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 feelings:
- 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 each year).
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