver, they
had better prepare for it.
“Strategic use of data probably doesn’t take more
effort than you’re doing now, but it requires new skills from HR,” says
Jeremy Shapiro, executive director at Morgan Stanley. According to
Shapiro, a trend toward more integrated reporting (i.e., where companies
report on elements such as sustainability and talent management as well
as financials) plus a rising awareness of how engagement links to
performance means that senior executives are starting to expect more out
of their HR data.
An article in Forbes further underscores why these expectations are rising:
How well do organizations truly understand what
drives performance among their workforce? The answer: not really very
well. Do we know why one sales person outperforms his peers? Do we
understand why certain leaders thrive and others flame out? Can we
accurately predict whether a candidate will really perform well in our
organization? The answer to most of these questions is no. The vast
majority of hiring, management, promotion, and rewards decisions are
made on gut feel, personal experience, and corporate belief systems.
This is like the vice-president of marketing spending millions of
dollars on a new marketing campaign because he or she “always does it
this way.” It’s an obsolete way to make decisions.
The Forbes piece cites an excellent example of how
this pattern can work against HR success: a large company had operated
under the belief that employees with good grades from highly ranked
colleges would make good performers. Therefore, their recruitment,
selection, and promotion processes were based on these academic drivers.
An analyst within the firm did a statistical analysis of sales
productivity and turnover, correlating total performance and retention
rates against a range of demographic factors. The results were
astonishing and contrary to long-held beliefs. Six factors were highly
correlated with success:
- No typos, errors, or grammatical mistakes on resumes
- No quitting school before achieving a degree
- Experience selling high-ticket commodities
- Demonstrated success in prior positions
- Ability to succeed with vague instruction
- Experience managing time and multi-tasking
However, three stood out as not mattering at all:
- Where they went to school
- What grades they had
- The quality of their references
Once this data was integrated into the recruiting
process, the company saw more than $4 million in revenue improvement the
next fiscal period.
Not surprisingly, leading enterprises are pioneering data-driven HR management. An article on TLNT.com
highlights how HR is a data-driven function at Google, where the
traditional HR function is called “people operations,” and an analytics
team drives all HR decisions. A couple of tenets from that team show how
removed their process is from the old HR world of relationships and gut
- All people decisions at Google are based on data and analytics.
- The goal is to bring the same level of rigor to people decisions that they do to engineering decisions.
This approach has resulted in Google producing amazing
workforce productivity results that few can match (on average, each
employee generates nearly $1 million in revenue and $200,000 in profit
Quoted in the hrmagazine.co.uk article, Matthew Hanwell, business consulting lead for social media at NorthgateArinso,
says that HR departments must get a better handle on big data and
understand that any analysis must be connected to business strategy. "HR
reporting is like an x-ray right now, black and white and in 2D," he
says. "It should be an MRI scan, allowing you to plot, scan, and drill.
This requires a different set of skills to interpret."
Hanwell and Shapiro agree that “data scientist” is a
role that will be emerging in HR departments, especially considering
their pressing need for data-driven insight.
Posted by Epicor Social Media Team